-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KqOE3EyrdiX8d4CTtsuS38AZ+t+vm6GQ+uOCpo2S3WrTWBsV6M5q+yY3rUz00r38 fs6gveVCdY9iETtHk9wR1Q== 0001193125-08-100310.txt : 20080502 0001193125-08-100310.hdr.sgml : 20080502 20080502115458 ACCESSION NUMBER: 0001193125-08-100310 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20080502 DATE AS OF CHANGE: 20080502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL ANNUITIES LIFE ASSURANCE CORP/CT CENTRAL INDEX KEY: 0000881453 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE CARRIERS, NEC [6399] IRS NUMBER: 061241288 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-136996 FILM NUMBER: 08797501 BUSINESS ADDRESS: STREET 1: ONE CORPORATE DRIVE CITY: SHELTON STATE: CT ZIP: 06484 BUSINESS PHONE: 2039261888 MAIL ADDRESS: STREET 1: ONE CORPORATE DRIVE CITY: SHELTON STATE: CT ZIP: 06484 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN SKANDIA LIFE ASSURANCE CORP/CT DATE OF NAME CHANGE: 19920929 424B3 1 d424b3.txt APEX PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION A Prudential Financial Company One Corporate Drive, Shelton, Connecticut 06484 ADVANCED SERIES ADVISOR PLAN/SM/ III ("ASAP III")/SM/ ADVANCED SERIES APEX II/SM/ ("APEX II")/SM/ ADVANCED SERIES XTRA CREDIT/SM/ SIX ("XT6")/SM/ ADVANCED SERIES LIFEVEST II/SM/ ("ASL II")/SM/ Flexible Premium Deferred Annuities PROSPECTUS: MAY 1, 2008 This prospectus describes four different flexible premium deferred annuities (the "Annuities" or the "Annuity") offered by Prudential Annuities Life Assurance Corporation ("Prudential Annuities"/SM/, "we", "our", or "us"). Each Annuity may be offered as an individual annuity contract or as an interest in a group annuity. Each Annuity has different features and benefits that may be appropriate for you based on your financial situation, your age and how you intend to use the Annuity. This Prospectus describes the important features of the Annuities and what you should consider before purchasing one of the Annuities. The Prospectus also describes differences among the Annuities which include differences in the fees and charges you pay and variations in some product features such as the availability of certain bonus amounts and basic death benefit protection. These differences among the products are discussed more fully in the Prospectus and summarized in Appendix F entitled "Selecting the Variable Annuity That's Right for You". There may also be differences in the compensation paid to your Financial Professional for each Annuity. Differences in compensation among different annuity products could influence a Financial Professional's decision as to which annuity to recommend to you. In addition, selling broker-dealer firms through which each Annuity is sold may decline to make available to their customers certain of the optional features and investment options offered generally under the Annuity. Alternatively, such firms may restrict the optional benefits that they do make available to their customers (e.g., by imposing a lower maximum issue age for certain optional benefits than what is prescribed generally under the Annuity). Please speak to your Financial Professional for further details. Each Annuity or certain of its investment options and/or features may not be available in all states. Various rights, benefits and certain fees may differ among states to meet applicable laws and/or regulations. For more information about variations applicable to your state, please refer to your Annuity contract or consult your Financial Professional. For some of the variations specific to Annuities approved for sale by the New York State Insurance Department, see Appendix H. Certain terms are capitalized in this Prospectus. Those terms are either defined in the Glossary of Terms or in the context of the particular section. THE SUB-ACCOUNTS Each Sub-account of Prudential Annuities Life Assurance Corporation Variable Account B invests in an underlying mutual fund portfolio. Currently, portfolios of the following underlying mutual funds are being offered: INVESCO AIM Advisors, Inc., Advanced Series Trust, Evergreen Variable Annuity Trust, First Defined Portfolio Fund LLC, Nationwide Variable Insurance Trust, ProFunds VP, The Prudential Series Fund, Franklin Templeton Variable Insurance Products Trust and Wells Fargo Variable Trust. See the following page for the complete list of Sub-accounts. PLEASE READ THIS PROSPECTUS Please read this Prospectus and the current prospectus for the underlying mutual funds. Keep them for future reference. If you are purchasing one of the Annuities as a replacement for an existing variable annuity or variable life coverage or a fixed insurance policy, you should consider any surrender or penalty charges you may incur when replacing your existing coverage and that this Annuity may be subject to a contingent deferred sales charge if you elect to surrender the Annuity or take a partial withdrawal. You should consider your need to access the Annuity's Account Value and whether the Annuity's liquidity features will satisfy that need. AVAILABLE INFORMATION We have also filed a Statement of Additional Information that is available from us, without charge, upon your request. The contents of the Statement of Additional Information are described below - see Table of Contents. The Statement of Additional Information is incorporated by reference into this prospectus. This Prospectus is part of the registration statement we filed with the SEC regarding this offering. Additional information on us and this offering is available in the registration statement and the exhibits thereto. You may review and obtain copies of these materials at no cost to you by contacting us. These documents, as well as documents incorporated by reference, may also be obtained through the SEC's Internet Website (http://www.sec.gov) for this registration statement as well as for other registrants that file electronically with the SEC. These annuities are NOT deposits or obligations of, or issued, guaranteed or endorsed by, any bank, are NOT insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other agency. An investment in an annuity involves investment risks, including possible loss of value, even with respect to amounts allocated to the AST Money Market Sub-account. - -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ADVANCED SERIES ADVISOR PLAN III/SM/, APEX(R), XTRA CREDIT(R) AND LIFEVEST(R) ARE SERVICE MARKS OR REGISTERED TRADEMARKS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND ARE USED UNDER LICENSE BY ITS AFFILIATES. - -------------------------------------------------------------------------------- FOR FURTHER INFORMATION CALL: 1-800-752-6342 Prospectus Dated: Statement of Additional May 1, 2008 Information Dated: May 1, 2008 COREPROS ASAP3SAI, APEX2SAI, XT6SAI, ASL2SAI PLEASE SEE OUR PRIVACY POLICY AND OUR IRA, ROTH IRA AND FINANCIAL DISCLOSURE STATEMENTS ATTACHED TO THE BACK COVER OF THIS PROSPECTUS. INVESTMENT OPTIONS Advanced Series Trust AST Advanced Strategies AST Aggressive Asset Allocation AST AllianceBernstein Core Value AST AllianceBernstein Growth & Income AST American Century Income & Growth AST American Century Strategic Allocation AST Balanced Asset Allocation AST Bond Portfolio 2015 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Capital Growth Asset Allocation AST Cohen & Steers Realty AST Conservative Asset Allocation AST CLS Growth Asset Allocation AST CLS Moderate Asset Allocation AST DeAM Large-Cap Value AST DeAM Small-Cap Value AST Federated Aggressive Growth AST First Trust Balanced Target AST First Trust Capital Appreciation Target AST Goldman Sachs Concentrated Growth AST Goldman Sachs Mid-Cap Growth *AST Goldman Sachs Small-Cap Value AST High Yield AST Horizon Growth Asset Allocation AST Horizon Moderate Asset Allocation AST International Growth AST International Value AST Investment Grade Bond AST JPMorgan International Equity AST Large-Cap Value AST Lord Abbett Bond Debenture AST Marsico Capital Growth AST MFS Global Equity AST MFS Growth AST Mid-Cap Value AST Money Market AST Neuberger Berman Mid-Cap Growth AST Neuberger Berman Mid-Cap Value AST Neuberger Berman Small-Cap Growth AST Niemann Capital Growth Asset Allocation AST PIMCO Limited Maturity Bond AST PIMCO Total Return Bond AST Preservation Asset Allocation AST QMA US Equity Alpha AST Small-Cap Growth AST Small-Cap Value AST T. Rowe Price Asset Allocation AST T. Rowe Price Global Bond AST T. Rowe Price Large-Cap Growth AST T. Rowe Price Natural Resources AST UBS Dynamic Alpha Strategy AST Western Asset Core Plus Bond INVESCO AIM Advisors, Inc AIM V.I. Dynamics Fund -- Series I shares AIM V.I. Financial Services Fund -- Series I shares AIM V.I. Global Health Care Fund -- Series I shares AIM V.I. Technology Fund -- Series I shares Evergreen Variable Annuity Trust Growth International Equity Omega First Defined Portfolio Fund, LLC First Trust(R) Target Focus Four Global Dividend Target 15 NASDAQ(R) Target 15 S&P(R) Target 24 Target Managed VIP The Dow(R) Target Dividend The Dow(R) DART 10 Value Line(R) Target 25 Franklin Templeton Variable Insurance Products Trust Franklin Templeton VIP Founding Funds Allocation Fund Nationwide Variable Insurance Trust Gartmore NVIT Developing Markets Fund ProFund VP Access VP High Yield Asia 30 Banks Basic Materials Bear Biotechnology Bull Consumer Goods Consumer Services Europe 30 Financials Health Care Industrials Internet Japan Large-Cap Growth Large-Cap Value Mid-Cap Growth Mid-Cap Value Oil & Gas NASDAQ-100 Pharmaceuticals Precious Metals Real Estate Rising Rates Opportunity Semiconductor Short Mid-Cap Short NASDAQ-100 Short Small-Cap Small-Cap Growth Small-Cap Value Technology Telecommunications U.S. Government Plus UltraBull UltraMid-Cap UltraNASDAQ-100 UltraSmall-Cap Utilities The Prudential Series Fund *SP International Growth Wells Fargo Variable Trust Wells Fargo Advantage VT Equity Income * no longer offered. CONTENTS INTRODUCTION......................................................................... 1 WHY WOULD I CHOOSE TO PURCHASE ONE OF THE ANNUITIES?................................ 1 WHAT ARE SOME OF THE KEY FEATURES OF THE ANNUITIES?................................. 1 HOW DO I PURCHASE ONE OF THE ANNUITIES?............................................. 2 GLOSSARY OF TERMS.................................................................... 3 SUMMARY OF CONTRACT FEES AND CHARGES................................................. 6 EXPENSE EXAMPLES..................................................................... 14 INVESTMENT OPTIONS................................................................... 16 WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?.................. 16 WHAT ARE THE FIXED ALLOCATIONS?..................................................... 35 FEES AND CHARGES..................................................................... 36 WHAT ARE THE CONTRACT FEES AND CHARGES?............................................. 36 WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?........................................ 38 WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?........................... 38 EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES........................................... 38 PURCHASING YOUR ANNUITY.............................................................. 39 WHAT ARE OUR REQUIREMENTS FOR PURCHASING ONE OF THE ANNUITIES?...................... 39 MANAGING YOUR ANNUITY................................................................ 40 MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?..................... 40 MAY I RETURN MY ANNUITY IF I CHANGE MY MIND?........................................ 40 MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?............................................ 41 MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?........................ 41 MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?.................... 41 MANAGING YOUR ACCOUNT VALUE.......................................................... 42 HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?........................................ 42 HOW DO I RECEIVE A LOYALTY CREDIT UNDER THE ASAP III AND APEX II ANNUITIES?......... 42 HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE UNDER THE ASAP III AND APEX II ANNUITIES?........................................................................ 42 HOW DO I RECEIVE CREDITS UNDER THE XT6 ANNUITY?..................................... 43 HOW ARE CREDITS APPLIED TO ACCOUNT VALUE UNDER THE XT6 ANNUITY?..................... 43 ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?.......... 44 DO YOU OFFER DOLLAR COST AVERAGING?................................................. 46 DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?.................................... 46 ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?........................................ 47 WHAT IS THE BALANCED INVESTMENT PROGRAM?............................................ 47 MAY I GIVE MY FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS? 47 MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?............. 47 HOW DO THE FIXED ALLOCATIONS WORK?.................................................. 48 HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?................................... 49 HOW DOES THE MARKET VALUE ADJUSTMENT WORK?.......................................... 49 WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?...................................... 50 ACCESS TO ACCOUNT VALUE.............................................................. 51 WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?.................................... 51 ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?....................................... 51 CAN I WITHDRAW A PORTION OF MY ANNUITY?............................................. 51 HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?....................................... 51 CAN I MAKE PERIODIC WITHDRAWALS FROM MY ANNUITY DURING THE ACCUMULATION PERIOD?..... 52 DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL REVENUE CODE?..................................................................... 52 WHAT ARE REQUIRED MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?......... 52
(i) CAN I SURRENDER MY ANNUITY FOR ITS VALUE?.............................................. 52 WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?............................ 53 WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?........................................... 53 HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?................................... 54 HOW ARE ANNUITY PAYMENTS CALCULATED?................................................... 55 LIVING BENEFIT PROGRAMS................................................................. 56 DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE THEY ARE ALIVE?........................................................................... 56 GUARANTEED RETURN OPTION PLUS/SM/ (GRO PLUS/SM/)....................................... 57 GUARANTEED RETURN OPTION (GRO)......................................................... 60 GUARANTEED RETURN OPTION PLUS 2008 (GRO PLUS 2008)..................................... 63 HIGHEST DAILY GUARANTEED RETURN OPTION (HD GRO)........................................ 66 GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)........................................... 69 GUARANTEED MINIMUM INCOME BENEFIT (GMIB)............................................... 73 LIFETIME FIVE/SM/ INCOME BENEFIT (LIFETIME FIVE)....................................... 76 SPOUSAL LIFETIME FIVE/SM/ INCOME BENEFIT (SPOUSAL LIFETIME FIVE)....................... 82 HIGHEST DAILY LIFETIME FIVE/SM/ INCOME BENEFIT (HIGHEST DAILY LIFETIME FIVE)........... 86 HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (HIGHEST DAILY LIFETIME SEVEN)......... 92 SPOUSAL HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (SPOUSAL HIGHEST DAILY LIFETIME SEVEN)............................................................................... 98 DEATH BENEFIT........................................................................... 106 WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?.......................................... 106 BASIC DEATH BENEFIT.................................................................... 106 OPTIONAL DEATH BENEFITS................................................................ 106 PRUDENTIAL ANNUITIES' ANNUITY REWARDS.................................................. 110 PAYMENT OF DEATH BENEFITS.............................................................. 111 VALUING YOUR INVESTMENT................................................................. 114 HOW IS MY ACCOUNT VALUE DETERMINED?.................................................... 114 WHAT IS THE SURRENDER VALUE OF MY ANNUITY?............................................. 114 HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?............................................ 114 HOW DO YOU VALUE FIXED ALLOCATIONS?.................................................... 114 WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?............................................ 114 WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?.......... 115 TAX CONSIDERATIONS...................................................................... 117 GENERAL INFORMATION..................................................................... 125 HOW WILL I RECEIVE STATEMENTS AND REPORTS?............................................. 125 WHO IS PRUDENTIAL ANNUITIES?........................................................... 125 WHAT ARE SEPARATE ACCOUNTS?............................................................ 126 WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?................................... 127 WHO DISTRIBUTES ANNUITIES OFFERED BY PRUDENTIAL ANNUITIES?............................. 128 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................ 130 FINANCIAL STATEMENTS................................................................... 130 HOW TO CONTACT US...................................................................... 131 INDEMNIFICATION........................................................................ 131 LEGAL PROCEEDINGS...................................................................... 131 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................................... 133 APPENDIX A - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B................... A-1 APPENDIX B - CALCULATION OF OPTIONAL DEATH BENEFITS..................................... B-1 APPENDIX C - PLUS40/TM/ OPTIONAL LIFE INSURANCE RIDER................................... C-1 APPENDIX D - ADDITIONAL INFORMATION ON ASSET ALLOCATION PROGRAMS........................ D-1 APPENDIX E - DESCRIPTION AND CALCULATION OF PREVIOUSLY OFFERED OPTIONAL DEATH BENEFITS........................................................................ E-1
(ii) APPENDIX F - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU.................... F-1 APPENDIX G - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME FIVE INCOME BENEFIT G-1 APPENDIX H - ANNUITIES APPROVED FOR SALE BY THE NEW YORK STATE INSURANCE DEPARTMENT. H-1 APPENDIX I - ASSET TRANSFER FORMULA UNDER GRO PLUS 2008 AND HIGHEST DAILY GRO....... I-1 APPENDIX J - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME SEVEN AND SPOUSAL HIGHEST DAILY LIFETIME SEVEN.............................................. J-1
(iii) INTRODUCTION WHY WOULD I CHOOSE TO PURCHASE ONE OF THE ANNUITIES? The Annuities are frequently used for retirement planning because they allow you to accumulate retirement savings and also offer annuity payment options when you are ready to begin receiving income. Each Annuity also offers a choice of different optional benefits, for an additional charge, that can provide principal protection or guaranteed minimum income protection for Owners while they are alive and one or more Death Benefits that can protect your retirement savings if you die during a period of declining markets. Each Annuity may be used as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth IRA, Section 401(a) plans (defined benefit plans and defined contribution plans such as 401(k), profit sharing and money purchase plans) or Tax Sheltered annuities (or 403(b)). Each Annuity may also be used as an investment vehicle for "non-qualified" investments. Each Annuity allows you to invest your money in a number of Sub-accounts as well as in one or more Fixed Allocations. This Prospectus describes four different Annuities including features that these Annuities have in common as well as differences. For a summary of each Annuity's features, please refer to Appendix F entitled, "Selecting the Variable Annuity That's Right for You." When an Annuity is purchased as a "non-qualified" investment, you generally are not taxed on any investment gains the Annuity earns until you make a withdrawal or begin to receive annuity payments. This feature, referred to as "tax-deferral", can be beneficial to the growth of your Account Value because money that would otherwise be needed to pay taxes on investment gains each year remains invested and can earn additional money. However, because the Annuity is designed for long-term retirement savings, a 10% penalty tax may be applied on withdrawals you make before you reach age 59 1/2. Annuities purchased as a non-qualified investment are not subject to the maximum contribution limits that may apply to a qualified investment, and are not subject to required minimum distributions after age 70 1/2. When an Annuity is purchased as a "qualified" investment, you should consider that the Annuity does not provide any tax advantages in addition to the preferential treatment already available through your retirement plan under the Internal Revenue Code. In other words, you need not invest in an Annuity to gain the preferential tax treatment provided by your retirement plan. An Annuity, however, may offer features and benefits in addition to providing tax deferral that other investment vehicles may not offer, including Death Benefit protection for your beneficiaries, lifetime income options and the ability to make transfers between numerous variable investment options offered under the Annuity. You should consult with your Financial Professional as to whether the overall benefits and costs of the Annuity are appropriate considering your overall financial plan. WHAT ARE SOME OF THE KEY FEATURES OF THE ANNUITIES? .. Each Annuity is a "flexible premium deferred annuity." It is called "flexible premium" because you have considerable flexibility in the timing and amount of Purchase Payments. Generally, investors "defer" receiving annuity payments until after an accumulation period. .. Each Annuity offers both Sub-accounts and Fixed Allocations. If you allocate your Account Value to Sub-accounts, the value of your Annuity will vary daily to reflect the investment performance of the underlying investment options. Fixed Allocations of different durations are offered that are guaranteed by us, but may have a Market Value Adjustment if you withdraw or transfer your Account Value before the Maturity Date. .. Each Annuity features two distinct periods - the accumulation period and the payout period. During the accumulation period your Account Value is allocated to one or more investment options. .. During the payout period, commonly called "annuitization," you can elect to receive annuity payments (1) for life; (2) for life with a guaranteed minimum number of payments; (3) based on joint lives; or (4) for a guaranteed number of payments. We currently make annuity payments available on a fixed basis only. .. Each Annuity offers optional income benefits, for an additional charge, that can provide principal protection or guaranteed minimum income or withdrawal protection for Owners while they are alive. .. Each Annuity offers a basic Death Benefit. It also offers optional Death Benefits that provide an enhanced level of protection for your beneficiary(ies) for an additional charge. .. You are allowed to withdraw a limited amount of money from each Annuity on an annual basis without any charges, although any optional guaranteed benefit you elect may be reduced. Other product features allow you to access your Account Value as necessary, although a charge may apply. You will be subject to taxes on most withdrawals. .. Transfers between investment options are tax-free. Currently, you may make twenty transfers each year free of charge. We also offer several programs that enable you to manage your Account Value as your financial needs and investment performance change. 1 With respect to XT6 only: . If you purchase this Annuity, we apply an additional amount (referred to as an XTra Credit/SM/, Purchase Credit or Credit) to your Account Value with each Purchase Payment you make, including your initial Purchase Payment and any additional Purchase Payments during the first six Annuity Years. . Please note that during the first 10 years, the total asset-based charges on the XT6 Annuity are higher than many of our other annuities. In addition, the Contingent Deferred Sales Charge (CDSC) on the XT6 Annuity is higher and is deducted for a longer period of time as compared to our other annuities. The XTra Credit/SM/ amount is included in your Account Value. However, Prudential Annuities may take back all XTra Credit amounts if you return your Annuity under the "free-look" provision. In addition, Prudential Annuities may take back XTra Credits associated with any Purchase Payment if (a) the XTra Credit was applied within twelve (12) months prior to the death of the Owner (or Annuitant if entity-owned) or (b) the XTra Credit was applied within 12 months prior to a request to surrender the Annuity under the medically-related surrender provision. . In these situations, your Account Value could be substantially reduced. The amount we take back will equal the XTra Credit, without adjustment up or down for investment performance. Therefore, any gain on the XTra Credit amount will not be taken back. But if there was a loss on the XTra Credit, the amount we take back will still equal the amount of the XTra Credit. Additional conditions and restrictions apply. We do not deduct a CDSC in any situation where we take back the XTra Credit amount. . If replacing an annuity, please consider all charges associated with that annuity. Credits applicable to bonus products should not be viewed as an offset of any surrender charge that applies to any annuity contract you currently own. For more information on all available annuities, please see Appendix F of this prospectus. With respect to APEX II only: . For annuities issued on or after June 20, 2005, this Annuity offers a Loyalty Credit which we add to your Account Value with respect to Purchase Payments that have been made during the first four Annuity Years less withdrawals through the fifth Annuity Anniversary, subject to our rules and state availability. With respect to ASAP III only: . For annuities issued on or after February 13, 2006, this Annuity offers a Loyalty Credit which we add to your Account Value with respect to Purchase Payments that have been made during the first four Annuity Years less withdrawals through the fifth Annuity Anniversary, subject to our rules and state availability. HOW DO I PURCHASE ONE OF THE ANNUITIES? We sell each Annuity through licensed, registered Financial Professionals. Unless we agree otherwise and subject to our rules, each Annuity has minimum initial Purchase Payments as follows: $1,000 for ASAP III, $10,000 for XT6 and APEX II, and $15,000 for ASL II. We may allow you to make a lower initial Purchase Payment provided you establish an electronic funds transfer under which Purchase Payments received in the first Annuity Year total at least the minimum initial Purchase Payment for the Annuity purchased. Unless we agree otherwise and subject to our rules, if the Annuity is owned by an individual or individuals, the oldest of those Owners must not be older than a maximum issue age as of the Issue Date of the Annuity as follows: age 80 for ASAP III, age 75 for XT6 and age 85 for APEX II. For ASL II, there is no maximum issue age, however the basic death benefit provides greater protection for Owners under age 85. If the Annuity is owned by an entity, the annuitant must not be older than the maximum issue age, as of the Issue Date of the Annuity unless we agree otherwise. The availability and level of protection of certain optional benefits may vary based on the age of the Owner or Annuitant on the Issue Date of the Annuity, the date the benefit is elected, or the date of the Owner's death. 2 GLOSSARY OF TERMS Many terms used within this Prospectus are described within the text where they appear. The description of those terms are not repeated in this Glossary of Terms. Account Value: The value of each allocation to a Sub-account (also referred to as a "variable investment option") or a Fixed Allocation prior to the Annuity Date, plus any earnings, and/or less any losses, distributions and charges. The Account Value is calculated before we assess any applicable Contingent Deferred Sales Charge ("CDSC" or "surrender charge") and/or, other than on an annuity anniversary, any fee that is deducted from the Annuity annually in arrears. The Account Value is determined separately for each Sub-account and for each Fixed Allocation, and then totaled to determine the Account Value for your entire Annuity. The Account Value of each Fixed Allocation on other than its Maturity Date may be calculated using a market value adjustment. With respect to XT6, the Account Value includes any Credits we applied to your Purchase Payments that we are entitled to take back under certain circumstances. With respect to ASAP III and APEX II, the Account Value includes any Loyalty Credit we apply. With respect to Annuities with a Highest Daily Lifetime Five Income Benefit election, Account Value includes the value of any allocation to the Benefit Fixed Rate Account. Adjusted Purchase Payments As used in the discussion of certain optional benefits in this prospectus and elsewhere, Adjusted Purchase Payments are Purchase Payments, increased by any Credits applied to your Account Value in relation to such Purchase Payments, and decreased by any charges deducted from such Purchase Payments. Annuitization: The application of Account Value to one of the available annuity options for the Owner to begin receiving periodic payments for life (or joint lives), for a guaranteed minimum number of payments or for life with a guaranteed minimum number of payments. Annuity Date: The date you choose for annuity payments to commence. Unless we agree otherwise, for Annuities issued on or after November 20, 2006, the Annuity Date must be no later than the first day of the calendar month coinciding with or next following the later of: (a) the oldest Owner's or Annuitant's 95th birthday, whichever occurs first, and (b) the fifth anniversary of the Issue Date. Annuity Year: A 12-month period commencing on the Issue Date of the Annuity and each successive 12-month period thereafter. Benefit Fixed Rate Account: An investment option offered as part of this Annuity that is used only if you have elected the optional Highest Daily Lifetime Five Income Benefit. Amounts allocated to the Benefit Fixed Rate Account earn a fixed rate of interest, and are held within our general account. You may not allocate Purchase Payments to the Benefit Fixed Rate Account. Rather, Account Value is transferred to the Benefit Fixed Rate Account only under the asset transfer feature of the Highest Daily Lifetime Five Income Benefit. Code: The Internal Revenue Code of 1986, as amended from time to time. Combination 5% Roll-Up and HAV Death Benefit: We offer an optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing the greater of the Highest Anniversary Value Death Benefit and a 5% annual increase on Purchase Payments adjusted for withdrawals. Contingent Deferred Sales Charge (CDSC): This is a sales charge that may be deducted when you make a full or partial withdrawal under your Annuity. We refer to this as a "contingent" charge because it is imposed only if you make a withdrawal. The charge is a percentage of each applicable Purchase Payment that is being withdrawn. The period during which a particular percentage applies is measured from the Issue Date of the Annuity. The amount and duration of the CDSC varies among ASAP III, APEX II and XT6. There is no CDSC for ASL II. See "Summary of Contract Fees and Charges" for details on the CDSC for each Annuity. Enhanced Beneficiary Protection Death Benefit: We offer an Optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing amounts in addition to the basic Death Benefit that can be used to offset federal and state taxes payable on any taxable gains in your Annuity at the time of your death. Fixed Allocation: An investment option that offers a fixed rate of interest for a specified Guarantee Period during the accumulation period. Free Look: Under state insurance laws, you have the right, during a limited period of time, to examine your Annuity and decide if you want to keep it or cancel it. This right is referred to as your "free look" right. The length of this time period depends on the law of your state, and may vary depending on whether your purchase is a replacement or not. Check your Annuity contract for more details about your free look right. 3 Guaranteed Minimum Income Benefit (GMIB): We offer an optional benefit that, for an additional cost, after a seven-year waiting period, guarantees your ability to begin receiving income from your Annuity in the form of annuity payments based on your total Purchase Payments and an annual increase of 5% on such Purchase Payments adjusted for withdrawals (called the "Protected Income Value"), regardless of the impact of market performance on your Account Value. Guaranteed Minimum Withdrawal Benefit (GMWB): We offer an optional benefit that, for an additional cost, guarantees your ability to withdraw amounts over time equal to an initial principal value, regardless of the impact of market performance on your Account Value. Guarantee Period: A period of time during the accumulation period where we credit a fixed rate of interest on a Fixed Allocation. Guaranteed Return Option Plus/SM/ (GRO Plus)/SM//Guaranteed Return Option (GRO)(R)/Highest Daily Guaranteed Return Option/SM/ (Highest Daily GRO)/SM/: Each of GRO Plus, GRO, and Highest Daily GRO is a separate optional benefit that, for an additional cost, guarantees a minimum Account Value at one or more future dates and that requires your participation in an asset transfer program. Beginning in 2008, we introduced a new version of GRO Plus, called GRO Plus 2008 that we offer for new elections. Highest Anniversary Value Death Benefit ("HAV"): We offer an optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing a death benefit equal to the greater of the basic Death Benefit and the Highest Anniversary Value, less proportional withdrawals. Highest Daily Lifetime Five/SM/ Income Benefit: We offer an optional benefit that, for an additional cost, guarantees your ability to withdraw an annual amount equal to a percentage of a principal value called the Total Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. Highest Daily Lifetime Seven/SM/ Income Benefit: An optional feature available for an additional charge that guarantees your ability to withdraw amounts equal to a percentage of a principal value called the Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. Highest Daily Lifetime Seven is the same class of optional benefit as our Highest Daily Lifetime Five Income Benefit, but differs (among other things) with respect to how the Protected Withdrawal Value is calculated and to how the lifetime withdrawals are calculated. Highest Daily Value Death Benefit ("HDV"): We offer an optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing a death benefit equal to the greater of the basic Death Benefit and the Highest Daily Value, less proportional withdrawals. Interim Value: The value of a Fixed Allocation on any date other than the Maturity Date. The Interim Value is equal to the initial value allocated to the Fixed Allocation plus all interest credited to the Fixed Allocation as of the date calculated, less any transfers or withdrawals from the Fixed Allocation. Issue Date: The effective date of your Annuity. Lifetime Five/SM/ Income Benefit: We offer an optional benefit that, for an additional cost, guarantees your ability to withdraw an annual amount equal to a percentage of an initial principal value called the Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. MVA: A market value adjustment used in the determination of Account Value of each Fixed Allocation on any day more than 30 days prior to the Maturity Date of such Fixed Allocation. Owner: With an Annuity issued as an individual annuity contract, the Owner is either an eligible entity or person named as having ownership rights in relation to the Annuity. With an Annuity issued as a certificate under a group annuity contract, the "Owner" refers to the person or entity who has the rights and benefits designated as to the "Participant" in the certificate. Spousal Highest Daily Lifetime Seven/SM/ Income Benefit: The spousal version of the Highest Daily Lifetime Seven Income Benefit. Spousal Highest Daily Lifetime Seven is the same class of optional benefit as our Spousal Lifetime Five Income Benefit, but differs (among other things) with respect to how the Protected Withdrawal Value is calculated and to how the lifetime withdrawals are calculated. Spousal Lifetime Five/SM/ Income Benefit: We offer an optional benefit that, for an additional cost, guarantees until the later death of two Designated Lives (as defined in this Prospectus) the ability to withdraw an annual amount equal to a percentage of an initial principal value called the Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. 4 Sub-Account: We issue your Annuity through our separate account. See "What is the Separate Account?" under the General Information section. The separate account invests in underlying mutual fund portfolios. From an accounting perspective, we divide the separate account into a number of sections, each of which corresponds to a particular underlying mutual fund portfolio. We refer to each such section of our separate account as a "Sub-account". Surrender Value: The value of your Annuity available upon surrender prior to the Annuity Date. It equals the Account Value as of the date we price the surrender minus any applicable CDSC, Annual Maintenance Fee, Tax Charge and the charge for any optional benefits and any additional amounts we applied to your Purchase Payments that we may be entitled to recover under certain circumstances. The surrender value may be calculated using a MVA with respect to amounts in any Fixed Allocation. No CDSC applies to the ASL II Annuity. Unit: A measure used to calculate your Account Value in a Sub-account during the accumulation period. Valuation Day: Every day the New York Stock Exchange is open for trading or any other day the Securities and Exchange Commission requires mutual funds or unit investment trusts to be valued. 5 SUMMARY OF CONTRACT FEES AND CHARGES Below is a summary of the fees and charges for the Annuities. Some fees and charges are assessed against each Annuity while others are assessed against assets allocated to the Sub-accounts. The fees and charges that are assessed against an Annuity include any applicable Contingent Deferred Sales Charge, Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are assessed against the Sub-accounts are the Mortality and Expense Risk charge, the charge for Administration of the Annuity, any applicable Distribution Charge and the charge for certain optional benefits you elect. Certain optional benefits deduct a charge from each Annuity based on a percentage of a "protected value." Each underlying mutual fund portfolio assesses a fee for investment management, other expenses and, with some mutual funds, a 12b-1 fee. The prospectus for each underlying mutual fund provides more detailed information about the expenses for the underlying mutual funds. The following tables provide a summary of the fees and charges you will pay if you surrender your Annuity or transfer Account Value among investment options. These fees and charges are described in more detail within this Prospectus. CONTINGENT DEFERRED SALES CHARGES FOR EACH ANNUITY /1/ ASAP III Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9+ ------------------------------------------------------ 7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0% ------------------------------------------------------ APEX II Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5+ ------------------------------ 8.5% 8.0% 7.0% 6.0% 0.0% ------------------------------ XT6 For Annuities issued prior to November 20, 2006, the following schedule applies: Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+ -------------------------------------------------------------------- 9.0% 9.0% 8.5% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0% -------------------------------------------------------------------- For Annuities issued on or after November 20, 2006 (subject to state availability), the following schedule applies /2/: Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+ -------------------------------------------------------------------- 9.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -------------------------------------------------------------------- ASL II There is no CDSC for this Annuity 1 The Contingent Deferred Sales Charges are assessed upon surrender or withdrawal. The charge is a percentage of each applicable Purchase Payment deducted upon surrender or withdrawal. The period during which a particular percentage applies is measured from the Issue Date of the Annuity. 2 In jurisdictions that have not yet approved this schedule, the schedule for Annuities issued prior to November 20, 2006 will apply.
- ---------------------------------------------------------------------------------------- OTHER TRANSACTION FEES AND CHARGES (assessed against each Annuity) - ---------------------------------------------------------------------------------------- FEE/CHARGE ASAP III APEX II ASL II XT6 - ---------------------------------------------------------------------------------------- Transfer Fee /1/ $15.00 maximum $15.00 maximum $15.00 maximum $15.00 maximum currently, $10.00 currently, $10.00 currently, $10.00 currently, $10.00 - ---------------------------------------------------------------------------------------- Tax Charge /2/ 0% to 3.5% 0% to 3.5% 0% to 3.5% 0% to 3.5% - ----------------------------------------------------------------------------------------
1 Currently, we deduct the fee after the 20/th/ transfer each Annuity Year. We guarantee that the number of charge free transfers per Annuity Year will never be less than 8. 2 We reserve the right to deduct the charge either at the time the tax is imposed, upon a full surrender of the Annuity, or upon annuitization. 6 The following table provides a summary of the periodic fees and charges you will pay while you own your Annuity, excluding the underlying mutual fund Portfolio annual expenses. These fees and charges are described in more detail within this Prospectus.
- ------------------------------------------------------------------------------------------------------------------- PERIODIC FEES AND CHARGES (assessed against each Annuity) - ------------------------------------------------------------------------------------------------------------------- FEE/CHARGE ASAP III APEX II ASL II XT6 Annual Maintenance Lesser of $35 or 2% of Lesser of $35 or 2% of Lesser of $35 or 2% of Lesser of $35 or 2% of Fee /1/ Account Value /2/ Account Value /2/ Account Value /2/ Account Value ------------------------------------------------------------------------------------------- Beneficiary Continuation Option Only Lesser of $30 or 2% Lesser of $30 or 2% Lesser of $30 or 2% Lesser of $30 or 2% - ------------------------------------------------------------------------------------------------------------------- ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS /3/ (assessed as a percentage of the daily net assets of the Sub-accounts) - ------------------------------------------------------------------------------------------------------------------- FEE/CHARGE Mortality & Expense 0.50% 1.50% 1.50% 0.50% Risk Charge /4/ - ------------------------------------------------------------------------------------------------------------------- Administration 0.15% 0.15% 0.15% 0.15% Charge /4/ - ------------------------------------------------------------------------------------------------------------------- Distribution Charge /5/ 0.60% in Annuity N/A N/A 1.00% in Annuity Years 1-8 Years 1-10 - ------------------------------------------------------------------------------------------------------------------- Settlement Service 1.40% (qualified); 1.40% (qualified); 1.40% (qualified); 1. 40% (qualified); Charge /6/ 1.00% (non-qualified) 1.00% (non-qualified) 1.00% (non-qualified) 1.00% (non-qualified) - ------------------------------------------------------------------------------------------------------------------- Total Annual Charges 1.25% in Annuity 1.65% 1.65% 1.65% in Annuity of the Sub-accounts Years 1-8; Years 1-10; (excluding settlement 0.65% in Annuity 0.65% in Annuity service charge) Years 9 and later Years 11 and later - -------------------------------------------------------------------------------------------------------------------
1 Assessed annually on the Annuity's anniversary date or upon surrender. For beneficiaries who elect the non-qualified Beneficiary Continuation Option, the fee is only applicable if Account Value is less than $25,000. 2 Only applicable if Account Value is less than $100,000. Fee may differ in certain States. 3 These charges are deducted daily and apply to the Sub-accounts only. 4 The combination of the Mortality and Expense Risk Charge and Administration Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus. 5 The Distribution Charge is 0.00% in Annuity Years 9+ for ASAP III and in Annuity Years 11+ for XT6. 6 The Mortality & Expense Risk Charge, the Administration Charge and the Distribution Charge (if applicable) do not apply if you are a beneficiary under the Beneficiary Continuation Option. The Settlement Service Charge applies only if your beneficiary elects the Beneficiary Continuation Option. The 1.00% and 1.40% charges set forth above are annual charges that are assessed against the Account Value in the Sub-accounts. 7 The following table sets forth the charge for each optional benefit under the Annuity. These fees would be in addition to the periodic fees and transaction fees set forth in the tables above.
- ------------------------------------------------------------------------------------------------------- YOUR OPTIONAL BENEFIT FEES AND CHARGES /1/ - ------------------------------------------------------------------------------------------------------- OPTIONAL BENEFIT OPTIONAL TOTAL TOTAL TOTAL TOTAL BENEFIT FEE/ ANNUAL ANNUAL ANNUAL ANNUAL CHARGE CHARGE /2/ CHARGE /2/ CHARGE /2/ CHARGE /2/ for ASAP III for APEX II for ASL II for XT6 - ------------------------------------------------------------------------------------------------------- GUARANTEED RETURN OPTION (GRO)/GRO 0.75% maximum /3/ 1.50% 1.90% 1.90% 1.90% Plus 0.25% current charge - ------------------------------------------------------------------------------------------------------- GUARANTEED RETURN OPTION PLUS 2008 0.75% maximum /3/ 1.60% 2.00% 2.00% 2.00% (GRO Plus 2008) 0.35% current charge - ------------------------------------------------------------------------------------------------------- HIGHEST DAILY GUARANTEED RETURN 0.75% maximum /3/ 1.60% 2.00% 2.00% 2.00% OPTION (HD GRO) 0.35% current charge - ------------------------------------------------------------------------------------------------------- GUARANTEED MINIMUM WITHDRAWAL BENEFIT 1.00% maximum /3/ 1.60% 2.00% 2.00% 2.00% (GMWB) 0.35% current charge - ------------------------------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT 1.00% maximum /3/ 1.25% 1.65% 1.65% 1.65% (GMIB) 0.50% current +0.50% of +0.50% of +0.50% of +0.50% of charge PIV PIV PIV PIV - ------------------------------------------------------------------------------------------------------- LIFETIME FIVE/SM/ INCOME BENEFIT 1.50% maximum /3/ 1.85% 2.25% 2.25% 2.25% 0.60% current charge - ------------------------------------------------------------------------------------------------------- SPOUSAL LIFETIME FIVE INCOME BENEFIT 1.50% maximum /3/ 2.00% 2.40% 2.40% 2.40% 0.75% current charge - ------------------------------------------------------------------------------------------------------- HIGHEST DAILY LIFETIME FIVE INCOME 1.50% maximum /3/ 1.85% 2.25% 2.25% 2.25% BENEFIT 0.60% current charge - ------------------------------------------------------------------------------------------------------- HIGHEST DAILY LIFETIME SEVEN INCOME 1.50% maximum /3/ 1.25% 1.65% 1.65% 1.65% BENEFIT 0.60% current +0.60% of +0.60% of +0.60% of +0.60% of charge PWV PWV PWV PWV - ------------------------------------------------------------------------------------------------------- SPOUSAL HIGHEST DAILY LIFETIME SEVEN 1.50% maximum /3/ 1.25% 1.65% 1.65% 1.65% INCOME BENEFIT 0.75% current +0.75% of +0.75% of +0.75% of +0.75% of charge PWV PWV PWV PWV - ------------------------------------------------------------------------------------------------------- ENHANCED BENEFICIARY PROTECTION DEATH 0.25% 1.50% 1.90% 1.90% 1.90% BENEFIT - ------------------------------------------------------------------------------------------------------- HIGHEST ANNIVERSARY VALUE DEATH 0.25% 1.50% 1.90% 1.90% 1.90% BENEFIT ("HAV") - ------------------------------------------------------------------------------------------------------- COMBINATION 5% ROLL-UP AND HAV DEATH 0.50% 1.75% 2.15% 2.15% 2.15% BENEFIT - ------------------------------------------------------------------------------------------------------- HIGHEST DAILY VALUE DEATH BENEFIT 0.50% 1.75% 2.15% 2.15% 2.15% ("HDV") - ------------------------------------------------------------------------------------------------------- Please refer to the section of this Prospectus that describes each optional benefit for a complete description of the benefit, including any restrictions or limitations that may apply. - -------------------------------------------------------------------------------------------------------
HOW CHARGE IS DETERMINED 1 Guaranteed Return Option/GRO Plus: Charge for each benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.50% total annual charge applies in Annuity years 1-8 and is 0.90% thereafter. For APEX II and ASL II, 1.90% total annual charge applies in all Annuity years, and for XT6, 1.90% total annual charge applies in Annuity Years 1-10 and is 0.90% thereafter. GRO PLUS 2008: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.60% total annual charge applies in Annuity years 1-8 and is 1.00% thereafter. For APEX II and ASL II, 2.00% total annual charge applies in all Annuity years, and for XT6, 2.00% total annual charge applies in Annuity Years 1-10 and is 1.00% thereafter. 8 Highest Daily GRO: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.60% total annual charge applies in Annuity years 1-8 and is 1.00% thereafter. For APEX II and ASL II, 2.00% total annual charge applies in all Annuity years, and for XT6, 2.00% total annual charge applies in Annuity Years 1-10 and is 1.00% thereafter. Guaranteed Minimum Withdrawal Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.60% total annual charge applies in Annuity years 1-8 and is 1.00% thereafter. For APEX II and ASL II, 2.00% total annual charge applies in all Annuity years, and for XT6, 2.00% total annual charge applies in Annuity Years 1-10 and is 1.00% thereafter. Guaranteed Minimum Income Benefit: Charge for this benefit is assessed against the GMIB Protected Income Value ("PIV"). As discussed in the description of the benefit, the charge is taken out of the Sub-accounts and the Fixed Allocations. For ASAP III, 0.50% of PIV for GMIB is in addition to 1.25% annual charge in years 1-8 and 0.65% thereafter. For APEX II and ASL II, 0.50% of PIV for GMIB is in addition to 1.65% annual charge. For XT6, 0.50% of PIV for GMIB is in addition to 1.65% in years 1-10 and 0.65% thereafter. Lifetime Five Income Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.85% total annual charge applies in Annuity years 1-8 and is 1.25% thereafter. For APEX II and ASL II, 2.25% total annual charge applies in all Annuity years, and for XT6, 2.25% total annual charge applies in Annuity Years 1-10 and is 1.25% thereafter. Spousal Lifetime Five Income Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 2.00% total annual charge applies in Annuity years 1-8 and is 1.40% thereafter. For APEX II and ASL II, 2.40% total annual charge applies in all Annuity years, and for XT6, 2.40% total annual charge applies in Annuity Years 1-10 and is 1.40% thereafter. Highest Daily Lifetime Five Income Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.85% total annual charge applies in Annuity years 1-8 and is 1.25% thereafter. For APEX II and ASL II, 2.25% total annual charge applies in all Annuity years, and for XT6, 2.25% total annual charge applies in Annuity Years 1-10 and is 1.25% thereafter. Highest Daily Lifetime Seven: Charge for this benefit is assessed against the Protected Withdrawal Value ("PWV"). As discussed in the description of the benefit, the charge is taken out of the Sub-accounts. For ASAP III, 0.60% of PWV for HD7 is in addition to 1.25% annual charge in years 1-8 and 0.65% thereafter. For APEX II and ASL II, 0.60% of PWV for HD7 is in addition to 1.65% annual charge. For XT6, 0.60% of PWV for HD7 is in addition to 1.65% in years 1-10 and 0.65% thereafter. Spousal Highest Daily Lifetime Seven: Charge for this benefit is assessed against the Protected Withdrawal Value ("PWV"). For ASAP III, 0.75% of PWV for SHD7 is in addition to 1.25% annual charge in years 1-8 and 0.65% thereafter. For APEX II and ASL II, 0.75% of PWV for SHD7 is in addition to 1.65% annual charge. For XT6, 0.75% of PWV for SHD7 is in addition to 1.65% in years 1-10 and 0.65% thereafter. Enhanced Beneficiary Protection Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.50% total annual charge applies in Annuity years 1-8 and is 0.90% thereafter. For APEX II and ASL II, 1.90% total annual charge applies in all Annuity years, and for XT6, 1.90% total annual charge applies in Annuity Years 1-10 and is 0.90% thereafter. Highest Anniversary Value Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.50% total annual charge applies in Annuity years 1-8 and is 0.90% thereafter. For APEX II and ASL II, 1.90% total annual charge applies in all Annuity years, and for XT6, 1.90% total annual charge applies in Annuity Years 1-10 and is 0.90% thereafter. Combination 5% roll-up and HAV Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.75% total annual charge applies in Annuity years 1-8 and is 1.15% thereafter. For APEX II and ASL II, 2.15% total annual charge applies in all Annuity years, and for XT6, 2.15% total annual charge applies in Annuity Years 1-10 and is 1.15% thereafter. Highest Daily Value Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For ASAP III, 1.75% total annual charge applies in Annuity years 1-8 and is 1.15% thereafter. For APEX II and ASL II, 2.15% total annual charge applies in all Annuity years, and for XT6, 2.15% total annual charge applies in Annuity Years 1-10 and is 1.15% thereafter. 2 The Total Annual Charge includes the Insurance Charge and Distribution Charge (if applicable) assessed against the average daily net assets allocated to the Sub-accounts. If you elect more than one optional benefit, the Total Annual Charge would be increased to include the charge for each optional benefit. With respect to GMIB, the 0.50% charge is assessed against the GMIB Protected Income Value. With respect to Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven, the 0.60% charge and 0.75% charge, respectively, is assessed against the Protected Withdrawal Value. With respect to each of Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven, one-fourth of the annual charge is deducted at the end of each quarter, where the quarters are part of years that have as their anniversary the date that the benefit was elected. These optional benefits are not available under the Beneficiary Continuation Option. 3 We reserve the right to increase the charge to the maximum charge indicated, upon any step-up or reset under the benefit, or new election of the benefit. However, we have no present intention of doing so. The following table provides the range (minimum and maximum) of the total annual expenses for the underlying mutual funds ("Portfolios") as of December 31, 2007. Each figure is stated as a percentage of the underlying Portfolio's average daily net assets.
------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES ------------------------------------------------- MINIMUM MAXIMUM ------------------------------------------------- Total Portfolio Operating Expense 0.59% 2.11% -------------------------------------------------
The following are the total annual expenses for each underlying mutual fund ("Portfolio") as of December 31, 2007, except as noted. The "Total Annual Portfolio Operating Expenses" reflect the combination of the underlying Portfolio's investment management fee, other expenses and any 12b-1 fees. Each figure is stated as a percentage of the underlying Portfolio's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. For certain of the underlying Portfolios, a portion of the management fee has been waived and/or other expenses have been partially reimbursed. The existence of any such fee waivers and/or reimbursements have been reflected in the footnotes. The following expenses are deducted by the underlying Portfolio before it provides Prudential Annuities with the daily net asset value. The underlying Portfolio information was provided by the underlying mutual funds and has not been independently verified by us. See the prospectuses or statements of additional information of the underlying Portfolios for further details. The current prospectus and statement of additional information for the underlying Portfolios can be obtained by calling 1-800-752-6342. 9
- ------------------------------------------------------------------------------------------------------- UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES (as a percentage of the average net assets of the underlying Portfolios) - ------------------------------------------------------------------------------------------------------- For the year ended December 31, 2007 --------------------------------------------------- UNDERLYING PORTFOLIO Acquired Total Portfolio Annual Management Other Fees & Portfolio Fee /4/ Expenses 12b-1 Fee Expenses /6/ Expenses - ------------------------------------------------------------------------------------------------------- Advanced Series Trust /1,3/ AST Advanced Strategies 0.85% 0.15% 0.00% 0.04% 1.04% AST Aggressive Asset Allocation /2/ 0.15% 0.03% 0.00% 0.96% 1.14% AST AllianceBernstein Core Value 0.75% 0.11% 0.00% 0.00% 0.86% AST AllianceBernstein Growth & Income 0.75% 0.08% 0.00% 0.00% 0.83% AST American Century Income & Growth 0.75% 0.11% 0.00% 0.00% 0.86% AST American Century Strategic Allocation 0.85% 0.25% 0.00% 0.00% 1.10% AST Balanced Asset Allocation /2/ 0.15% 0.01% 0.00% 0.90% 1.06% AST Bond Portfolio 2015 /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST Bond Portfolio 2018 /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST Bond Portfolio 2019 /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST Capital Growth Asset Allocation /2/ 0.15% 0.01% 0.00% 0.93% 1.09% AST CLS Growth Asset Allocation /2,5/ 0.30% 0.36% 0.00% 0.99% 1.65% AST CLS Moderate Asset Allocation /2,5/ 0.30% 0.36% 0.00% 0.91% 1.57% AST Cohen & Steers Realty Portfolio 1.00% 0.12% 0.00% 0.00% 1.12% AST Conservative Asset Allocation /2/ 0.15% 0.02% 0.00% 0.87% 1.04% AST DeAM Large-Cap Value 0.85% 0.11% 0.00% 0.00% 0.96% AST DeAM Small-Cap Value 0.95% 0.18% 0.00% 0.00% 1.13% AST Federated Aggressive Growth 0.95% 0.11% 0.00% 0.00% 1.06% AST First Trust Balanced Target 0.85% 0.11% 0.00% 0.00% 0.96% AST First Trust Capital Appreciation Target 0.85% 0.11% 0.00% 0.00% 0.96% AST Goldman Sachs Concentrated Growth 0.90% 0.10% 0.00% 0.00% 1.00% AST Goldman Sachs Mid-Cap Growth 1.00% 0.12% 0.00% 0.00% 1.12% AST Goldman Sachs Small-Cap Value 0.95% 0.13% 0.00% 0.00% 1.08% AST High Yield 0.75% 0.12% 0.00% 0.00% 0.87% AST Horizon Growth Asset Allocation /2,5/ 0.30% 0.84% 0.00% 0.97% 2.11% AST Horizon Moderate Asset Allocation /2,5/ 0.30% 0.57% 0.00% 0.90% 1.77% AST International Growth 1.00% 0.11% 0.00% 0.00% 1.11% AST International Value 1.00% 0.12% 0.00% 0.00% 1.12% AST Investment Grade Bond /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST JPMorgan International Equity 0.87% 0.13% 0.00% 0.00% 1.00% AST Large-Cap Value 0.75% 0.08% 0.00% 0.00% 0.83% AST Lord Abbett Bond-Debenture 0.80% 0.11% 0.00% 0.00% 0.91% AST Marsico Capital Growth 0.90% 0.08% 0.00% 0.00% 0.98% AST MFS Global Equity 1.00% 0.21% 0.00% 0.00% 1.21% AST MFS Growth 0.90% 0.12% 0.00% 0.00% 1.02% AST Mid-Cap Value 0.95% 0.14% 0.00% 0.00% 1.09% AST Money Market 0.50% 0.09% 0.00% 0.00% 0.59% AST Neuberger Berman Mid-Cap Growth 0.90% 0.10% 0.00% 0.00% 1.00% AST Neuberger Berman Mid-Cap Value 0.89% 0.10% 0.00% 0.00% 0.99% AST Neuberger Berman Small-Cap Growth 0.95% 0.12% 0.00% 0.00% 1.07% AST Niemann Capital Growth Asset Allocation /2,5/ 0.30% 0.50% 0.00% 0.96% 1.76% AST PIMCO Limited Maturity Bond 0.65% 0.11% 0.00% 0.00% 0.76% AST PIMCO Total Return Bond 0.65% 0.09% 0.00% 0.00% 0.74% AST Preservation Asset Allocation/ 2/ 0.15% 0.03% 0.00% 0.82% 1.00% AST QMA US Equity Alpha 1.00% 0.63% 0.00% 0.00% 1.63% AST Small-Cap Growth 0.90% 0.15% 0.00% 0.00% 1.05% AST Small-Cap Value 0.90% 0.10% 0.00% 0.00% 1.00% AST T. Rowe Price Asset Allocation 0.85% 0.12% 0.00% 0.00% 0.97% AST T. Rowe Price Global Bond 0.80% 0.13% 0.00% 0.00% 0.93% AST T. Rowe Price Large-Cap Growth 0.88% 0.08% 0.00% 0.00% 0.96% AST T. Rowe Price Natural Resources 0.90% 0.10% 0.00% 0.00% 1.00%
10
- ------------------------------------------------------------------------------------------------------------------ UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES (as a percentage of the average net assets of the underlying Portfolios) - ------------------------------------------------------------------------------------------------------------------ For the year ended December 31, 2007 --------------------------------------------------- UNDERLYING PORTFOLIO Acquired Total Portfolio Annual Management Other Fees & Portfolio Fee /4/ Expenses 12b-1 Fee Expenses /6/ Expenses - ------------------------------------------------------------------------------------------------------------------ Advanced Series Trust continued AST UBS Dynamic Alpha Strategy 1.00% 0.13% 0.00% 0.02% 1.15% AST Western Asset Core Plus Bond /5/ 0.70% 0.10% 0.00% 0.02% 0.82% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Funds /7, 8, 9/ AIM V.I. Dynamics Fund - Series I shares 0.75% 0.36% 0.00% 0.00% 1.11% AIM V.I. Financial Services Fund - Series I shares 0.75% 0.36% 0.00% 0.00% 1.11% AIM V.I. Global Health Care Fund - Series I shares 0.75% 0.32% 0.00% 0.01% 1.08% AIM V.I. Technology Fund - Series I shares 0.75% 0.35% 0.00% 0.01% 1.11% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Evergreen Variable Annuity Trust /10/ Growth 0.70% 0.20% 0.00% 0.01% 0.91% International Equity 0.39% 0.24% 0.00% 0.00% 0.63% Omega 0.52% 0.19% 0.00% 0.00% 0.71% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ First Defined Portfolio Fund, LLC First Trust(R) Target Focus Four /11/ 0.60% 1.07% 0.25% 0.00% 1.92% Global Dividend Target 15 0.60% 0.54% 0.25% 0.00% 1.39% NASDAQ(R) Target 15 0.60% 0.91% 0.25% 0.00% 1.76% S&P(R) Target 24 0.60% 0.70% 0.25% 0.00% 1.55% Target Managed VIP 0.60% 0.50% 0.25% 0.00% 1.35% The Dow(R) DART 10 0.60% 0.71% 0.25% 0.00% 1.56% The Dow(R) Target Dividend 0.60% 0.51% 0.25% 0.00% 1.36% Value Line(R) Target 25 0.60% 0.56% 0.25% 0.00% 1.41% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Franklin Templeton Variable Insurance Products Trust Franklin Templeton VIP Founding Funds Allocation Fund /12/ 0.00% 0.41% 0.35% 0.65% 1.41% Management and administration fee waivers/reductions: 0.28% Net expenses after fee reimbursement/expense waiver: 1.13% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Nationwide Variable Insurance Trust Gartmore NVIT Developing Markets Fund /13/ 1.05% 0.35% 0.25% N/A 1.65% - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ ProFund VP /14/ Access VP High Yield 0.75% 0.88% 0.25% 0.00% 1.88% Asia 30 0.75% 0.64% 0.25% 0.00% 1.64% Banks 0.75% 0.91% 0.25% 0.00% 1.91% Basic Materials 0.75% 0.71% 0.25% 0.00% 1.71% Bear 0.75% 0.70% 0.25% 0.00% 1.70% Biotechnology 0.75% 0.76% 0.25% 0.00% 1.76% Bull 0.75% 0.67% 0.25% 0.00% 1.67% Consumer Goods 0.75% 0.82% 0.25% 0.00% 1.82% Consumer Services 0.75% 1.07% 0.25% 0.00% 2.07% Europe 30 0.75% 0.66% 0.25% 0.00% 1.66% Financials 0.75% 0.74% 0.25% 0.00% 1.74% Health Care 0.75% 0.72% 0.25% 0.00% 1.72% Industrials 0.75% 0.84% 0.25% 0.00% 1.84% Internet 0.75% 0.75% 0.25% 0.00% 1.75% Japan 0.75% 0.68% 0.25% 0.00% 1.68% Large-Cap Growth 0.75% 0.70% 0.25% 0.00% 1.70% Large-Cap Value 0.75% 0.72% 0.25% 0.00% 1.72% Mid-Cap Growth 0.75% 0.70% 0.25% 0.00% 1.70%
11
- ------------------------------------------------------------------------------------------------- UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES (as a percentage of the average net assets of the underlying Portfolios) - ------------------------------------------------------------------------------------------------- For the year ended December 31, 2007 --------------------------------------------------- UNDERLYING PORTFOLIO Acquired Total Portfolio Annual Management Other Fees & Portfolio Fee /4/ Expenses 12b-1 Fee Expenses /6/ Expenses - ------------------------------------------------------------------------------------------------- ProFund VP /14/ continued Mid-Cap Value 0.75% 0.72% 0.25% 0.00% 1.72% NASDAQ-100 0.75% 0.69% 0.25% 0.00% 1.69% Oil & Gas 0.75% 0.71% 0.25% 0.00% 1.71% Pharmaceuticals 0.75% 0.73% 0.25% 0.00% 1.73% Precious Metals 0.75% 0.70% 0.25% 0.00% 1.70% Real Estate 0.75% 0.73% 0.25% 0.00% 1.73% Rising Rates Opportunity 0.75% 0.62% 0.25% 0.00% 1.62% Semiconductor 0.75% 0.83% 0.25% 0.00% 1.83% Short Mid-Cap 0.75% 0.78% 0.25% 0.00% 1.78% Short NASDAQ-100 0.75% 0.71% 0.25% 0.00% 1.71% Short Small-Cap 0.75% 0.66% 0.25% 0.00% 1.66% Small-Cap Growth 0.75% 0.69% 0.25% 0.00% 1.69% Small-Cap Value 0.75% 0.76% 0.25% 0.00% 1.76% Technology 0.75% 0.72% 0.25% 0.00% 1.72% Telecommunications 0.75% 0.72% 0.25% 0.00% 1.72% U.S. Government Plus 0.50% 0.68% 0.25% 0.00% 1.43% UltraBull 0.75% 0.68% 0.25% 0.00% 1.68% UltraMid-Cap 0.75% 0.69% 0.25% 0.00% 1.69% UltraNASDAQ-100 0.75% 0.69% 0.25% 0.00% 1.69% UltraSmall-Cap 0.75% 0.73% 0.25% 0.00% 1.73% Utilities 0.75% 0.72% 0.25% 0.00% 1.72% - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- The Prudential Series Fund SP International Growth Portfolio 0.85% 0.09% 0.00% 0.00% 0.94% - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- Wells Fargo Variable Trust Wells Fargo Advantage VT Equity Income Fund 0.55% 0.24% 0.25% 0.00% 1.04%
1 The Fund has entered into arrangements with the issuers of the variable insurance products offering the Portfolios under which the Fund compensates the issuers 0.10% for providing ongoing services to Portfolio shareholders in lieu of the Fund providing such services directly to shareholders. Amounts paid under these arrangements are included in "Other Expenses." Subject to the expense limitations set forth below, for each Portfolio of the Fund other than the Dynamic and Tactical Asset Allocation Portfolios, 0.03% of the 0.10% administrative services fee is voluntarily waived. The Dynamic and Tactical Asset Allocation Portfolios do not directly pay any portion of the 0.10% administrative service fee. The Acquired Portfolios in which the Dynamic and Tactical Asset Allocation Portfolios invest, however, are subject to the administrative services fee. With respect to the AST QMA US Equity Alpha Portfolio, "Other Expenses" includes dividend expenses on short sales and interest expenses on short sales. Our reference above to the Dynamic Asset Allocation Portfolios refers to these portfolios: AST Aggressive Asset Allocation, AST Balanced Asset Allocation, AST Capital Growth Asset Allocation, AST Conservative Asset Allocation, and AST Preservation Asset Allocation. Our reference to the Tactical Asset Allocation Portfolios refers to these portfolios: AST CLS Growth Asset Allocation, AST CLS Moderate Asset Allocation, AST Horizon Growth Asset Allocation, AST Horizon Moderate Asset Allocation, and AST Niemann Capital Growth Asset Allocation. 2 Some of the Portfolios invest in other investment companies (the Acquired Portfolios). For example, each Dynamic Asset Allocation Portfolio and Tactical Asset Allocation Portfolio invests primarily in shares of other Portfolios of Advanced Series Trust. Investors in a Portfolio indirectly bear the fees and expenses of the Acquired Portfolios. The expenses shown under "Acquired Portfolio Fees and Expenses" represent a weighted average of the expense ratios of the Acquired Portfolios in which each Portfolio invested during the year ended December 31, 2007. The Dynamic Asset Allocation Portfolios and Tactical Asset Allocation Portfolios do not pay any transaction fees when purchasing or redeeming shares of the Acquired Portfolios. Our reference above to the Dynamic Asset Allocation Portfolios refers to these portfolios: AST Aggressive Asset Allocation, AST Balanced Asset Allocation, AST Capital Growth Asset Allocation, AST Conservative Asset Allocation, and AST Preservation Asset Allocation. Our reference to the Tactical Asset Allocation Portfolios refers to these portfolios: AST CLS Growth Asset Allocation, AST CLS Moderate Asset Allocation, AST Horizon Growth Asset Allocation, AST Horizon Moderate Asset Allocation, and AST Niemann Capital Growth Asset Allocation. 3 Prudential Investments LLC and AST Investment Services, Inc. have voluntarily agreed to waive a portion of their management fee and/or limit total expenses (expressed as an annual percentage of average daily net assets) for certain Portfolios of the Fund. These arrangements, which are set forth as follows, may be discontinued or otherwise modified at any time. AST American Century Strategic Allocation: 1.25%; AST Cohen & Steers Realty: 1.45%; AST DeAM Small-Cap Value: 1.14%; AST Goldman Sachs Concentrated Growth: 0.86%; AST Goldman Sachs Mid-Cap Growth: 1.12%; AST High Yield: 0.88%; AST JPMorgan International Equity: 1.01%; AST International Value: 1.50%; AST Large-Cap Value: 1.20%; AST Lord Abbett Bond-Debenture: 0.88%; AST MFS Global Equity: 1.18%; AST MFS Growth: 1.35%; AST Marsico Capital Growth: 1.35%; AST Mid-Cap Value: 1.45%; AST Money Market: 0.56%; AST Neuberger Berman Mid-Cap Growth: 1.25%; AST Neuberger Berman Mid-Cap Value: 1.25%; AST PIMCO Total Return Bond: contractual Portfolio expense limit 1.05%, which can be discontinued or modified only by amending the contract; AST PIMCO Limited Maturity Bond: 1.05%; AST T. Rowe Price Asset Allocation: 1.25%; AST T. Rowe Price Natural Resources: 1.35%; AST International Growth: 1.75%. 12 4 The management fee rate shown in the "management fees" column represents the actual fee rate paid by the indicated Portfolio for the fiscal year ended December 31, 2007, except that the fee rate shown does not reflect the impact of any voluntary management fee waivers that may be applicable and which would result in a reduction in the fee rate paid by the Portfolio. The management fee rate for certain Portfolios may include "breakpoints" which are reduced fee rates that are applicable at specified levels of Portfolio assets; the effective fee rates shown in the table reflect and incorporate any fee "breakpoints" which may be applicable. 5 The Tactical Asset Allocation Portfolios and Western Asset Core Plus Bond Portfolio are based on estimated expenses for 2008 and current period average daily net assets. The AST Bond Portfolio 2015, AST Bond Portfolio 2018, AST Bond Portfolio 2019 and the AST Investment Grade Bond Portfolio are based on estimated expenses for 2008 at an estimated asset level. 6 Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Total Annual Portfolio Operating Expenses listed above may exceed the expense limit numbers. The impact of the acquired fund fees and expenses are included in the total returns of the Fund. 7 The Fund's advisor has contractually agreed to waive advisory fees and/or reimburse expenses of Series I shares to the extent necessary to limit Total Annual Portfolio Operating Expenses (subject to certain exclusions) of Series I shares to 1.30% of average daily net assets. The expense limitation agreement is in effect through at least April 30, 2009. 8 Except as otherwise noted, figures shown in the table are for the year ended December 31, 2007 and are expressed as a percentage of the Fund's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. 9 Effective July 1, 2007, AIM contractually agreed to waive 100% of the advisory fee AIM receives from affiliated money market funds on investments by the fund in such affiliated money market funds. The fee waivers reflect this agreement. This waiver agreement is in effect through at least April 30, 2009. 10 The Total Annual Portfolio Operating Expenses excludes expense reductions. 11 Effective on or about November 19, 2007, the Portfolio changed its name from First Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four Portfolio. The Portfolio's investment strategy was also changed. The above fees and expenses include the Portfolio's fees and expenses prior to the name change and change in investment strategy. 12 Operating expenses are estimates based on Class 1 expenses for fiscal year ended December 31, 2007, except for 12b-1 fees which are based on the Class 4 maximum contractual amounts. The Fund does not pay management fees but will indirectly bear its proportionate share of any management fees and other expenses paid by the underlying funds (or "acquired funds") in which it will invest. Acquired funds' estimated fees and expenses are based on the acquired funds' expenses for the fiscal year ended December 31, 2007. Effective December 1, 2007, the administrator has contractually agreed to waive or limit its fee to assume as its own expense certain expenses otherwise payable by the Portfolio, excluding the portfolios' fees and expenses, so that direct operating expenses of the Portfolio do not exceed 0.13% (other than certain non-routine expenses or costs, including those relating to litigation, indemnification, reorganizations, and liquidations) until April 30, 2009. 13 The Trust and the Adviser have entered into a written contract limiting operating expenses to 1.40% for all share classes until May 1, 2009. 14 ProFund Advisors LLC has contractually agreed to waive Investment Advisory and Management Services Fees and to reimburse other expenses to the extent Total Annual Portfolio Operating Expenses, as a percentage of average daily net assets, exceed 1.63% (1.33% for ProFund VP U.S. Government Plus and 1.30% for ProFund VP Money Market) through April 30, 2009. After such date, any of the expense limitations may be terminated or revised. Amounts waived or reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC within three years of the waiver or reimbursement to the extent that recoupment will not cause the Portfolio's expenses to exceed any expense limitation in place at that time. A waiver or reimbursement lowers the expense ratio and increases overall returns to investors. 13 EXPENSE EXAMPLES These examples are intended to help you compare the cost of investing in one Prudential Annuities Annuity with the cost of investing in other Prudential Annuities and/or other variable annuities. Below are examples for each Annuity showing what you would pay in expenses at the end of the stated time periods had you invested $10,000 in the Annuity and your investment has a 5% return each year. The examples reflect the following fees and charges for each Annuity as described in "Summary of Contract Fees and Charges": . Insurance Charge . Distribution Charge (if applicable) . Contingent Deferred Sales Charge (when and if applicable) . Annual Maintenance Fee . The maximum combination of optional benefit charges The examples also assume the following for the period shown: . You allocate all of your Account Value to the Sub-account with the maximum total annual operating expenses, and those expenses remain the same each year* . For each charge, we deduct the maximum charge rather than the current charge . You make no withdrawals of Account Value . You make no transfers, or other transactions for which we charge a fee . No tax charge applies . You elect the Lifetime Five Income Benefit, the Highest Daily Value Death Benefit and the Enhanced Beneficiary Protection Death Benefit (which are the maximum combination of optional benefit charges) . For the XT6 example, the Credit applicable to the Annuity is 6.5% of the Purchase Payment** . For the APEX II example, the Loyalty Credit applies to the Annuity and is equal to 2.75% of total Purchase Payments made during the first four Annuity years . For the ASAP III example, the Loyalty Credit applies to the Annuity and is equal to 0.50% of total Purchase Payment made during the first four Annuity years. Amounts shown in the examples are rounded to the nearest dollar. * Note: Not all portfolios offered as Sub-accounts may be available depending on optional benefit selection, the applicable jurisdiction and selling firm. ** The Credit that is applied to Purchase Payments received after the first Annuity Year is less than 6.5% (see "How do I Receive Credits?") THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUNDS OR THEIR PORTFOLIOS - ACTUAL EXPENSES WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS. Expense Examples are provided as follows: 1) if you surrender the Annuity at the end of the stated time period; 2) if you annuitize at the end of the stated time period; and 3) if you do not surrender your Annuity. A table of accumulation values appears in Appendix A to this Prospectus. If you surrender your annuity at the end of the applicable time period: /1/
1 yr 3 yrs 5 yrs 10 yrs ------------------------------------ ASAP III $1,271 $2,356 $3,374 $5,605 ------------------------------------ APEX II $1,414 $2,551 $3,158 $6,107 ------------------------------------ ASL II $632 $1,869 $3,074 $5,944 ------------------------------------ XT6/ 3/ $1,537 $2,759 $3,849 $6,426 ------------------------------------
If you annuitize your annuity at the end of the applicable time period: /2/
1 yr 3 yrs 5 yrs 10 yrs ---------------------------------- ASAP III N/A $1,771 $2,924 $5,605 ---------------------------------- APEX II N/A $1,921 $3,158 $6,107 ---------------------------------- ASL II $632 $1,869 $3,074 $5,944 ---------------------------------- XT6 /3/ N/A N/A $3,273 $6,330 ----------------------------------
14 If you do not surrender your annuity:
1 yr 3 yrs 5 yrs 10 yrs ---------------------------------- ASAP III $596 $1,771 $2,924 $5,605 ---------------------------------- APEX II $649 $1,921 $3,158 $6,107 ---------------------------------- ASL II $632 $1,869 $3,074 $5,944 ---------------------------------- XT6 /3/ $673 $1,991 $3,273 $6,330 ----------------------------------
1 There is no CDSC for ASL II. See "Summary of Contract Fees and Charges" for the CDSC schedule for each Annuity. 2 If you own XT6, you may not annuitize in the first Three (3) Annuity Years; if you own ASAP III or APEX II, you may not annuitize in the first Annuity Year. 3 XT6 Annuities purchased prior to November 20, 2006 are subject to a different CDSC schedule. 15 INVESTMENT OPTIONS WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS? Each variable investment option is a Sub-account of Prudential Annuities Life Assurance Corporation Variable Account B (see "What are Separate Accounts" for more detailed information). Each Sub-account invests exclusively in one Portfolio. You should carefully read the prospectus for any Portfolio in which you are interested. The following chart classifies each of the Portfolios based on our assessment of their investment style (as of the date of this Prospectus). The chart also provides a description of each Portfolio's investment objective (in italics) and a short, summary description of their key policies to assist you in determining which Portfolios may be of interest to you. There is no guarantee that any underlying Portfolio will meet its investment objective. Not all portfolios offered as Sub-accounts may be available depending on optional benefit selection, the applicable jurisdiction and selling firm. The Portfolios that you select are your choice - we do not provide investment advice, and we do not recommend or endorse any particular Portfolio. Please see the General Information section of this prospectus, under the heading concerning "service fees" for a discussion of fees that we may receive from underlying mutual funds and /or their affiliates. The name of the advisor/sub-advisor for each Portfolio appears next to the description. Those Portfolios whose name includes the prefix "AST" are Portfolios of Advanced Series Trust. The investment managers for AST are AST Investment Services, Inc., a Prudential Financial Company, and Prudential Investments LLC, both of which are affiliated companies of Prudential Annuities. However, a sub-advisor, as noted below, is engaged to conduct day-to-day management. The Portfolios are not publicly traded mutual funds. They are only available as investment options in variable annuity contracts and variable life insurance policies issued by insurance companies, or in some cases, to participants in certain qualified retirement plans. However, some of the Portfolios available as Sub-accounts under the Annuities are managed by the same portfolio advisor or sub-advisor as a retail mutual fund of the same or similar name that the Portfolio may have been modeled after at its inception. Certain retail mutual funds may also have been modeled after a Portfolio. While the investment objective and policies of the retail mutual funds and the Portfolios may be substantially similar, the actual investments will differ to varying degrees. Differences in the performance of the funds can be expected, and in some cases could be substantial. You should not compare the performance of a publicly traded mutual fund with the performance of any similarly named Portfolio offered as a Sub-account. Details about the investment objectives, policies, risks, costs and management of the Portfolios are found in the prospectuses for the underlying mutual funds. The current prospectus and statement of additional information for the underlying Portfolios can be obtained by calling 1-800-752-6342. Effective May 1, 2004, the SP International Growth Portfolio (formerly the SP William Blair International Growth Portfolio) is no longer offered as a Sub-account under the Annuities, except as follows: if at any time prior to May 1, 2004 you had any portion of your Account Value allocated to the SP William Blair International Growth Sub-account, you may continue to allocate Account Value and make transfers into and/ or out of the SP William Blair International Growth Sub-account, including any electronic funds transfer, dollar cost averaging, asset allocation and rebalancing programs. If you never had a portion of your Account Value allocated to the SP William Blair International Growth Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May 1, 2004, you cannot allocate Account Value to the SP William Blair International Growth Sub-account. With respect to XT6, APEX II and ASL II: Effective as of the close of business June 28, 2002, the AST Goldman Sachs Small-Cap Value Portfolio is no longer offered as a Sub-account under the Annuities, except as follows: if at any time on or prior to June 28, 2002 you had any portion of your Account Value allocated to the AST Goldman Sachs Small-Cap Value Sub-account, you may continue to allocate Account Value and make transfers into and/or out of the AST Goldman Sachs Small-Cap Value Sub-account, including any electronic funds transfer, dollar cost averaging, asset allocation and rebalancing programs. If you never had a portion of your Account Value allocated to the AST Goldman Sachs Small-Cap Value Sub-account on or prior to June 28, 2002 or if you purchase your Annuity after June 28, 2002, you cannot allocate Account Value to the AST Goldman Sachs Small-Cap Value Sub-Account. The AST Goldman Sachs Small-Cap Value Portfolio is not available nor was it ever available under ASAP III. Either of these Sub-accounts may be offered to new Owners at some future date; however, at the present time, there is no intention to do so. We also reserve the right to offer or close this Sub-account to all Owners that owned the Annuity prior to the close date. For ASAP III, XT6, and ASL II Annuities issued beginning on May 26, 2008, we will significantly limit the Owner's ability to invest in the ProFund VP Portfolios. Specifically: . We will not permit those who acquire an ASAP III, XT6, or ASL II Annuity on or after May 26, 2008 (including beneficiaries who acquire such an Annuity under the Beneficiary Continuation Option) to invest in any ProFund VP Portfolio; and . Those who acquired an ASAP III, XT6, or ASL II Annuity prior to May 26, 2008 may invest in any ProFund VP Portfolio without being subject to the above restrictions; and . Those who currently hold an APEX II Annuity, or who acquire an APEX II Annuity after May 26, 2008, may invest in any ProFund VP Portfolio (except that beneficiaries who acquire an APEX II Annuity on or after May 26, 2008 under the Beneficiary Continuation Option may not invest in any ProFund VP Portfolio). 16 The following chart lists the currently available and permitted investment options when you choose certain optional benefits: Optional Benefit Name* Allowable Benefit Allocations: Lifetime Five Income Benefit AST Capital Growth Asset Allocation Portfolio Spousal Lifetime Five Income Benefit AST Balanced Asset Allocation Portfolio Highest Daily Lifetime Five Income Benefit AST Conservative Asset Allocation Portfolio Highest Daily Lifetime Seven Income Benefit AST Preservation Asset Allocation Portfolio Spousal Highest Daily Lifetime Seven Income Benefit AST First Trust Balanced Target Portfolio Highest Daily Value Death Benefit AST First Trust Capital Appreciation Target Portfolio AST Advanced Strategies Portfolio AST T. Rowe Price Asset Allocation Portfolio AST UBS Dynamic Alpha Strategy Portfolio AST American Century Strategic Allocation Portfolio AST Niemann Capital Growth Asset Allocation Portfolio AST CLS Growth Asset Allocation Portfolio AST CLS Moderate Asset Allocation Portfolio AST Horizon Growth Asset Allocation Portfolio AST Horizon Moderate Asset Allocation Portfolio Franklin Templeton VIP Founding Funds Allocation Fund - - -------------------------------------------------------- Optional Benefit Name* All investment options permitted, EXCEPT these: Combo 5% Rollup & HAV Death Benefit ProFund VP UltraNASDAQ-100 Guaranteed Minimum Income Benefit ProFund VP UltraSmall Cap Guaranteed Minimum Withdrawal Benefit ProFund VP Semiconductor GRO/GRO PLUS/GRO PLUS 2008 ProFund VP Internet Highest Anniversary Value Death Benefit ProFund VP UltraBull Highest Daily GRO Value Line(R) Target 25 AIM VI Technology ProFund VP Technology NASDAQ(R) Target 15 ProFund VP Biotechnology ProFund VP Short Small-Cap Access VP High Yield ProFund VP Short Mid-Cap Evergreen VA Growth Fund - - -------------------------------------------------------- Optional Benefit Name* Additional 5 investment options NOT permitted with GRO Plus 2008 & Highest Daily GRO ProFund VP Ultra Mid-Cap ProFund VP Precious Metals GRO PLUS 2008 ProFund VP NASDAQ-100 Highest Daily GRO ProFund VP Asia 30 ProFund VP Short NASDAQ-100 - --------------------------------------------------------------------------------------------------------------
* Detailed Information regarding these optional benefits can be found in the "Living Benefits" and "Death Benefit" sections of this Prospectus. 17 ----------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ----------------------------------------------------------------------- ADVANCED SERIES TRUST ----------------------------------------------------------------------- ASSET AST Advanced Strategies Portfolio: LSV Asset ALLOCA seeks a high level of absolute Management; TION/ return. The Portfolio invests Marsico Capital BALANCED primarily in a diversified portfolio Management, LLC; of equity and fixed income Pacific Investment securities across different Management investment categories and investment Company LLC managers. The Portfolio pursues a (PIMCO); T. Rowe combination of traditional and Price Associates, non-traditional investment Inc.; William Blair strategies. & Company, LLC ----------------------------------------------------------------------- ASSET AST Aggressive Asset Allocation AST Investment ALLOCA Portfolio: seeks the highest Services, Inc. & TION/ potential total return consistent Prudential BALANCED with its specified level of risk Investments LLC/ tolerance. The Portfolio will invest Prudential its assets in several other Advanced Investments LLC Series Trust Portfolios. Under normal market conditions, the Portfolio will devote approximately 100% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 92.5% to 100%) and the remainder of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 0% - 7.5%). ----------------------------------------------------------------------- LARGE AST AllianceBernstein Core Value AllianceBernstein CAP Portfolio: seeks long-term capital L.P. VALUE growth by investing primarily in common stocks. The subadviser expects that the majority of the Portfolio's assets will be invested in the common stocks of large companies that appear to be undervalued. Among other things, the Portfolio seeks to identify compelling buying opportunities created when companies are undervalued on the basis of investor reactions to near-term problems or circumstances even though their long-term prospects remain sound. The subadviser seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large. ----------------------------------------------------------------------- LARGE AST AllianceBernstein Growth & AllianceBernstein CAP Income Portfolio: seeks long-term L.P. VALUE growth of capital and income while attempting to avoid excessive fluctuations in market value. The Portfolio normally will invest in common stocks (and securities convertible into common stocks). The subadviser will take a value-oriented approach, in that it will try to keep the Portfolio's assets invested in securities that are selling at reasonable valuations in relation to their fundamental business prospects. ----------------------------------------------------------------------- LARGE AST American Century Income & Growth American Century CAP Portfolio: seeks capital growth with Investment VALUE current income as a secondary Management, Inc. objective. The Portfolio invests primarily in common stocks that offer potential for capital growth, and may, consistent with its investment objective, invest in stocks that offer potential for current income. The subadviser utilizes a quantitative management technique with a goal of building an equity portfolio that provides better returns than the S&P 500 Index without taking on significant additional risk and while attempting to create a dividend yield that will be greater than the S&P 500 Index. ----------------------------------------------------------------------- ASSET AST American Century Strategic American Century ALLOCA Allocation Portfolio: seeks Investment TION/ long-term capital growth with some Management, Inc. BALANCED regular income. The Portfolio will invest, under normal circumstances, in any type of U.S. or foreign equity security that meets certain fundamental and technical standards. The portfolio managers will draw on growth, value and quantitative investment techniques in managing the equity portion of the Portfolio and diversify the Portfolio's investments among small, medium and large companies. ----------------------------------------------------------------------- ASSET AST Balanced Asset Allocation AST Investment ALLOCA Portfolio: seeks the highest Services, Inc. & TION/ potential total return consistent Prudential BALANCED with its specified level of risk Investments LLC/ tolerance. The Portfolio will invest Prudential its assets in several other Advanced Investments LLC Series Trust Portfolios. Under normal market conditions, the Portfolio will devote approximately 75% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 67.5% to 80%), and 25% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 20.0% to 32.5%). ----------------------------------------------------------------------- 18 --------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR --------------------------------------------------------------------- FIXED AST Bond Portfolio 2015: seeks the Prudential INCOME highest potential total return Investment consistent with its specified level Management, Inc. of risk tolerance to meet the parameters established to support the GRO benefits and maintain liquidity to support changes in market conditions for a fixed maturity of 2015. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. --------------------------------------------------------------------- FIXED AST Bond Portfolio 2018: seeks the Prudential INCOME highest potential total return Investment consistent with its specified level Management, Inc. of risk tolerance to meet the parameters established to support the GRO benefits and maintain liquidity to support changes in market conditions for a fixed maturity of 2018. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. --------------------------------------------------------------------- FIXED AST Bond Portfolio 2019: seeks the Prudential INCOME highest potential total return Investment consistent with its specified level Management, Inc. of risk tolerance to meet the parameters established to support the GRO benefits and maintain liquidity to support changes in market conditions for a fixed maturity of 2019. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. --------------------------------------------------------------------- ASSET AST Capital Growth Asset Allocation AST Investment ALLOCA Portfolio: seeks the highest Services, Inc. & TION/ potential total return consistent Prudential BALANCED with its specified level of risk Investments LLC/ tolerance. The Portfolio will invest Prudential its assets in several other Advanced Investments LLC Series Trust Portfolios. Under normal market conditions, the Portfolio will devote approximately 65% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 57.5% to 72.5%, and 35% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 27.5% to 42.5%). --------------------------------------------------------------------- ASSET AST CLS Growth Asset Allocation CLS Investment ALLOCA Portfolio: seeks the highest Firm, LLC TION/ potential total return consistent GROWTH with its specified level of risk tolerance. Under normal circumstances, at least 90% of the Portfolio's assets will be invested in other portfolios of Advanced Series Trust (the underlying portfolios) while no more than 10% of the Portfolio's assets may be invested in exchange traded funds (ETFs). Under normal market conditions, the Portfolio will devote from 60% to 80% of its net assets to underlying portfolios and ETFs investing primarily in equity securities, and from 20% to 40% of its net assets to underlying portfolios and ETFs investing primarily in debt securities and money market instruments. --------------------------------------------------------------------- ASSET AST CLS Moderate Asset Allocation CLS Investment ALLOCA Portfolio: seeks the highest Firm, LLC TION/ potential total return consistent GROWTH with its specified level of risk tolerance. Under normal circumstances, at least 90% of the Portfolio's assets will be invested in other portfolios of Advanced Series Trust (the underlying portfolios) while no more than 10% of the Portfolio's assets may be invested in exchange traded funds (ETFs). Under normal market conditions, the Portfolio will devote from 40% to 60% of its net assets to underlying portfolios and ETFs investing primarily in equity securities, and from 40% to 60% of its net assets to underlying portfolios and ETFs investing primarily in debt securities and money market instruments. --------------------------------------------------------------------- SPECIALTY AST Cohen & Steers Realty Portfolio: Cohen & Steers seeks to maximize total return Capital through investment in real estate Management, Inc. securities. The Portfolio pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets in common stocks and other equity securities issued by real estate companies, such as real estate investment trusts (REITs). Under normal circumstances, the Portfolio will invest substantially all of its assets in the equity securities of real estate companies, i.e., a company that derives at least 50% of its revenues from the ownership, construction, financing, management or sale of real estate or that has at least 50% of its assets in real estate. Real estate companies may include real estate investment trusts (REITs). --------------------------------------------------------------------- ASSET AST Conservative Asset Allocation AST Investment ALLOCA Portfolio: seeks the highest Services, Inc. & TION/ potential total return consistent Prudential BALANCED with its specified level of risk Investments LLC/ tolerance. The Portfolio will invest Prudential its assets in several other Advanced Investments LLC Series Trust Portfolios. Under normal market conditions, the Portfolio will devote approximately 55% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 47.5% to 62.5%), and 45% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 37.5% to 52.5%. --------------------------------------------------------------------- 19 ------------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------- LARGE AST DeAM Large-Cap Value Portfolio: Deutsche CAP seeks maximum growth of capital by Investment VALUE investing primarily in the value Management stocks of larger companies. The Americas, Inc. Portfolio pursues its objective, under normal market conditions, by primarily investing at least 80% of the value of its assets in the equity securities of large-sized companies included in the Russell 1000(R) Value Index. The subadviser employs an investment strategy designed to maintain a portfolio of equity securities which approximates the market risk of those stocks included in the Russell 1000(R) Value Index, but which attempts to outperform the Russell 1000(R) Value Index through active stock selection. ------------------------------------------------------------------------- SMALL AST DeAM Small-Cap Value Portfolio: Deutsche CAP seeks maximum growth of investors' Investment VALUE capital by investing primarily in Management the value stocks of smaller Americas, Inc. companies. The Portfolio pursues its objective, under normal market conditions, by primarily investing at least 80% of its total assets in the equity securities of small-sized companies included in the Russell 2000(R) Value Index. The subadviser employs an investment strategy designed to maintain a portfolio of equity securities which approximates the market risk of those stocks included in the Russell 2000(R) Value Index, but which attempts to outperform the Russell 2000(R) Value Index. ------------------------------------------------------------------------- SMALL AST Federated Aggressive Growth Federated Equity CAP Portfolio: seeks capital growth. The Management GROWTH Portfolio pursues its investment Company of objective by investing primarily in Pennsylvania/ the stocks of small companies that Federated Global are traded on national security Investment exchanges, NASDAQ stock exchange and Management Corp.; the over- the-counter-market. Small Federated MDTA companies will be defined as LLC companies with market capitalizations similar to companies in the Russell 2000 Growth Index. ------------------------------------------------------------------------- ASSET AST First Trust Balanced Target First Trust Advisors ALLOCA Portfolio: seeks long-term capital L.P. TION/ growth balanced by current income. BALANCED The Portfolio seeks to achieve its objective by investing approximately 65% in common stocks and approximately 35% in fixed income securities. The Portfolio allocates the equity portion of the portfolio across five uniquely specialized strategies - The Dow(R) Target Dividend, the Value Line(R) Target 25, the Global Dividend Target 15, the NYSE(R) International Target 25, and the Target Small Cap. Each strategy employs a quantitative approach by screening common stocks for certain attributes and/or using a multi-factor scoring system to select the common stocks. The fixed income allocation is determined by the Dow Jones Income strategy which utilizes certain screens to select bonds from the Dow Jones Corporate Bond Index or like-bonds not in the index. ------------------------------------------------------------------------- ASSET AST First Trust Capital Appreciation First Trust Advisors ALLOCA Target Portfolio: seeks long-term L.P. TION/ capital growth. The Portfolio seeks BALANCED to achieve its objective by investing approximately 80% in common stocks and 20% in fixed income securities. The portfolio allocates the equity portion of the portfolio across five uniquely specialized strategies - the Value Line(R) Target 25, the Global Dividend Target 15, the Target Small Cap, the Nasdaq(R) Target 15, and the NYSE(R) International Target 25. Each strategy employs a quantitative approach by screening common stocks for certain attributes and/or using a multi-factor scoring system to select the common stocks. The fixed income allocation is determined by the Dow Jones Income strategy which utilizes certain screens to select bonds from the Dow Jones Corporate Bond Index or like-bonds not in the index. ------------------------------------------------------------------------- LARGE AST Goldman Sachs Concentrated Goldman Sachs CAP Growth Portfolio: seeks long-term Asset Management, GROWTH growth of capital. The Portfolio L.P. will pursue its objective by investing primarily in equity securities of companies that the subadviser believes have the potential to achieve capital appreciation over the long-term. The Portfolio seeks to achieve its investment objective by investing, under normal circumstances, in approximately 30 - 45 companies that are considered by the subadviser to be positioned for long-term growth. ------------------------------------------------------------------------- 20 --------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR --------------------------------------------------------------------- MID CAP AST Goldman Sachs Mid-Cap Growth Goldman Sachs GROWTH Portfolio: seeks long-term capital Asset Management, growth. The Portfolio pursues its L.P. investment objective, by investing primarily in equity securities selected for their growth potential, and normally invests at least 80% of the value of its assets in medium-sized companies. Medium-sized companies are those whose market capitalizations (measured at the time of investment) fall within the range of companies in the Russell Mid-cap Growth Index. The subadviser seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large. --------------------------------------------------------------------- SMALL AST Goldman Sachs Small-Cap Value Goldman Sachs CAP Portfolio: seeks long-term capital Asset Management, VALUE appreciation. The Portfolio will L.P. seek its objective through investments primarily in equity securities that are believed to be undervalued in the marketplace. The Portfolio will invest, under normal circumstances, at least 80% of the value of its assets plus any borrowings for investment purposes in small capitalization companies. The 80% investment requirement applies at the time the Portfolio invests its assets. The Portfolio generally defines small capitalization companies as companies with market capitalizations that are within the range of the Russell 2000 Value Index at the time of purchase. --------------------------------------------------------------------- FIXED AST High Yield Portfolio: seeks Pacific Investment INCOME maximum total return, consistent Management with preservation of capital and Company LLC prudent investment management. The (PIMCO) Portfolio invests, under normal circumstances, at least 80% of its net assets plus any borrowings for investment purposes (measured at time of purchase) in high yield, fixed-income securities that, at the time of purchase, are non-investment grade securities. Such securities are commonly referred to as "junk bonds". --------------------------------------------------------------------- ASSET AST Horizon Growth Asset Allocation Horizon ALLOCA Portfolio: seeks the highest Investments, LLC TION/ potential total return consistent GROWTH with its specified level of risk tolerance. Under normal circumstances, at least 90% of the Portfolio's assets will be invested in other portfolios of Advanced Series Trust (the underlying portfolios) while no more than 10% of the Portfolio's assets may be invested in exchange traded funds (ETFs). Under normal market conditions, the Portfolio will devote from 60% to 80% of its net assets to underlying portfolios and ETFs investing primarily in equity securities, and from 20% to 40% of its net assets to underlying portfolios and ETFs investing primarily in debt securities and money market instruments. --------------------------------------------------------------------- ASSET AST Horizon Moderate Asset Horizon ALLOCA Allocation Portfolio: seeks the Investments, LLC TION/ highest potential total return GROWTH consistent with its specified level of risk tolerance. Under normal circumstances, at least 90% of the Portfolio's assets will be invested in other portfolios of Advanced Series Trust (the underlying portfolios) while no more than 10% of the Portfolio's assets may be invested in exchange traded funds (ETFs). Under normal market conditions, the Portfolio will devote from 40% to 60% of its net assets to underlying portfolios and ETFs investing primarily in equity securities, and from 40% to 60% of its net assets to underlying portfolios and ETFs investing primarily in debt securities and money market instruments. --------------------------------------------------------------------- INTERNA AST International Growth Portfolio: Marsico Capital TIONAL seeks long-term capital growth. Management, LLC; EQUITY Under normal circumstances, the William Blair & Portfolio invests at least 80% of Company, LLC the value of its assets in securities of issuers that are economically tied to countries other than the United States. Although the Portfolio intends to invest at least 80% of its assets in the securities of issuers located outside the United States, it may at times invest in U.S. issuers and it may invest all of its assets in fewer than five countries or even a single country. The Portfolio looks primarily for stocks of companies whose earnings are growing at a faster rate than other companies or which offer attractive growth. --------------------------------------------------------------------- INTERNA AST International Value Portfolio: LSV Asset TIONAL seeks long-term capital Management; EQUITY appreciation. The Portfolio normally Thornburg invests at least 80% of the Investment Portfolio's assets in equity Management, Inc. securities. The Portfolio will invest at least 65% of its net assets in the equity securities of companies in at least three different countries, without limit as to the amount of assets that may be invested in a single country. --------------------------------------------------------------------- 21 --------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR --------------------------------------------------------------------- FIXED AST Investment Grade Bond Portfolio: Prudential INCOME seeks the highest potential total Investment return consistent with its specified Management, Inc. level of risk tolerance to meet the parameters established to support the Highest Daily Lifetime Seven benefits and maintain liquidity to support changes in market conditions for a fixed duration (weighted average maturity) of about 6 years. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. --------------------------------------------------------------------- INTERNA AST JPMorgan International Equity J.P. Morgan TIONAL Portfolio: seeks long-term capital Investment EQUITY growth by investing in a diversified Management, Inc. portfolio of international equity securities. The Portfolio seeks to meet its objective by investing, under normal market conditions, at least 80% of its assets in a diversified portfolio of equity securities of companies located or operating in developed non-U.S. countries and emerging markets of the world. The equity securities will ordinarily be traded on a recognized foreign securities exchange or traded in a foreign over-the-counter market in the country where the issuer is principally based, but may also be traded in other countries including the United States. --------------------------------------------------------------------- LARGE AST Large-Cap Value Portfolio: seeks Dreman Value CAP current income and long-term growth Management LLC; VALUE of income, as well as capital Hotchkis and Wiley appreciation. The Portfolio invests, Capital under normal circumstances, at least Management LLC; 80% of its net assets in common J.P. Morgan stocks of large capitalization Investment companies. Large capitalization Management, Inc. companies are those companies with market capitalizations within the market capitalization range of the Russell 1000 Value Index. --------------------------------------------------------------------- FIXED AST Lord Abbett Bond-Debenture Lord, Abbett & Co. INCOME Portfolio: seeks high current income LLC and the opportunity for capital appreciation to produce a high total return. The Portfolio invests, under normal circumstances, at least 80% of the value of its assets in fixed income securities. The Portfolio allocates its assets principally among fixed income securities in four market sectors: U.S. investment grade securities, U.S. high yield securities, foreign securities (including emerging market securities) and convertible securities. Under normal circumstances, the Portfolio invests in each of the four sectors described above. However, the Portfolio may invest substantially all of its assets in any one sector at any time, subject to the limitation that at least 20% of the Portfolio's net assets must be invested in any combination of investment grade debt securities, U.S. Government securities and cash equivalents. The Portfolio may also make significant investments in mortgage-backed securities. Although the Portfolio expects to maintain a weighted average maturity in the range of five to twelve years, there are no restrictions on the overall Portfolio or on individual securities. The Portfolio may invest up to 20% of its net assets in equity securities. --------------------------------------------------------------------- LARGE AST Marsico Capital Growth Marsico Capital CAP Portfolio: seeks capital growth. Management, LLC GROWTH Income realization is not an investment objective and any income realized on the Portfolio's investments, therefore, will be incidental to the Portfolio's objective. The Portfolio will pursue its objective by investing primarily in common stocks of large companies that are selected for their growth potential. Large capitalization companies are companies with market capitalizations within the market capitalization range of the Russell 1000 Growth Index. In selecting investments for the Portfolio, the subadviser uses an approach that combines "top down" macroeconomic analysis with "bottom up" stock selection. The "top down" approach identifies sectors, industries and companies that may benefit from the trends the subadviser has observed. The subadviser then looks for individual companies with earnings growth potential that may not be recognized by the market at large, utilizing a "bottom up" stock selection process. The Portfolio will normally hold a core position of between 35 and 50 common stocks. The Portfolio may hold a limited number of additional common stocks at times when the Portfolio manager is accumulating new positions, phasing out existing or responding to exceptional market conditions. --------------------------------------------------------------------- 22 ---------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ---------------------------------------------------------------------- INTERNA AST MFS Global Equity Portfolio: Massachusetts TIONAL seeks capital growth. Under normal Financial Services EQUITY circumstances the Portfolio invests Company at least 80% of its assets in equity securities. The Portfolio will invest in the securities of U.S. and foreign issuers (including issuers in emerging market countries). While the portfolio may invest its assets in companies of any size, the Portfolio generally focuses on companies with relatively large market capitalizations relative to the markets in which they are traded. ---------------------------------------------------------------------- LARGE AST MFS Growth Portfolio: seeks Massachusetts CAP long-term capital growth and future, Financial Services GROWTH rather than current income. Under Company normal market conditions, the Portfolio invests at least 80% of its net assets in common stocks and related securities, such as preferred stocks, convertible securities and depositary receipts, of companies that the subadviser believes offer better than average prospects for long-term growth. The subadviser uses a "bottom up" as opposed to a "top down" investment style in managing the Portfolio. ---------------------------------------------------------------------- MID CAP AST Mid Cap Value Portfolio: seeks EARNEST Partners VALUE to provide capital growth by LLC; WEDGE investing primarily in Capital mid-capitalization stocks that Management, LLP appear to be undervalued. The Portfolio generally invests, under normal circumstances, at least 80% of the value of its net assets in mid- capitalization companies. Mid-capitalization companies are generally those that have market capitalizations, at the time of purchase, within the market capitalization range of companies included in the Russell Midcap Value Index during the previous 12-months based on month-end data. ---------------------------------------------------------------------- FIXED AST Money Market Portfolio: seeks Prudential INCOME high current income while Investment maintaining high levels of Management, Inc. liquidity. The Portfolio invests in high-quality, short-term, U.S. dollar denominated corporate, bank and government obligations. The Portfolio will invest in securities which have effective maturities of not more than 397 days. ---------------------------------------------------------------------- MID CAP AST Neuberger Berman Mid-Cap Growth Neuberger Berman GROWTH Portfolio: seeks capital growth. Management Inc. Under normal market conditions, the Portfolio invests at least 80% of its net assets in the common stocks of mid-capitalization companies. Mid-capitalization companies are those companies whose market capitalization is within the range of market capitalizations of companies in the Russell Midcap(R) Growth Index. Using fundamental research and quantitative analysis, the subadviser looks for fast-growing companies that are in new or rapidly evolving industries. ---------------------------------------------------------------------- MID CAP AST Neuberger Berman Mid-Cap Value Neuberger Berman VALUE Portfolio: seeks capital growth. Management Inc. Under normal market conditions, the Portfolio invests at least 80% of its net assets in the common stocks of medium capitalization companies. For purposes of the Portfolio, companies with market capitalizations that fall within the range of the Russell Midcap(R) Index at the time of investment are considered medium capitalization companies. Some of the Portfolio's assets may be invested in the securities of large-cap companies as well as in small-cap companies. Under the Portfolio's value-oriented investment approach, the subadviser looks for well-managed companies whose stock prices are undervalued and that may rise in price before other investors realize their worth. ---------------------------------------------------------------------- SMALL AST Neuberger Berman Small-Cap Neuberger Berman CAP Growth Portfolio: seeks maximum Management Inc. GROWTH growth of investors' capital from a portfolio of growth stocks of smaller companies. The Portfolio pursues its objective, under normal circumstances, by primarily investing at least 80% of its total assets in the equity securities of small-sized companies included in the Russell 2000 Growth(R) Index. ---------------------------------------------------------------------- ASSET AST Niemann Capital Growth Asset Neimann Capital ALLOCA Allocation Portfolio: seeks the Management Inc. TION/ highest potential total return GROWTH consistent with its specified level of risk tolerance. Under normal circumstances, at least 90% of the Portfolio's assets will be invested in other portfolios of Advanced Series Trust (the underlying portfolios) while no more than 10% of the Portfolio's assets may be invested in exchange traded funds (ETFs). Under normal market conditions, the Portfolio will devote from 60% to 80% of its net assets to underlying portfolios and ETFs investing primarily in equity securities, and from 20% to 40% of its net assets to underlying portfolios and ETFs investing primarily in debt securities and money market instruments. ---------------------------------------------------------------------- 23 ---------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ---------------------------------------------------------------------- FIXED AST PIMCO Limited Maturity Bond Pacific Investment INCOME Portfolio: seeks to maximize total Management return consistent with preservation Company LLC of capital and prudent investment (PIMCO) management. The Portfolio will invest in a portfolio of fixed-income investment instruments of varying maturities. The average portfolio duration of the Portfolio generally will vary within a one- to three- year time frame based on the subadviser's forecast for interest rates. ---------------------------------------------------------------------- FIXED AST PIMCO Total Return Bond Pacific Investment INCOME Portfolio: seeks to maximize total Management return consistent with preservation Company LLC of capital and prudent investment (PIMCO) management. The Portfolio will invest in a portfolio of fixed-income investment instruments of varying maturities. ---------------------------------------------------------------------- ASSET AST Preservation Asset Allocation AST Investment ALLOCA Portfolio: seeks the highest Services, Inc. & TION/ potential total return consistent Prudential BALANCED with its specified level of risk Investments LLC/ tolerance. The Portfolio will invest Prudential its assets in several other Advanced Investments LLC Series Trust Portfolios. Under normal market conditions, the Portfolio will devote approximately 35% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 27.5% to 42.5%), and 65% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 57.5% to 72.5%. ---------------------------------------------------------------------- LARGE AST QMA US Equity Portfolio Quantitative CAP (formerly known as AST Management BLEND AllianceBernstein Managed Index 500 Associates LLC Portfolio): seeks to produce returns that exceed those of the benchmark. The portfolio utilizes a long/short investment strategy and will normally invest at least 80% of its net assets plus borrowings in equity and equity related securities of issuers traded on a securities exchange or market in the US. The benchmark index is the Russell 1000(R) which is comprised of stocks representing more than 90% of the market cap of the US market and includes the largest 1000 securities in the Russell 3000(R) index. ---------------------------------------------------------------------- SMALL AST Small-Cap Growth Portfolio: Eagle Asset CAP seeks long-term capital growth. The Management; GROWTH Portfolio pursues its objective by Neuberger Berman investing, under normal Management Inc. circumstances, at least 80% of the value of its assets in small-capitalization companies. Small-capitalization companies are those companies with a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000(R) Index at the time of the Portfolio's investment. ---------------------------------------------------------------------- SMALL AST Small-Cap Value Portfolio: seeks ClearBridge CAP to provide long-term capital growth Advisors, LLC; VALUE by investing primarily in Dreman Value small-capitalization stocks that Management LLC; appear to be undervalued. The J.P. Morgan Portfolio invests, under normal Investment circumstances, at least 80% of the Management, Inc.; value of its net assets in small Lee Munder capitalization stocks. Small Investments, Ltd capitalization stocks are the stocks of companies with market capitalization that are within the market capitalization range of the Russell 2000(R) Value Index. ---------------------------------------------------------------------- ASSET AST T. Rowe Price Asset Allocation T. Rowe Price ALLOCA Portfolio: seeks a high level of Associates, Inc. TION/ total return by investing primarily BALANCED in a diversified portfolio of fixed income and equity securities. The Portfolio normally invests approximately 60% of its total assets in equity securities and 40% in fixed income securities. This mix may vary depending on the subadviser's outlook for the markets. The subadviser concentrates common stock investments in larger, more established companies, but the Portfolio may include small and medium-sized companies with good growth prospects. The fixed income portion of the Portfolio will be allocated among investment grade securities, high yield or "junk" bonds, emerging market securities, foreign high quality debt securities and cash reserves. ---------------------------------------------------------------------- 24 ------------------------------------------------------------------------ STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------ FIXED AST T. Rowe Price Global Bond T. Rowe Price INCOME Portfolio: seeks to provide high International, Inc. current income and capital growth by investing in high-quality foreign and U.S. dollar-denominated bonds. The Portfolio will invest at least 80% of its total assets in fixed income securities. The Portfolio invests in all types of bonds, including those issued or guaranteed by U.S. or foreign governments or their agencies and by foreign authorities, provinces and municipalities as well as investment grade corporate bonds, mortgage and asset-backed securities, and high-yield bonds of U.S. and foreign issuers. The Portfolio generally invests in countries where the combination of fixed-income returns and currency exchange rates appears attractive, or, if the currency trend is unfavorable, where the subadviser believes that the currency risk can be minimized through hedging. The Portfolio may also invest up to 20% of its assets in the aggregate in below investment-grade, high-risk bonds ("junk bonds"). In addition, the Portfolio may invest up to 30% of its assets in mortgage- related (including mortgage dollar rolls and derivatives, such as collateralized mortgage obligations and stripped mortgage securities) and asset-backed securities. ------------------------------------------------------------------------ LARGE AST T. Rowe Price Large-Cap Growth T. Rowe Price CAP Portfolio: seeks long-term growth of Associates, Inc. GROWTH capital by investing predominantly in the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. The Portfolio takes a growth approach to investment selection and normally invests at least 80% of its net assets in the common stocks of large companies. Large companies are defined as those whose market cap is larger than the median market cap of companies in the Russell 1000 Growth Index as of the time of purchase. ------------------------------------------------------------------------ SPECIALTY AST T. Rowe Price Natural Resources T. Rowe Price Portfolio: seeks long-term capital Associates, Inc. growth primarily through the common stocks of companies that own or develop natural resources (such as energy products, precious metals and forest products) and other basic commodities. The Portfolio invests, under normal circumstances, at least 80% of the value of its assts in natural resource companies. The Portfolio may also invest in non-resource companies with the potential for growth. The Portfolio looks for companies that have the ability to expand production, to maintain superior exploration programs and production facilities, and the potential to accumulate new resources. Although at least 50% of Portfolio assets will be invested in U.S. securities, up to 50% of total assets also may be invested in foreign securities. ------------------------------------------------------------------------ ASSET AST UBS Dynamic Alpha Portfolio: UBS Global Asset ALLOCA seeks to maximize total return, Management TION/ consisting of capital appreciation (Americas) Inc. BALANCED and current income. The Portfolio invests in securities and financial instruments to gain exposure to global equity, global fixed income and cash equivalent markets, including global currencies. The Portfolio may invest in equity and fixed income securities of issuers located within and outside the United States or in open-end investment companies advised by UBS Global Asset Management (Americas) Inc., the Portfolio's subadviser, to gain exposure to certain global equity and global fixed income markets. ------------------------------------------------------------------------ FIXED AST Western Asset Core Plus Bond Western Asset INCOME Portfolio: seeks to maximize total Management return, consistent with prudent Company investment management and liquidity needs, by investing to obtain its average specified duration. The Portfolio's current target average duration is generally 2.5 to 7 years. The Portfolio pursues this objective by investing in all major fixed income sectors with a bias towards non-Treasuries. ------------------------------------------------------------------------ THE PRUDENTIAL SERIES FUND ------------------------------------------------------------------------ INTERNA SP International Growth Portfolio: Marsico Capital TIONAL seeks long-term capital Management, LLC; EQUITY appreciation. The Portfolio invests William Blair & primarily in equity-related Company, LLC. securities of foreign issuers. The Portfolio invests primarily in the common stock of large and medium-sized foreign companies, although it may also invest in companies of all sizes. Under normal circumstances, the Portfolio invests at least 65% of its total assets in common stock of foreign companies operating or based in at least five different countries, which may include countries with emerging markets. The Portfolio looks primarily for stocks of companies whose earnings are growing at a faster rate than other companies or which offer attractive growth potential. ------------------------------------------------------------------------ 25 ------------------------------------------------------------------------ STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS ------------------------------------------------------------------------ MID CAP AIM Variable Insurance Funds - AIM Advisor: Invesco GROWTH V.I. Dynamics Fund - Series I Aim Advisors, Inc. shares: The investment objective is Sub-advisor: long-term capital growth. The Advisory entities Portfolio pursues its objective by affiliated with normally investing at least 65% of Invesco Aim its assets in equity securities of Advisors, Inc. mid-sized companies that are included in the Russell Midcap(R) Growth Index at the time of purchase. ------------------------------------------------------------------------ SPECIALTY AIM Variable Insurance Funds - AIM Advisor: Invesco V.I. Financial Services Fund - Aim Advisors, Inc. Series I shares: The investment Sub-advisor: objective is capital growth. The Advisory entities Portfolio normally invests at least affiliated with 80% of its net assets, plus the Invesco Aim amount of any borrowings for Advisors, Inc. investment purposes, in equity securities of issuers engaged primarily in financial services-related industries. ------------------------------------------------------------------------ SPECIALTY AIM Variable Insurance Funds - AIM Advisor: Invesco V.I. Global Health Care Fund - Aim Advisors, Inc. Series I shares: The investment Sub-advisor: objective is capital growth. The Advisory entities Portfolio normally invests at least affiliated with 80% of its net assets in securities Invesco Aim of health care industry companies. Advisors, Inc. ------------------------------------------------------------------------ SPECIALTY AIM Variable Insurance Funds - AIM Advisor: Invesco V.I. Technology Fund - Series I Aim Advisors, Inc. shares: The investment objective is capital growth. The Portfolio normally invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities and equity-related instruments of companies engaged in technology-related industries. Companies in technology-related industries include, but are not limited to, those involved in the design, manufacture, distribution, licensing, or provision of various applied technologies, hardware, software, semiconductors, telecommunications equipment and services and service-related companies in information technology. ------------------------------------------------------------------------ EVERGREEN VARIABLE ANNUITY TRUST ------------------------------------------------------------------------ SMALL Evergreen VA Growth: seeks long-term Evergreen CAP capital growth. The Portfolio Investment GROWTH invests at least 75% of its assets Management in common stocks of small- and Company, LLC medium-sized companies (i.e., companies whose market capitalizations fall within the market capitalization range of the companies tracked by the Russell 2000(R) Growth Index, measured at the time of purchase). The remaining portion of the Portfolio's assets may be invested in companies of any size. The Portfolio's managers employ a growth-style of equity management and will generally seek to purchase stocks of companies that have demonstrated earnings growth potential which they believe is not yet reflected in the stock's market price. The Portfolio's managers consider potential earnings growth above the average earnings growth of companies included in the Russell 2000(R) Growth Index as a key factor in selecting investments. ------------------------------------------------------------------------ INTERNA Evergreen VA International Equity: Evergreen TIONAL seeks long-term capital growth and Investment EQUITY secondarily, modest income. The Management Portfolio will normally invest at Company, LLC least 80% of its assets in equity securities issued by, in the manager's opinion, established and quality non-U.S. companies located in countries with developed markets. The Portfolio may purchase securities across all market capitalizations. The Portfolio normally invests at least 65% of its assets in securities of companies in at least three countries (other than the U.S.). The Portfolio may also invest in emerging markets. The Portfolio's managers seek both growth and value opportunities For growth investments, the Portfolio's manager seeks, among other things, good business models, good management and growth in cash flows. For value investments, the Portfolio's manager seeks, among other things, companies that are undervalued in the marketplace compared to their assets. The Portfolio normally intends to seek modest income from dividends paid by its equity holdings. Other than cash and cash equivalents, the Portfolio intends to invest substantially all of its assets in the securities of non-U.S. issuers. ------------------------------------------------------------------------ 26 ------------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------- SPECIALTY Evergreen VA Omega: seeks long-term Evergreen capital growth. The Portfolio Investment invests primarily, and under normal Management conditions substantially all of its Company, LLC assets, in common stocks of U.S. companies across any market capitalizations. The Portfolio's manager employs a growth style of equity management that seeks to emphasizes companies with cash flow growth, sustainable competitive advantages, returns on invested capital above their cost of capital and the ability to manage for profitable growth that can create long-term value for shareholders. ------------------------------------------------------------------------- FIRST DEFINED PORTFOLIO FUND, LLC ------------------------------------------------------------------------- SPECIALTY First Trust Target Focus Four First Trust Advisors Portfolio (formerly, First Trust 10 L.P. Uncommon Values Portfolio): seeks to provide above-average capital appreciation. The Portfolio seeks to achieve its objective by investing in the common stocks of companies which are selected by applying four separate uniquely specialized strategies. (the "Focus Four Strategy"). The Focus Four Strategy adheres to a disciplined investment process that targets the following four strategies: The Dow(R) Target Dividend Strategy, Value Line(R) Target 25 Strategy, S&P Target SMid 60 Strategy, and NYSE(R) International Target 25 Strategy. ------------------------------------------------------------------------- SPECIALTY Global Dividend Target 15 Portfolio: First Trust Advisors seeks to provide above-average total L.P. return. The Portfolio seeks to achieve its objective by investing in common stocks issued by companies that are expected to provide income and to have the potential for capital appreciation. The Portfolio invests primarily in the common stocks of the companies which are components of the Dow Jones Industrial Average/sm/ ("DJIA/sm/"), the Financial Times Industrial Ordinary Share Index ("FT Index") and the Hang Seng Index. The Portfolio primarily consists of common stocks of the five companies with the lowest per share stock prices of the ten companies in each of the DJIA/sm/, FT Index and Hang Seng Index, respectively, that have the highest dividend yields in the respective index on or about the applicable stock selection date. Each security is initially equally weighted in the portfolio. ------------------------------------------------------------------------- SPECIALTY NASDAQ(R) Target 15 Portfolio: seeks First Trust Advisors to provide above-average total L.P. return. Beginning with the stocks in the NASDAQ-100 Index(R) on or about the applicable stock selection date, the Portfolio selects fifteen stocks based on a multi-factor model. A modified market capitalization approach is used to weight each security in the portfolio. ------------------------------------------------------------------------- SPECIALTY S&P(R) Target 24 Portfolio: seeks to First Trust Advisors provide above-average total return. L.P. Beginning with the stocks in the Standard & Poor's 500 Index ("S&P 500 Index"), on or about the applicable stock selection date, the Portfolio selects three stocks from each of the eight largest economic sectors of the S&P 500 Index. The twenty four stocks are selected based on a multi-factor model and a modified market capitalization approach is used to weight each security in the portfolio. ------------------------------------------------------------------------- SPECIALTY Target Managed VIP Portfolio: seeks First Trust Advisors to provide above-average total L.P. return. The Portfolio seeks to achieve its objective by investing in common stocks of the companies that are identified based on six uniquely specialized strategies - The Dow(R) DART 5, the European Target 20, the NASDAQ(R) Target 15, the S&P(R) Target 24, the Target Small-Cap and the Value Line(R) Target 25. Each strategy employs a quantitative approach by screening common stocks for certain attributes and/or using a multi-factor scoring system to select the common stocks. ------------------------------------------------------------------------- SPECIALTY The Dow(R) Target Dividend First Trust Advisors Portfolio: seeks to provide L.P. above-average total return. The Portfolio seeks to achieve its objective by investing in common stocks issued by companies that are expected to provide income and to have the potential for capital appreciation. Beginning with the stocks in The Dow Jones Select Dividend Index/sm/, on or about the applicable stock selection date, the Portfolio selects twenty common stocks based on a multi-factor model. Each security is initially equally weighted in the portfolio. ------------------------------------------------------------------------- SPECIALTY The Dow(R) DART 10 Portfolio: seeks First Trust Advisors to provide above-average total L.P. return. The Portfolio seeks to achieve its objective by investing in common stocks issued by companies that are expected to provide income and to have the potential for capital appreciation. The Portfolio invests primarily in the common stocks of the ten companies in the DJIA that have the highest combined dividend yields and buyback ratios on or about the applicable stock selection date. Each security is initially equally weighted in the portfolio. ------------------------------------------------------------------------- 27 -------------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR -------------------------------------------------------------------------- SPECIALTY Value Line(R) Target 25 Portfolio: First Trust Advisors seeks to provide above-average L.P. capital appreciation. The Portfolio seeks to achieve its objective by investing in 25 of the 100 common stocks that Value Line(R) gives a #1 ranking for Timelines/tm/ which have recently exhibited certain positive financial attributes. Value Line(R) ranks approximately 1,700 stocks of which 100 are given their #1 ranking for Timeliness(TM) which measures Value Line's view of their probable price performance during the next six to 12 months relative to the others. Beginning with the 100 stocks that Value Line(R) ranks #1 for Timeliness(TM), on or about the applicable stock selection date, the Portfolio selects twenty five stocks based on a multi-factor model. A modified market capitalization approach is used to weight each security in the portfolio. -------------------------------------------------------------------------- FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST -------------------------------------------------------------------------- MODERATE Franklin Templeton Founding Funds Franklin Templeton ALLOCA Allocation Fund: Seeks capital Services, LLC TION appreciation, with income as a secondary goal. The Fund normally invests equal portions in Class 1 shares of Franklin Income Securities Fund; Mutual Shares Securities Fund; and Templeton Growth Securities Fund. -------------------------------------------------------------------------- NATIONWIDE VARIABLE INSURANCE TRUST -------------------------------------------------------------------------- INTERNA Gartmore NVIT Developing Markets NWD Management TIONAL Fund: seeks long-term capital & Research Trust/ EQUITY appreciation, under normal Gartmore Global conditions by investing at least 80% Partners of the value of its net assets in equity securities of companies of any size based in the world's developing market countries. Under normal market conditions, investments are maintained in at least six countries at all times with no more than 35% of the value of its net assets invested in securities of any one country. -------------------------------------------------------------------------- PROFUND VP -------------------------------------------------------------------------- Each ProFund VP portfolio described below pursues an investment strategy that seeks to provide daily investment results, before fees and expenses, that match a widely followed index, increased by a specified factor relative to the index, or that match the inverse of the index or the inverse of the index multiplied by a specified factor. The investment strategy of some of the portfolios may magnify (both positively and negatively) the daily investment results of the applicable index. It is recommended that only those Annuity Owners who engage a financial advisor to allocate their account value using a strategic or tactical asset allocation strategy invest in these portfolios. The Portfolios are arranged based on the index on which its investment strategy is based. -------------------------------------------------------------------------- SPECIALTY ProFund VP Bull: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the S&P 500(R) Index. -------------------------------------------------------------------------- SPECIALTY ProFund VP Bear: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the inverse (opposite) of the daily performance of the S&P 500(R) Index. If ProFund VP Bear is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the S&P 500(R) Index when the Index declines on a given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day. -------------------------------------------------------------------------- SPECIALTY ProFund VP UltraBull: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to twice (200%) the daily performance of the S&P 500(R) Index. If ProFund VP UltraBull is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the S&P 500(R) Index when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day. -------------------------------------------------------------------------- The S&P 500(R) Index is a measure of large-cap U.S. stock market performance. It is a float-adjusted market capitalization weighted index of 500 U.S. operating companies and REITS selected by an S&P U.S. Index Committee through a non- mechanical process that factors criteria such as liquidity, price, market capitalization and financial viability. Reconstitution occurs both on a quarterly and ongoing basis. -------------------------------------------------------------------------- 28 ------------------------------------------------------------------------ STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------ SPECIALTY ProFund VP NASDAQ-100 (formerly ProFund Advisors known as ProFund VP OTC): seeks LLC daily investment results, before fees and expenses, that correspond to the daily performance of the NASDAQ-100 Index(R). ------------------------------------------------------------------------ SPECIALTY ProFund VP Short NASDAQ-100 ProFund Advisors (formerly known as ProFund VP Short LLC OTC): seeks daily investment results, before fees and expenses, that correspond to the inverse (opposite) of the daily performance of the NASDAQ-100 Index(R). If ProFund VP Short OTC is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the NASDAQ-100 Index(R) when the Index declines on a given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day. ------------------------------------------------------------------------ SPECIALTY ProFund VP UltraNASDAQ-100 (formerly ProFund Advisors known as ProFund VP UltraOTC): seeks LLC daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the NASDAQ-100 Index(R). If ProFund VP UltraOTC is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the NASDAQ-100 Index(R) when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day. ------------------------------------------------------------------------ The NASDAQ-100 Index(R) includes 100 of the largest non-financial domestic and international issues listed on the NASDAQ Stock Market. To be eligible for inclusion companies cannot be in bankruptcy proceedings and must meet certain additional criteria including minimum trading volume and "seasoning" requirements. The Index is calculated under a modified capitalization-weighted methodology. Reconstitution and rebalancing occurs on an annual, quarterly and ongoing basis. ------------------------------------------------------------------------ SPECIALTY ProFund VP UltraSmall-Cap: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to twice (200%) the daily performance of the Russell 2000(R) Index. If ProFund VP UltraSmall-Cap is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the Russell 2000 Index(R) when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day. ------------------------------------------------------------------------ SPECIALTY ProFund VP Short Small-Cap: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the inverse (opposite) of the daily performance of the Russell 2000(R) Index. If ProFund VP Short Small-Cap is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the Russell 2000 Index when the Index declines on a given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day. ------------------------------------------------------------------------ The Russell 2000 Index is a measure of small-cap U.S. stock market performance. It is an adjusted market capitalization weighted index containing approximately 2000 of the smallest companies in the Russell 3000 Index or approximately 8% of the total market capitalization of the Russell 3000 Index, which in turn represents approximately 98% of the investable U.S. equity market. All U.S. companies listed on the NYSE, AMEX or NASDAQ meeting an initial minimum ($1) price are considered for inclusion. Reconstitution occurs annually. Securities are not replaced if they leave the index, however, new issue securities meeting other membership requirements may be added on a quarterly basis. ------------------------------------------------------------------------ SPECIALTY ProFund VP UltraMid-Cap: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to twice (200%) the daily performance of the S&P MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in meeting its objective, its net asset value should gain approximately twice as much, on a percentage basis, as the S&P MidCap 400 Index when the Index rises on a given day. Conversely, its net asset value should lose approximately twice as much, on a percentage basis, as the Index when the Index declines on a given day. ------------------------------------------------------------------------ 29 ------------------------------------------------------------------------ STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------ SPECIALTY ProFund VP Short Mid-Cap: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the inverse (opposite) of the daily performance of the S&P MidCap 400 Index(R). If ProFund VP Short Mid-Cap is successful in meeting its objective, its net asset value should gain approximately the same amount, on a percentage basis, as any decrease in the S&P MidCap 400 Index when the Index declines on a given day. Conversely, its net asset value should lose approximately the same amount, on a percentage basis, as any increase in the Index when the Index rises on a given day. ------------------------------------------------------------------------ The S&P MidCap 400 Index is a measure of mid-size company U.S. stock market performance. It is a float-adjusted market capitalization weighted index of 400 U.S. operating companies and REITs. Securities are selected for inclusion in the index by the S&P U.S. Index Committee through a non-mechanical process that factors criteria such as liquidity, price, market capitalization and financial viability. Reconstitution occurs both on a quarterly and ongoing basis. ------------------------------------------------------------------------ SMALL ProFund VP Small-Cap Value: seeks ProFund Advisors CAP daily investment results, before LLC VALUE fees and expenses, that correspond to the daily performance of the S&P SmallCap 600/Citigroup Value Index(R). The S&P SmallCap 600/Citigroup Value Index is designed to provide a comprehensive measure of small-cap U.S. equity "value" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P SmallCap 600 Index that have been identified as being on the value end of the growth-value spectrum. (Note: The S&P SmallCap 600 Index is a measure of small-cap company U.S. stock market performance. It is a float adjusted market capitalization weighted index of 600 U.S. operating companies. Securities are selected for inclusion in the index by an S&P committee through a nonmechanical process that factors criteria such as liquidity, price, market capitalization, financial viability, and public float.) ------------------------------------------------------------------------ SMALL ProFund VP Small-Cap Growth: seeks ProFund Advisors CAP daily investment results, before LLC GROWTH fees and expenses, that correspond to the daily performance of the S&P SmallCap 600/Citigroup Growth Index(R). The S&P SmallCap 600/Citigroup Growth Index is designed to provide a comprehensive measure of small-cap U.S. equity "growth" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P SmallCap 600 Index that have been identified as being on the growth end of the growth-value spectrum. (Note: The S&P SmallCap 600 Index is a measure of small-cap company U.S. stock market performance. It is a float adjusted market capitalization weighted index of 600 U.S. operating companies. Securities are selected for inclusion in the index by an S&P committee through a nonmechanical process that factors criteria such as liquidity, price, market capitalization, financial viability, and public float.) ------------------------------------------------------------------------ The S&P SmallCap 600 Index is a measure of small-cap company U.S. stock market performance. It is a float adjusted market capitalization weighted index of 600 U.S. operating companies. Securities are selected for inclusion in the index by an S&P committee through a nonmechanical process that factors criteria such as liquidity, price, market capitalization, financial viability, and public float. ------------------------------------------------------------------------ LARGE ProFund VP Large-Cap Value: seeks ProFund Advisors CAP daily investment results, before LLC VALUE fees and expenses, that correspond to the daily performance of the S&P 500/Citigroup Value Index(R). The S&P 500/Citigroup Value Index is designed to provide a comprehensive measure of large-cap U.S. equity "value" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P 500 Index that have been identified as being on the value end of the growth value spectrum. ------------------------------------------------------------------------ LARGE ProFund VP Large-Cap Growth: seeks ProFund Advisors CAP daily investment results, before LLC GROWTH fees and expenses, that correspond to the daily performance of the S&P 500/Citigroup Growth Index(R). The S&P 500/Citigroup Growth Index is designed to provide a comprehensive measure of large-cap U.S. equity "growth" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P 500 Index that have been identified as being on the growth end of the growth-value spectrum. ------------------------------------------------------------------------ The S&P 500/Citigroup Growth Index is designed to provide a comprehensive measure of large-cap U.S. equity "growth" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P 500 Index that have been identified as being on the growth end of the growth-value spectrum. ------------------------------------------------------------------------ 30 ------------------------------------------------------------------------ STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------------ MID CAP ProFund VP Mid-Cap Value: seeks ProFund Advisors VALUE daily investment results, before LLC fees and expenses, that correspond to the daily performance of the S&P MidCap 400/Citigroup Value Index(R). The S&P MidCap 400/Citigroup Value Index is designed to provide a comprehensive measure of mid-cap U.S. equity "value" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P MidCap 400 Index that have been identified as being on the value end of the growth-value spectrum. ------------------------------------------------------------------------ MID CAP ProFund VP Mid-Cap Growth: seeks ProFund Advisors GROWTH daily investment results, before LLC fees and expenses, that correspond to the daily performance of the S&P MidCap 400/Citigroup Growth Index(R). The S&P MidCap 400/Citigroup Growth Index is designed to provide a comprehensive measure of mid-cap U.S. equity "growth" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P MidCap 400 Index that have been identified as being on the growth end of the growth-value spectrum. ------------------------------------------------------------------------ The S&P MidCap 400/Citigroup Value Index is designed to provide a comprehensive measure of mid-cap U.S. equity "value" performance. It is an unmanaged float adjusted market capitalization weighted index comprised of stocks representing approximately half the market capitalization of the S&P MidCap 400 Index that have been identified as being on the value end of the growth-value spectrum. ------------------------------------------------------------------------ SPECIALTY ProFund VP Asia 30: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the ProFunds Asia 30 Index. The ProFunds Asia 30 Index, created by ProFund Advisors, is composed of 30 companies whose principal offices are located in the Asia/Pacific region, excluding Japan, and whose securities are traded on U.S. exchanges or on the NASDAQ as depository receipts or ordinary shares. The component companies in the ProFunds Asia 30 Index are determined annually based upon their U.S. dollar-traded volume. Their relative weights are determined based on the modified market capitalization method. ------------------------------------------------------------------------ SPECIALTY ProFund VP Europe 30: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the ProFunds Europe 30 Index. The ProFunds Europe 30 Index, created by ProFund Advisors, is composed of companies whose principal offices are located in Europe and whose securities are traded on U.S. exchanges or on the NASDAQ as depositary receipts or ordinary shares. The component companies in the ProFunds Europe 30 Index are determined annually based upon their U.S. dollar- traded volume. Their relative weights are determined based on a modified market capitalization method. ------------------------------------------------------------------------ SPECIALTY ProFund VP Japan: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Nikkei 225 Stock Average. The Fund determines its success in meeting this investment objective by comparing its daily return on a given day with the daily performance of the dollar-denominated Nikkei 225 futures contracts traded in the United States. The Fund seeks to provide a return consistent with an investment in the component equities in the Nikkei 225 Stock Average hedged to U.S. dollars. ------------------------------------------------------------------------ The Nikkei 225 Stock Average ("Nikkei" ) is a modified price-weighted index of the 225 most actively traded and liquid Japanese companies listed in the First Section of the Tokyo Stock Exchange (TSE). The Nikkei is calculated from the prices of the 225 TSE First Section stocks selected to represent a broad cross-section of Japanese industries and the overall performance of the Japanese equity market. Nihon Keizai Shimbun, Inc. is the sponsor of the Index. Companies in the Nikkei are reviewed annually. Emphasis is placed on maintaining the Index's historical continuity while keeping the Index composed of stocks with high market liquidity. The sponsor consults with various market experts, considers company specific information and the overall composition of the Index. ------------------------------------------------------------------------ SPECIALTY ProFund VP Banks: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Banks Index. The Dow Jones U.S. Banks Index measures the performance of the banking sector of the U.S. equity market. Component companies include regional and major U.S. domiciled banks engaged in a wide range of financial services, including retail banking, loans and money transmissions. ------------------------------------------------------------------------ 31 --------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR --------------------------------------------------------------------- SPECIALTY ProFund VP Basic Materials: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Basic Materials Index. The Dow Jones U.S. Basic Materials Index measures the performance of the basic materials industry of the U.S. equity market. Component companies are involved in the production of aluminum, steel, non ferrous metals, commodity chemicals, specialty chemicals, forest products, paper products, as well as the mining of precious metals and coal. --------------------------------------------------------------------- SPECIALTY ProFund VP Biotechnology: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Biotechnology Index. The Dow Jones U.S. Biotechnology Index measures the performance of the biotechnology subsector of the U.S. equity market. Component companies engage in research and development of biological substances for drug discovery and diagnostic development. These companies derive most of their revenue from the sale of licensing of drugs and diagnostic tools. --------------------------------------------------------------------- SPECIALTY ProFund VP Consumer Goods: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Consumer Goods Index. The Dow Jones U.S. Consumer Goods Index measures the performance of consumer spending in the goods industry of the U.S. equity market. Component companies include automobiles and auto parts and tires, brewers and distillers, farming and fishing, durable and non-durable household product manufacturers, cosmetic companies, food and tobacco products, clothing, accessories and footwear. --------------------------------------------------------------------- SPECIALTY ProFund VP Consumer Services: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Consumer Services Index. The Dow Jones U.S. Consumer Services Index measures the performance of consumer spending in the services industry of the U.S. equity market. Component companies include airlines, broadcasting and entertainment, apparel and broadline retailers, food and drug retailers, media agencies, publishing, gambling, hotels, restaurants and bars, and travel and tourism. --------------------------------------------------------------------- SPECIALTY ProFund VP Financials: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Financials Index. The Dow Jones U.S. Financials Index measures the performance of the financial services industry of the U.S. equity market. Component companies include regional banks; major U.S. domiciled international banks; full line, life, and property and casualty insurance companies; companies that invest, directly or indirectly in real estate; diversified financial companies such as Fannie Mae, credit card issuers, check cashing companies, mortgage lenders and investment advisers; securities brokers and dealers, including investment banks, merchant banks and online brokers; and publicly traded stock exchanges. --------------------------------------------------------------------- SPECIALTY ProFund VP Health Care: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Health Care Index. The Dow Jones U.S. Health Care Index measures the performance of the healthcare industry of the U.S. equity market. Component companies include health care providers, biotechnology companies, medical supplies, advanced medical devices and pharmaceuticals. --------------------------------------------------------------------- SPECIALTY ProFund VP Industrials: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Industrials Index. The Dow Jones U.S. Industrials Index measures the performance of the industrial industry of the U.S. equity market. Component companies include building materials, heavy construction, factory equipment, heavy machinery, industrial services, pollution control, containers and packaging, industrial diversified, air freight, marine transportation, railroads, trucking, land-transportation equipment, shipbuilding, transportation services, advanced industrial equipment, electric components and equipment, and aerospace. --------------------------------------------------------------------- 32 ---------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ---------------------------------------------------------------------- SPECIALTY ProFund VP Internet: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones Composite Internet Index. The Dow Jones Composite Internet Index measures the performance of stocks in the U.S. equity markets that generate the majority of their revenues from the Internet. The Index is composed of two sub-groups: Internet Commerce - companies that derive the majority of their revenues from providing goods and/or services through an open network, such as a web site. Internet Services - companies that derive the majority of their revenues from providing access to the Internet or providing services to people using the Internet. ---------------------------------------------------------------------- SPECIALTY ProFund VP Oil & Gas: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Oil & Gas Index. The Dow Jones U.S. Oil & Gas Index measures the performance of the oil and gas industry of the U.S. equity market. Component companies include oil drilling equipment and services, oil companies-major, oil companies-secondary, pipelines, liquid, solid or gaseous fossil fuel producers and service companies. ---------------------------------------------------------------------- SPECIALTY ProFund VP Pharmaceuticals: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals Index measures the performance of the pharmaceuticals subsector of the U.S. equity market. Component companies include the makers of prescription and over-the-counter drugs such as birth control pills, vaccines, aspirin and cold remedies. ---------------------------------------------------------------------- SPECIALTY ProFund VP Precious Metals: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones Precious Metals Index. The Dow Jones Precious Metals Index measures the performance of the precious metals mining industry. Component companies include leading miners and producers of gold, silver and platinum-group metals whose securities are available to U.S. investors during U.S. trading hours. It is a float-adjusted market-capitalization weighted index. ---------------------------------------------------------------------- SPECIALTY ProFund VP Real Estate: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Real Estate Index. The Dow Jones U.S. Real Estate Index measures the performance of the real estate sector of the U.S. equity market. Component companies include those that invest directly or indirectly through development, management or ownership of shopping malls, apartment buildings and housing developments; and real estate investment trusts ("REITs") that invest in apartments, office and retail properties. REITs are passive investment vehicles that invest primarily in income-producing real estate or real estate related loans or interests. ---------------------------------------------------------------------- SPECIALTY ProFund VP Semiconductor: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Semiconductosr Index. The Dow Jones U.S. Semiconductors Index measures the performance of the semiconductor subsector of the U.S. equity market. Component companies are engaged in the production of semiconductors and other integrated chips, as well as other related products such as semiconductor capital equipment and mother-boards. ---------------------------------------------------------------------- SPECIALTY ProFund VP Technology: seeks daily ProFund Advisors investment results, before fees and LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Technology Index. The Dow Jones U.S. Technology Index measures the performance of the technology industry of the U.S. equity market. Component companies include those involved in computers and office equipment, software, communications technology, semiconductors, diversified technology services and Internet services. ---------------------------------------------------------------------- SPECIALTY ProFund VP Telecommunications: seeks ProFund Advisors daily investment results, before LLC fees and expenses, that correspond to the daily performance of the Dow Jones U.S. Telecommunications Index. The Dow Jones U.S. Telecommunications Index measures the performance of the telecommunications industry of the U.S. equity market. Component companies include fixed-line communications and wireless communications companies. ---------------------------------------------------------------------- 33 ---------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ---------------------------------------------------------------------- SPECIALTY ProFund VP Utilities: seeks daily ProFund investment results, before fees and Advisors LLC expenses, that correspond to the daily performance of the Dow Jones U.S. Utilities Sector Index. The Dow Jones U.S. Utilities Sector Index measures the performance of the utilities industry of the U.S. equity market. Component companies include electric utilities, gas utilities and water utilities. ---------------------------------------------------------------------- SPECIALTY ProFund VP U.S. Government Plus: ProFund seeks daily investment results, Advisors LLC before fees and expenses, that correspond to one and one-quarter times (125%) the daily price movement of the most recently issued 30-year U.S. Treasury bond ("Long Bond"). In accordance with its stated objective, the net asset value of ProFund VP U.S. Government Plus generally should decrease as interest rates rise. If ProFund VP U.S. Government Plus is successful in meeting its objective, its net asset value should gain approximately one and one-quarter times (125%) as much, on a percentage basis, as any daily increase in the price of the Long Bond on a given day. Conversely, it value should lose approximately one and one-quarter as much, on a percentage basis, as any daily decrease in the price of the Long Bond on a given day. ---------------------------------------------------------------------- SPECIALTY ProFund VP Rising Rates Opportunity: ProFund Advisors seeks daily investment results, LLC before fees and expenses, that correspond to one and one-quarter times (125%) the inverse (opposite) of the daily price movement of the most recently issued 30-year U.S. Treasury bond ("Long Bond"). In accordance with its stated objective, the net asset value of ProFund VP Rising Rates Opportunity generally should decrease as interest rates fall. If ProFund VP Rising Rates Opportunity is successful in meeting its objective, its net asset value should gain approximately one and one-quarter times as much, on a percentage basis, as any daily decrease in the Long Bond on a given day. Conversely, its net asset value should lose approximately one and one-quarter times as much, on a percentage basis, as any daily increase in the price of the Long Bond on a given day. ---------------------------------------------------------------------- SPECIALTY Access VP High Yield Fund: seeks to ProFund Advisors provide investment results that LLC correspond generally to the total return of the high yield market consistent with maintaining reasonable liquidity. The Fund will achieve its high yield exposure primarily through credit default swaps (CDSs) but may invest in high yield debt instruments ("junk bonds"), interest rate swap agreements and futures contracts, and other debt and money market instruments without limitation, consistent with applicable regulations. Under normal market conditions, the Fund will invest at least 80% of its net assets in CDSs and other financial instruments that in combination have economic characteristics similar to the high yield debt market and/or in high yield debt securities. The Fund seeks to maintain exposure to the high yield bond markets regardless of market conditions and without taking defensive positions in cash or other instruments in anticipation of an adverse climate for the high yield bond markets. ProFund Advisors does not conduct fundamental analysis in managing the Fund. ---------------------------------------------------------------------- WELLS FARGO VARIABLE TRUST ---------------------------------------------------------------------- LARGE Wells Fargo Advantage VT Equity Wells Fargo Funds CAP Income Fund: Seeks long-term capital Management, LLC, VALUE appreciation and dividend income. adviser; The Portfolio invests principally in Wells Capital equity securities of large- Management capitalization companies, which they Incorporated, define as companies with market subadviser capitalizations of $3 billion or more. ---------------------------------------------------------------------- 34 "Dow Jones Industrial Average/SM/", "DJIA/SM/", "Dow Industrials/SM/", "The Dow/SM/", and the other Dow indices, are service marks of Dow Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain purposes by First Trust Advisors L.P. ("First Trust"). The portfolios are not endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in such products. "Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by First Trust. The Portfolios are not sponsored, endorsed, managed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the Portfolio. "The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and "Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc. (which with its affiliates are the "Corporations") and have been licensed for use by First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio have not been passed on by the Corporations as to its legality or suitability. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued, endorsed, sponsored, managed, sold or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the Nasdaq Target 15 Portfolio or the Target Managed VIP Portfolio. "Value Line(R)," "The Value Line Investment Survey," and "Value Line Timeliness/TM/ Ranking System" are registered trademarks of Value Line Securities, Inc. or Value Line Publishing, Inc. The Target Managed VIP(R) Portfolio and Value Line Target 25 Portfolio are not sponsored, recommended, sold or promoted by Value Line Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value Line"). Value Line makes no representation regarding the advisability of investing in the Portfolio. "Value Line Publishing, Inc.'s ("VLPI") only relationship to First Trust Advisors L.P. or the Portfolio is VLPI's licensing to First Trust Advisors L.P. of certain VLPI trademarks and trade names and the Value Line Timeliness Ranking System (the "System"), which is composed by VLPI without regard to First Trust Advisors L.P., the Portfolio or any investor. First Trust Advisors, L.P. has sub-licensed certain VLPI trademarks and trade names to Prudential Investments LLC. VLPI has no obligation to take the needs of First Trust Advisors L.P., Prudential Investments LLC or any investor in the Portfolio into consideration in composing the System. The Portfolio's results may differ from the hypothetical or published results of the Value Line Timeliness Ranking System. VLPI is not responsible for, and has not participated in, the determination of the prices and composition of the Portfolio or the timing of the issuance for sale of the Portfolio or in the calculation of the equations by which the Portfolio is to be converted into cash. VLPI MAKES NO WARRANTY CONCERNING THE SYSTEM, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES ARISING FROM USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE, AND VLPI MAKES NO WARRANTY AS TO THE POTENTIAL PROFITS OR ANY OTHER BENEFITS THAT MAY BE ACHIEVED BY USING THE SYSTEM OR ANY INFORMATION OR MATERIALS GENERATED THEREFROM. VLPI DOES NOT WARRANT THAT THE SYSTEM WILL MEET ANY REQUIREMENTS OR THAT IT WILL BE ACCURATE OR ERROR-FREE. VLPI ALSO DOES NOT GUARANTEE ANY USES, INFORMATION, DATA OR OTHER RESULTS GENERATED FROM THE SYSTEM. VLPI HAS NO OBLIGATION OR LIABILITY (I) IN CONNNECTION WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE PORTFOLIO; OR (II) FOR ANY LOSS, DAMAGE, COST OR EXPENSE SUFFERED OR INCURRED BY ANY INVESTOR OR OTHER PERSON OR ENTITY IN CONNNECTION WITH THE PORTFOLIO, AND IN NO EVENT SHALL VLPI BE LIABLE FOR ANY LOST PROFITS OR OTHER CONSEQUENTIAL, SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR EXEMPLARY DAMAGES IN CONNECTION WITH THE PORTFOLIO." Dow Jones has no relationship to the ProFunds VP, other than the licensing of the Dow Jones sector indices and its service marks for use in connection with the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes any representations regarding the advisability of investing in the ProFunds VP. WHAT ARE THE FIXED ALLOCATIONS? We offer Fixed Allocations of different durations during the accumulation period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a specified period of time, called the "Guarantee Period." In most states, we offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also offer special purpose Fixed Allocations for use with certain optional investment programs. We guarantee the fixed rate for the entire Guarantee Period. However, if you withdraw or transfer Account Value before the end of the Guarantee Period, we will adjust the value of your withdrawal or transfer based on a formula, called a "Market Value Adjustment." The Market Value Adjustment can either be positive or negative, depending on the movement of applicable interest rates payable on Strips of the appropriate duration. Please refer to the section entitled "How does the Market Value Adjustment Work?" for a description of the formula along with examples of how it is calculated. You may allocate Account Value to more than one Fixed Allocation at a time. Fixed Allocations may not be available in all states. Availability of Fixed Allocations is subject to change and may differ by state and by the annuity product you purchase. Please call Prudential Annuities at 1-800-752-6342 to determine availability of Fixed Allocations in your state and for your annuity product. We may restrict your ability to allocate Account Value to Fixed Allocations if you elect certain optional benefits. The interest rate that we credit to the Fixed Allocations may be reduced by an amount that corresponds to the asset-based charges assessed against the Sub-accounts. 35 FEES AND CHARGES The charges under each Annuity are designed to cover, in the aggregate, our direct and indirect costs of selling, administering and providing benefits under each Annuity. They are also designed, in the aggregate, to compensate us for the risks of loss we assume. If, as we expect, the charges that we collect from the Annuities exceed our total costs in connection with the Annuities, we will earn a profit. Otherwise we will incur a loss. For example, Prudential Annuities may make a profit on the Insurance Charge if, over time, the actual costs of providing the guaranteed insurance obligations under an Annuity are less than the amount we deduct for the Insurance Charge. To the extent we make a profit on the Insurance Charge, such profit may be used for any other corporate purpose, including payment of other expenses that Prudential Annuities incurs in promoting, distributing, issuing and administering an Annuity and, in the case of XT6, ASAP III and APEX II to offset a portion of the costs associated with offering any Credits which are funded through Prudential Annuities' general account. The rates of certain of our charges have been set with reference to estimates of the amount of specific types of expenses or risks that we will incur. In most cases, this prospectus identifies such expenses or risks in the name of the charge; however, the fact that any charge bears the name of, or is designed primarily to defray a particular expense or risk does not mean that the amount we collect from that charge will never be more than the amount of such expense or risk, nor does it mean that we may not also be compensated for such expense or risk out of any other charges we are permitted to deduct by the terms of the Annuity. A portion of the proceeds that Prudential Annuities receives from charges that apply to the Sub-accounts may include amounts based on market appreciation of the Sub-account values including, for ASAP III, XT6 and APEX II, appreciation on amounts that represent any Credits. WHAT ARE THE CONTRACT FEES AND CHARGES? Contingent Deferred Sales Charge: We do not deduct a sales charge from Purchase Payments you make to your Annuity. However, we may deduct a CDSC if you surrender your Annuity or when you make a partial withdrawal. The CDSC reimburses us for expenses related to sales and distribution of the Annuity, including commissions, marketing materials and other promotional expenses. The CDSC is calculated as a percentage of your Purchase Payment being surrendered or withdrawn during the applicable Annuity Year. For purposes of calculating the CDSC, we consider the year following the Issue Date of your Annuity as Year 1. The amount of the CDSC decreases over time, measured from the Issue Date of the Annuity. The CDSC percentages for ASAP III, APEX II and XT6 are shown under "Summary of Contract Fees and Charges". No CDSC is deducted from ASL II Annuities. If you purchase XT6 and make a withdrawal that is subject to a CDSC, we may use part of that CDSC to recoup our costs of providing the Credit. However, we do not impose any CDSC on your withdrawal of a Credit amount. With respect to a partial withdrawal, we calculate the CDSC by assuming that any available free withdrawal amount is taken out first (see How Much Can I Withdraw as a Free Withdrawal?). If the free withdrawal amount is not sufficient, we then assume that withdrawals are taken from Purchase Payments that have not been previously withdrawn, on a first-in, first-out basis, and subsequently from any other Account Value in the Annuity. For purposes of calculating any applicable CDSC on a surrender, the Purchase Payments being withdrawn may be greater than your remaining Account Value or the amount of your withdrawal request. This is most likely to occur if you have made prior partial withdrawals or if your Account Value has declined in value due to negative market performance. In that scenario, we would determine the CDSC amount as the applicable percentage of the Purchase Payments being withdrawn, rather than as a percentage of the remaining Account Value or withdrawal request. Thus, the CDSC would be greater than if it were calculated as a percentage of remaining Account Value or withdrawal amount. We may waive any applicable CDSC under certain circumstances including certain medically-related circumstances or when taking a Minimum Distribution from an Annuity purchased as a "qualified" investment. Free Withdrawals, Medically-Related Surrenders and Minimum Distributions are each explained more fully in the section entitled "Access to Your Account Value". Transfer Fee: Currently, you may make twenty (20) free transfers between investment options each Annuity Year. We will charge $10.00 for each transfer after the twentieth in each Annuity Year. We do not consider transfers made as part of a Dollar Cost Averaging, Automatic Rebalancing or asset allocation program when we count the twenty free transfers. All transfers made on the same day will be treated as one (1) transfer. Renewals or transfers of Account Value from a Fixed Allocation at the end of its Guarantee Period are not subject to the Transfer Fee and are not counted toward the twenty free transfers. We may reduce the number of free transfers allowable each Annuity Year (subject to a minimum of eight) without charging a Transfer Fee unless you make use of electronic means to transmit your transfer requests. We may eliminate the Transfer Fee for transfer requests transmitted electronically or through other means that reduce our processing costs. If you are enrolled in any program that does not permit transfer requests to be transmitted electronically, the Transfer Fee will not be waived. Annual Maintenance Fee: During the accumulation period we deduct an Annual Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account Value invested in the Sub-accounts, whichever is less. This fee will be deducted annually on the anniversary of the Issue Date of your Annuity or, if you surrender your Annuity during the Annuity Year, the fee is deducted at the 36 time of surrender. With respect to ASAP III, APEX II and ASL II, currently, the Annual Maintenance Fee is only deducted if your Account Value is less than $100,000 on the anniversary of the Issue Date or at the time of surrender. With respect to XT6, we deduct the Annual Maintenance Fee regardless of Account Value. We do not impose the Annual Maintenance Fee upon annuitization, the payment of a Death Benefit, or a medically-related full surrender. We may increase the Annual Maintenance Fee. However, any increase will only apply to Annuities issued after the date of the increase. For beneficiaries that elect the Beneficiary Continuation Option, the Annual Maintenance Fee is the lesser of $30 or 2% of Account Value. For a non-qualified Beneficiary Continuation Option, the fee is only applicable if the Account Value is less than $25,000 at the time the fee is assessed. Tax Charge: Several states and some municipalities charge premium taxes or similar taxes on annuities that we are required to pay. The amount of tax will vary from jurisdiction to jurisdiction and is subject to change. The tax charge currently ranges up to 3 1/2% of your Purchase Payments and is designed to approximate the taxes that we are required to pay. We reserve the right to deduct the charge either at the time the tax is imposed, upon a full surrender of the Annuity, or upon annuitization. We may assess a charge against the Sub-accounts and the Fixed Allocations equal to any taxes which may be imposed upon the separate accounts. We will pay company income taxes on the taxable corporate earnings created by this separate account product. While we may consider company income taxes when pricing our products, we do not currently include such income taxes in the tax charges you pay under the Annuity. We will periodically review the issue of charging for these taxes and may impose a charge in the future. In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of company assets, including separate account assets, which are treated as company assets under applicable income tax law. These benefits reduce our overall corporate income tax liability. Under current law, such benefits may include foreign tax credits and corporate dividends received deductions. We do not pass these tax benefits through to holders of the separate account annuity contracts because (i) the contract owners are not the owners of the assets generating these benefits under applicable income tax law and (ii) we do not currently include company income taxes in the tax charges you pay under the contract. Insurance Charge: We deduct an Insurance Charge daily. The charge is assessed against the daily assets allocated to the Sub-accounts and is equal to the amount indicated under "Summary of Contract Fees and Charges". The Insurance Charge is the combination of the Mortality & Expense Risk Charge and the Administration Charge. The Insurance Charge is intended to compensate Prudential Annuities for providing the insurance benefits under each Annuity, including each Annuity's basic Death Benefit that provides guaranteed benefits to your beneficiaries even if the market declines and the risk that persons we guarantee annuity payments to will live longer than our assumptions. The charge also covers administrative costs associated with providing the Annuity benefits, including preparation of the contract and prospectus, confirmation statements, annual account statements and annual reports, legal and accounting fees as well as various related expenses. Finally, the charge covers the risk that our assumptions about the mortality risks and expenses under each Annuity are incorrect and that we have agreed not to increase these charges over time despite our actual costs. We may increase the portion of the total Insurance Charge that is deducted for administrative costs; however, any increase will only apply to Annuities issued after the date of the increase. The Insurance Charge is not deducted against assets allocated to a Fixed Allocation. However, the amount we credit to Fixed Allocations may also reflect similar assumptions about the insurance guarantees provided under each Annuity and the administrative costs associated with providing the Annuity benefits. Distribution Charge: For ASAP III and XT6, we deduct a Distribution Charge daily. The charge is assessed against the average assets allocated to the Sub-accounts and is equal to the amount indicated under "Summary of Contract Fees and Charges" on an annual basis. The Distribution Charge is intended to compensate us for a portion of our acquisition expenses under the Annuity, including promotion and distribution of the Annuity and, with respect to XT6, the costs associated with offering Credits which are funded through Prudential Annuities general account. The Distribution Charge is deducted against your Annuity's Account Value and any increases or decreases in your Account Value based on market fluctuations of the Sub-accounts will affect the charge. Optional Benefits for which we assess a charge: Generally, if you elect to purchase certain optional benefits, we will deduct an additional charge on a daily basis from your Account Value allocated to the Sub-accounts. The additional charge is included in the daily calculation of the Unit Price for each Sub-account. We may assess charges for other optional benefits on a different basis. Please refer to the section entitled "Summary of Contract Fees and Charges" for the list of charges for each Optional Benefit. Settlement Service Charge: If your beneficiary takes the death benefit under a Beneficiary Continuation Option, we deduct a Settlement Service Charge. The charge is assessed daily against the average assets allocated to the Sub-accounts and is equal to an annual charge of 1.00% for non-qualified Annuities and 1.40% for qualified Annuities. Fees and expenses incurred by the Portfolios: Each Portfolio incurs total annual operating expenses comprised of an investment management fee, other expenses and any distribution and service (12b-1) fees that may apply. These fees and expenses are reflected daily by each Portfolio before it provides Prudential Annuities with the net asset value as of the close of business each day. More detailed information about fees and expenses can be found in the prospectuses for the Portfolios. 37 WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS? No specific fees or expenses are deducted when determining the rate we credit to a Fixed Allocation. However, for some of the same reasons that we deduct the Insurance Charge against Account Value allocated to the Sub-accounts, we also take into consideration mortality, expense, administration, profit and other factors in determining the interest rates we credit to Fixed Allocations. Any CDSC or Tax Charge applies to amounts that are taken from the Sub-accounts or the Fixed Allocations. A Market Value Adjustment may also apply to transfers, certain withdrawals, surrender or annuitization from a Fixed Allocation. WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION? If you select a fixed payment option, the amount of each fixed payment will depend on the Account Value of your Annuity when you elected to annuitize. There is no specific charge deducted from these payments; however, the amount of each annuity payment reflects assumptions about our insurance expenses. If you select a variable payment option that we may offer, then the amount of your benefits will reflect changes in the value of your Annuity and will be subject to charges that apply under the variable immediate annuity option. Also, a tax charge may apply (see "Tax Charge" above). Currently, we only offer fixed payment options. EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES We may reduce or eliminate certain fees and charges or alter the manner in which the particular fee or charge is deducted. For example, we may reduce the amount of any CDSC or the length of time it applies, reduce or eliminate the amount of the Annual Maintenance Fee or reduce the portion of the total Insurance Charge that is deducted as an Administration Charge. Generally, these types of changes will be based on a reduction to our sales, maintenance or administrative expenses due to the nature of the individual or group purchasing the Annuity. Some of the factors we might consider in making such a decision are: (a) the size and type of group; (b) the number of Annuities purchased by an Owner; (c) the amount of Purchase Payments or likelihood of additional Purchase Payments; (d) whether an annuity is reinstated pursuant to our rules; and/or (e) other transactions where sales, maintenance or administrative expenses are likely to be reduced. We will not discriminate unfairly between Annuity purchasers if and when we reduce any fees and charges. 38 PURCHASING YOUR ANNUITY WHAT ARE OUR REQUIREMENTS FOR PURCHASING ONE OF THE ANNUITIES? Initial Purchase Payment: Unless we agree otherwise and subject to our rules, you must make a minimum initial Purchase Payment as follows: $1,000 for ASAP III, $10,000 for XT6 and APEX II and $15,000 for ASL II. However, if you decide to make payments under a systematic investment or an electronic funds transfer program, we may accept a lower initial Purchase Payment provided that, within the first Annuity Year, your subsequent Purchase Payments plus your initial Purchase Payment total the minimum initial Purchase Payment amount required for the Annuity purchased. Where allowed by law, we must approve any initial and additional Purchase Payments of $1,000,000 or more. We may apply certain limitations and/or restrictions on an Annuity as a condition of our acceptance, including limiting the liquidity features or the Death Benefit protection provided under an Annuity, limiting the right to make additional Purchase Payments, changing the number of transfers allowable under an Annuity or restricting the Sub-accounts or Fixed Allocations that are available. Other limitations and/or restrictions may apply. Applicable laws designed to counter terrorists and prevent money laundering might, in certain circumstances, require us to block a contract owner's ability to make certain transactions, and thereby refuse to accept Purchase Payments or requests for transfers, partial withdrawals, total withdrawals, death benefits, or income payments until instructions are received from the appropriate regulator. We also may be required to provide additional information about you and your Annuity to government regulators. Except as noted below, Purchase Payments must be submitted by check drawn on a U.S. bank, in U.S. dollars, and made payable to Prudential Annuities. Purchase Payments may also be submitted via 1035 exchange or direct transfer of funds. Under certain circumstances, Purchase Payments may be transmitted to Prudential Annuities via wiring funds through your Financial Professional's broker-dealer firm. Additional Purchase Payments may also be applied to your Annuity under an electronic funds transfer arrangement where you authorize us to deduct money directly from your bank account. We may reject any payment if it is received in an unacceptable form. Our acceptance of a check is subject to our ability to collect funds. Age Restrictions: Unless we agree otherwise and subject to our rules, the Owner (or Annuitant if entity owned) must not be older than a maximum issue age as of the Issue Date of the Annuity as follows: age 80 for ASAP III, age 75 for XT6 and age 85 for APEX II. For ASL II, there is no maximum issue age, however the basic death benefit provides greater protection for Owners under age 85. If an Annuity is owned jointly, the oldest of the Owners must not be older than the maximum issue age on the Issue Date. You should consider your need to access your Account Value and whether the Annuity's liquidity features will satisfy that need. If you take a distribution prior to age 59 1/2, you may be subject to a 10% penalty in addition to ordinary income taxes on any gain. The availability and level of protection of certain optional benefits may vary based on the age of the Owner on the Issue Date of the Annuity or the date of the Owner's death. Owner, Annuitant and Beneficiary Designations: We will ask you to name the Owner(s), Annuitant and one or more Beneficiaries for your Annuity. . Owner: The Owner(s) holds all rights under the Annuity. You may name up to two Owners in which case all ownership rights are held jointly. Generally, joint owners are required to act jointly; however, if each owner provides us with an instruction that we find acceptable, we will permit each owner to act separately. All information and documents that we are required to send you will be sent to the first named owner. This Annuity does not provide a right of survivorship. Refer to the Glossary of Terms for a complete description of the term "Owner." . Annuitant: The Annuitant is the person upon whose life we continue to make annuity payments. You must name an Annuitant who is a natural person. We do not accept a designation of joint Annuitants during the accumulation period. In limited circumstances and where allowed by law, you may name one or more Contingent Annuitants. Generally, a Contingent Annuitant will become the Annuitant if the Annuitant dies before the Annuity Date. Please refer to the discussion of "Considerations for Contingent Annuitants" in the Tax Considerations section of the Prospectus. . Beneficiary: The Beneficiary is the person(s) or entity you name to receive the Death Benefit. Your Beneficiary Designation should be the exact name of your beneficiary, not only a reference to the beneficiary's relationship to you. If you use a designation of "surviving spouse," we will pay the Death Benefit to the individual that is your spouse at the time of your death (as defined under the federal tax laws and regulations). If no beneficiary is named the Death Benefit will be paid to you or your estate. Your right to make certain designations may be limited if your Annuity is to be used as an IRA or other "qualified" investment that is given beneficial tax treatment under the Code. You should seek competent tax advice on the income, estate and gift tax implications of your designations. 39 MANAGING YOUR ANNUITY MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS? You may change the Owner, Annuitant and Beneficiary Designations by sending us a request in writing in a form acceptable to us. Upon an ownership change, any automated investment or withdrawal programs will be canceled. The new owner must submit the applicable program enrollment if they wish to participate in such a program. Where allowed by law, such changes will be subject to our acceptance. Some of the changes we will not accept include, but are not limited to: . a new Owner subsequent to the death of the Owner or the first of any joint Owners to die, except where a spouse Beneficiary has become the Owner as a result of an Owner's death; . a new Annuitant subsequent to the Annuity Date; . for "non-qualified" investments, a new Annuitant prior to the Annuity Date if the Annuity is owned by an entity; and . a change in Beneficiary if the Owner had previously made the designation irrevocable. There are also restrictions on designation changes when you have elected certain optional benefits. See the "Living Benefit Programs" and "Death Benefits" sections of this Prospectus for any such restrictions. Spousal Designations If an Annuity is co-owned by spouses, we will assume that the sole primary Beneficiary is the surviving spouse that was named as the co-owner unless you elect an alternative Beneficiary Designation. Unless you elect an alternative Beneficiary Designation, upon the death of either spousal Owner, the surviving spouse may elect to assume ownership of the Annuity instead of taking the Death Benefit payment. The Death Benefit that would have been payable will be the new Account Value of the Annuity as of the date of due proof of death and any required proof of a spousal relationship. As of the date the assumption is effective, the surviving spouse will have all the rights and benefits that would be available under the Annuity to a new purchaser of the same attained age. For purposes of determining any future Death Benefit for the beneficiary of the surviving spouse, the new Account Value will be considered as the initial Purchase Payment. No CDSC will apply to the new Account Value. However, any additional Purchase Payments applied after the date the assumption is effective will be subject to all provisions of the Annuity, including the CDSC when applicable. Spousal assumption is also permitted, subject to our rules and regulatory approval, if the Annuity is held by a custodial account established to hold retirement assets for the benefit of the natural person Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code ("Code") (or any successor Code section thereto) ("Custodial Account") and, on the date of the Annuitant's death, the spouse of the Annuitant is (1) the Contingent Annuitant under the Annuity and (2) the beneficiary of the Custodial Account. The ability to continue the Annuity in this manner will result in the Annuity no longer qualifying for tax deferral under the Code. However, such tax deferral should result from the ownership of the Annuity by the Custodial Account. Please consult your tax or legal adviser. We define a spouse the same as under federal tax laws and regulations. Contingent Annuitant Generally, if an Annuity is owned by an entity and the entity has named a Contingent Annuitant, the Contingent Annuitant will become the Annuitant upon the death of the Annuitant, and no Death Benefit is payable. Unless we agree otherwise, the Annuity is only eligible to have a Contingent Annuitant designation if the entity which owns the Annuity is (1) a plan described in Internal Revenue Code Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an entity described in Code Section 72(u)(1) (or any successor Code section thereto); or (3) a Custodial Account, as described in the above section. Where the Annuity is held by a Custodial Account, the Contingent Annuitant will not automatically become the Annuitant upon the death of the Annuitant. Upon the death of the Annuitant, the Custodial Account will have the choice, subject to our rules, to either elect to receive the Death Benefit or elect to continue the Annuity. If the Custodial Account elects to receive the Death Benefit, the Account Value of the Annuity as of the date of due proof of death of the Annuitant will reflect the amount that would have been payable had a Death Benefit been paid. See the section above entitled "Spousal Designations" for more information about how the Annuity can be continued by a Custodial Account. MAY I RETURN MY ANNUITY IF I CHANGE MY MIND? If after purchasing your Annuity you change your mind and decide that you do not want it, you may return it to us within a certain period of time known as a right to cancel period. This is often referred to as a "free look." Depending on the state in which you purchased your Annuity and, in some states, if you purchased the Annuity as a replacement for a prior contract, the right to cancel period may be ten (10) days, or longer, measured from the time that you received your Annuity. If you return your Annuity during the applicable period, we will refund your current Account Value plus any tax charge deducted, less any applicable federal and state income tax withholding and depending on your state's requirements, any applicable insurance charges deducted. The amount returned to you may be higher or lower than the Purchase Payment(s) applied during the right to cancel period. Where required by law, we will return your Purchase Payment(s), or the greater of your current Account Value and the amount of your Purchase 40 Payment(s) applied during the right to cancel period less any applicable federal and state income tax withholding. With respect to XT6, if you return your Annuity, we will not return any XTra Credits we applied to your Annuity based on your Purchase Payments. MAY I MAKE ADDITIONAL PURCHASE PAYMENTS? Unless we agree otherwise and subject to our rules, the minimum amount that we accept as an additional Purchase Payment is $100 unless you participate in our Systematic Investment Plan or a periodic Purchase Payment program. Purchase Payments made while you participate in an asset allocation program will be allocated in accordance with such program. Additional Purchase Payments may be made at any time before the Annuity Date. Additional Purchase Payments are not permitted in certain states. MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT? You can make additional Purchase Payments to your Annuity by authorizing us to deduct money directly from your bank account and applying it to your Annuity. We call our electronic funds transfer program "The Systematic Investment Plan." Purchase Payments made through electronic funds transfer may only be allocated to the Sub-accounts when applied. Different allocation requirements may apply in connection with certain optional benefits. We may allow you to invest in your Annuity with a lower initial Purchase Payment, as long as you authorize payments through an electronic funds transfer that will equal at least the minimum Purchase Payment set forth above during the first 12 months of your Annuity. We may suspend or cancel electronic funds transfer privileges if sufficient funds are not available from the applicable financial institution on any date that a transaction is scheduled to occur. MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM? These types of programs are only available with certain types of qualified investments. If your employer sponsors such a program, we may agree to accept periodic Purchase Payments through a salary reduction program as long as the allocations are made only to Sub-accounts and the periodic Purchase Payments received in the first year total at least the minimum Purchase Payment set forth above. 41 MANAGING YOUR ACCOUNT VALUE HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED? (See "Valuing Your Investment" for a description of our procedure for pricing initial and subsequent Purchase Payments.) Initial Purchase Payment: Once we accept your application, we invest your Purchase Payment in your Annuity according to your instructions for allocating your Account Value. The Purchase Payment is your initial Purchase Payment minus any tax charges that may apply. You can allocate Account Value to one or more Sub-accounts or Fixed Allocations. Investment restrictions will apply if you elect certain optional benefits. Subsequent Purchase Payments: Unless you participate in an asset allocation program, or unless you have provided us with other specific allocation instructions for one, more than one, or all subsequent Purchase Payments, we will allocate any additional Purchase Payments you make according to your initial Purchase Payment allocation instructions. If you so instruct us, we will allocate subsequent Purchase Payments according to any new allocation instructions. Unless you tell us otherwise, Purchase Payments made while you participate in an asset allocation program will be allocated in accordance with such program. HOW DO I RECEIVE A LOYALTY CREDIT UNDER THE ASAP III AND APEX II ANNUITIES? We apply a Loyalty Credit to your Annuity's Account Value at the end of your fifth Annuity Year ("fifth Annuity Anniversary"). With respect to ASAP III, for annuities issued on or after February 13, 2006, the Loyalty Credit is equal to 0.50% of total Purchase Payments made during the first four Annuity Years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Annuity Anniversary. With respect to APEX II, for annuities issued between June 20, 2005 and February 13, 2006, the Loyalty Credit is equal to 2.25% of total Purchase Payments made during the first four Annuity Years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Annuity Anniversary. For APEX II Annuities issued on or after February 13, 2006, the Loyalty Credit is equal to 2.75% of total Purchase Payments made during the first four Annuity Years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Annuity Anniversary. If the total Purchase Payments made during the first four Annuity Years is less than the cumulative amount of withdrawals made on or before the fifth Annuity Anniversary, no Loyalty Credit will be applied to your Annuity. Also, no Loyalty Credit will be applied to your Annuity if your Account Value is zero on the fifth Annuity Anniversary. This would include any situation where the Annuity is still in force due to the fact that payments are being made under an optional benefit such as Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five or the Guaranteed Minimum Withdrawal Benefit. In addition, no Loyalty Credit will be applied to your Annuity if before the fifth Annuity Anniversary: (i) you have surrendered your Annuity; (ii) you have annuitized your Annuity; (iii) your Beneficiary has elected our Beneficiary Continuation Option; or (iv) we have received due proof of your death (and there has been no spousal continuation election made). If your spouse continues the Annuity under our spousal continuation option, we will apply the Loyalty Credit to your Annuity only on the fifth Annuity Anniversary measured from the date that we originally issued you the Annuity. Since the Loyalty Credit is applied to the Account Value only, any guarantees that are not based on Account Value will not reflect the Loyalty Credit. Similarly, guarantees that are made against a loss in Account Value will not be triggered in certain very limited circumstances where they otherwise would have been, had no Loyalty Credit been applied to the Account Value. HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE UNDER THE ASAP III AND APEX II ANNUITIES? Any Loyalty Credit that is allocated to your Account Value on the fifth Annuity Anniversary will be allocated to the Fixed Allocations and Sub-accounts in the same percentages as Purchase Payments are then being allocated to your Annuity. Example of Applying the Loyalty Credit with respect to ASAP III Assume you make an initial Purchase Payment of $10,000 and your Annuity is issued on or after February 13, 2006. During Annuity Year four (i.e., prior to the fourth Annuity Anniversary) you make an additional $10,000 Purchase Payment. During the early part of Annuity Year five (i.e., prior to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and later in the year make a withdrawal of $5,000. The Loyalty Credit that we will apply to your Annuity on the fifth Annuity Anniversary is, subject to state availability, equal to 0.50% of $15,000 (this represents the $20,000 of Purchase Payments made during the first four Annuity Years minus the $5,000 withdrawal made in the fifth Annuity Year. The computation disregards the additional $10,000 Purchase Payment made in the fifth Annuity Year.) Therefore, the Loyalty Credit amount would be equal to $75.00. Example of Applying the Loyalty Credit with respect to APEX II Assume you make an initial Purchase Payment of $10,000 and your Annuity is issued on or after February 13, 2006. During Annuity Year four (i.e., prior to the fourth Annuity Anniversary) you make an additional $10,000 Purchase Payment. During the early part of Annuity Year five (i.e., prior to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and later in the year make a withdrawal of $5,000. The Loyalty Credit that we will apply to your Annuity on the fifth Annuity Anniversary is, subject to state availability, equal to 2.75% of $15,000 (this represents the $20,000 of Purchase Payments made during the first four 42 Annuity Years minus the $5,000 withdrawal made in the fifth Annuity Year. The computation disregards the additional $10,000 Purchase Payment made in the fifth Annuity Year.) Therefore, the Loyalty Credit amount would be equal to $412.50. HOW DO I RECEIVE CREDITS UNDER THE XT6 ANNUITY? We apply a "Credit" to your Annuity's Account Value each time you make a Purchase Payment during the first six (6) Annuity Years. The amount of the Credit is payable from our general account. The amount of the Credit depends on the Annuity Year in which the Purchase Payment(s) is made, according to the table below: For annuities issued prior to February 13, 2006:
ANNUITY YEAR CREDIT ------------------- 1 6.00% 2 5.00% 3 4.00% 4 3.00% 5 2.00% 6 1.00% 7+ 0.00% -------------------
For annuities issued on or after February 13, 2006 (subject to state availability):
ANNUITY YEAR CREDIT ------------------- 1 6.50% 2 5.00% 3 4.00% 4 3.00% 5 2.00% 6 1.00% 7+ 0.00% -------------------
Credits Applied to Purchase Payments for Designated Class of Annuity Owner Prior to May 1, 2004, where allowed by state law, Annuities could be purchased by a member of the class defined below, with a different table of Credits. The Credit applied to all Purchase Payments on such Annuities is as follows based on the Annuity Year in which the Purchase Payment was made: Year 1 -9.0%; Year 2 -9.0%; Year 3 -8.5%; Year 4 -8.0%; Year 5 -7.0%; Year 6 -6.0%; Year 7 -5.0%; Year 8 -4.0%; Year 9 -3.0%; Year 10 -2%; Year 11+ -0.0%. The designated class of Annuity Owners included: (a) any parent company, affiliate or subsidiary of ours; (b) an officer, director, employee, retiree, sales representative, or in the case of an affiliated broker-dealer, registered representative of such company; (c) a director, officer or trustee of any underlying mutual fund; (d) a director, officer or employee of any investment manager, sub-advisor, transfer agent, custodian, auditing, legal or administrative services provider that is providing investment management, advisory, transfer agency, custodian-ship, auditing, legal and/or administrative services to an underlying mutual fund or any affiliate of such firm; (e) a director, officer, employee or registered representative of a broker-dealer or insurance agency that has a then current selling agreement with us and/or with Prudential Annuities Distributors, Inc., a Prudential Financial Company; (f) a director, officer, employee or authorized representative of any firm providing us or our affiliates with regular legal, actuarial, auditing, underwriting, claims, administrative, computer support, marketing, office or other services; (g) the then current spouse of any such person noted in (b) through (f), above; (h) the parents of any such person noted in (b) through (g), above; (i) the child(ren) or other legal dependent under the age of 21 of any such person noted in (b) through (h); and (j) the siblings of any such persons noted in (b) through (h) above. All other terms and conditions of the Annuity apply to Owners in the designated class. HOW ARE CREDITS APPLIED TO ACCOUNT VALUE UNDER THE XT6 ANNUITY? Each Credit is allocated to your Account Value at the time the Purchase Payment is applied to your Account Value. The amount of the Credit is allocated to the investment options in the same ratio as the applicable Purchase Payment is applied. Examples of Applying Credits Initial Purchase Payment Assume you make an initial Purchase Payment of $10,000 and your Annuity is issued on or after February 13, 2006. We would apply a 6.5% Credit to your Purchase Payment and allocate the amount of the Credit ($650 = $10,000 X .065) to your Account Value in the proportion that your Purchase Payment is allocated. 43 Additional Purchase Payment in Annuity Year 2 Assume that you make an additional Purchase Payment of $5,000. We would apply a 5.0% Credit to your Purchase Payment and allocate the amount of the Credit ($250 = $5,000 X .05) to your Account Value. Additional Purchase Payment in Annuity Year 6 Assume that you make an additional Purchase Payment of $15,000. We would apply a 1.0% Credit to your Purchase Payment and allocate the amount of the Credit ($150 = $15,000 X .01) to your Account Value. The amount of any XTra Credits applied to your XT6 Annuity Account Value can be taken back by Prudential Annuities under certain circumstances: . any XTra Credits applied to your Account Value on Purchase Payments made within the 12 months before the Owner's (or Annuitant's if entity owned) date of death will be taken back; . the amount available under the medically-related surrender portion of the Annuity will not include the amount of any XTra Credits payable on Purchase Payments made within 12 months prior to the date of a request under the medically-related surrender provision; and . if you elect to "free look" your Annuity, the amount returned to you will not include the amount of any XTra Credits. The Account Value may be substantially reduced if Prudential Annuities takes back the XTra Credit amount under these circumstances. The amount we take back will equal the XTra Credit, without adjustment up or down for investment performance. Therefore, any gain on the XTra Credit amount will not be taken back. But if there was a loss on the XTra Credit, the amount we take back will still equal amount of the XTra Credit. We do not deduct a CDSC in any situation where we take back the XTra Credit amount. During the first 10 Annuity Years, the total asset-based charges on this Annuity (including the Insurance Charge and the Distribution Charge) are higher than many of our other annuities, including other annuities we offer that apply credits to Purchase Payments. General Information about Credits . We do not consider Credits to be "investment in the contract" for income tax purposes. . You may not withdraw the amount of any Credits under the Free Withdrawal provision. The Free Withdrawal provision only applies to withdrawals of Purchase Payments. ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS? During the accumulation period you may transfer Account Value between investment options subject to the restrictions outlined below. Transfers are not subject to taxation on any gain. We may require a minimum of $500 in each Sub-account you allocate Account Value to at the time of any allocation or transfer. If you request a transfer and, as a result of the transfer, there would be less than $500 in the Sub-account, we may transfer the remaining Account Value in the Sub-account pro- rata to the other investment options to which you transferred. Currently, any transfer involving the ProFunds VP Sub-accounts must be received by us no later than one hour prior to any announced closing of the applicable securities exchange (generally, 3:00 p.m. Eastern time) to be processed on the current Valuation Day. The "cut-off" time for such financial transactions involving a ProFunds VP Sub-account will be extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m. Eastern time) for transactions submitted electronically, including through Prudential Annuities' Internet website (www.prudentialannuities.com). Currently, we charge $10.00 for each transfer after the twentieth (20/th/) transfer in each Annuity Year. Transfers made as part of a Dollar Cost Averaging, Automatic Rebalancing or asset allocation program do not count toward the twenty free transfer limit. Renewals or transfers of Account Value from a Fixed Allocation at the end of its Guarantee Period are not subject to the transfer charge. We may reduce the number of free transfers allowable each Annuity Year (subject to a minimum of eight) without charging a Transfer Fee. We may also increase the Transfer Fee that we charge to $20.00 for each transfer after the number of free transfers has been used up. We may eliminate the Transfer Fee for transfer requests transmitted electronically or through other means that reduce our processing costs. If enrolled in any program that does not permit transfer requests to be transmitted electronically, the Transfer Fee will not be waived. Once you have made 20 transfers among the Sub-accounts during an Annuity Year, we will accept any additional transfer request during that year only if the request is submitted to us in writing with an original signature and otherwise is in good order. For purposes of this 20 transfer limit, we (i) do not view a facsimile transmission as a "writing", (ii) will treat multiple transfer requests submitted on the same Valuation Day as a single transfer, and (iii) do not count any transfer that solely involves Sub-accounts corresponding to any ProFund Portfolio and/or the AST Money Market Portfolio or any transfer that involves one of our systematic programs, such as asset allocation and automated withdrawals. Frequent transfers among Sub-accounts in response to short-term fluctuations in markets, sometimes called "market timing," can make it very difficult for a Portfolio manager to manage a Portfolio's investments. Frequent transfers may cause the Portfolio to 44 hold more cash than otherwise necessary, disrupt management strategies, increase transaction costs, or affect performance. Each Annuity offers Sub-accounts designed for Owners who wish to engage in frequent transfers (i.e., one or more of the Sub-accounts corresponding to the ProFund Portfolios and the AST Money Market Portfolio), and we encourage Owners seeking frequent transfers to utilize those Sub-accounts. In light of the risks posed to Owners and other investors by frequent transfers, we reserve the right to limit the number of transfers in any Annuity Year for all existing or new Owners and to take the other actions discussed below. We also reserve the right to limit the number of transfers in any Annuity Year or to refuse any transfer request for an Owner or certain Owners if: (a) we believe that excessive transfer activity (as we define it) or a specific transfer request or group of transfer requests may have a detrimental effect on Unit Values or the share prices of the Portfolios; or (b) we are informed by a Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or redemption of shares in the Portfolio must be restricted because the Portfolio believes the transfer activity to which such purchase and redemption relates would have a detrimental effect on the share prices of the affected Portfolio. Without limiting the above, the most likely scenario where either of the above could occur would be if the aggregate amount of a trade or trades represented a relatively large proportion of the total assets of a particular Portfolio. In furtherance of our general authority to restrict transfers as described above, and without limiting other actions we may take in the future, we have adopted the following specific restrictions: .. With respect to each Sub-account (other than the AST Money Market Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we track amounts exceeding a certain dollar threshold that were transferred into the Sub-account. If you transfer such amount into a particular Sub-account, and within 30 calendar days thereafter transfer (the "Transfer Out") all or a portion of that amount into another Sub-account, then upon the Transfer Out, the former Sub-account becomes restricted (the "Restricted Sub-account"). Specifically, we will not permit subsequent transfers into the Restricted Sub-account for 90 calendar days after the Transfer Out if the Restricted Sub-account invests in a non-international Portfolio, or 180 calendar days after the Transfer Out if the Restricted Sub-account invests in an international Portfolio. For purposes of this rule, we (i) do not count transfers made in connection with one of our systematic programs, such as asset allocation and automated withdrawals; (ii) do not count any transfer that solely involves Sub-accounts corresponding to any ProFund Portfolio and/or the AST Money Market Portfolio; and (iii) do not categorize as a transfer the first transfer that you make after the Issue Date, if you make that transfer within 30 calendar days after the Issue Date. Even if an amount becomes restricted under the foregoing rules, you are still free to redeem the amount from your Annuity at any time. .. We reserve the right to effect exchanges on a delayed basis for all contracts. That is, we may price an exchange involving the Sub-accounts on the Valuation Day subsequent to the Valuation Day on which the exchange request was received. Before implementing such a practice, we would issue a separate written notice to Owners that explains the practice in detail. If we deny one or more transfer requests under the foregoing rules, we will inform you or your Financial Professional promptly of the circumstances concerning the denial. Contract owners in New York who purchased their contracts prior to March 15, 2004 are not subject to the specific restrictions outlined in bulleted paragraphs immediately above. In addition, there are contract owners of different variable annuity contracts that are funded through the same Separate Account that are not subject to the above-referenced transfer restrictions and, therefore, might make more numerous and frequent transfers than contract owners who are subject to such limitations. Finally, there are contract owners of other variable annuity contracts or variable life contracts that are issued by Prudential Annuities as well as other insurance companies that have the same underlying mutual fund portfolios available to them. Since some contract owners are not subject to the same transfer restrictions, unfavorable consequences associated with such frequent trading within the underlying mutual fund (e.g., greater portfolio turnover, higher transaction costs, or performance or tax issues) may affect all contract owners. Similarly, while contracts managed by a Financial Professional or third party investment advisor are subject to the restrictions on transfers between investment options that are discussed above, if the advisor manages a number of contracts in the same fashion unfavorable consequences may be associated with management activity since it may involve the movement of a substantial portion of an underlying mutual fund's assets which may affect all contract owners invested in the affected options. Apart from jurisdiction-specific and contract differences in transfer restrictions, we will apply these rules uniformly (including contracts managed by a Financial Professional or third party investment advisor), and will not waive a transfer restriction for any contract owner. Although our transfer restrictions are designed to prevent excessive transfers, they are not capable of preventing every potential occurrence of excessive transfer activity. The Portfolios have adopted their own policies and procedures with respect to excessive trading of their respective shares, and we reserve the right to enforce any such current or future policies and procedures. The prospectuses for the Portfolios describe any such policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. Under SEC rules, we are required to: (1) enter into a written agreement with each Portfolio or its principal underwriter or its transfer agent that obligates us to provide to the Portfolio promptly upon request certain information about the trading activity of individual contract owners, and (2) execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific contract owners who violate the excessive trading policies established by the Portfolio. In addition, you should be aware that some Portfolios may receive "omnibus" purchase and redemption orders from other insurance companies or intermediaries such as retirement plans. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable 45 insurance contracts and/or individual retirement plan participants. The omnibus nature of these orders may limit the Portfolios in their ability to apply their excessive trading policies and procedures. In addition, the other insurance companies and/or retirement plans may have different policies and procedures or may not have any such policies and procedures because of contractual limitations. For these reasons, we cannot guarantee that the Portfolios (and thus contract owners) will not be harmed by transfer activity relating to other insurance companies and/or retirement plans that may invest in the Portfolios. A Portfolio also may assess a short term trading fee in connection with a transfer out of the Sub-account investing in that Portfolio that occurs within a certain number of days following the date of allocation to the Sub-account. Each Portfolio determines the amount of the short term trading fee and when the fee is imposed. The fee is retained by or paid to the Portfolio and is not retained by us. The fee will be deducted from your Account Value, to the extent allowed by law. At present, no Portfolio has adopted a short-term trading fee. DO YOU OFFER DOLLAR COST AVERAGING? Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost Averaging allows you to systematically transfer an amount periodically from one investment option to one or more other investment options. You can choose to transfer earnings only, principal plus earnings or a flat dollar amount. You may elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly, semi-annually, or annually from Sub-accounts, or a program that transfers amounts monthly from Fixed Allocations. By investing amounts on a regular basis instead of investing the total amount at one time, Dollar Cost Averaging may decrease the effect of market fluctuation on the investment of your Purchase Payment. This may result in a lower average cost of units over time. However, there is no guarantee that Dollar Cost Averaging will result in a profit or protect against a loss in a declining market. There is no minimum Account Value required to enroll in a Dollar Cost Averaging program and we do not deduct a charge for participating in a Dollar Cost Averaging program. You can Dollar Cost Average from Sub-accounts or Fixed Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number of rules that include, but are not limited to the following: . You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3 years. . You may only Dollar Cost Average earnings or principal plus earnings. If transferring principal plus earnings, the program must be designed to last the entire Guarantee Period for the Fixed Allocation. . Dollar Cost Averaging transfers from Fixed Allocations are not subject to a Market Value Adjustment. NOTE: When a Dollar Cost Averaging program is established from a Fixed Allocation, the fixed rate of interest we credit to your Account Value is applied to a declining balance due to the transfers of Account Value to the Sub-accounts during the Guarantee Period. This will reduce the effective rate of return on the Fixed Allocation over the Guarantee Period. The Dollar Cost Averaging program is not available if you have elected an automatic rebalancing program or an asset allocation program. Dollar Cost Averaging from Fixed Allocations also is not available if you elect certain optional benefits. Prudential Annuities may offer Fixed Allocations with Guarantee Periods of 6 months or 12 months exclusively for use with a Dollar Cost Averaging program ("DCA Fixed Allocations"). DCA Fixed Allocations are designed to automatically transfer Account Value in either 6 or 12 payments under a Dollar Cost Averaging program. Dollar Cost Averaging transfers will be effected on the date the DCA Fixed Dollar Allocation is established and each month following until the entire principal amount plus earnings is transferred. DCA Fixed Allocations may only be established with your initial Purchase Payment or additional Purchase Payments. You may not transfer existing Account Value to a DCA Fixed Allocation. We reserve the right to terminate offering these special purpose Fixed Allocations at any time. Account Value allocated to the DCA Fixed Allocation will be transferred to the Sub-accounts you choose under the Dollar Cost Averaging program. If you terminate the Dollar Cost Averaging program before the entire principal amount plus earnings has been transferred to the Sub-account(s), you must transfer all remaining Account Value to any other investment option. Unless you provide alternate instructions at the time you terminate the Dollar Cost Averaging program, Account Value will be transferred to the AST Money Market Sub-account. Transfers from Fixed Allocations as part of a Dollar Cost Averaging program are not subject to a Market Value Adjustment. However, a Market Value Adjustment will apply if you terminate the Dollar Cost Averaging program before the entire principal amount plus earnings has been transferred to the Sub-account(s). DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS? Yes. During the accumulation period, we offer Automatic Rebalancing among the Sub-accounts you choose. You can choose to have your Account Value rebalanced monthly, quarterly, semi-annually, or annually. On the appropriate date, the Sub-accounts you chose are rebalanced to the allocation percentages you requested. With Automatic Rebalancing, we transfer the appropriate amount from the "overweighted" Sub-accounts to the "underweighted" Sub-accounts to return your allocations to the percentages you request. For example, over time the performance of the Sub-accounts will differ, causing your percentage allocations to shift. 46 Any transfer to or from any Sub-account that is not part of your Automatic Rebalancing program, will be made; however, that Sub-account will not become part of your rebalancing program unless we receive instructions from you indicating that you would like such option to become part of the program. There is no minimum Account Value required to enroll in Automatic Rebalancing. All rebalancing transfers as part of an Automatic Rebalancing program are not included when counting the number of transfers each year toward the maximum number of free transfers. We do not deduct a charge for participating in an Automatic Rebalancing program. Participation in the Automatic Rebalancing program may be restricted if you are enrolled in certain other optional programs. Sub-accounts that are part of a Systematic Withdrawal program or Dollar Cost Averaging program will be excluded from an Automatic Rebalancing program. ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE? We currently do not offer any asset allocation programs for use with your Annuity. Prior to December 5, 2005, we made certain asset allocation programs available. If you enrolled in one of the asset allocation programs prior to December 5, 2005, see the Appendix entitled, "Additional Information on the Asset Allocation Programs" for more information on how the programs are administered. WHAT IS THE BALANCED INVESTMENT PROGRAM? We offer a balanced investment program where a portion of your Account Value is allocated to a Fixed Allocation and the remaining Account Value is allocated to the Sub-accounts that you select. When you enroll in the Balanced Investment Program, you choose the duration that you wish the program to last. This determines the duration of the Guarantee Period for the Fixed Allocation. Based on the fixed rate for the Guarantee Period chosen, we calculate the portion of your Account Value that must be allocated to the Fixed Allocation to grow to a specific "principal amount" (such as your initial Purchase Payment). We determine the amount based on the rates then in effect for the Guarantee Period you choose. If you continue the program until the end of the Guarantee Period and make no withdrawals or transfers, at the end of the Guarantee Period, the Fixed Allocation will have grown to equal the "principal amount". Withdrawals or transfers from the Fixed Allocation before the end of the Guarantee Period will terminate the program and may be subject to a Market Value Adjustment. You can transfer the Account Value that is not allocated to the Fixed Allocation between any of the Sub-accounts available under your Annuity. Account Value you allocate to the Sub-accounts is subject to market fluctuations and may increase or decrease in value. We do not deduct a charge for participating in the Balanced Investment Program. Example Assume you invest $100,000. You choose a 10-year program and allocate a portion of your Account Value to a Fixed Allocation with a 10-year Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*. Based on the fixed interest rate for the Guarantee Period chosen, the factor is 0.781198 for determining how much of your Account Value will be allocated to the Fixed Allocation. That means that $78,120 will be allocated to the Fixed Allocation and the remaining Account Value ($21,880) will be allocated to the Sub-accounts. Assuming that you do not make any withdrawals or transfers from the Fixed Allocation, it will grow to $100,000 at the end of the Guarantee Period. Of course we cannot predict the value of the remaining Account Value that was allocated to the Sub-accounts. * The rate in this example is hypothetical and may not reflect the current rate for Guarantee Periods of this duration. MAY I GIVE MY FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS? Yes. Subject to our rules, your Financial Professional may forward instructions regarding the allocation of your Account Value, and request financial transactions involving investment options. If your Financial Professional has this authority, we deem that all transactions that are directed by your Financial Professional with respect to your Annuity have been authorized by you. You must contact us immediately if and when you revoke such authority. We will not be responsible for acting on instructions from your Financial Professional until we receive notification of the revocation of such person's authority. We may also suspend, cancel or limit these privileges at any time. We will notify you if we do. MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT? Yes. You may engage your own investment advisor to manage your account. These investment advisors may be firms or persons who also are appointed by us, or whose affiliated broker-dealers are appointed by us, as authorized sellers of the Annuities. Even if this is the case, however, please note that the investment advisor you engage to provide advice and/or make transfers for you, is not acting on our behalf, but rather is acting on your behalf. We do not offer advice about how to allocate your Account Value under any circumstance. As such, we are not responsible for any recommendations such investment advisors make, any investment models or asset allocation programs they choose to follow or any specific transfers they make on your behalf. Please note that if you have engaged a third-party investment advisor to provide asset allocation services with respect to your Annuity, we do not allow you to elect an optional benefit that requires investment in an asset allocation Portfolio and/or that involves mandatory Account Value transfers (e.g. Highest Daily GRO). You will receive confirmations of transactions that affect your Annuity. It is your responsibility to arrange for the payment of the advisory fee charged by your investment advisor. Similarly, it is your responsibility to understand the advisory services provided by your investment advisor and the advisory fees charged for the services. 47 We or an affiliate of ours may provide administrative support to licensed, registered Financial Professionals or Investment advisors who you authorize to make financial transactions on your behalf. We may require Financial Professionals or investment advisors, who are authorized by multiple contract owners to make financial transactions, to enter into an administrative agreement with Prudential Annuities as a condition of our accepting transactions on your behalf. The administrative agreement may impose limitations on the Financial Professional's or investment advisor's ability to request financial transactions on your behalf. These limitations are intended to minimize the detrimental impact of a Financial Professional who is in a position to transfer large amounts of money for multiple clients in a particular Portfolio or type of portfolio or to comply with specific restrictions or limitations imposed by a Portfolio(s) of Prudential Annuities. Please Note: Annuities where your Financial Professional or investment advisor has the authority to forward instruction on financial transactions are also subject to the restrictions on transfers between investment options that are discussed in the section entitled "ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?" Since transfer activity directed by a Financial Professional or third party investment adviser may result in unfavorable consequences to all contract owners invested in the affected options, we reserve the right to limit the investment options available to a particular Owner where such authority as described above has been given to a Financial Professional or investment advisor or impose other transfer restrictions we deem necessary. The administrative agreement may limit the available investment options, require advance notice of large transactions, or impose other trading limitations on your Financial Professional. Your Financial Professional will be informed of all such restrictions on an ongoing basis. We may also require that your Financial Professional transmit all financial transactions using the electronic trading functionality available through our Internet website (www.prudentialannuities.com). Limitations that we may impose on your Financial Professional or investment advisor under the terms of the administrative agreement do not apply to financial transactions requested by an Owner on their own behalf, except as otherwise described in this Prospectus. HOW DO THE FIXED ALLOCATIONS WORK? We credit a fixed interest rate to the Fixed Allocation throughout a set period of time called a "Guarantee Period." Fixed Allocations currently are offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations of different durations available in the future, including Fixed Allocations offered exclusively for use with certain optional investment programs. Fixed Allocations may not be available in all states and may not always be available for all Guarantee Periods depending on market factors and other considerations. The interest rate credited to a Fixed Allocation is the rate in effect when the Guarantee Period begins and does not change during the Guarantee Period. The rates are an effective annual rate of interest. We determine the interest rates for the various Guarantee Periods. At the time that we confirm your Fixed Allocation, we will advise you of the interest rate in effect and the date your Fixed Allocation matures. We may change the rates we credit new Fixed Allocations at any time. Any change in interest rate does not affect Fixed Allocations that were in effect before the date of the change. To inquire as to the current rates for Fixed Allocations, please call 1-800-752-6342. A Guarantee Period for a Fixed Allocation begins: . when all or part of a net Purchase Payment is allocated to that particular Guarantee Period; . upon transfer of any of your Account Value to a Fixed Allocation for that particular Guarantee Period; or . when you "renew" a Fixed Allocation by electing a new Guarantee Period. To the extent permitted by law, we may establish different interest rates for Fixed Allocations offered to a class of Owners who choose to participate in various optional investment programs we make available. This may include, but is not limited to, Owners who elect to use Fixed Allocations under a dollar cost averaging program (see "Do You Offer Dollar Cost Averaging?") or the Balanced Investment Program. The interest rate credited to Fixed Allocations offered to this class of purchasers may be different than those offered to other purchasers who choose the same Guarantee Period but who do not participate in an optional investment program. Any such program is at our sole discretion. Prudential Annuities may offer Fixed Allocations with Guarantee Periods of 3 months or 6 months exclusively for use as a short-term Fixed Allocation ("Short-term Fixed Allocations"). Short-term Fixed Allocations may only be established with your initial Purchase Payment or additional Purchase Payments. You may not transfer existing Account Value to a Short-term Fixed Allocation. We reserve the right to terminate offering these special purpose Fixed Allocations at any time. On the Maturity Date of the Short-term Fixed Allocation, the Account Value will be transferred to the Sub-account(s) you choose at the inception of the program. If no instructions are provided, such Account Value will be transferred to the AST Money Market Sub-account. Short-term Fixed Allocations may not be renewed on the Maturity Date. If you surrender the Annuity or transfer any Account Value from the Short-term Fixed Allocation to any other investment option before the end of the Guarantee Period, a Market Value Adjustment will apply. 48 HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS? We do not have a specific formula for determining the fixed interest rates for Fixed Allocations. Generally the interest rates we offer for Fixed Allocations will reflect the investment returns available on the types of investments we make to support our fixed rate guarantees. These investment types may include cash, debt securities guaranteed by the United States government and its agencies and instrumentalities, money market instruments, corporate debt obligations of different durations, private placements, asset-backed obligations and municipal bonds. In determining rates we also consider factors such as the length of the Guarantee Period for the Fixed Allocation, regulatory and tax requirements, liquidity of the markets for the type of investments we make, commissions, administrative and investment expenses, our insurance risks in relation to the Fixed Allocations, general economic trends and competition. Some of these considerations are similar to those we consider in determining the Insurance Charge that we deduct from Account Value allocated to the Sub-accounts. The interest rate that we credit to the Fixed Allocations may be reduced by an amount that corresponds to the asset-based charges assessed against the Sub-accounts. We will credit interest on a new Fixed Allocation in an existing Annuity at a rate not less than the rate we are then crediting to Fixed Allocations for the same Guarantee Period selected by new Annuity purchasers in the same class. The interest rate we credit for a Fixed Allocation is subject to a minimum. Please refer to the Statement of Additional Information. In certain states the interest rate may be subject to a minimum under state law or regulation. HOW DOES THE MARKET VALUE ADJUSTMENT WORK? If you transfer or withdraw Account Value from a Fixed Allocation more than 30 days before the end of its Guarantee Period, we will adjust the value of your investment based on a formula, called a "Market Value Adjustment" or "MVA". The amount of any Market Value Adjustment can be either positive or negative, depending on the movement of a combination of Strip Yields on Strips and an Option-adjusted Spread (each as defined below) between the time that you purchase the Fixed Allocation and the time you make a transfer or withdrawal. The Market Value Adjustment formula compares the combination of Strip Yields for Strips and the Option-adjusted Spreads as of the date the Guarantee Period began with the combination of Strip Yields for Strips and the Option-adjusted Spreads as of the date the MVA is being calculated. In certain states the amount of any Market Value Adjustment may be limited under state law or regulation. If your Annuity is governed by the laws of that state, any Market Value Adjustment that applies will be subject to our rules for complying with such law or regulation. .. "Strips" are a form of security where ownership of the interest portion of United States Treasury securities are separated from ownership of the underlying principal amount or corpus. .. "Strip Yields" are the yields payable on coupon Strips of United States Treasury securities. .. "Option-adjusted Spread" is the difference between the yields on corporate debt securities (adjusted to disregard options on such securities) and government debt securities of comparable duration. We currently use the Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of Option-adjusted Spreads. MVA Formula The MVA formula is applied separately to each Fixed Allocation to determine the Account Value of the Fixed Allocation on a particular date. The formula is as follows: [(1+I) / (1+J+0.0010)]/N/365/ where: I is the Strip Yield as of the start date of the Guarantee Period for coupon Strips maturing at the end of the applicable Guarantee Period plus the Option-adjusted Spread. If there are no Strips maturing at that time, we will use the Strip Yield for the Strips maturing as soon as possible after the Guarantee Period ends. J is the Strip Yield as of the date the MVA formula is being applied for coupon Strips maturing at the end of the applicable Guarantee Period plus the Option-adjusted Spread. If there are no Strips maturing at that time, we will use the Strip Yield for the Strips maturing as soon as possible after the Guarantee Period ends. N is the number of days remaining in the original Guarantee Period. If you surrender your Annuity under the right to cancel provision, the MVA formula is: [(1 + I)/(1 + J)]/N/365/ 49 MVA Examples The following hypothetical examples show the effect of the MVA in determining Account Value. Assume the following: . You allocate $50,000 into a Fixed Allocation (we refer to this as the "Allocation Date" in these examples) with a Guarantee Period of 5 years (we refer to this as the "Maturity Date" in these examples). . The Strip Yields for coupon Strips beginning on Allocation Date and maturing on Maturity Date plus the Option-adjusted Spread is 5.50% (I = 5.50%). . You make no withdrawals or transfers until you decide to withdraw the entire Fixed Allocation after exactly three (3) years, at which point 730 days remain before the Maturity Date (N = 730). Example of Positive MVA Assume that at the time you request the withdrawal, the Strip Yields for Strips maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J = 4.00%). Based on these assumptions, the MVA would be calculated as follows: MVA Factor = [(1+I)/(1+J+0.0010)] /N/365/ = [1.055/1.041]/2/ = 1.027078 Interim Value = $57,881.25 Account Value after MVA = Interim Value X MVA Factor = $59,448.56 Example of Negative MVA Assume that at the time you request the withdrawal, the Strip Yields for Strips maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J = 7.00%). Based on these assumptions, the MVA would be calculated as follows: MVA Factor = [(1+I)/(1+J+0.0010)]/N/365/ = [1.055/1.071]/2/ = 0.970345 Interim Value = $57,881.25 Account Value after MVA = Interim Value X MVA Factor = $56,164.78. WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES? The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee Period. Before the Maturity Date, you may choose to renew the Fixed Allocation for a new Guarantee Period of the same or different length or you may transfer all or part of that Fixed Allocation's Account Value to another Fixed Allocation or to one or more Sub-accounts. We will not charge a MVA if you choose to renew a Fixed Allocation on its Maturity Date or transfer the Account Value to one or more Sub-accounts. We will notify you before the end of the Guarantee Period about the fixed interest rates that we are currently crediting to all Fixed Allocations that are being offered. The rates being credited to Fixed Allocations may change before the Maturity Date. If you do not specify how you want a Fixed Allocation to be allocated on its Maturity Date, we will then transfer the Account Value of the Fixed Allocation to the AST Money Market Sub-account. You can then elect to allocate the Account Value to any of the Sub-accounts or to a new Fixed Allocation. 50 ACCESS TO ACCOUNT VALUE WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME? During the accumulation period you can access your Account Value through partial withdrawals, Systematic Withdrawals, and where required for tax purposes, Minimum Distributions. You can also surrender your Annuity at any time. We may deduct a portion of the Account Value being withdrawn or surrendered as a CDSC, if applicable. If you surrender your Annuity, in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax Charge that applies and the charge for any optional benefits. We may also apply a Market Value Adjustment to any Fixed Allocations being withdrawn or surrendered. Certain amounts may be available to you each Annuity Year that are not subject to a CDSC. These are called "Free Withdrawals." Unless you notify us differently, withdrawals are taken pro-rata based on the Account Value in the investment options at the time we receive your withdrawal request. Each of these types of distributions is described more fully below. ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS? (For more information, see "Tax Considerations.") During the Accumulation Period A distribution during the accumulation period is deemed to come first from any "gain" in your Annuity and second as a return of your "tax basis", if any. Distributions from your Annuity are generally subject to ordinary income taxation on the amount of any investment gain unless the distribution qualifies as a non-taxable exchange or transfer. If you take a distribution prior to the taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to ordinary income taxes on any gain. You may wish to consult a professional tax advisor for advice before requesting a distribution. During the Annuitization Period During the annuitization period, a portion of each annuity payment is taxed as ordinary income at the tax rate you are subject to at the time of the payment. The Code and regulations have "exclusionary rules" that we use to determine what portion of each annuity payment should be treated as a return of any tax basis you have in your Annuity. Once the tax basis in your Annuity has been distributed, the remaining annuity payments are taxable as ordinary income. The tax basis in your Annuity may be based on the tax-basis from a prior contract in the case of a 1035 exchange or other qualifying transfer. CAN I WITHDRAW A PORTION OF MY ANNUITY? Yes, you can make a withdrawal during the accumulation period. . To meet liquidity needs, you can withdraw a limited amount from your Annuity during each Annuity Year without application of any CDSC. We call this the "Free Withdrawal" amount. The Free Withdrawal amount is not available if you choose to surrender your Annuity. Amounts withdrawn as a Free Withdrawal do not reduce the amount of CDSC that may apply upon a subsequent withdrawal or surrender of your Annuity. After any partial withdrawal, your Annuity must have a Surrender Value of at least $1,000, or we may treat the partial withdrawal request as a request to fully surrender your Annuity. The minimum Free Withdrawal you may request is $100. . You can also make withdrawals in excess of the Free Withdrawal amount. The minimum partial withdrawal you may request is $100. To determine if a CDSC applies to partial withdrawals, we: 1. First determine what, if any, amounts qualify as a Free Withdrawal. These amounts are not subject to the CDSC. 2. Next determine what, if any, remaining amounts are withdrawals of Purchase Payments. Amounts in excess of the Free Withdrawal amount will be treated as withdrawals of Purchase Payments unless all Purchase Payments have been previously withdrawn. These amounts are subject to the CDSC. Purchase Payments are withdrawn on a first in, first out basis. 3. Withdraw any remaining amounts from any other Account Value. These amounts are not subject to the CDSC. You may request a withdrawal for an exact dollar amount after deduction of any CDSC that applies (called a "net withdrawal") or request a gross withdrawal from which we will deduct any CDSC that applies, resulting in less money being payable to you than the amount you requested. If you request a net withdrawal, the amount deducted from your Account Value to pay the CDSC may also be subject to a CDSC. Partial withdrawals may also be available following annuitization but only if you choose certain annuity payment options. (Note, however, that we do not permit commutation once annuity payments have commenced). To request the forms necessary to make a withdrawal from your Annuity, call 1-800-752-6342 or visit our Internet Website at www.prudentialannuities.com. HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL? The maximum Free Withdrawal amount during each Annuity Year is equal to 10% of all Purchase Payments that are subject to a CDSC. Withdrawals made within an Annuity Year reduce the Free Withdrawal amount available for the remainder of the Annuity 51 Year. If you do not make a withdrawal during an Annuity Year, you are not allowed to carry over the Free Withdrawal amount to the next Annuity Year. CAN I MAKE PERIODIC WITHDRAWALS FROM MY ANNUITY DURING THE ACCUMULATION PERIOD? Yes. We call these "Systematic Withdrawals." You can receive Systematic Withdrawals of earnings only or a flat dollar amount. Systematic Withdrawals may be subject to a CDSC. We will determine whether a CDSC applies and the amount in the same way as we would for a partial withdrawal. Systematic Withdrawals can be made from Account Value allocated to the Sub-accounts or Fixed Allocations. Generally, Systematic Withdrawals from Fixed Allocations are limited to earnings accrued after the program of Systematic Withdrawals begins, or payments of fixed dollar amounts that do not exceed such earnings. Systematic Withdrawals are available on a monthly, quarterly, semi-annual or annual basis. The minimum amount for each Systematic Withdrawal is $100. If any scheduled Systematic Withdrawal is for less than $100 (which may occur under a program that provides payment of an amount equal to the earnings in your Annuity for the period requested), we may postpone the withdrawal and add the expected amount to the amount that is to be withdrawn on the next scheduled Systematic Withdrawal. DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL REVENUE CODE? Yes. If your Annuity is used as a funding vehicle for certain retirement plans that receive special tax treatment under Sections 401, 403(b), 408 or 408A of the Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax on distributions made prior to age 59 1/2 if you elect to receive distributions as a series of "substantially equal periodic payments". Distributions received under these provisions in any Annuity Year that exceed the maximum amount available as a free withdrawal will be subject to any applicable CDSC. We may apply a Market Value Adjustment to any Fixed Allocations. To request a program that complies with Sections 72(t), you must provide us with certain required information in writing on a form acceptable to us. We may require advance notice to allow us to calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity must be at least $20,000 before we will allow you to begin a program for withdrawals under Sections 72(t). The minimum amount for any such withdrawal is $100 and payments may be made monthly, quarterly, semi-annually or annually. You may also annuitize your contract and begin receiving payments for the remainder of your life (or life expectancy) as a means of receiving income payments before age 59 1/2 that are not subject to the 10% penalty. WHAT ARE REQUIRED MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM? (See "Tax Considerations" for a further discussion of Required Minimum Distributions.) Required Minimum Distributions are a type of Systematic Withdrawal we allow to meet distribution requirements under Sections 401, 403(b) or 408 of the Code. Required Minimum Distribution rules do not apply to Roth IRAs during the Owner's lifetime. Under the Code, you may be required to begin receiving periodic amounts from your Annuity. In such case, we will allow you to make Systematic Withdrawals in amounts that satisfy the Required Minimum Distribution rules under the Code. We do not assess a CDSC on Required Minimum Distributions from your Annuity if you are required by law to take such Required Minimum Distributions from your Annuity at the time it is taken. However, a CDSC (if applicable) may be assessed on that portion of a Systematic Withdrawal that is taken to satisfy the Required Minimum Distribution provisions in relation to other savings or investment plans under other qualified retirement plans not maintained with Prudential Annuities. The amount of the Required Minimum Distribution for your particular situation may depend on other annuities, savings or investments. We will only calculate the amount of your Required Minimum Distribution based on the value of your Annuity. We require three (3) days advance written notice to calculate and process the amount of your payments. You may elect to have Required Minimum Distributions paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount that applies to Systematic Withdrawals applies to monthly Required Minimum Distributions but does not apply to Required Minimum Distributions taken out on a quarterly, semi-annual or annual basis. You may also annuitize your contract and begin receiving payments for the remainder of your life (or life expectancy) as a means of receiving income payments and satisfying the Required Minimum Distribution provisions under the Code. CAN I SURRENDER MY ANNUITY FOR ITS VALUE? Yes. During the accumulation period you can surrender your Annuity at any time. Upon surrender, you will receive the Surrender Value. Upon surrender of your Annuity, you will no longer have any rights under the surrendered Annuity. For purposes of calculating any applicable CDSC on surrender, the Purchase Payments being withdrawn may be greater than your remaining Account Value or the amount of your withdrawal request. This is most likely to occur if you have made prior 52 withdrawals under the Free Withdrawal provision or if your Account Value has declined in value due to negative market performance. In that scenario, we would determine the CDSC amount as the applicable percentage of the Purchase Payments being withdrawn, rather than as a percentage of the remaining Account Value or withdrawal request. Thus, the CDSC would be greater than if it were calculated as a percentage of remaining Account Value or withdrawal amount. We may apply a Market Value Adjustment to any Fixed Allocations. Under certain annuity payment options, you may be allowed to surrender your Annuity for its then current value. To request the forms necessary to surrender your Annuity, call 1-800-752-6342 or visit our Internet Website at www.prudentialannuities.com. WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY? Where permitted by law, you may request to surrender all or part of your Annuity prior to the Annuity Date without application of any otherwise applicable CDSC upon occurrence of a medically-related "Contingency Event" as described below. We may apply a Market Value Adjustment to any Fixed Allocations. If you request a full surrender, the amount payable will be your Account Value minus, with respect to XT6, (a) the amount of any XTra Credits applied within 12 months prior to your request to surrender your Annuity under this provision; and (b) the amount of any XTra Credits added in conjunction with any Purchase Payments received after our receipt of your request for a medically-related surrender (e.g. Purchase Payments received at such time pursuant to a salary reduction program). With respect to partial surrenders, we similarly reserve the right to take back XTra Credits as described above. This waiver of any applicable CDSC is subject to our rules in place at the time of your request, which currently include but are not limited to the following: . The Annuitant must have been named or any change of Annuitant must have been accepted by us, prior to the "Contingency Event" described below in order to qualify for a medically-related surrender; . the Annuitant must be alive as of the date we pay the proceeds of such surrender request; . if the Owner is one or more natural persons, all such Owners must also be alive at such time; . we must receive satisfactory proof of the Annuitant's confinement in a Medical Care Facility or Fatal Illness in writing on a form satisfactory to us; and . no additional Purchase Payments can be made to the Annuity. A "Contingency Event" occurs if the Annuitant is: . first confined in a "Medical Care Facility" while your Annuity is in force and remains confined for at least 90 days in a row; or . first diagnosed as having a "Fatal Illness" while your Annuity is in force. The definitions of "Medical Care Facility" and "Fatal Illness," as well as additional terms and conditions, are provided in your Annuity. Specific details and definitions in relation to this benefit may differ in certain jurisdictions. WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE? We currently make available annuity options that provide fixed annuity payments or adjustable annuity payments. Your Annuity provides certain fixed annuity payment options. We do not guarantee to continue to make available any other option other than the fixed annuity payment options set forth in your Annuity. Fixed options provide the same amount with each payment. Adjustable options provide a fixed payment that is periodically adjusted based on current interest rates. Please refer to the "Living Benefits" section below for a description of annuity options that are available when you elect one of the living benefits. For additional information on annuity payment options you may request a Statement of Additional Information. You may choose an Annuity Date, an annuity option and the frequency of annuity payments. You may change your choices before the Annuity Date under the terms of your contract. A maximum Annuity Date may be required by law or under the terms of your Annuity. The Annuity Date may depend on the annuity option you choose. Certain annuity options may not be available depending on the age of the Annuitant. See section below entitled "How and When Do I Choose the Annuity Payment Option?" Certain of these annuity options may be available to Beneficiaries who choose to receive the Death Benefit proceeds as a series of payments instead of a lump sum payment. Please note, with respect to XT6, you may not annuitize within the first three Annuity Years and with respect to ASAP III and APEX II, you may not annuitize within the first Annuity Year. Option 1 Payments for Life: Under this option, income is payable periodically until the death of the "key life". The "key life" (as used in this section) is the person or persons upon whose life annuity payments are based. No additional annuity payments are made after 53 the death of the key life. Since no minimum number of payments is guaranteed, this option offers the largest amount of periodic payments of the life contingent annuity options. It is possible that only one payment will be payable if the death of the key life occurs before the date the second payment was due, and no other payments nor death benefits would be payable. Under this option, you cannot make a partial or full surrender of the annuity. Option 2 Payments Based on Joint Lives: Under this option, income is payable periodically during the joint lifetime of two key lives, and thereafter during the remaining lifetime of the survivor, ceasing with the last payment prior to the survivor's death. No minimum number of payments is guaranteed under this option. It is possible that only one payment will be payable if the death of all the key lives occurs before the date the second payment was due, and no other payments or death benefits would be payable. Under this option, you cannot make a partial or full surrender of the annuity. Option 3 Payments for Life with a Certain Period: Under this option, income is payable until the death of the key life. However, if the key life dies before the end of the period selected (5, 10 or 15 years), the remaining payments are paid to the Beneficiary until the end of such period. Under this option, you cannot make a partial or full surrender of the annuity. Option 4 Fixed Payments for a Certain Period: Under this option, income is payable periodically for a specified number of years. If the payee dies before the end of the specified number of years, the remaining payments are paid to the Beneficiary until the end of such period. Note that under this option, payments are not based on any assumptions of life expectancy. Therefore, that portion of the Insurance Charge assessed to cover the risk that key lives outlive our expectations provides no benefit to an Owner selecting this option. Under this option, you cannot make a partial or full surrender of the annuity. We may make different annuity payment options available in the future. We do not guarantee to continue to make available any other option other than the fixed annuity payment options set forth in your contract. HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION? Unless prohibited by law, we require that you elect either a life annuity or an annuity with a certain period of at least 5 years if any CDSC would apply were you to surrender your Annuity on the Annuity Date. Certain annuity payment options may not be available if your Annuity Date occurs during the period that a CDSC would apply. You have a right to choose your Annuity Date, provided it is no later than the maximum Annuity Date that may be required by law or under the terms of your Annuity. For Annuities issued prior to November 20, 2006: . if you do not provide us with your Annuity Date, a default date for the Annuity Date will be the first day of the calendar month following the later of the Annuitant's 85th birthday or the fifth anniversary of our receipt of your request to purchase an Annuity; and . unless you instruct us otherwise, the annuity payments, where allowed by law, will be calculated on a fixed basis under Option 3, Payments for Life with 10 years certain. If you choose to defer the Annuity Date beyond the default date, the IRS may not consider your contract to be an annuity under the tax law. If that should occur, all gain in your Annuity at that time will become immediately taxable to you. Further, each subsequent year's increase in Account Value would be taxable in that year. By choosing to continue to defer after the default date, you will assume the risk that your Annuity will not be considered an annuity for federal income tax purposes. For Annuities issued on or after November 20, 2006: . Unless we agree otherwise, the Annuity Date you choose must be no later than the first day of the calendar month coinciding with or next following the later of: (a) the oldest Owner's or Annuitant's 95/th/ birthday, whichever occurs first, and (b) the fifth anniversary of the Issue Date. Certain states may have different requirements based on applicable laws. . If you do not provide us with your Annuity Date, the maximum date as described above will be the default date; and, unless you instruct us otherwise, we will pay you the annuity payments and the annuity payments, where allowed by law, will be calculated on a fixed basis under Option 3, Payments for Life with 10 years certain. Please note that annuitization essentially involves converting your Account Value to an annuity payment stream, the length of which depends on the terms of the applicable annuity option. Thus, once annuity payments begin, your death benefit is determined solely under the terms of the applicable annuity payment option, and you no longer participate in any optional living benefit (unless you have annuitized under that benefit). 54 HOW ARE ANNUITY PAYMENTS CALCULATED? Fixed Annuity Payments If you choose to receive fixed annuity payments, you will receive equal fixed-dollar payments throughout the period you select. The amount of the fixed payment will vary depending on the annuity payment option and payment frequency you select. Generally, the first annuity payment is determined by multiplying the Account Value, minus any state premium taxes that may apply, by the factor determined from our table of annuity rates. The table of annuity rates differs based on the type of annuity chosen and the frequency of payment selected. Our rates will not be less than our guaranteed minimum rates. These guaranteed minimum rates are derived from the a2000 Individual Annuity Mortality Table with an assumed interest rate of 3% per annum. Where required by law or regulation, such annuity table will have rates that do not differ according to the gender of the key life. Otherwise, the rates will differ according to the gender of the key life. Adjustable Annuity Payments We may make an adjustable annuity payment option available. Adjustable annuity payments are calculated similarly to fixed annuity payments except that on every fifth (5/th/) anniversary of receiving annuity payments, the annuity payment amount is adjusted upward or downward depending on the rate we are currently crediting to annuity payments. The adjustment in the annuity payment amount does not affect the duration of remaining annuity payments, only the amount of each payment. 55 LIVING BENEFIT PROGRAMS DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE THEY ARE ALIVE? Prudential Annuities offers different optional benefits, for an additional charge, that can provide investment protection for Owners while they are alive. Notwithstanding the additional protection provided under the optional Living Benefit Programs, the additional cost has the impact of reducing net performance of the investment options. Each optional benefit offers a distinct type of guarantee, regardless of the performance of the Sub-accounts, that may be appropriate for you depending on the manner in which you intend to make use of your Annuity while you are alive. Depending on which optional benefit you choose, you can have flexibility to invest in the Sub-accounts while: .. protecting a principal amount from decreases in value as of specified future dates due to investment performance; .. taking withdrawals with a guarantee that you will be able to withdraw not less than a principal amount over time; .. guaranteeing a minimum amount of growth will be applied to your principal, if it is to be used as the basis for certain types of lifetime income payments or lifetime withdrawals; or .. providing spousal continuation of certain benefits. The "living benefits" that Prudential Annuities offers are the Guaranteed Return Option (GRO), the Guaranteed Return Option Plus (GRO Plus), Guaranteed Return Option Plus 2008 (GRO Plus 2008), the Highest Daily Guaranteed Return Option (Highest Daily GRO), the Guaranteed Minimum Withdrawal Benefit (GMWB), the Guaranteed Minimum Income Benefit (GMIB), the Lifetime Five Income Benefit, the Spousal Lifetime Five Income Benefit, the Highest Daily Lifetime Five Income Benefit, the Highest Daily Lifetime Seven Income Benefit and the Spousal Highest Daily Lifetime Seven Income Benefit. In general, these benefits fall into four basic categories: Here is a general description of each kind of living benefit that we offer under this Annuity: .. Guaranteed Minimum Accumulation Benefits. The common characteristic of these benefits is that a specified amount of your annuity value is guaranteed at some point in the future. For example, under our Highest Daily GRO benefit, we make an initial guarantee that your annuity value on the day you start the benefit will not be any less ten years later. If your annuity value is less on that date, we use our own funds to give you the difference. Because the guarantee inherent in the guaranteed minimum accumulation benefit does not take effect until a specified number of years into the future, you should elect such a benefit only if your investment time horizon is of at least that duration. .. Guaranteed Minimum Income Benefit or ("GMIB"). As discussed elsewhere in this prospectus, you have the right under your annuity to ask us to convert your accumulated annuity value into a series of annuity payments. Generally, the smaller the amount of your annuity value, the smaller the amount of your annuity payments. GMIB addresses this risk, by guaranteeing a certain amount of appreciation in the amount used to produce annuity payments. Thus, even if your annuity value goes down in value, GMIB guarantees that the amount we use to determine the amount of the annuity payments will go up in value by the prescribed amount. You should select GMIB only if you are prepared to delay your annuity payments for the required waiting period and if you anticipate needing annuity payments. .. Guaranteed Minimum Withdrawal Benefit. This benefit is designed for someone who wants to access the annuity's value through withdrawals over time, rather than by annuitizing. This benefit guarantees that a specified amount will be available for withdrawal over time, even if the value of the annuity itself has declined. .. Lifetime Guaranteed Minimum Withdrawal Benefits. These benefits also are designed for someone who wants to access the annuity's value through withdrawals over time, rather than by annuitizing. These benefits differ, however, in that the withdrawal amounts are guaranteed for life (or until the second to die of spouses). The way that we establish the guaranteed amount that, in turn, determines the amount of the annual lifetime payments varies among these benefits. Under our Highest Daily Lifetime Seven benefit, for example, the guaranteed amount generally is equal to your annuity value, appreciated at seven percent annually. Please refer to the benefit descriptions that follow for a complete description of the terms, conditions and limitations of each optional benefit. Investment restrictions apply if you elect certain optional living benefits. See the chart in the "Investment Options" section of the Prospectus for a list of investment options available and permitted with each benefit. You should consult with your Financial Professional to determine if any of these optional benefits may be appropriate for you based on your financial needs. There are many factors to consider, but we note that among them you may want to evaluate the tax implications of these different approaches to meeting your needs, both between these benefits and in comparison to other potential solutions to your needs (e.g., comparing the tax implications of the withdrawal benefit and annuity payments). 56 GUARANTEED RETURN OPTION Plus /SM/ (GRO Plus /SM/) The Guaranteed Return Option Plus described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. The program can be elected by new purchasers on the Issue Date of their Annuity, and can be elected by existing Annuity Owners on either the anniversary of the Issue Date of their Annuity or on a date other than that anniversary, as described below under "Election of the Program". The Guaranteed Return Option Plus is not available if you elect any other optional living benefit, the Highest Daily Value Death Benefit, or the Dollar Cost Averaging program if it involves transfers out of the Fixed Allocations. We offer a program that, after a seven-year period following commencement of the program (we refer to the end of that period and any applicable subsequent period as the "maturity date") and on each anniversary of the maturity date thereafter while the program remains in effect, guarantees your Account Value will not be less than your Account Value on the effective date of your program (called the "Protected Principal Value"). The program also offers you the opportunity to elect a second, enhanced guaranteed amount at a later date if your Account Value has increased, while preserving the guaranteed amount established on the effective date of your program. The enhanced guaranteed amount (called the "Enhanced Protected Principal Value") guarantees that, after a separate period following election of the enhanced guarantee and on each anniversary thereafter while this enhanced guarantee amount remains in effect, your Account Value will not be less than your Account Value on the effective date of your election of the enhanced guarantee. The program monitors your Account Value daily and, if necessary, systematically transfers amounts between the Sub-accounts you choose and Fixed Allocations used to support the Protected Principal Value(s). The program may be appropriate if you wish to protect a principal amount against market downturns as of a specific date in the future, but also wish to invest in the Sub-accounts to participate in market performance. There is an additional charge if you elect the Guaranteed Return Option Plus program. The guarantees provided by the program exist only on the applicable maturity date(s) and on each anniversary of the maturity date(s) thereafter. However, due to the ongoing monitoring of your Account Value and the transfer of Account Value between the Sub-accounts and the Fixed Allocations to support our future guarantees, the program may provide some protection from significant market losses if you choose to surrender your Annuity or begin receiving annuity payments prior to a maturity date. For this same reason, the program may limit your ability to benefit from market increases while it is in effect. Key Feature - Protected Principal Value/Enhanced Protected Principal Value The Guaranteed Return Option Plus offers a base guarantee as well as the option of electing an enhanced guarantee at a later date. . Base Guarantee: Under the base guarantee, Prudential Annuities guarantees that on the maturity date and on each anniversary of the maturity date thereafter that the program remains in effect, your Account Value will be no less than the Protected Principal Value. On the maturity date and on each anniversary after the maturity date that the program remains in effect, if your Account Value is below the Protected Principal Value, Prudential Annuities will apply additional amounts to your Annuity from its general account to increase your Account Value to be equal to the Protected Principal Value. . Enhanced Guarantee: On any anniversary following commencement of the program, you can establish an enhanced guaranteed amount based on your current Account Value. Under the enhanced guarantee, Prudential Annuities guarantees that at the end of a specified period following the election of the enhanced guarantee (also referred to as its "maturity date"), and on each anniversary of the maturity date thereafter that the enhanced guaranteed amount remains in effect, your Account Value will be no less than the Enhanced Protected Principal Value. You can elect an enhanced guarantee more than once; however, a subsequent election supersedes the prior election of an enhanced guarantee. Election of an enhanced guarantee does not impact the base guarantee. In addition, you may elect an "auto step-up" feature that will automatically create an enhanced guarantee (or increase your enhanced guarantee, if previously elected) on each anniversary of the program (and create a new maturity period for the new enhanced guarantee) if the Account Value as of that anniversary exceeds the Protected Principal Value or Enhanced Protected Principal Value by 7% or more. You may also elect to terminate an enhanced guarantee. If you elect to terminate the enhanced guarantee, the base guarantee will remain in effect. If you have elected the enhanced guarantee, on the guarantee's maturity date and on each anniversary of the maturity date thereafter that the enhanced guarantee amount remains in effect, if your Account Value is below the Enhanced Protected Principal Value, Prudential Annuities will apply additional amounts to your Annuity from its general account to increase your Account Value to be equal to the Enhanced Protected Principal Value. 57 Any amounts added to your Annuity to support our guarantee under the program will be applied on a pro rata basis to the Sub-accounts (after first transferring any amounts held in the Fixed Allocations pro rata to the Sub-accounts and then, if necessary, reallocating those assets according to our asset allocation mechanism). If our assumptions are correct and the operations relating to the administration of the program work properly, we do not expect that we will need to add additional amounts to your Annuity. The Protected Principal Value is referred to as the "Base Guarantee" and the Enhanced Protected Principal Value is referred to as the "Step-up Guarantee" in the rider we issue for this benefit. Withdrawals under your Annuity Withdrawals from your Annuity, while the program is in effect, will reduce the base guarantee under the program as well as any enhanced guarantee. Cumulative annual withdrawals up to 5% of the Protected Principal Value as of the effective date of the program (adjusted for any subsequent Purchase Payments and, with respect to XT6, any Credits applied to such Purchase Payments) will reduce the applicable guaranteed amount by the actual amount of the withdrawal (referred to as the "dollar-for-dollar limit"). If the amount withdrawn is greater than the dollar-for-dollar limit, the portion of the withdrawal equal to the dollar-for-dollar limit will be treated as described above, and the portion of the withdrawal in excess of the dollar-for-dollar limit will reduce the base guarantee and the enhanced guarantee proportionally, according to the formula as described in the rider for this benefit (see the examples of this calculation below). Withdrawals other than Systematic Withdrawals will be taken pro-rata from the Sub-accounts and any Fixed Allocations. Systematic Withdrawals will be taken pro-rata from the Sub-accounts and any Fixed Allocations up to growth attributable to the Fixed Allocations and thereafter pro-rata solely from the Sub-accounts. Withdrawals will be subject to all other provisions of your Annuity, including any Contingent Deferred Sales Charge and Market Value Adjustment that would apply. Charges for other optional benefits under your Annuity that are deducted as an annual charge in arrears will not reduce the applicable guaranteed amount under the Guaranteed Return Option Plus program, however, any partial withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance Rider (not currently offered for sale) and any third party investment advisory service will be treated as withdrawals and will reduce the applicable guaranteed amount. The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the GRO Plus/SM/ program are October 13, 2004; 2.) an initial Purchase Payment of $250,000 (includes any Credits under XT6); 3.) a base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GRO Plus or other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Dollar-for-dollar Limit: .. The base guarantee amount is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 18, 2004 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. the base guarantee amount is first reduced by the Remaining Limit (from $240,000 to $237,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or $177,500). The resulting base guarantee amount is: $237,500 X (1 - $7,500 / $177,500), or $227,464.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. Example 3. Reset of the Dollar-for-dollar Limit A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As the amount withdrawn is less than the dollar-for-dollar limit: .. The base guarantee amount is reduced by the amount withdrawn (i.e., reduced by $10,000, from $227,464.79 to $217,464.79). .. The Remaining Limit for the balance of the second Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Key Feature - Allocation of Account Value Account Value is transferred to and maintained in Fixed Allocations to the extent we, in our sole discretion, deem it is necessary to support our guarantee(s) under the program. We monitor fluctuations in your Account Value each Valuation Day, as well as the prevailing interest rates on Fixed Allocations, the remaining duration(s) until the applicable maturity date(s) and the amount of Account Value allocated to Fixed Allocation(s) relative to a "reallocation trigger", which determines whether Account Value must be 58 transferred to or from Fixed Allocation(s). While you are not notified when your Account Value reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from Fixed Allocation(s). . If your Account Value is greater than or equal to the reallocation trigger, your Account Value in the Sub-accounts will remain allocated according to your most recent instructions. If a portion of Account Value was previously allocated to a Fixed Allocation to support the applicable guaranteed amount, all or a portion of those amounts may be transferred from the Fixed Allocation and re-allocated to the Sub-accounts pro-rata according to your most recent allocation instructions (including the model allocations under any asset allocation program you may have elected). A Market Value Adjustment will apply when we reallocate Account Value from a Fixed Allocation to the Sub-accounts, which may result in a decrease or increase in your Account Value. . If your Account Value is less than the reallocation trigger, a portion of your Account Value in the Sub-accounts will be transferred from the Sub-accounts pro-rata according to your allocations to a new Fixed Allocation(s) to support the applicable guaranteed amount. The new Fixed Allocation(s) will have a Guarantee Period equal to the time remaining until the applicable maturity date(s). The Account Value allocated to the new Fixed Allocation(s) will be credited with the fixed interest rate(s) then being credited to a new Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded to the next highest yearly duration). The Account Value will remain invested in each applicable Fixed Allocation until the applicable maturity date unless, at an earlier date, your Account Value is greater than or equal to the reallocation trigger and, therefore, amounts can be transferred to the Sub-accounts while maintaining the guaranteed protection under the program (as described above). If a significant amount of your Account Value is systematically transferred to Fixed Allocations to support the Protected Principal Value and/or the Enhanced Protected Principal Value during periods of market declines, low interest rates, and/or as the program nears its maturity date, less of your Account Value may be available to participate in the investment experience of the Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the base guarantee or any enhanced guarantee, or any anniversary of such maturity date(s), a significant portion of your Account Value may be allocated to Fixed Allocations to support any applicable guaranteed amount(s). If your Account Value is less than the reallocation trigger and new Fixed Allocations must be established during periods where the interest rate(s) being credited to such Fixed Allocations is low, a larger portion of your Account Value may need to be transferred to Fixed Allocations to support the applicable guaranteed amount(s), causing less of your Account Value to be available to participate in the investment experience of the Sub-accounts. Separate Fixed Allocations may be established in support of the Protected Principal Value and the Enhanced Protected Principal Value (if elected). There may also be circumstances when a Fixed Allocation will be established only in support of the Protected Principal Value or the Enhanced Protected Principal Value. If you elect an enhanced guarantee, it is more likely that a portion of your Account Value may be allocated to Fixed Allocations and will remain allocated for a longer period of time to support the Enhanced Protected Principal Value, even during a period of positive market performance and/or under circumstances where Fixed Allocations would not be necessary to support the Protected Principal Value. Further, there may be circumstances where Fixed Allocations in support of the Protected Principal Value or Enhanced Protected Principal Value are transferred to the Sub-accounts differently than each other because of the different guarantees they support. Prudential Annuities uses an allocation mechanism based on assumptions of expected and maximum market volatility, interest rates and time left to the maturity of the program to determine the reallocation trigger. The allocation mechanism is used to determine the allocation of Account Value between Fixed Allocations and the Sub-accounts you choose. Prudential Annuities reserves the right to change the allocation mechanism and the reallocation trigger at its discretion, subject to regulatory approval where required. Changes to the allocation mechanism and/or the reallocation trigger may be applied to existing programs where allowed by law. Election of the Program The Guaranteed Return Option Plus program can be elected at the time that you purchase your Annuity, or on any Valuation Day thereafter (prior to annuitization). If you elect the program after the Issue Date of your Annuity, the program will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the guaranteed amount will be based on your Account Value as of that date. If you previously elected the Guaranteed Return Option program and wish to elect the Guaranteed Return Option Plus program, your prior Guaranteed Return Option program will be terminated. Termination of the Guaranteed Return Option for the purpose of electing the Guaranteed Return Option Plus will be treated as any other termination of the Guaranteed Return Option (see below), including the termination of any guaranteed amount, and application of any applicable Market Value Adjustment when amounts are transferred to the Sub-accounts as a result of the termination. The Guaranteed Return Option Plus program will then be added to your Annuity based on the current Account Value. Termination of the Program You can elect to terminate the enhanced guarantee but maintain the protection provided by the base guarantee. You also can terminate the Guaranteed Return Option Plus program entirely. If you terminate the program entirely, you can subsequently elect to 59 participate in the program again (based on the Account Value on that date) by furnishing the documentation we require. In a rising market, you could, for example, terminate the program on a given Valuation Day and two weeks later reinstate the program with a higher base guarantee (and a new maturity date). However, your ability to reinstate the program is limited by the following: (A) in any Annuity Year, we do not permit more than two program elections (including any election made effective on the Annuity issue date and any election made by a surviving spouse) and (B) a program reinstatement cannot be effected on the same Valuation Day on which a program termination was effected. Upon termination, any Account Value in the Fixed Allocations will be transferred to the Sub-accounts pro-rata based on the Account Values in such Sub-accounts, or in accordance with any effective asset allocation program. A Market Value Adjustment will apply. The program will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract); (b) as of the date Account Value is applied to begin annuity payments; or (c) upon full surrender of the Annuity. If you elect to terminate the program, the Guaranteed Return Option Plus will no longer provide any guarantees. The surviving spouse may elect the benefit at any time, subject to the limitations described above, after the death of the Annuity Owner. The surviving spouse's election will be effective on the Valuation Day that we receive the required documentation in good order at our home office, and the Account Value on that Valuation Day will be the Protected Principal Value. Special Considerations under the Guaranteed Return Option Plus This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the Sub-accounts. No Fixed Allocations may be in effect as of the date that you elect to participate in the program. However, the reallocation trigger may transfer Account Value to Fixed Allocations as of the effective date of the program under some circumstances. . You cannot allocate any portion of Purchase Payments (including any Credits applied to such Purchase Payments under XT6) or transfer Account Value to or from a Fixed Allocation while participating in the program; however, all or a portion of any Purchase Payments (including any Credits applied to such Purchase Payments under XT6) may be allocated by us to Fixed Allocations to support the amount guaranteed. You cannot participate in any dollar cost averaging program that transfers Account Value from a Fixed Allocation to a Sub-account. . Transfers from Fixed Allocations made as a result of the allocation mechanism under the program will be subject to the Market Value Adjustment formula under an Annuity; however, the 0.10% liquidity factor in the formula will not apply. A Market Value Adjustment may be either positive or negative. Transfer amounts will be taken from the most recently established Fixed Allocation. . Transfers from the Sub-accounts to Fixed Allocations or from Fixed Allocations to the Sub-accounts under the program will not count toward the maximum number of free transfers allowable under an Annuity. . Any amounts applied to your Account Value by Prudential Annuities on the maturity date or any anniversary of the maturity date will not be treated as "investment in the contract" for income tax purposes. . Low interest rates may require allocation to Fixed Allocations even when the current Account Value exceeds the guarantee. . As the time remaining until the applicable maturity date gradually decreases the program will become increasingly sensitive to moves to Fixed Allocations. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We currently deduct a charge equal to 0.25% of the average daily net assets of the Sub-accounts for participation in the Guaranteed Return Option Plus program. The annual charge is deducted daily. The charge is deducted to compensate Prudential Annuities for: (a) the risk that your Account Value on the maturity date is less than the amount guaranteed; and (b) administration of the program. If you elect the Enhanced Guarantee under the program, and on the date you elect to step-up, the charges under the program have changed for new purchases, your program may be subject to the new charge level. GUARANTEED RETURN OPTION (GRO)(R) The Guaranteed Return Option described below is offered only in those jurisdictions where we have not yet received regulatory approval for the Guaranteed Return Option Plus as of the date the election of the option is made. Certain terms and conditions may differ between jurisdictions. The program can be elected by new purchasers on the Issue Date of their Annuity, and can be elected by existing Annuity Owners on either the anniversary of the Issue Date of their Annuity or on a date other than that anniversary, as described below under "Election of the Program". The Guaranteed Return Option is not available if you elect any other optional living benefit, or the Dollar Cost Averaging program if it involves transfers out of the Fixed Allocations. 60 We offer a program that, after a seven-year period following commencement of the program (we refer to the end of that period as the "maturity date") guarantees your Account Value will not be less than your Account Value on the effective date of your program (called the "Protected Principal Value"). The program monitors your Account Value daily and, if necessary, systematically transfers amounts between the Sub-accounts you choose and the Fixed Allocation used to support the Protected Principal Value. The program may be appropriate if you wish to protect a principal amount against market downturns as of a specific date in the future, but also wish to invest in the Sub-accounts to participate in market performance. There is an additional charge if you elect the Guaranteed Return Option program. The guarantee provided by the program exists only on the applicable maturity date. However, due to the ongoing monitoring of your Account Value and the transfer of Account Value between the Sub-accounts and the Fixed Allocation to support our future guarantee, the program may provide some protection from significant market losses if you choose to surrender your Annuity or begin receiving annuity payments prior to a maturity date. For this same reason, the program may limit your ability to benefit from market increases while it is in effect. Key Feature - Protected Principal Value Under the GRO option, Prudential Annuities guarantees that on the maturity date, your Account Value will be no less than the Protected Principal Value. On the maturity date if your Account Value is below the Protected Principal Value, Prudential Annuities will apply additional amounts to your Annuity from its general account to increase your Account Value to be equal to the Protected Principal Value. Any amounts added to your Annuity to support our guarantee under the program will be applied to the Sub-accounts pro rata, after first transferring any amounts held in the Fixed Allocations pro rata to the Sub-accounts, based on your most recent allocation instructions in accordance with the allocation mechanism we use under the program. We will notify you of any amounts added to your Annuity under the program. If our assumptions are correct and the operations relating to the administration of the program work properly, we do not expect that we will need to add additional amounts to an Annuity. The Protected Principal Value is generally referred to as the "Guaranteed Amount" in the rider we issue for this benefit. Key Feature - Allocation of Account Value Account Value is transferred to and maintained in a Fixed Allocation to the extent we, in our sole discretion, deem it is necessary to support our guarantee under the program. We monitor fluctuations in your Account Value each Valuation Day, as well as the prevailing interest rate on the Fixed Allocation, the remaining duration until the applicable maturity date and the amount of Account Value allocated to the Fixed Allocation relative to a "reallocation trigger", which determines whether Account Value must be transferred to or from the Fixed Allocation. While you are not notified when your Account Value reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the Fixed Allocation. . If your Account Value is greater than or equal to the reallocation trigger, your Account Value in the Sub-accounts will remain allocated according to your most recent instructions. If a portion of Account Value was previously allocated to the Fixed Allocation to support the guaranteed amount, all or a portion of those amounts may be transferred from the Fixed Allocation and re-allocated to the Sub-accounts pro-rata according to your most recent allocation instructions (including the model allocations under any asset allocation program you may have elected). A Market Value Adjustment will apply when we reallocate Account Value from the Fixed Allocation to the Sub-accounts, which may result in a decrease or increase in your Account Value. . If your Account Value is less than the reallocation trigger, a portion of your Account Value in the Sub-accounts will be transferred from your Sub-accounts pro-rata according to your allocations to a new Fixed Allocation to support the guaranteed amount. The new Fixed Allocation will have a Guarantee Period equal to the time remaining until the applicable maturity date. The Account Value allocated to the new Fixed Allocation will be credited with the fixed interest rate then being credited to a new Fixed Allocation maturing on the applicable maturity date (rounded to the next highest yearly duration). The Account Value will remain invested in the Fixed Allocation until the maturity date unless, at an earlier date, your Account Value is greater than or equal to the reallocation trigger and, therefore, amounts can be transferred to the Sub-accounts while maintaining the guaranteed protection under the program (as described above). If a significant amount of your Account Value is systematically transferred to the Fixed Allocation to support the Protected Principal Value during periods of market declines, low interest rates, and/or as the program nears its maturity date, less of your Account Value may be available to participate in the investment experience of the Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the guarantee a significant portion of your Account Value may be allocated to the Fixed Allocation to support any applicable guaranteed amount. If your Account Value is less than the reallocation trigger and a new Fixed Allocation must be established during periods where the interest rate being credited to such Fixed Allocation is low, a larger portion of your Account Value may need to be transferred to 61 the Fixed Allocation to support the guaranteed amount, causing less of your Account Value to be available to participate in the investment experience of the Sub-accounts. Withdrawals from your Annuity, while the program is in effect, will reduce the Protected Principal Value proportionally. The proportion will be equal to the proportionate reduction in the Account Value due to the withdrawal as of that date. Withdrawals will be taken pro rata from the Sub-accounts and any Fixed Allocations. Systematic withdrawals will be taken pro rata from the Sub-accounts and any Fixed Allocations up to growth attributable to the Fixed Allocations and thereafter pro rata solely from the Sub-accounts. Withdrawals will be subject to all other provisions of your Annuity, including any Contingent Deferred Sales Charge and Market Value Adjustment that would apply. Prudential Annuities uses an allocation mechanism based on assumptions of expected and maximum market volatility, interest rates and time left to the maturity of the program to determine the reallocation trigger. The allocation mechanism is used to determine the allocation of Account Value between the Fixed Allocation and the Sub-accounts you choose. Prudential Annuities reserves the right to change the allocation mechanism and the reallocation trigger at its discretion, subject to regulatory approval where required. Changes to the allocation mechanism and/or the reallocation trigger may be applied to existing programs where allowed by law. Election of the Program The Guaranteed Return Option can be elected at the time that you purchase your Annuity, or on any Valuation Day thereafter (prior to annuitization). If you elect the program after the Issue Date of your Annuity, the program will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the Protected Principal Value will be based on your Account Value as of that date. Restart of the Program Once each Annuity Year you may request to restart the Program. Such a request is an election by you to terminate the existing Program and start a new one. Restarts only take effect on anniversaries of the Issue Date. To make such a request for a restart, you must notify us. If we accept your request, we then terminate the existing Program as of that valuation period, if it is an anniversary of the Issue Date, or, if not, as of the next following anniversary of the Issue Date. The new Program starts at that time. The initial Protected Principal Value for the new Program is the Account Value as of the effective date of the new Program. Unless you tell us otherwise, the duration of the new Program will be the same as that for the existing Program. However, if we do not then make that duration available, you must elect from those we make available at that time. As part of terminating the existing Program, we transfer any amounts in Fixed Allocations, subject to a Market Value Adjustment, to the Sub-accounts on a pro-rata basis. If your entire Account Value was then in Fixed Allocations, you must first provide us instructions as to how to allocate the transferred Account Value among the Sub-accounts. Termination of the Program The Annuity Owner also can terminate the Guaranteed Return Option program. Upon termination, any Account Value in the Fixed Allocation will be transferred to the Sub-accounts pro-rata based on the Account Values in such Sub-accounts, or in accordance with any effective asset allocation program. A Market Value Adjustment will apply. The program will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract); (b) as of the date Account Value is applied to begin annuity payments; or (c) upon full surrender of your Annuity. If you elect to terminate the program, the Guaranteed Return Option will no longer provide any guarantees. If the surviving spouse assumes your Annuity, he/she may re-elect the benefit on any anniversary of the Issue Date of the Annuity or, if the deceased Owner had not previously elected the benefit, may elect the benefit at any time. The surviving spouse's election will be effective on the Valuation Day that we receive the required documentation in good order at our home office, and the Account Value on that Valuation Day will be the Protected Principal Value. The charge for the Guaranteed Return Option program will no longer be deducted from your Account Value after the benefit has been terminated, although for those Annuities for which the GRO charge is deducted annually rather than daily (see Charges Under the Program below), we will deduct the final annual charge upon termination of the benefit. Special Considerations under the Guaranteed Return Option This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the Sub-accounts. The Fixed Allocation may not be in effect as of the date that you elect to participate in the program. However, the reallocation trigger may transfer Account Value to the Fixed Allocation as of the effective date of the program under some circumstances. . Annuity Owners cannot allocate any portion of Purchase Payments (including any Credits applied to such Purchase Payments under XT6) or transfer Account Value to or from the Fixed Allocation while participating in the program; however, all or a portion of any Purchase Payments (including any Credits applied to such Purchase Payments under XT6) may be allocated by us to the Fixed Allocation to support the amount guaranteed. You cannot participate in any dollar cost averaging program that transfers Account Value from a Fixed Allocation to a Sub-account. . Transfers from the Fixed Allocation made as a result of the allocation mechanism under the program will be subject to the Market Value Adjustment formula under an Annuity; however, the 0.10% liquidity factor in the formula will not apply. A Market Value Adjustment may be either positive or negative. Transfer amounts will be taken from the most recently established Fixed Allocation. 62 . Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed Allocation to the Sub-accounts under the program will not count toward the maximum number of free transfers allowable under an Annuity. . Any amounts applied to your Account Value by Prudential Annuities on the maturity date will not be treated as "investment in the contract" for income tax purposes. . Low interest rates may require allocation to the Fixed Allocation even when the current Account Value exceeds the guarantee. . As the time remaining until the applicable maturity date gradually decreases the program will become increasingly sensitive to moves to the Fixed Allocation. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We deduct a charge equal to 0.25% of the average daily net assets of the Sub-accounts for participation in the Guaranteed Return Option program. The annual charge is deducted daily. The charge is deducted to compensate Prudential Annuities for: (a) the risk that your Account Value on the maturity date is less than the amount guaranteed; and (b) administration of the program. With respect to XT6 and APEX II, effective November 18, 2002, Prudential Annuities changed the manner in which the annual charge for the Guaranteed Return Option is deducted to the method described above. The annual charge for the Guaranteed Return Option for Owners who elected the benefit between February 4, 2002 and November 15, 2002 for XT6 and APEX II and subsequent to November 15, 2002 in those states where the daily deduction of the charge has not been approved, is deducted annually, in arrears, according to the prospectus in effect as of the date the program was elected. Owners who terminate and then re-elect the Guaranteed Return Option or elect to restart the Guaranteed Return Option at any time after November 15, 2002 will be subject to the charge method described above. Owners who purchased an ASAP III Annuity between April 1, 2003 and September 30, 2003 or an ASL II Annuity between February 4, 2002 and November 15, 2002 (the "Promotional Period") will not be charged the 0.25% annual fee for the Guaranteed Return Option program (or GRO Plus if we are no longer offering GRO) if elected at any time while their Annuity is in effect. . Prudential Annuities will not charge the 0.25% annual fee for the entire period that the program remains in effect, including any extension of the program's maturity date resulting from the Owner's election to restart the 7-year program duration, regardless of when the Owner elects to participate in the Guaranteed Return Option program (or GRO Plus if we are no longer offering GRO). . Owners who complete the initial 7-year program duration OR terminate the program before the program's maturity date, will not be charged the 0.25% annual fee for participating in the program if they re-elect the Guaranteed Return Option program (or GRO Plus if we are no longer offering GRO) at a later date. . All other terms and conditions of your Annuity and the Guaranteed Return Option program (or GRO Plus if we are no longer offering GRO) apply to Owners who qualify for the waiver of the 0.25% annual fee. . Owners who purchase an Annuity after the completion of the Promotional Period do not qualify for the 0.25% annual fee waiver. GUARANTEED RETURN OPTION PLUS 2008/SM/ (GRO Plus 2008)/SM / The GRO Plus 2008 benefit described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Upon our receipt of approval in a given State, we will offer only GRO Plus 2008 for new elections, rather than the existing versions of GRO. Certain terms and conditions may differ between jurisdictions once approved. You can elect this benefit on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in either this benefit or Highest Daily GRO, in which case your election must be on an Annuity Anniversary). GRO Plus 2008 is not available if you participate in any other optional living benefit. However, GRO Plus 2008 may be elected together with any optional death benefit, other than the Highest Daily Value Death Benefit and the Plus40 Optional Life Insurance Rider. Under GRO Plus 2008, we guarantee that the Account Value on the date that the benefit is added to your Annuity (adjusted for subsequent Purchase Payments and withdrawals as detailed below) will not be any less than that original value on the seventh anniversary of benefit election and each anniversary thereafter. We refer to this initial guarantee as the "base guarantee." In addition to the base guarantee, GRO Plus 2008 offers the possibility of an enhanced guarantee. You may lock in an enhanced guarantee once per "benefit year" (i.e., a year beginning on the date you acquired the benefit and each anniversary thereafter) if your Account Value on the Valuation Day exceeds the amount of any outstanding base guarantee or enhanced guarantee. We guarantee that the Account Value locked-in by that enhanced guarantee will not be any less seven years later, and each anniversary of that date thereafter. In addition, you may elect an automatic enhanced guarantee feature under which, if Account Value on a 63 benefit anniversary exceeds the highest existing guarantee by 7% or more, we guarantee that such Account Value will not be any less seven benefit anniversaries later and each benefit anniversary thereafter. You may maintain only one enhanced guarantee in addition to your base guarantee. Thus, when a new enhanced guarantee is created, it cancels any existing enhanced guarantee. However, the fact that an enhanced guarantee was effected automatically on a benefit anniversary does not prevent you from "manually" locking-in an enhanced guarantee during the ensuing benefit year. Please note that whenever an enhanced guarantee is created, we reserve the right to increase your charge for GRO Plus 2008 if we have increased the charge for new elections of the benefit generally. You may not lock in an enhanced guarantee, either manually or through our optional automatic program, within seven years of the date by which annuity payments must commence under the terms of your Annuity (please see "How and When Do I Choose The Annuity Payment Option?" for further information on your maximum Annuity Date). In general, we refer to a date on which the Account Value is guaranteed to be present as the "maturity date". If the Account Value on the maturity date is less than the guaranteed amount, we will contribute funds from our general account to bring your Account Value up to the guaranteed amount. If the maturity date is not a Valuation Day, then we would contribute such an amount on the next Valuation Day. We will allocate any such amount to each Sub-account (other than the "Current AST bond portfolio Sub-account" described below) in accordance with your current allocations instructions. Regardless of whether we need to contribute funds at the end of a guarantee period, we will at that time transfer all amounts held within the Current AST bond portfolio Sub-account associated with the maturing guarantee to your other Sub-accounts, on a pro rata basis. If the entire Account Value is invested in an AST bond portfolio Sub-account, we will allocate according to your current allocation instructions. We increase both the base guarantee and any enhanced guarantee by the amount of each Purchase Payment (and associated credits) made subsequent to the date that the guarantee was established. For example, if the effective date of the benefit was January 1, 2009 and the Account Value was $100,000 on that date, then a $30,000 Purchase Payment made on March 30, 2010 would increase the base guarantee amount to $130,000. As illustrated in the examples below, additional Purchase Payments also increase an amount we refer to as the "dollar-for-dollar corridor." The dollar-for-dollar corridor is equal to 5% of the base guarantee amount (i.e., 5% of the Account Value at benefit election). Thereafter, the dollar-for-dollar corridor is adjusted only for subsequent Purchase Payments (i.e., 5% of the Purchase Payment is added to the corridor amount) and "excess withdrawals" (as described below). Thus, the creation of any enhanced guarantee has no impact on the dollar-for-dollar corridor. Each "benefit year", withdrawals that you make that are equal to or less than the dollar-for-dollar corridor reduce both the amount of the dollar-for-dollar corridor for that benefit year plus the base guarantee amount and the amount of any enhanced guarantee by the exact amount of the withdrawal. However, if you withdraw more than the dollar-for-dollar corridor in a given benefit year, we use the portion of the withdrawal that exceeded the dollar-for-dollar corridor to effect a proportional reduction to both the dollar-for-dollar corridor itself and each guarantee amount. We calculate a proportional reduction by (i) identifying the amount of the withdrawal that exceeded the dollar-for-dollar corridor (the "excess withdrawal") (ii) subtracting the dollar-for-dollar amount from the Account Value prior to the withdrawal (iii) dividing the excess withdrawal by the amount in (ii), and (iv) reducing each guarantee amount, and the dollar-for-dollar corridor itself, by the percentage derived in (iii). See examples of this calculation below. Any partial withdrawals in payment of any third party investment advisory service will be treated as withdrawals, and will reduce each guarantee amount and the dollar-for-dollar corridor in the manner indicated above. EXAMPLES The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the GRO Plus/SM/ 2008 program are October 13, 2008; 2.) an initial Purchase Payment of $250,000 (includes any Credits); 3.) a base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GRO Plus 2008 or other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 29, 2008 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Dollar-for-dollar Limit: .. The base guarantee amount is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 18, 2008 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. the base guarantee amount is first reduced by the Remaining Limit (from $240,000 to $237,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or $177,500). 64 The resulting base guarantee amount is: $237,500 X (1 - $7,500 / $177,500), or $227,464.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. The resulting dollar-for-dollar corridor for the next Annuity Year is calculated by multiplying the prior dollar-for-dollar corridor by the same ratio by which we reduce the Guarantee Amount above: $12,500 X (1 - $7,500 / $177,500), or $11,971.83. Key Feature - Allocation of Account Value To allow us to make these guarantees, we monitor your Account Value according to the formula that is set forth in the schedule supplement to the rider. Because the formula is made part of your schedule supplement, the formula applicable to you may not be altered once you elect the benefit. However, we do reserve the right to amend the formula for newly-issued Annuities that elect GRO Plus 2008 and for existing Annuities that elect the benefit in the future. This required allocation mechanism helps us manage our financial exposure under GRO Plus 2008, by moving assets out of certain Sub-accounts in the event of securities market declines. In essence, we seek to preserve the value of these assets, by transferring them to a more stable option (i.e., one or more specified bond portfolios of Advanced Series Trust). We refer to these bond portfolios collectively as the "AST bond portfolios." The formula also contemplates the transfer of assets from an AST bond portfolio to the other Sub-accounts in certain other scenarios. The formula itself is the same as that used for our Highest Daily GRO benefit, and is set forth in Appendix I to this prospectus. A summary description of each AST Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies Of The Portfolios? Upon the initial transfer of your Account Value into an AST Bond Portfolio, we will send a prospectus for that Portfolio to you along with your confirmation. In addition, you can find a copy of the AST Bond Portfolio prospectus by going to www.prudentialannuities.com. Each AST bond portfolio is unique, in that its underlying investments generally mature at different times. For example, there would be an AST bond portfolio whose underlying investments generally mature in 2015, an AST bond portfolio whose underlying investments generally mature in 2016, and so forth. We will introduce new AST bond portfolios in subsequent years, to correspond generally to the length of new guarantee periods that are created under this benefit (and the Highest Daily GRO benefit). If you have elected GRO Plus 2008, you may invest in an AST bond portfolio only by operation of the asset transfer formula, and thus you may not allocate Purchase Payments to such a Portfolio. Please see this prospectus and the prospectus for the Advanced Series Trust for more information about each AST bond portfolio used with this benefit. Although we employ several AST bond portfolios for purposes of the benefit, the formula described in the next paragraph operates so that your Account Value may be allocated to only one AST bond portfolio Sub-account at one time. In the description of the formula in the next paragraph, we refer to the AST bond portfolio Sub-account in which you are invested immediately prior to any potential asset transfer as the "Current AST bond portfolio Sub-account." The formula may dictate that a transfer out of the Current AST Bond Portfolio Sub-account be made, or alternatively may mandate a transfer into another AST bond portfolio Sub-account. Any transfer into an AST bond portfolio Sub-account will be directed to the AST bond portfolio Sub-account associated with the "current liability" (we refer to that Sub-account as the "Transfer AST bond portfolio Sub-account"). Note that if the Current AST bond portfolio Sub-account is associated with the current liability, then that Sub-account would be the Transfer AST bond portfolio Sub-account, and we would simply transfer additional assets into the Sub-account if such a transfer is dictated by the formula. As indicated, the AST bond portfolios are employed with this benefit to help us mitigate the financial risks under our guarantee. Thus, in accordance with the formula, applicable to you under the benefit, we determine which AST bond portfolio your Account Value is transferred to, and under what circumstances a transfer is made. In general, the asset transfer formula works as follows (please see Appendix I). On each Valuation Day, the formula automatically performs an analysis with respect to each guarantee amount that is outstanding. For each outstanding guarantee, the formula begins by determining the present value on that Valuation Day that, if appreciated at the applicable "discount rate", would equal the applicable guarantee amount on the maturity date. As detailed in the formula, the discount rate is an interest rate determined by taking a benchmark index used within the financial services industry and then reducing the rate determined by that index by a prescribed adjustment. Once selected, we do not change the applicable benchmark index (although we do reserve the right to use a new benchmark index if the original benchmark is discontinued). The greatest of each such present value is referred to as the "current liability" in the formula. The formula compares the current liability to the amount of your Account Value held within the Current AST bond portfolio Sub-account and to your Account Value held within the other Sub-accounts. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount held within your other Sub-accounts, exceeds an upper target value (currently, 0.85), then the formula will make a transfer into the Transfer AST bond portfolio Sub-account, in the amount dictated by the formula. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount within your other Sub-accounts, is less than a lower target value (currently, 0.79), then the formula will transfer Account Value within the Current AST bond portfolio Sub-account into the other Sub-accounts (other than the Transfer AST bond portfolio Sub-account), in the amount dictated by the formula. If a significant amount of your Account Value is systematically transferred to an AST bond portfolio Sub-account to support the guarantee amounts during periods of market declines, low interest rates, and/or as the guarantee nears its maturity date, less of your Account Value may be available to participate in the investment experience of the other 65 Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the guarantee, a significant portion of your Account Value may be allocated to an AST bond portfolio Sub-account to support any applicable guaranteed amount(s). Election/Cancellation of the Program GRO Plus 2008 can be elected on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in either this benefit or Highest Daily GRO, in which case your election must be on an Annuity Anniversary). If you elect the benefit after the Issue Date of your Annuity, the benefit will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the base guarantee amount will equal the Account Value on that day. You may elect GRO Plus 2008 only if the oldest of the Owner and Annuitant is 84 or younger on the date of election (80 or younger, in New York). If you currently participate in one of the original versions of GRO, you may terminate that benefit at any time and elect GRO Plus 2008. You may cancel the GRO Plus 2008 benefit at any time. Upon cancellation, we will transfer any Account Value that is held in an AST bond portfolio Sub-account to the other Sub-accounts, according to your current allocation instructions. GRO Plus 2008 will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract), unless the Annuity is continued by the surviving spouse; (b) as of the date Account Value is applied to begin annuity payments; (c) as of the anniversary of benefit election that immediately precedes the contractually-mandated latest annuity date, or (d) upon full surrender of the Annuity. If you elect to terminate the program, GRO Plus 2008 will no longer provide any guarantees. The charge for the GRO Plus 2008 program will no longer be deducted from your Account Value upon termination of the program. Special Considerations under GRO Plus 2008 This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the permitted Sub-accounts. The permitted Sub-accounts are those described in the Investment Option section of the prospectus. No fixed interest rate allocations may be in effect as of the date that you elect to participate in the program. . You cannot participate in any dollar cost averaging program that transfers Account Value from a fixed interest rate option to a Sub-account. . Transfers between an AST bond portfolio Sub-account and your other Sub-accounts under the program will not count toward the maximum number of free transfers allowable under the Annuity. . Any amounts applied to your Account Value by us on a maturity date will not be treated as "investment in the contract" for income tax purposes. . As the time remaining until the applicable maturity date gradually decreases, the program may become increasingly sensitive to moves to an AST bond portfolio Sub-account. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. Moreover, if you are invested in prohibited investment options and seek to acquire the benefit, we will ask you to reallocate to permitted investment options as a prerequisite to acquiring the benefit. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We deduct a charge equal to 0.35% of the average daily net assets of the Sub-accounts for participation in the GRO Plus 2008 program. The annual charge is deducted daily. The charge is deducted to compensate us for: (a) the risk that your Account Value on a maturity date is less than the amount guaranteed and (b) administration of the program. We reserve the right to increase this fee for newly-issued contracts or new elections of the benefit. HIGHEST DAILY GUARANTEED RETURN OPTION/SM/ (HD GRO)/SM/ The Highest Daily Guaranteed Return Option described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. You can elect this benefit on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in this benefit, in which case your election must be on an Annuity Anniversary). Highest Daily GRO is not available if you participate in any other living benefit. However, Highest Daily GRO may be elected together with any optional death benefit, other than the Highest Daily Value Death Benefit or the Plus40 Life Insurance Rider. Highest Daily GRO creates a series of separate guarantees, each of which is based on the highest Account Value attained on a day during the applicable time period. As each year of your participation in the benefit passes, we create a new guarantee. Each guarantee then remains in existence until the date on which it matures (unless the benefit terminates sooner). We refer to each date on which the specified Account Value is guaranteed as the "maturity date" for that guarantee. 66 The guarantees provided by the program exist only on the applicable maturity date(s). However, due to the ongoing monitoring of your Account Value, and the transfer of Account Value to support our future guarantees, the program may provide some protection from significant market losses if you choose to surrender your Annuity or begin receiving annuity payments prior to a maturity date. For this same reason, the program may limit your ability to benefit from market increases while it is in effect. The initial guarantee is created on the day that the Highest Daily GRO benefit is added to your Annuity. We guarantee that your Account Value on the tenth anniversary of that day (we refer to each such anniversary as a "benefit anniversary") will not be less than your Account Value on the day that the Highest Daily GRO benefit was added to your Annuity. Each benefit anniversary thereafter, we create a new guarantee. With respect to each such subsequent guarantee, we identify the highest Account Value that occurred between the date of that benefit anniversary and the date on which Highest Daily GRO was added to your Annuity. We guarantee that your Account Value ten years after that benefit anniversary will be no less than the highest daily Account Value that occurred during that time period. The following example illustrates the time period over which we identify the highest daily Account Value for purposes of each subsequent guarantee under the benefit. If the date of benefit election were January 1, 2009, we would create a guarantee on January 1, 2012 based on the highest Account Value achieved between January 1, 2009 and January 1, 2012, and that guarantee would mature on January 1, 2022. As described below, we adjust each of the guarantee amounts for purchase payments and withdrawals. In general, we refer to a date on which the Account Value is guaranteed to be present as the "maturity date". If the Account Value on the maturity date is less than the guaranteed amount, we will contribute funds from our general account to bring your Account Value up to the guaranteed amount. If the maturity date is not a Valuation Day, then we would contribute such an amount on the next Valuation Day. We will allocate any such amount to each Sub-account (other than the "Current AST bond portfolio Sub-account" described below) in accordance with your current allocations instructions. Regardless of whether we need to contribute funds at the end of a guarantee period, we will at that time transfer all amounts held within the AST bond portfolio Sub-account associated with the maturing guarantee to your other Sub-accounts, on a pro rata basis. If the entire account value is invested in the AST bond portfolio Sub-account, we will allocate according to your current allocation instructions. We increase the amount of each guarantee that has not yet reached its maturity date, as well as the highest daily Account Value that we calculate to establish a guarantee, by the amount of each Purchase Payment (and associated Credits) made prior to the applicable maturity date. For example, if the effective date of the benefit was January 1, 2009, and there was an initial guaranteed amount that was set at $100,000 maturing January 1, 2019, and a second guaranteed amount that was set at $120,000 maturing January 1, 2020, then a $30,000 Purchase Payment made on March 30, 2010 would increase the guaranteed amounts to $130,000 and $150,000, respectively. As illustrated in the examples below, additional Purchase Payments also increase an amount we refer to as the "dollar-for-dollar corridor." We reflect the effect of withdrawals by reference to an amount called the "dollar-for-dollar corridor." The dollar-for-dollar corridor is set initially to equal 5% of the initial guaranteed amount (i.e., 5% of the Account Value at benefit election). Each "benefit year" (i.e., a year that begins on the date of election of Highest Daily GRO and each anniversary thereafter), withdrawals that you make that are equal to or less than the dollar-for-dollar corridor reduce (i) the amount of the dollar-for-dollar corridor for that benefit year (ii) the amount of each outstanding guarantee amount, and (iii) the highest daily Account Value that we calculate to establish a guarantee, by the exact amount of the withdrawal. However, if you withdraw more than the dollar-for-dollar corridor in a given benefit year, we use the portion of the withdrawal that exceeded the dollar-for-dollar corridor to effect a proportional reduction to both the dollar-for-dollar corridor itself and each outstanding guaranteed amount, as well as the highest daily Account Value that we calculate to establish a guarantee. We calculate a proportional reduction by (i) identifying the amount of the withdrawal that exceeded the dollar-for-dollar corridor (the "excess withdrawal") (ii) subtracting the dollar-for-dollar amount from the Account Value prior to the withdrawal (iii) dividing the excess withdrawal by the amount in (ii), and (iv) reducing each guaranteed amount, as well as the highest daily Account Value that we calculate to establish a guarantee and the dollar for dollar corridor itself, by the percentage derived in (iii). See examples of this calculation below. Any partial withdrawals in payment of any third party investment advisory service will be treated as withdrawals, and will reduce each applicable guaranteed amount and the dollar-for-dollar corridor in the manner indicated above. EXAMPLES The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the Highest Daily GRO program are October 13, 2008; 2.) an initial Purchase Payment of $250,000 (includes any Credits); 3.) an initial guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for Highest Daily GRO or other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 29, 2008 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Dollar-for-dollar Limit: .. The initial guarantee amount is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). 67 Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 18, 2008 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. the initial guarantee amount is first reduced by the Remaining Limit (from $240,000 to $237,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or $177,500). The resulting initial guarantee amount is: $237,500 X (1 - $7,500 / $177,500), or $227,464.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. The resulting dollar-for-dollar corridor for the next Annuity Year is calculated by multiplying the prior dollar-for-dollar corridor by the same ratio by which we reduce the Guarantee Amount above: $12,500 X (1 - $7,500 / $177,500), or $11,971.83. Key Feature - Allocation of Account Value To allow us to make these guarantees, we monitor your Account Value according to the formula that is set forth in the schedule supplement to the rider. Because the formula is made part of your schedule supplement, the formula may not be altered. However, we do reserve the right to amend the formula for newly-issued annuity contracts that elect Highest Daily GRO and for existing contracts that elect the benefit post-issue. This required allocation mechanism helps us manage our financial exposure under Highest Daily GRO, by moving assets out of certain Sub-accounts in certain scenarios. In essence, we seek to preserve the value of these assets, by transferring them to a more stable option (i.e., one of a specified group of bond portfolios within Advanced Series Trust) (collectively, the "AST Bond Portfolios"). The formula also contemplates the transfer of assets from the AST Bond Portfolios to the other Sub-accounts in other scenarios. For purposes of operating the Highest Daily GRO formula, we have included as investment options within this Annuity several AST bond portfolios. Each AST bond portfolio is unique, in that its underlying investments generally mature at the same time as each outstanding maturity date that exists under the benefit. For example, there would be an AST bond portfolio whose underlying investments generally mature in 2018 (corresponding to all guarantees that mature in 2018), an AST Bond Portfolio whose underlying investments generally mature in 2019 (corresponding to all guarantees that mature in 2019), and so forth. We will introduce new AST bond portfolios in subsequent years, to correspond generally to the length of new guarantee periods that are created under this benefit. If you have elected Highest Daily GRO, you may invest in an AST bond portfolio only by operation of the asset transfer formula, and thus you may not allocate Purchase Payments to such a Portfolio. Please see this prospectus and the prospectus for the Advanced Series Trust for more information about each AST bond portfolio used with this benefit. A summary description of each AST Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies Of The Portfolios?" Upon the initial transfer of your Account Value into an AST Bond Portfolio, we will send a prospectus for that Portfolio to you along with your confirmation. In addition, you can find a copy of the AST Bond Portfolio prospectus by going to www.prudentialannuities.com Although we employ several AST bond portfolios for purposes of the benefit, the formula described in the next paragraph operates so that your Account Value may be allocated to only one AST bond portfolio Sub-account at one time. In the description of the formula in the next paragraph, we refer to the AST bond portfolio Sub-account in which you are invested immediately prior to any potential asset transfer as the "Current AST bond portfolio Sub-account." The formula may dictate that a transfer out of the Current AST bond portfolio Sub-account be made, or alternatively may mandate a transfer into an AST bond portfolio Sub-account. Any transfer into an AST bond portfolio Sub-account will be directed to the AST bond portfolio Sub-account associated with the "current liability" (we refer to that Sub-account as the "Transfer AST bond portfolio Sub-account"). Note that if the Current AST bond portfolio Sub-account is associated with the current liability, then that Sub-account would be the Transfer AST bond portfolio Sub-account, and we would simply transfer additional assets into the Sub-account if dictated by the formula. In general, the asset transfer formula works as follows. On each Valuation Day, the formula automatically performs an analysis with respect to each guarantee that is outstanding. For each outstanding guarantee, the formula begins by determining the present value on that Valuation Day that, if appreciated at the applicable "discount rate", would equal the applicable guarantee amount on the maturity date. As detailed in the formula, the discount rate is an interest rate determined by taking a benchmark index used within the financial services industry and then reducing that interest rate by a prescribed adjustment. Once selected, we do not change the applicable benchmark index (although we do reserve the right to use a new benchmark index if the original benchmark is discontinued). The greatest of each such present value is referred to as the "current liability" in the formula. The formula compares the current liability to the amount of your Account Value held within the Current AST bond portfolio Sub-account and to your Account Value held within the other Sub-accounts. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount held within your other Sub-accounts, exceeds an upper target value (currently, 0.85), then the formula will make a transfer into the Transfer AST bond portfolio Sub-account, in the amount dictated by the formula. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and 68 divided by the amount within your other Sub-accounts, is less than a lower target value (currently, 0.79), then the formula will transfer Account Value within the Current AST bond portfolio Sub-account into the other Sub-accounts (other than the Transfer AST bond portfolio Sub-account), in the amount dictated by the formula. If a significant amount of your Account Value is systematically transferred to an AST bond portfolio Sub-account to support the guarantee amounts during periods of market declines, low interest rates, and/or as the guarantee nears its maturity date, less of your Account Value may be available to participate in the investment experience of the other Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the guarantee, a significant portion of your Account Value may be allocated to an AST bond portfolio Sub-account to support any applicable guaranteed amount(s). Election/Cancellation of the Program Highest Daily GRO can be elected on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in either this benefit or GRO Plus 2008, in which case your election must be on an Annuity Anniversary). If you elect the benefit after the Issue Date of your Annuity, the benefit will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the initial guaranteed amount will equal the Account Value on that day. You may elect Highest Daily GRO only if the oldest of the Owner and Annuitant is 84 or younger on the date of election (80 or younger, in New York). If you currently participate in one of the original versions of GRO, you may terminate that benefit at any time and elect Highest Daily GRO. You may cancel Highest Daily GRO at any time. Upon cancellation, we will transfer any Account Value that is held in an AST bond portfolio Sub-account to the other Sub-accounts, according to your current allocation instructions. Highest Daily GRO will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract), unless the Annuity is continued by the surviving spouse; (b) as of the date Account Value is applied to begin annuity payments; (c) as of the anniversary of benefit election that immediately precedes the contractually-mandated latest annuity date, or (d) upon full surrender of the Annuity. If you elect to terminate the program, Highest Daily GRO will no longer provide any guarantees. The charge for the Highest Daily GRO program will no longer be deducted from your Account Value upon termination of the program. Special Considerations under Highest Daily GRO This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the permitted Sub-accounts. The permitted Sub-accounts are those described in the Investment Option section of this prospectus. No fixed interest rate allocations may be in effect as of the date that you elect to participate in the program. . You cannot participate in any dollar cost averaging program that transfers Account Value from a fixed interest rate option to a Sub-account. . Transfers from the other Sub-accounts to an AST bond portfolio Sub-account or from an AST bond portfolio Sub-account to the other Sub-accounts under the program will not count toward the maximum number of free transfers allowable under the Annuity. . Any amounts applied to your Account Value by us on a maturity date will not be treated as "investment in the contract" for income tax purposes. . As the time remaining until the applicable maturity date gradually decreases, the program may become increasingly sensitive to moves to an AST bond portfolio Sub-account. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We deduct an annual charge equal to 0.35% of the average daily net assets of the Sub-accounts (including each AST bond portfolio Sub-account) for participation in the Highest Daily GRO program. The charge is deducted daily. The charge is deducted to compensate us for: (a) the risk that your Account Value on the maturity date is less than the amount guaranteed and (b) administration of the program. We reserve the right to increase this fee for newly-issued contracts or new elections of the benefit. GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) The Guaranteed Minimum Withdrawal Benefit program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Currently, the program can only be elected by new purchasers on the Issue Date of their Annuity. We may offer the program to existing Annuity Owners in the future, subject to our eligibility rules and restrictions. The Guaranteed Minimum Withdrawal Benefit program is not available if you elect any other optional living benefit. 69 We offer a program that guarantees your ability to withdraw amounts equal to an initial principal value (called the "Protected Value"), regardless of the impact of market performance on your Account Value, subject to our program rules regarding the timing and amount of withdrawals. The program may be appropriate if you intend to make periodic withdrawals from your Annuity and wish to ensure that market performance will not affect your ability to protect your principal. You are not required to make withdrawals as part of the program - the guarantee is not lost if you withdraw less than the maximum allowable amount of principal each year under the rules of the program. There is an additional charge if you elect the GMWB program; however, the charge may be waived under certain circumstances described below. Key Feature - Protected Value The Protected Value is the total amount that we guarantee will be available to you through withdrawals from your Annuity and/or benefit payments, regardless of the impact of market performance on your Account Value. The Protected Value is reduced with each withdrawal you make until the Protected Value is reduced to zero. When the Protected Value is reduced to zero due to your withdrawals, the GMWB program terminates. Additionally, the Protected Value is used to determine the maximum annual amount that you can withdraw from your Annuity, called the Protected Annual Withdrawal Amount, without triggering an adjustment in the Protected Value on a proportional basis. The Protected Value is referred to as the "Benefit Base" in the rider we issue for this benefit. The Protected Value is determined as of the date you make your first withdrawal under your Annuity following your election of the GMWB program. The initial Protected Value is equal to the greater of (A) the Account Value on the date you elect the GMWB program, plus any additional Purchase Payments (plus any Credits applied to such Purchase Payments under XT6) before the date of your first withdrawal; or (B) the Account Value as of the date of the first withdrawal from your Annuity. The Protected Value may be enhanced by increases in your Account Value due to market performance during the period between your election of the GMWB program and the date of your first withdrawal. .. If you elect the GMWB program at the time you purchase your Annuity, the Account Value will be your initial Purchase Payment (plus any Credits applied to such Purchase Payments under XT6). .. If we offer the GMWB program to existing Annuity Owners, the Account Value on the anniversary of the Issue Date of your Annuity following your election of the GMWB program will be used to determine the initial Protected Value. .. If you make additional Purchase Payments after your first withdrawal, the Protected Value will be increased by the amount of the additional Purchase Payment (plus any Credits applied to such Purchase Payments under XT6). You may elect to step-up your Protected Value if, due to positive market performance, your Account Value is greater than the Protected Value. You are eligible to step-up the Protected Value on or after the 5/th/ Annuity anniversary following the first withdrawal under the GMWB program. The Protected Value can be stepped up again on or after the 5/th/ Annuity anniversary following the preceding step-up. If you elect to step-up the Protected Value, you must do so during the 30-day period prior to your eligibility date. If you elect to step-up the Protected Value under the program, and on the date you elect to step-up, the charges under the GMWB program have changed for new purchasers, your program may be subject to the new charge going forward. Upon election of the step-up, we reset the Protected Value to be equal to the then current Account Value. For example, assume your initial Protected Value was $100,000 and you have made cumulative withdrawals of $40,000, reducing the Protected Value to $60,000. On the date you are eligible to step-up the Protected Value, your Account Value is equal to $75,000. You could elect to step-up the Protected Value to $75,000 on the date you are eligible. Upon election of the step-up, we also reset the Protected Annual Withdrawal Amount (discussed immediately below) to be equal to the greater of (A) the Protected Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the Protected Value immediately after the reset. Key Feature - Protected Annual Withdrawal Amount The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year are less than or equal to the Protected Annual Withdrawal Amount, your Protected Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is reduced by the actual amount of the withdrawal, including any CDSC or MVA that may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected Annual Withdrawal Amount trigger a proportional adjustment to both the Protected Value and the Protected Annual Withdrawal Amount, as described in the rider for this benefit (see the examples of this calculation below). The Protected Annual Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we issue for this benefit. The GMWB program does not affect your ability to make withdrawals under your Annuity or limit your ability to request withdrawals that exceed the Protected Annual Withdrawal Amount. You are not required to withdraw all or any portion of the Protected Annual Withdrawal Amount each Annuity Year. .. If, cumulatively, you withdraw an amount less than the Protected Annual Withdrawal Amount in any Annuity Year, you cannot carry-over the unused portion of the Protected Annual Withdrawal Amount to subsequent Annuity Years. However, because the Protected Value is only reduced by the actual amount of withdrawals you make under these circumstances, any unused Protected Annual Withdrawal Amount may extend the period of time until the remaining Protected Value is reduced to zero. .. Additional Purchase Payments will increase the Protected Annual Withdrawal Amount by 7% of the applicable Purchase Payment (and any Credits we apply to such Purchase Payments under XT6). 70 .. If the Protected Annual Withdrawal Amount after an adjustment exceeds the Protected Value, the Protected Annual Withdrawal Amount will be set equal to the Protected Value. The following examples of dollar-for dollar and proportional reductions and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and the effective date of the GMWB program are October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any Credits in the case of XT6); 3.) a Protected Value of $250,000; and 4.) a Protected Annual Withdrawal Amount of $17,500 (7% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GMWB or any other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Protected Annual Withdrawal Amount: .. The Protected Value is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining Protected Annual Withdrawal Amount for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $17,500 to $7,500). Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 13, 2005 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $220,000. As the amount withdrawn exceeds the remaining Protected Annual Withdrawal Amount of $7,500 from Example 1: .. the Protected Value is first reduced by the remaining Protected Annual Withdrawal Amount (from $240,000 to $232,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the remaining Protected Annual Withdrawal Amount ($10,000 - $7,500, or $2,500). -- B is the Account Value less the remaining Protected Annual Withdrawal Amount ($220,000 - $7,500, or $212,500). The resulting Protected Value is: $232,500 X (1 - $2,500/$212,500), or $229,764.71. .. the Protected Annual Withdrawal Amount is also reduced by the ratio of A to B: The resulting Protected Annual Withdrawal Amount is: $17,500 X (1 - $2,500/$212,500), or $17,294.12. -- The remaining Protected Annual Withdrawal Amount is set to zero (0) for the balance of the first Annuity Year. Example 3. Reset of the Maximum Annual Benefit A $10,000 withdrawal is made on October 13, 2006 (second Annuity Year). The remaining Protected Annual Withdrawal Amount has been reset to the Protected Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn is less than the remaining Protected Annual Withdrawal Amount: .. the Protected Value is reduced by the amount withdrawn (i.e., reduced by $10,000, from $229,764.71 to $219,764.71). .. the remaining Protected Annual Withdrawal Amount for the balance of the second Annuity Year is also reduced by the amount withdrawn (from $17,294.12 to $7,294.12). BENEFITS UNDER THE GMWB PROGRAM . In addition to any withdrawals you make under the GMWB program, market performance may reduce your Account Value. If your Account Value is equal to zero, and you have not received all of your Protected Value in the form of withdrawals from your Annuity, we will continue to make payments equal to the remaining Protected Value in the form of fixed, periodic payments until the remainder of the Protected Value is paid, at which time the rider terminates. The fixed, periodic payments will each be equal to the Protected Annual Withdrawal Amount, except for the last payment which may be equal to the remaining Protected Value. We will determine the duration for which periodic payments will continue by dividing the Protected Value by the Protected Annual Withdrawal Amount. You will not have the right to make additional Purchase Payments or receive the remaining Protected Value in a lump sum. You can elect the frequency of payments, subject to our rules then in effect. . If the death benefit under your Annuity becomes payable before you have received all of your Protected Value in the form of withdrawals from your Annuity, your Beneficiary has the option to elect to receive the remaining Protected Value as an alternate death benefit payout in lieu of the amount payable under any other death benefit provided under your Annuity. The remaining Protected Value will be payable in the form of fixed, periodic payments. Your beneficiary can elect the frequency of payments, subject to our rules then in effect. We will determine the duration for which periodic payments will continue by dividing the Protected Value by the Protected Annual Withdrawal Amount. The Protected Value is not equal to the Account Value for purposes of the Annuity's other death benefit options. The GMWB program does not increase or decrease the amount otherwise payable under the Annuity's other death benefit options. Generally, the GMWB program would be of value to your Beneficiary only when the Protected Value at death exceeds any other amount available as a death benefit. 71 . If you elect to begin receiving annuity payments before you have received all of your Protected Value in the form of withdrawals from your Annuity, an additional annuity payment option will be available that makes fixed annuity payments for a certain period, determined by dividing the Protected Value by the Protected Annual Withdrawal Amount. If you elect to receive annuity payments calculated in this manner, the assumed interest rate used to calculate such payments will be 0%, which is less than the assumed interest rate on other annuity payment options we offer. This 0% assumed interest rate results in lower annuity payments than what would have been paid if the assumed interest rate was higher than 0%. You can also elect to terminate the GMWB program and begin receiving annuity payments based on your then current Account Value (not the remaining Protected Value) under any of the available annuity payment options. Other Important Considerations . Withdrawals under the GMWB program are subject to all of the terms and conditions of your Annuity, including any CDSC and MVA that may apply. . Withdrawals made while the GMWB program is in effect will be treated, for tax purposes, in the same way as any other withdrawals under your Annuity. . The GMWB program does not directly affect your Annuity's Account Value or Surrender Value, but any withdrawal will decrease the Account Value by the amount of the withdrawal. If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the GMWB program. The GMWB program provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Protected Value in the form of periodic benefit payments. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option you designate. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Election of the Program Currently, the GMWB program can only be elected at the time that you purchase your Annuity. In the future, we may offer existing Annuity Owners the option to elect the GMWB program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. If you elect the GMWB program after the Issue Date of your Annuity, the program will be effective as of the next anniversary date. Your Account Value as of such anniversary date will be used to calculate the initial Protected Value and the initial Protected Annual Withdrawal Amount. We reserve the right to restrict the maximum amount of Protected Value that may be covered under the GMWB program under this Annuity or any other annuities that you own that are issued by Prudential Annuities or its affiliated companies. Termination of the Program The program terminates automatically when your Protected Value reaches zero based on your withdrawals. You may terminate the program at any time by notifying us. If you terminate the program, any guarantee provided by the benefit will terminate as of the date the termination is effective. The program terminates upon your surrender of your Annuity, upon due proof of death (unless your surviving spouse elects to continue your Annuity and the GMWB program or your Beneficiary elects to receive the amounts payable under the GMWB program in lieu of the death benefit) or upon your election to begin receiving annuity payments. The charge for the GMWB program will no longer be deducted from your Account Value upon termination of the program. Charges under the Program Currently, we deduct a charge equal to 0.35% of the average daily net assets of the Sub-accounts per year to purchase the GMWB program. The annual charge is deducted daily. .. If, during the seven years following the effective date of the program, you do not make any withdrawals, and do not make any additional Purchase Payments after a five-year period following the effective date of the program, the program will remain in effect; however, we will waive the annual charge going forward. If you make an additional Purchase Payment following the waiver of the annual charge, we will begin charging for the program. After year seven (7) following the effective date of the program, withdrawals will not cause a charge to be re-imposed. .. If you elect to step-up the Protected Value under the program, and on the date you elect to step-up, the charges under the program have changed for new purchasers, your program may be subject to the new charge level for the benefit. Additional Tax Considerations for Qualified Contracts/Arrangements If you purchase an Annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the required minimum distribution rules under the Code provide that you begin receiving periodic amounts from your Annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than 5 percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the 72 Code may exceed the Protected Annual Withdrawal Amount, which will cause us to recalculate the Protected Value and the Protected Annual Withdrawal Amount, resulting in a lower amount payable in future Annuity Years. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as required minimum distribution provisions under the tax law. GUARANTEED MINIMUM INCOME BENEFIT (GMIB) The Guaranteed Minimum Income Benefit program described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Currently, the program can only be elected by new purchasers on the Issue Date of their Annuity. We may offer the program to existing Annuity Owners in the future, subject to our eligibility rules and restrictions. The Guaranteed Minimum Income Benefit program is not available if you elect any other optional living benefit. We offer a program that, after a seven-year waiting period, guarantees your ability to begin receiving income from your Annuity in the form of annuity payments based on a guaranteed minimum value (called the "Protected Income Value") that increases after the waiting period begins, regardless of the impact of market performance on your Account Value. The program may be appropriate for you if you anticipate using your Annuity as a future source of periodic fixed income payments for the remainder of your life and wish to ensure that the basis upon which your income payments will be calculated will achieve at least a minimum amount despite fluctuations in market performance. There is an additional charge if you elect the GMIB program. Key Feature - Protected Income Value The Protected Income Value is the minimum amount that we guarantee will be available (net of any applicable tax charge), after a waiting period of at least seven years, as a basis to begin receiving fixed annuity payments. The Protected Income Value is initially established on the effective date of the GMIB program and is equal to your Account Value on such date. Currently, since the GMIB program may only be elected at issue, the effective date is the Issue Date of your Annuity. The Protected Income Value is increased daily based on an annual growth rate of 5%, subject to the limitations described below. The Protected Income Value is referred to as the "Protected Value" in the rider we issue for this benefit. The 5% annual growth rate is referred to as the "Roll-Up Percentage" in the rider we issue for this benefit. The Protected Income Value is subject to a limit of 200% (2X) of the sum of the Protected Income Value established on the effective date of the GMIB program, or the effective date of any step-up value, plus any additional Purchase Payments (and any Credit that is applied to such Purchase Payments in the case of XT6) made after the waiting period begins ("Maximum Protected Income Value"), minus the sum of any reductions in the Protected Income Value due to withdrawals you make from your Annuity after the waiting period begins. . Subject to the maximum age/durational limits described immediately below, we will no longer increase the Protected Income Value by the 5% annual growth rate once you reach the Maximum Protected Income Value. However, we will increase the Protected Income Value by the amount of any additional Purchase Payments after you reach the Maximum Protected Income Value. Further, if you make withdrawals after you reach the Maximum Protected Income Value, we will reduce the Protected Income Value and the Maximum Protected Income Value by the proportional impact of the withdrawal on your Account Value. . Subject to the Maximum Protected Income Value, we will no longer increase the Protected Income Value by the 5% annual growth rate after the later of the anniversary date on or immediately following the Annuitant's 80/th/ birthday or the 7/th/ anniversary of the later of the effective date of the GMIB program or the effective date of the most recent step-up. However, we will increase the Protected Income Value by the amount of any additional Purchase Payments (and any Credit that is applied to such Purchase Payments in the case of XT6). Further, if you make withdrawals after the Annuitant reaches the maximum age/duration limits, we will reduce the Protected Income Value and the Maximum Protected Income Value by the proportional impact of the withdrawal on your Account Value. . Subject to the Maximum Protected Income Value, if you make an additional Purchase Payment, we will increase the Protected Income Value by the amount of the Purchase Payment (and any Credit that is applied to such Purchase Payment in the case of XT6) and will apply the 5% annual growth rate on the new amount from the date the Purchase Payment is applied. . As described below, after the waiting period begins, cumulative withdrawals each Annuity Year that are up to 5% of the Protected Income Value on the prior anniversary of your Annuity will reduce the Protected Income Value by the amount of the withdrawal. Cumulative withdrawals each Annuity Year in excess of 5% of the Protected Income Value on the prior anniversary of your Annuity will reduce the Protected Income Value proportionately. All withdrawals after the Maximum Protected Income Value is reached will reduce the Protected Income Value proportionately. The 5% annual growth rate will be applied to the reduced Protected Income Value from the date of the withdrawal. Stepping-Up the Protected Income Value - You may elect to "step-up" or "reset" your Protected Income Value if your Account Value is greater than the current Protected Income Value. Upon exercise of the step-up provision, your initial Protected Income 73 Value will be reset equal to your current Account Value. From the date that you elect to step-up the Protected Income Value, we will apply the 5% annual growth rate to the stepped-up Protected Income Value, as described above. You can exercise the step-up provision twice while the GMIB program is in effect, and only while the Annuitant is less than age 76. . A new seven-year waiting period will be established upon the effective date of your election to step-up the Protected Income Value. You cannot exercise your right to begin receiving annuity payments under the GMIB program until the end of the new waiting period. In light of this waiting period upon resets, it is not recommended that you reset your GMIB if the required beginning date under IRS minimum distribution requirements would commence during the 7 year waiting period. See "Tax Considerations" section in this prospectus for additional information on IRS requirements. . The Maximum Protected Income Value will be reset as of the effective date of any step-up. The new Maximum Protected Income Value will be equal to 200% of the sum of the Protected Income Value as of the effective date of the step-up plus any subsequent Purchase Payments (and any Credit that is applied to such Purchase Payments in the case of XT6), minus the impact of any withdrawals after the date of the step-up. . When determining the guaranteed annuity purchase rates for annuity payments under the GMIB program, we will apply such rates based on the number of years since the most recent step-up. . If you elect to step-up the Protected Income Value under the program, and on the date you elect to step-up, the charges under the GMIB program have changed for new purchasers, your program may be subject to the new charge going forward. . A step-up will increase the dollar for dollar limit on the anniversary of the Issue Date of the Annuity following such step-up. Impact of Withdrawals on the Protected Income Value - Cumulative withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals in any Annuity Year in excess of 5% of the Protected Income Value will reduce the Protected Income Value proportionately (see the examples of this calculation below). The 5% annual withdrawal amount is determined on each anniversary of the Issue Date (or on the Issue Date for the first Annuity Year) and applies to any withdrawals during the Annuity Year. This means that the amount available for withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each Annuity anniversary to reflect changes in the Protected Income Value during the prior Annuity Year. The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the GMIB program are October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any Credits in the case of XT6); 3.) an initial Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GMIB or any other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year). No prior withdrawals have been taken. Immediately prior to the withdrawal, the Protected Income Value is $251,038.10 (the initial value accumulated for 31 days at an annual effective rate of 5%). As the amount withdrawn is less than the dollar-for-dollar limit: .. the Protected Income Value is reduced by the amount withdrawn (i.e., by $10,000, from $251,038.10 to $241,038.10). .. the remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 13, 2005 (still within the first Annuity Year). Immediately before the withdrawal, the Account Value is $220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. the Protected Income Value is first reduced by the Remaining Limit (from $242,006.64 to $239,506.64); .. the result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($220,000 - $2,500, or $217,500). The resulting Protected Income Value is: $239,506.64 X (1 - $7,500/$217,500), or $231,247.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. Example 3. Reset of the Dollar-for-dollar Limit A $10,000 withdrawal is made on the first anniversary of the Issue Date, October 13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit: .. the Protected Income Value is reduced by the amount withdrawn (i.e., reduced by $10,000, from $240,838.37 to $230,838.37). .. the Remaining Limit for the balance of the second Annuity Year is also reduced by the amount withdrawn (from $12,041.92 to $2,041.92). 74 Key Feature - GMIB Annuity Payments You can elect to apply the Protected Income Value to one of the available GMIB Annuity Payment Options on any anniversary date following the initial waiting period, or any subsequent waiting period established upon your election to step-up the Protected Income Value. Once you have completed the waiting period, you will have a 30-day period each year, prior to the Annuity anniversary, during which you may elect to begin receiving annuity payments under one of the available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on or immediately following the Annuitant's or your 95/th/ birthday (whichever is sooner), except for Annuities used as a funding vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on or immediately following the Annuitant's 92/nd/ birthday. Your Annuity or state law may require you to begin receiving annuity payments at an earlier date. The amount of each GMIB Annuity Payment will be determined based on the age and, where permitted by law, sex of the Annuitant by applying the Protected Income Value (net of any applicable tax charge that may be due) to the GMIB Annuity Payment Option you choose. We use special annuity purchase rates to calculate the amount of each payment due under the GMIB Annuity Payment Options. These special rates for the GMIB Annuity Payment Options are calculated using an assumed interest rate factor that provides for lower growth in the value applied to produce annuity payments than if you elected an annuity payment option that is not part of the GMIB program. These special rates also are calculated using other factors such as "age setbacks" (use of an age lower than the Annuitant's actual age) that result in lower payments than would result if you elected an annuity payment option that is not part of the GMIB program. Use of an age setback entails a longer assumed life for the Annuitant which in turn results in lower annuity payments. On the date that you elect to begin receiving GMIB Annuity Payments, we guarantee that your payments will be calculated based on your Account Value and our then current annuity purchase rates if the payment amount calculated on this basis would be higher than it would be based on the Protected Income Value and the special GMIB annuity purchase rates. GMIB Annuity Payment Option 1 - Payments for Life with a Certain Period Under this option, monthly annuity payments will be made until the death of the Annuitant. If the Annuitant dies before having received 120 monthly annuity payments, the remainder of the 120 monthly annuity payments will be made to the Beneficiary. GMIB Annuity Payment Option 2 - Payments for Joint Lives with a Certain Period Under this option, monthly annuity payments will be made until the death of both the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant die before having received 120 monthly annuity payments, the remainder of the 120 monthly annuity payments will be made to the Beneficiary. .. If the Annuitant dies first, we will continue to make payments until the later of the death of the Joint Annuitant and the end of the period certain. However, if the Joint Annuitant is still receiving annuity payments following the end of the certain period, we will reduce the amount of each subsequent payment to 50% of the original payment amount. .. If the Joint Annuitant dies first, we will continue to make payments until the later of the death of the Annuitant and the end of the period certain. You cannot withdraw your Account Value or the Protected Income Value under either GMIB Annuity Payment Option once annuity payments have begun. We may make other payout frequencies available, such as quarterly, semi-annually or annually. Other Important Considerations .. You should note that GMIB is designed to provide a type of insurance that serves as a safety net only in the event your Account Value declines significantly due to negative investment performance. If your Account Value is not significantly affected by negative investment performance, it is unlikely that the purchase of the GMIB will result in your receiving larger annuity payments than if you had not purchased GMIB. This is because the assumptions that we use in computing the GMIB, such as the annuity purchase rates, (which include assumptions as to age-setbacks and assumed interest rates), are more conservative than the assumptions that we use in computing annuity payout options outside of GMIB. Therefore, you may generate higher income payments if you were to annuitize a lower Account Value at the current annuity purchase rates, than if you were to annuitize under the GMIB with a higher Protected Value than your Account Value but, at the annuity purchase rates guaranteed under the GMIB. The GMIB program does not directly affect an Annuity's Account Value, Surrender Value or the amount payable under either the basic Death Benefit provision of the Annuity or any optional Death Benefit provision. If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Income Value. The Protected Income Value is only applicable if you elect to begin receiving annuity payments under one of the GMIB annuity options after the waiting period. .. Each Annuity offers other annuity payment options that you can elect which do not impose an additional charge, but which do not offer to guarantee a minimum value on which to make annuity payments. .. Where allowed by law, we reserve the right to limit subsequent Purchase Payments if we determine, at our sole discretion, that based on the timing of your Purchase Payments and withdrawals, your Protected Income Value is increasing in ways we did 75 not intend. In determining whether to limit Purchase Payments, we will look at Purchase Payments which are disproportionately larger than your initial Purchase Payment and other actions that may artificially increase the Protected Income Value. .. We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. .. If you change the Annuitant after the effective date of the GMIB program, the period of time during which we will apply the 5% annual growth rate may be changed based on the age of the new Annuitant. If the new Annuitant would not be eligible to elect the GMIB program based on his or her age at the time of the change, then the GMIB program will terminate. .. Annuity payments made under the GMIB program are subject to the same tax treatment as any other annuity payment. .. At the time you elect to begin receiving annuity payments under the GMIB program or under any other annuity payment option we make available, the protection provided by an Annuity's basic Death Benefit or any optional Death Benefit provision you elected will no longer apply. Election of the Program Currently, the GMIB program can only be elected at the time that you purchase your Annuity. The Annuitant must be age 75 or less as of the effective date of the GMIB program. In the future, we may offer existing Annuity Owners the option to elect the GMIB program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. If you elect the GMIB program after the Issue Date of your Annuity, the program will be effective as of the date of election. Your Account Value as of that date will be used to calculate the Protected Income Value as of the effective date of the program. Termination of the Program The GMIB program cannot be terminated by the Owner once elected. The GMIB program automatically terminates as of the date your Annuity is fully surrendered, on the date the Death Benefit is payable to your Beneficiary (unless your surviving spouse elects to continue your Annuity), or on the date that your Account Value is transferred to begin making annuity payments. The GMIB program may also be terminated if you designate a new Annuitant who would not be eligible to elect the GMIB program based on his or her age at the time of the change. Upon termination of the GMIB program we will deduct the charge from your Account Value for the portion of the Annuity Year since the prior anniversary of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year). Charges under the Program Currently, we deduct a charge equal to 0.50% per year of the average Protected Income Value for the period the charge applies. Because the charge is calculated based on the average Protected Income Value, it does not increase or decrease based on changes to the Annuity's Account Value due to market performance. The dollar amount you pay each year will increase in any year the Protected Income Value increases, and it will decrease in any year the Protected Income Value decreases due to withdrawal, irrespective of whether your Account Value increases or decreases. The charge is deducted annually in arrears each Annuity Year on the anniversary of the Issue Date of an Annuity. We deduct the amount of the charge pro-rata from the Account Value allocated to the Sub-accounts and the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed Allocation. If you surrender your Annuity, begin receiving annuity payments under the GMIB program or any other annuity payment option we make available during an Annuity Year, or the GMIB program terminates, we will deduct the charge for the portion of the Annuity Year since the prior anniversary of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year). No charge applies after the Annuity Date. LIFETIME FIVE/SM/ INCOME BENEFIT (LIFETIME FIVE)/SM/ The Lifetime Five Income Benefit program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Lifetime Five can be elected only where the Annuitant and the Owner are the same person or, if the Annuity Owner is an entity, where there is only one Annuitant. Currently, if you elect Lifetime Five and subsequently terminate the benefit, there may be a restriction on your ability to re-elect Lifetime Five and elect another of our lifetime withdrawal benefits. The Annuitant must be at least 45 years old when the program is elected. The Lifetime Five Income Benefit program is not available if you elect any other optional living benefit. As long as your Lifetime Five Income Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available option(s) with this program. We offer a program that guarantees your ability to withdraw amounts equal to a percentage of an initial principal value (called the "Protected Withdrawal Value"), regardless of the impact of market performance on your Account Value, subject to our program 76 rules regarding the timing and amount of withdrawals. There are two options - one is designed to provide an annual withdrawal amount for life (the "Life Income Benefit") and the other is designed to provide a greater annual withdrawal amount as long as there is Protected Withdrawal Value (adjusted as described below) (the "Withdrawal Benefit"). If there is no Protected Withdrawal Value, the withdrawal benefit will be zero. You do not choose between these two options; each option will continue to be available as long as your Annuity has an Account Value and the Lifetime Five is in effect. Certain benefits under Lifetime Five may remain in effect even if the Account Value of your Annuity is zero. The program may be appropriate if you intend to make periodic withdrawals from your Annuity and wish to ensure that market performance will not affect your ability to receive annual payments. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the program. Key Feature - Protected Withdrawal Value The Protected Withdrawal Value is used to determine the amount of each annual payment under the Life Income Benefit and the Withdrawal Benefit. The initial Protected Withdrawal Value is determined as of the date you make your first withdrawal under your Annuity following your election of Lifetime Five. The initial Protected Withdrawal Value is equal to the greater of (A) the Account Value on the date you elect Lifetime Five, plus any additional Purchase Payments, as applicable, each growing at 5% per year from the date of your election of the program, or application of the Purchase Payment to your Annuity until the date of your first withdrawal or the 10/th/ anniversary of the benefit effective date, if earlier (B) the Account Value on the date of the first withdrawal from your Annuity, prior to the withdrawal, and (C) the highest Account Value on each Annuity anniversary, plus subsequent Purchase Payments prior to the first withdrawal or the 10/th/ anniversary of the benefit effective date, if earlier. With respect to (A) and (C) above, after the 10th anniversary of the benefit effective date, each value is increased by the amount of any subsequent Purchase Payments. With respect to XT6, Credits are added to Purchase Payments for purposes of calculating the Protected Withdrawal Value, the Annual Income Amount and the Annual Withdrawal Amount (see below for a description of Annual Income Amount and Annual Withdrawal Amount). . If you elect the Lifetime Five program at the time you purchase your Annuity, the Account Value will be your initial Purchase Payment. . For existing Owners who are electing the Lifetime Five benefit, the Account Value on the date of your election of the Lifetime Five program will be used to determine the initial Protected Withdrawal Value. . If you make additional Purchase Payments after your first withdrawal, the Protected Withdrawal Value will be increased by the amount of each additional Purchase Payment. The Protected Withdrawal Value is reduced each time a withdrawal is made on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata basis for withdrawals in an Annuity Year in excess of that amount until the Protected Withdrawal Value is reduced to zero. At that point the Annual Withdrawal Amount will be zero until such time (if any) as the Annuity reflects a Protected Withdrawal Value (for example, due to a step-up or additional Purchase Payments being made into the Annuity). Step-Up of the Protected Withdrawal Value You may elect to step-up your Protected Withdrawal Value if, due to positive market performance, your Account Value is greater than the Protected Withdrawal Value. If you elected the Lifetime Five program on or after March 20, 2006: . you are eligible to step-up the Protected Withdrawal Value on or after the 1st anniversary of the first withdrawal under the Lifetime Five program . the Protected Withdrawal Value can be stepped up again on or after the 1st anniversary of the preceding step-up If you elected the Lifetime Five program prior to March 20, 2006 and that original election remains in effect: . you are eligible to step-up the Protected Withdrawal Value on or after the 5th anniversary of the first withdrawal under the Lifetime Five program . the Protected Withdrawal Value can be stepped up again on or after the 5th anniversary of the preceding step-up In either scenario (i.e., elections before or after March 20, 2006) if you elect to step-up the Protected Withdrawal Value under the program, and on the date you elect to step-up, the charges under the Lifetime Five program have changed for new purchasers, your program may be subject to the new charge at the time of step-up. Upon election of the step-up, we increase the Protected Withdrawal Value to be equal to the then current Account Value. For example, assume your initial Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you are eligible to step-up the Protected Withdrawal Value, your Account Value is equal to $75,000. You could elect to step-up the Protected Withdrawal Value to $75,000 on the date you are eligible. If your current Annual Income Amount and Annual Withdrawal Amount are less than they would be if we did not reflect the step-up in Protected Withdrawal Value, then we will increase these amounts to reflect the step-up as described below. An optional automatic step-up ("Auto Step-Up") feature is available for this benefit. This feature may be elected at the time the benefit is elected or at any time while the benefit is in force. 77 If you elected the Lifetime Five program on or after March 20, 2006 and have also elected the Auto Step-Up feature: . the first Auto Step-Up opportunity will occur on the 1st Annuity Anniversary that is at least one year after the later of (1) the date of the first withdrawal under the Lifetime Five program or (2) the most recent step-up . your Protected Withdrawal Value will only be stepped-up if 5% of the Account Value is greater than the Annual Income Amount by any amount . if at the time of the first Auto Step-Up opportunity, 5% of the Account Value is not greater than the Annual Income Amount, an Auto Step-Up opportunity will occur on each successive Annuity Anniversary until a step-up occurs . once a step-up occurs, the next Auto Step-Up opportunity will occur on the 1st Annuity Anniversary that is at least one year after the most recent step-up If you elected the Lifetime Five program prior to March 20, 2006 and have also elected the Auto Step-Up feature: . the first Auto Step-Up opportunity will occur on the Annuity Anniversary that is at least 5 years after the later of (1) the date of the first withdrawal under the Lifetime Five Program benefit or (2) the most recent step-up . your Protected Withdrawal Value will only be stepped-up if 5% of the Account Value is greater than the Annual Income Amount by 5% or more . if at the time of the first Auto Step-Up opportunity, 5% of the Account Value does not exceed the Annual Income Amount by 5% or more, an Auto Step-Up opportunity will occur on each successive Annuity Anniversary until a step-up occurs . once a step-up occurs, the next Auto Step-Up opportunity will occur on the Annuity Anniversary that is at least 5 years after the most recent step-up In either scenario (i.e., elections before or after March 20, 2006), if on the date that we implement an Auto Step-Up to your Protected Withdrawal Value, the charge for Lifetime Five has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Subject to our rules and restrictions, you will still be permitted to manually step-up the Protected Withdrawal Value even if you elect the Auto Step-Up feature. Key Feature - Annual Income Amount under the Life Income Benefit The initial Annual Income Amount is equal to 5% of the initial Protected Withdrawal Value. Under the Lifetime Five program, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. A withdrawal can be considered Excess Income under the Life Income Benefit even though it does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect a step-up (or an auto step-up is effected), your Annual Income Amount increases to equal 5% of your Account Value after the step-up if such amount is greater than your Annual Income Amount. Your Annual Income Amount also increases if you make additional Purchase Payments. The amount of the increase is equal to 5% of any additional Purchase Payments (and any associated Credit with respect to XT6). Any increase will be added to your Annual Income Amount beginning on the day that the step-up is effective or the Purchase Payment is made. A determination of whether you have exceeded your Annual Income Amount is made at the time of each withdrawal; therefore a subsequent increase in the Annual Income Amount will not offset the effect of a withdrawal that exceeded the Annual Income Amount at the time the withdrawal was made. Key Feature - Annual Withdrawal Amount under the Withdrawal Benefit The initial Annual Withdrawal Amount is equal to 7% of the initial Protected Withdrawal Value. Under the Lifetime Five program, if your cumulative withdrawals each Annuity Year are less than or equal to the Annual Withdrawal Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar basis. If your cumulative withdrawals are in excess of the Annual Withdrawal Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Withdrawal to the Account Value immediately prior to such withdrawal (see the examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. When you elect a step-up (or an auto step-up is effected), your Annual Withdrawal Amount increases to equal 7% of your Account Value after the step-up if such amount is greater than your Annual Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make additional Purchase Payments. The amount of the increase is equal to 7% of any additional Purchase Payments (and any associated Credit with respect to XT6). A determination of whether you have exceeded your Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a subsequent increase in the Annual Withdrawal Amount will not offset the effect of a withdrawal that exceeded the Annual Withdrawal Amount at the time the withdrawal was made. The Lifetime Five program does not affect your ability to make withdrawals under your Annuity or limit your ability to request withdrawals that exceed the Annual Income Amount and the Annual Withdrawal Amount. You are not required to withdraw all or any portion of the Annual Withdrawal Amount or Annual Income Amount in each Annuity Year. 78 . If, cumulatively, you withdraw an amount less than the Annual Withdrawal Amount under the Withdrawal Benefit in any Annuity Year, you cannot carry-over the unused portion of the Annual Withdrawal Amount to subsequent Annuity Years. However, because the Protected Withdrawal Value is only reduced by the actual amount of withdrawals you make under these circumstances, any unused Annual Withdrawal Amount may extend the period of time until the remaining Protected Withdrawal Value is reduced to zero. . If, cumulatively, you withdraw an amount less than the Annual Income Amount under the Life Income Benefit in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. However, because the Protected Withdrawal Value is only reduced by the actual amount of withdrawals you make under these circumstances, any unused Annual Income Amount may extend the period of time until the remaining Protected Withdrawal Value is reduced to zero. Examples of Withdrawals The following examples of dollar-for-dollar and proportional reductions of the Protected Withdrawal Value, Annual Withdrawal Amount and Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of $250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; and 4.) the first withdrawal occurs on March 1, 2006 when the Account Value is equal to $263,000. The values set forth here are purely hypothetical, and do not reflect the charge for Lifetime Five or any other fees and charges. The initial Protected Withdrawal Value is calculated as the greatest of (a), (b) and (c): (a)Purchase payment accumulated at 5% per year from February 1, 2005 until March 1, 2006 (393 days) = $250,000 X 1.05/(393/365)/ = $263,484.33 (b)Account Value on March 1, 2006 (the date of the first withdrawal) = $263,000 (c)Account Value on February 1, 2006 (the first Annuity Anniversary) = $265,000 Therefore, the initial Protected Withdrawal Value is equal to $265,000. The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life Income Benefit (5% of $265,000). Example 1. Dollar-for-dollar reduction If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual Withdrawal Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 - $10,000 = $8,550. Annual Withdrawal Amount for future Annuity Years remains at $18,550 .. Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000 = $3,250. Annual Income Amount for future Annuity Years remains at $13,250 .. Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000 Example 2. Dollar-for-dollar and proportional reductions (a)If $15,000 was withdrawn (more than the Annual Income Amount but less than the Annual Withdrawal Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 - $15,000 = $3,550. Annual Withdrawal Amount for future Annuity Years remains at $18,550 .. Remaining Annual Income Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 = $1,750) reduces Annual Income Amount for future Annuity Years. .. Reduction to Annual Income Amount = Excess Income/Account Value before Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250 = $93 Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157 .. Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000 (b)If $25,000 was withdrawn (more than both the Annual Income Amount and the Annual Withdrawal Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Withdrawal Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 = $6,450) reduces Annual Withdrawal Amount for future Annuity Years. .. Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value before Excess Withdrawal X Annual Withdrawal Amount = $6,450/($263,000 - $18,550) X $18,550 = $489 79 Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 = $18,061 .. Remaining Annual Income Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 = $11,750) reduces Annual Income Amount for future Annuity Years. .. Reduction to Annual Income Amount = Excess Income/Account Value before Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250 = $623. Annual Income Amount for future Annuity Years = $13,250 - $623 = $12,627 .. Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount ($18,550) from $265,000 to $246,450. It is further reduced by the greater of a dollar-for-dollar reduction or a proportional reduction. Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450 .. Proportional reduction = Excess Withdrawal/Account Value before Excess Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X $246,450 = $6,503 Protected Withdrawal Value = $246,450 - max {$6,450, $6,503} = $239,947 BENEFITS UNDER THE LIFETIME FIVE PROGRAM . If your Account Value is equal to zero, and the cumulative withdrawals in the current Annuity Year are greater than the Annual Withdrawal Amount, the Lifetime Five program will terminate. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount and amounts are still payable under both the Life Income Benefit and the Withdrawal Benefit, you will be given the choice of receiving the payments under the Life Income Benefit or under the Withdrawal Benefit. Thus, in that scenario, the remaining amounts under the Life Income Benefit and the Withdrawal Benefit would be payable even though your Account Value was reduced to zero. Once you make this election we will make an additional payment for that Annuity Year equal to either the remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity Year, if any, depending on the option you choose. In subsequent Annuity Years we make payments that equal either the Annual Income Amount or the Annual Withdrawal Amount as described in this Prospectus. You will not be able to change the option after your election and no further Purchase Payments will be accepted under your Annuity. If you do not make an election, we will pay you annually under the Life Income Benefit. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount but less than or equal to the Annual Withdrawal Amount and amounts are still payable under the Withdrawal Benefit, you will receive the payments under the Withdrawal Benefit. In the year of a withdrawal that reduced your Account Value to zero, we will make an additional payment to equal any remaining Annual Withdrawal Amount and make payments equal to the Annual Withdrawal Amount in each subsequent year (until the Protected Withdrawal Value is depleted). Once your Account Value equals zero no further Purchase Payments will be accepted under your Annuity. . If annuity payments are to begin under the terms of your Annuity or if you decide to begin receiving annuity payments and there is any Annual Income Amount due in subsequent Annuity Years or any remaining Protected Withdrawal Value, you can elect one of the following three options: (1)apply your Account Value to any annuity option available; or (2)request that, as of the date annuity payments are to begin, we make annuity payments each year equal to the Annual Income Amount. We make such annuity payments until the Annuitant's death; or (3)request that, as of the date annuity payments are to begin, we pay out any remaining Protected Withdrawal Value as annuity payments. Each year such annuity payments will equal the Annual Withdrawal Amount or the remaining Protected Withdrawal Value if less. We make such annuity payments until the earlier of the Annuitant's death or the date the Protected Withdrawal Value is depleted. We must receive your request in a form acceptable to us at our office. . In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments as a single life fixed annuity with five payments certain using the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such annuity payments will be the greater of: (1)the present value of future Annual Income Amount payments. Such present value will be calculated using the greater of the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. . If no withdrawal was ever taken, we will determine a Protected Withdrawal Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as if you made your first withdrawal on the date the annuity payments are to begin. 80 Other Important Considerations . Withdrawals under the Lifetime Five program are subject to all of the terms and conditions of your Annuity, including any applicable CDSC. . Withdrawals made while the Lifetime Five program is in effect will be treated, for tax purposes, in the same way as any other withdrawals under your Annuity. The Lifetime Five program does not directly affect your Annuity's Account Value or Surrender Value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Withdrawal Value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Lifetime Five program. The Lifetime Five program provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Protected Withdrawal Value or Annual Income Amount in the form of periodic benefit payments. . In general, you must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. Election of the Program The Lifetime Five program can be elected at the time that you purchase your Annuity. We also offer existing Owners the option to elect the Lifetime Five program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. Your Account Value as the date of election will be used as a basis to calculate the initial Protected Withdrawal Value, the initial Protected Annual Withdrawal Amount, and the Annual Income Amount. Currently, if you terminate the program, you generally will only be permitted to re-elect Lifetime Five or elect another lifetime withdrawal benefit on any anniversary of the Issue Date that is at least 90 calendar days from the date the benefit was last terminated. If you elected Lifetime Five prior to March 20, 2006, and you terminate the program, there will be no waiting period before you can re-elect the program or elect Highest Daily Lifetime Five or Spousal Lifetime Five provided that you had not previously elected Lifetime Five after the Issue Date and within the same Annuity Year that you terminate Lifetime Five. If you had previously elected Lifetime Five after the Issue Date and within the same Annuity Year that you terminated Lifetime Five, you will be able to re-elect the program or elect Highest Daily Lifetime Five or Spousal Lifetime Five on any date on or after the next anniversary of the Issue Date. However, once you choose to re-elect/elect, the waiting period described above will apply to subsequent re-elections. We reserve the right to limit the re-election/election frequency in the future. Before making any such change to the re-election/election frequency, we will provide prior notice to Owners who have an effective Lifetime Five Income Benefit. Termination of the Program The program terminates automatically when your Protected Withdrawal Value and Annual Income Amount equal zero. You may terminate the program at any time by notifying us. If you terminate the program, any guarantee provided by the benefit will terminate as of the date the termination is effective and certain restrictions on re-election of the benefit will apply as described above. The program terminates upon your surrender of your Annuity, upon the death of the Annuitant (but your surviving spouse may elect a new Lifetime Five if your spouse elects the spousal continuance option and your spouse would then be eligible to elect the benefit if he or she was a new purchaser), upon a change in ownership of your Annuity that changes the tax identification number of the Owner, upon change in the Annuitant or upon your election to begin receiving annuity payments. While you may terminate your program at any time, we may not terminate the program other than in the circumstances listed above. However, we may stop offering the program for new elections or re-elections at any time in the future. The charge for the Lifetime Five program will no longer be deducted from your Account Value upon termination of the program. Additional Tax Considerations If you purchase an Annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your Annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount required under the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount, which will cause us to increase the Annual Income Amount and the Annual Withdrawal Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. Any such payments will reduce your Protected Withdrawal 81 Value. In addition, the amount and duration of payments under the annuity payment and Death Benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. SPOUSAL LIFETIME FIVE/SM/ INCOME BENEFIT (SPOUSAL LIFETIME FIVE)/SM/ The Spousal Lifetime Five program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Currently, if you elect Spousal Lifetime Five and subsequently terminate the benefit, there may be a restriction on your ability to re-elect Spousal Lifetime Five or elect another lifetime withdrawal benefit. (See "Election of and Designations under the Program" below for details). Spousal Lifetime Five must be elected based on two Designated Lives, as described below. Each Designated Life must be at least 55 years old when the benefit is elected. The Spousal Lifetime Five program is not available if you elect any other optional living benefit or optional death benefit. As long as your Spousal Lifetime Five Income Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available option(s) with this program. We offer a program that guarantees until the later death of two natural persons that are each other's spouses at the time of election of Spousal Lifetime Five and at the first death of one of them (the "Designated Lives", each a "Designated Life") the ability to withdraw an annual amount ("Spousal Life Income Benefit") equal to a percentage of an initial principal value (the "Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The Spousal Life Income Benefit may remain in effect even if the Account Value of the Annuity is zero. The program may be appropriate if you intend to make periodic withdrawals from your Annuity, wish to ensure that market performance will not affect your ability to receive annual payments, and wish either spouse to be able to continue the Spousal Life Income Benefit after the death of the first. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the program. Key Feature - Initial Protected Withdrawal Value The Protected Withdrawal Value is used to determine the amount of each annual payment under the Spousal Life Income Benefit. The initial Protected Withdrawal Value is determined as of the date you make your first withdrawal under the Annuity following your election of Spousal Lifetime Five. The initial Protected Withdrawal Value is equal to the greater of (A) the Account Value on the date you elect Spousal Lifetime Five, plus any additional Purchase Payments as applicable, each growing at 5% per year from the date of your election of the program, or application of the Purchase Payment to your Annuity, until the date of your first withdrawal or the 10/th/ anniversary of the benefit effective date, if earlier (B) the Account Value on the date of the first withdrawal from your Annuity, prior to the withdrawal, and (C) the highest Account Value on each Annuity anniversary, plus subsequent Purchase Payments prior to the first withdrawal or the 10/th/ anniversary of the benefit effective date, if earlier. With respect to (A) and (C) above, after the 10/th/ anniversary of the benefit effective date, each value is increased by the amount of any subsequent Purchase Payments. With respect to XT6, Credits are added to Purchase Payments for purposes of calculating the Protected Withdrawal Value and the Annual Income Amount (see below for a description of Annual Income Amount). .. If you elect the Spousal Lifetime Five program at the time you purchase your Annuity, the Account Value will be your initial Purchase Payment. .. For existing Owners who are electing the Spousal Lifetime Five benefit, the Account Value on the date of your election of the Spousal Lifetime Five program will be used to determine the initial Protected Withdrawal Value. Key Feature - Annual Income Amount under the Spousal Life Income Benefit The initial Annual Income Amount is equal to 5% of the initial Protected Withdrawal Value. Under the Spousal Lifetime Five program, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Annual Income Amount under the Spousal Life Income Benefit in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. The Spousal Lifetime Five program does not affect your ability to make withdrawals under your Annuity or limit your ability to request withdrawals that exceed the Annual Income Amount. 82 Step-Up of Annual Income Amount You may elect to step-up your Annual Income Amount if, due to positive market performance, 5% of your Account Value is greater than the Annual Income Amount. You are eligible to step-up the Annual Income Amount on or after the 1/st/ anniversary of the first withdrawal under the Spousal Lifetime Five program. The Annual Income Amount can be stepped up again on or after the 1/st/ anniversary of the preceding step-up. If you elect to step-up the Annual Income Amount under the program, and on the date you elect to step-up, the charges under the Spousal Lifetime Five program have changed for new purchasers, your program may be subject to the new charge at the time of such step-up. When you elect a step-up, your Annual Income Amount increases to equal 5% of your Account Value after the step-up. Your Annual Income Amount also increases if you make additional Purchase Payments. The amount of the increase is equal to 5% of any additional Purchase Payments (plus any Credit with respect to XT6). Any increase will be added to your Annual Income Amount beginning on the day that the step-up is effective or the Purchase Payment is made. A determination of whether you have exceeded your Annual Income Amount is made at the time of each withdrawal; therefore a subsequent increase in the Annual Income Amount will not offset the effect of a withdrawal that exceeded the Annual Income Amount at the time the withdrawal was made. An optional automatic step-up ("Auto Step-Up") feature is available for this benefit. This feature may be elected at the time the benefit is elected or at any time while the benefit is in force. If you elect this feature, the first Auto Step-Up opportunity will occur on the 1st Annuity Anniversary that is at least one year after the later of (1) the date of the first withdrawal under the Spousal Lifetime Five program or (2) the most recent step-up. At this time, your Annual Income Amount will be stepped-up if 5% of your Account Value is greater than the Annual Income Amount by any amount. If 5% of the Account Value does not exceed the Annual Income Amount, then an Auto Step-Up opportunity will occur on each successive Annuity Anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up opportunity will occur on the 1st Annuity Anniversary that is at least 1 year after the most recent step-up. If, on the date that we implement an Auto Step-Up to your Annual Income Amount, the charge for Spousal Lifetime Five has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Subject to our rules and restrictions, you will still be permitted to manually step-up the Annual Income Amount even if you elect the Auto Step-Up feature. Examples of withdrawals and step-up The following examples of dollar-for-dollar and proportional reductions and the step-up of the Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the Spousal Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of $250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; 4.) the first withdrawal occurs on March 1, 2006 when the Account Value is equal to $263,000; and 5.) the Account Value on February 1, 2010 is equal to $280,000. The values set forth here are purely hypothetical, and do not reflect the charge for the Spousal Lifetime Five or any other fees and charges. The initial Protected Withdrawal Value is calculated as the greatest of (a), (b) and (c): (a)Purchase payment accumulated at 5% per year from February 1, 2005 until March 1, 2006 (393 days) = $250,000 X 1.05/(393/365)/ = $263,484.33 (b)Account Value on March 1, 2006 (the date of the first withdrawal) = $263,000 (c)Account Value on February 1, 2006 (the first Annuity Anniversary) = $265,000 Therefore, the initial Protected Withdrawal Value is equal to $265,000. The Annual Income Amount is equal to $13,250 under the Spousal Life Income Benefit (5% of $265,000). Example 1. Dollar-for-dollar reduction If $10,000 was withdrawn (less than the Annual Income Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000 = $3,250 .. Annual Income Amount for future Annuity Years remains at $13,250 Example 2. Dollar-for-dollar and proportional reductions If $15,000 was withdrawn (more than the Annual Income Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Income Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 $1,750) reduces Annual Income Amount for future Annuity Years. .. Reduction to Annual Income Amount = Excess Income/Account Value before Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250 = $93. Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157 Example 3. Step-up of the Annual Income Amount If a step-up of the Annual Income Amount is requested on February 1, 2010 or the Auto Step-Up feature was elected, the step-up would occur because 5% of the Account Value, which is $14,000 (5% of $280,000), is greater than the Annual Income Amount of $13,250. The new Annual Income Amount will be equal to $14,000. 83 BENEFITS UNDER THE SPOUSAL LIFETIME FIVE PROGRAM To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount and amounts are still payable under the Spousal Life Income Benefit, we will make an additional payment for that Annuity Year equal to the remaining Annual Income Amount for the Annuity Year, if any. Thus, in that scenario, the remaining Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Annual Income Amount as described in this Prospectus. No further Purchase Payments will be accepted under your Annuity. We will make payments until the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount, the Spousal Life Income Benefit terminates and no additional payments will be made. .. If annuity payments are to begin under the terms of your Annuity or if you decide to begin receiving annuity payments and there is any Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any annuity option available; or (2)request that, as of the date annuity payments are to begin, we make annuity payments each year equal to the Annual Income Amount. We will make payments until the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. We must receive your request in a form acceptable to us at our office. .. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments as a joint and survivor or single (as applicable) life fixed annuity with five payments certain using the same basis that is used to calculate the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such annuity payments will be the greater of: (1)the present value of future Annual Income Amount payments. Such present value will be calculated using the same basis that is used to calculate the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. .. If no withdrawal was ever taken, we will determine an initial Protected Withdrawal Value and calculate an Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. Other Important Considerations .. Withdrawals under the Spousal Lifetime Five program are subject to all of the terms and conditions of the Annuity, including any CDSC. .. Withdrawals made while the Spousal Lifetime Five program is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Spousal Lifetime Five program does not directly affect the Annuity's Account Value or Surrender Value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Withdrawal Value. .. You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Spousal Lifetime Five program. The Spousal Lifetime Five program provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. .. In general, you must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. .. There may be circumstances where you will continue to be charged the full amount for the Spousal Lifetime Five program even when the benefit is only providing a guarantee of income based on one life with no survivorship. .. In order for the Surviving Designated Life to continue the Spousal Lifetime Five program upon the death of an owner, the Designated Life must elect to assume ownership of the Annuity under the spousal continuation option. When the Annuity is owned by a Custodial Account, in order for Spousal Lifetime Five to be continued after the death of the first Designated Life (the Annuitant), the Custodial Account must elect to continue the Annuity and the second Designated Life (the Contingent Annuitant) will be named as the new Annuitant. See "Spousal Designations", and "Spousal Assumption of Annuity" in this Prospectus. 84 Election of and Designations under the Program Spousal Lifetime Five can only be elected based on two Designated Lives. Designated Lives must be natural persons who are each other's spouses at the time of election of the program and at the death of the first of the Designated Lives to die. Currently, the program may only be elected where the Owner, Annuitant and Beneficiary Designations are as follows: . One Annuity Owner, where the Annuitant and the Owner are the same person and the beneficiary is the Owner's spouse. The Owner/Annuitant and the beneficiary each must be at least 55 years old at the time of election; or . Co-Annuity Owners, where the Owners are each other's spouses. The Beneficiary Designation must be the surviving spouse. The first named Owner must be the Annuitant. Both Owners must each be at least 55 years old at the time of election; or . One Annuity Owner, where the Owner is a custodial account established to hold retirement assets for the benefit of the Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code (or any successor Code section thereto) ("Custodial Account"), the Beneficiary is the Custodial Account and the spouse of the Annuitant is the Contingent Annuitant. Both the Annuitant and Contingent Annuitant must each be at least 55 years old at the time of election. No Ownership changes or Annuitant changes will be permitted once this program is elected. However, if the Annuity is co-owned, the Owner that is not the Annuitant may be removed without affecting the benefit. The Spousal Lifetime Five program can be elected at the time that you purchase your Annuity. We also offer existing Owners the option to elect the Spousal Lifetime Five program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. Your Account Value as the date of election will be used as a basis to calculate the initial Protected Withdrawal Value and the Annual Income Amount. Currently, if you terminate the program, you may, for certain optional benefits, be permitted to elect a lifetime withdrawal benefit only on any anniversary of the Issue Date that is at least 90 calendar days from the date the benefit was last terminated. We reserve the right to further limit the election frequency in the future. Before making any such change to the election frequency, we will provide prior notice to Owners who have an effective Spousal Lifetime Five Income Benefit. Termination of the Program The program terminates automatically when your Annual Income Amount equals zero. You may terminate the program at any time by notifying us. If you terminate the program, any guarantee provided by the benefit will terminate as of the date the termination is effective and certain restrictions on re-election of the benefit will apply as described above. We reserve the right to further limit the frequency election in the future. The program terminates upon your surrender of the Annuity, upon the first Designated Life to die if the Annuity is not continued, upon the second Designated Life to die or upon your election to begin receiving annuity payments. The charge for the Spousal Lifetime Five program will no longer be deducted from your Account Value upon termination of the program. Additional Tax Considerations If you purchase an Annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or an employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your Annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than 5 percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount required under the Code may exceed the Annual Income Amount, which will cause us to increase the Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and Death Benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. 85 HIGHEST DAILY LIFETIME FIVE/SM/ INCOME BENEFIT (HD5)/SM/ The Highest Daily Lifetime Five program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Highest Daily Lifetime Five is offered as an alternative to Lifetime Five and Spousal Lifetime Five. Currently, if you elect Highest Daily Lifetime Five and subsequently terminate the benefit, you will not be able to re-elect Highest Daily Lifetime Five, and may have a waiting period until you can elect another lifetime withdrawal benefit. See "Election of and Designations under the Program" below for details. The income benefit under Highest Daily Lifetime Five currently is based on a single "designated life" who is at least 55 years old on the date that the benefit is acquired. The Highest Daily Lifetime Five Benefit is not available if you elect any other optional living benefit, although you may elect any optional death benefit (other than the Highest Daily Value Death Benefit). Any DCA program that transfers Account Value from a Fixed Allocation is also not available as Fixed Allocations are not permitted with the benefit. As long as your Highest Daily Lifetime Five Benefit is in effect, you must allocate your Account Value in accordance with the then-permitted and available investment option(s) with this program. We offer a benefit that guarantees until the death of the single designated life the ability to withdraw an annual amount (the "Total Annual Income Amount") equal to a percentage of an initial principal value (the "Total Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, and wish to ensure that market performance will not affect your ability to receive annual payments. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. As discussed below, we require that you participate in our asset transfer program in order to participate in Highest Daily Lifetime Five, and in the Appendices to this prospectus, we set forth the formula under which we make those asset transfers. As discussed below, a key component of Highest Daily Lifetime Five is the Total Protected Withdrawal Value, which is an amount that is distinct from Account Value. Because each of the Total Protected Withdrawal Value and Total Annual Income Amount is determined in a way that is not solely related to Account Value, it is possible for Account Value to fall to zero, even though the Total Annual Income Amount remains. You are guaranteed to be able to withdraw the Total Annual Income Amount for the rest of your life, provided that you have not made "excess withdrawals." Excess withdrawals, as discussed below, will reduce your Total Annual Income Amount. Thus, you could experience a scenario in which your Account Value was zero, and, due to your excess withdrawals, your Total Annual Income Amount also was reduced to zero. In that scenario, no further amount would be payable under Highest Daily Lifetime Five. Key Feature - Total Protected Withdrawal Value The Total Protected Withdrawal Value is used to determine the amount of the annual payments under Highest Daily Lifetime Five. The Total Protected Withdrawal Value is equal to the greater of the Protected Withdrawal Value and any Enhanced Protected Withdrawal Value that may exist. We describe how we determine Enhanced Protected Withdrawal Value, and when we begin to calculate it, below. If you do not meet the conditions described below for obtaining Enhanced Protected Withdrawal Value then Total Protected Withdrawal Value is simply equal to Protected Withdrawal Value. The Protected Withdrawal Value initially is equal to the Account Value on the date that you elect Highest Daily Lifetime Five. On each Valuation Day thereafter, until the earlier of the first withdrawal or ten years after the date of your election of the benefit, we recalculate the Protected Withdrawal Value. Specifically, on each such Valuation Day (the "Current Valuation Day"), the Protected Withdrawal Value is equal to the greater of: . the Protected Withdrawal Value for the immediately preceding Valuation Day (the "Prior Valuation Day"), appreciated at the daily equivalent of 5% annually during the calendar day(s) between the Prior Valuation Day and the Current Valuation Day (i.e., one day for successive Valuation Days, but more than one calendar day for Valuation Days that are separated by weekends and/or holidays), plus the amount of any Purchase Payment (including any associated credit) made on the Current Valuation Day; and . the Account Value. If you have not made a withdrawal prior to the tenth anniversary of the date you elected Highest Daily Lifetime Five (which we refer to as the "Tenth Anniversary"), we will continue to calculate a Protected Withdrawal Value. On or after the Tenth Anniversary and up until the date of the first withdrawal, your Protected Withdrawal Value is equal to the greater of the Protected Withdrawal Value on the Tenth Anniversary or your Account Value. The Enhanced Protected Withdrawal Value is only calculated if you do not take a withdrawal prior to the Tenth Anniversary. Thus, if you do take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive Enhanced Protected Withdrawal Value. If so, then on or after the Tenth Anniversary up until the date of the first withdrawal, the Enhanced Protected Withdrawal Value is equal to the sum of: 86 (a)200% of the Account Value on the date you elected Highest Daily Lifetime Five; (b)200% of all Purchase Payments (and any associated Credits) made during the one-year period after the date you elected Highest Daily Lifetime Five; and (c)100% of all Purchase Payments (and any associated Credits) made more than one year after the date you elected Highest Daily Lifetime Five, but prior to the date of your first withdrawal. We cease these daily calculations of the Protected Withdrawal Value and Enhanced Protected Withdrawal Value (and therefore, the Total Protected Withdrawal Value) when you make your first withdrawal. However, as discussed below, subsequent Purchase Payments (and any associated Credits) will increase the Total Annual Income Amount, while "excess" withdrawals (as described below) may decrease the Total Annual Income Amount. Key Feature - Total Annual Income Amount under the Highest Daily Lifetime Five Benefit The initial Total Annual Income Amount is equal to 5% of the Total Protected Withdrawal Value. For purposes of the asset transfer formula described below, we also calculate a Highest Daily Annual Income Amount, which is initially equal to 5% of the Protected Withdrawal Value. Under the Highest Daily Lifetime Five benefit, if your cumulative withdrawals in an Annuity Year are less than or equal to the Total Annual Income Amount, they will not reduce your Total Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Total Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Total Annual Income Amount ("Excess Income"), your Total Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. A Purchase Payment that you make will increase the then-existing Total Annual Income Amount and Highest Daily Annual Income Amount by an amount equal to 5% of the Purchase Payment (including the amount of any associated Credits). An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto Step-Up feature can result in a larger Total Annual Income Amount if your Account Value increases subsequent to your first withdrawal. We begin examining the Account Value for purposes of this feature starting with the anniversary of the Issue Date of the Annuity (the "Annuity Anniversary") immediately after your first withdrawal under the benefit. Specifically, upon the first such Annuity Anniversary, we identify the Account Value on the Valuation Days corresponding to the end of each quarter that (i) is based on your Annuity Year, rather than a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls within the immediately preceding Annuity Year. If the end of any such quarter falls on a holiday or a weekend, we use the next Valuation Day. We multiply each of those quarterly Account Values by 5%, adjust each such quarterly value for subsequent withdrawals and Purchase Payments, and then select the highest of those values. If the highest of those values exceeds the existing Total Annual Income Amount, we replace the existing amount with the new, higher amount. Otherwise, we leave the existing Total Annual Income Amount intact. In later years, (i.e., after the first Annuity Anniversary after the first withdrawal) we determine whether an automatic step-up should occur on each Annuity Anniversary, by performing a similar examination of the Account Values on the end of the four immediately preceding quarters. If, on the date that we implement a Highest Quarterly Auto Step-Up to your Total Annual Income Amount, the charge for Highest Daily Lifetime Five has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Prior to increasing your charge for Highest Daily Lifetime Five upon a step-up, we would notify you, and give you the opportunity to cancel the automatic step-up feature. If you receive notice of a proposed step-up and accompanying fee increase, you should carefully evaluate whether the amount of the step-up justifies the increased fee to which you will be subject. The Highest Daily Lifetime Five program does not affect your ability to make withdrawals under your annuity, or limit your ability to request withdrawals that exceed the Total Annual Income Amount. Under Highest Daily Lifetime Five, if your cumulative withdrawals in an Annuity Year are less than or equal to the Total Annual Income Amount, they will not reduce your Total Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Total Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Total Annual Income Amount in any Annuity Year, you cannot carry-over the unused portion of the Total Annual Income Amount to subsequent Annuity Years. Examples of dollar-for-dollar and proportional reductions, and the Highest Quarterly Auto Step-Up are set forth below. The values depicted here are purely hypothetical, and do not reflect the charges for the Highest Daily Lifetime Five benefit or any other fees and charges. Assume the following for all three examples: . The Issue Date is December 1, 2006 . The Highest Daily Lifetime Five benefit is elected on March 5, 2007. Dollar-for-dollar reductions On May 2, 2007, the Total Protected Withdrawal Value is $120,000, resulting in a Total Annual Income Amount of $6,000 (5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the remaining Total Annual Income Amount for that Annuity Year (up to and including December 1, 2007) is $3,500. This is the result of a dollar-for-dollar reduction of the Total Annual Income Amount - $6,000 less $2,500 = $3,500. 87 Proportional reductions Continuing the previous example, assume an additional withdrawal of $5,000 occurs on August 6, 2007 and the Account Value at the time of this withdrawal is $110,000. The first $3,500 of this withdrawal reduces the Total Annual Income Amount for that Annuity Year to $0. The remaining withdrawal amount - $1,500 - reduces the Total Annual Income Amount in future Annuity Years on a proportional basis based on the ratio of the excess withdrawal to the Account Value immediately prior to the excess withdrawal. (Note that if there were other withdrawals in that Annuity Year, each would result in another proportional reduction to the Total Annual Income Amount). Here is the calculation: Account Value before withdrawal $110,000.00 Less amount of "non" excess withdrawal $ 3,500.00 Account Value immediately before excess withdrawal of $1,500 $106,500.00 Excess withdrawal amount $ 1,500.00 Divided by Account Value immediately before excess withdrawal $106,500.00 Ratio 1.41% Total Annual Income Amount $ 6,000.00 Less ratio of 1.41% $ 84.51 Total Annual Income Amount for future Annuity Years $ 5,915.49
Highest Quarterly Auto Step-Up On each Annuity Anniversary date, the Total Annual Income Amount is stepped-up if 5% of the highest quarterly value since your first withdrawal (or last Annuity Anniversary in subsequent years), adjusted for withdrawals and additional Purchase Payments, is higher than the Total Annual Income Amount, adjusted for excess withdrawals and additional Purchase Payments (plus any Credit with respect to XT6). Continuing the same example as above, the Total Annual Income Amount for this Annuity Year is $6,000. However, the excess withdrawal on August 6 reduces this amount to $5,915.49 for future years (see above). For the next Annuity Year, the Total Annual Income Amount will be stepped-up if 5% of the highest quarterly Account Value, adjusted for withdrawals, is higher than $5,915.49. Here are the calculations for determining the quarterly values. Only the June 1 value is being adjusted for excess withdrawals as the September 1 and December 1 Valuation Days occur after the excess withdrawal on August 6.
Highest Quarterly Value (adjusted with Adjusted Total Annual withdrawal and Purchase Income Amount (5% of the Date* Account value Payments)** Highest Quarterly Value) - ----- ------------- ----------------------- ------------------------ June 1, 2007 $118,000.00 $118,000.00 $5,900.00 August 6, 2007 $110,000.00 $112,885.55 $5,644.28 September 1, 2007 $112,000.00 $112,885.55 $5,644.28 December 1, 2007 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The quarterly valuation dates are every three months thereafter - March 1, June 1, September 1, and December 1. In this example, we do not use the March 1 date as the first withdrawal took place after March 1. The Annuity Anniversary Date of December 1 is considered the fourth and final quarterly valuation date for the year. ** In this example, the first quarterly value after the first withdrawal is $118,000 on June 1, yielding an adjusted Total Annual Income Amount of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The calculations for the adjustments are: . The Account Value of $118,000 on June 1 is first reduced dollar-for-dollar by $3,500 ($3,500 is the remaining Total Annual Income Amount for the Annuity Year), resulting in an adjusted Account Value of $114,500 before the excess withdrawal. . This amount ($114,500) is further reduced by 1.41% (this is the ratio in the above example which is the excess withdrawal divided by the Account Value immediately preceding the excess withdrawal) resulting in a Highest Quarterly Value of $112,885.55. The adjusted Total Annual Income Amount is carried forward to the next quarterly anniversary date of September 1. At this time, we compare this amount to 5% of the Account Value on September 1. Since the June 1 adjusted Total Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to carry $5,644.28 forward to the next and final quarterly anniversary date of December 1. The Account Value on December 1 is $119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28, the adjusted Total Annual Income Amount is reset to $5,950.00. In this example, 5% of the December 1 value yields the highest amount of $ 5,950.00. Since this amount is higher than the current year's Total Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Total Annual Income Amount for the next Annuity Year, starting on December 2, 2007 and continuing through December 1, 2008, will be stepped-up to $5,950.00. Benefits Under the Highest Daily Lifetime Five Program .. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Total Annual Income Amount and amounts are still payable under Highest Daily Lifetime Five, we will make an additional payment, if any, for that Annuity Year equal to the remaining Total Annual Income Amount for the Annuity Year. Thus, in that 88 scenario, the remaining Total Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Total Annual Income Amount as described in this section. We will make payments until the death of the single designated life. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Total Annual Income Amount, the Highest Daily Lifetime Five benefit terminates, and no additional payments will be made. .. If Annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving Annuity payments and there is a Total Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any Annuity option available; or (2)request that, as of the date Annuity payments are to begin, we make Annuity payments each year equal to the Total Annual Income Amount. We will make payments until the death of the single designated life. We must receive your request in a form acceptable to us at our office. .. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments in the form of a single life fixed annuity with ten payments certain, by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such Annuity payments will be the greater of: (1)the present value of the future Total Annual Income Amount payments. Such present value will be calculated using the greater of the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. .. If no withdrawal was ever taken, we will calculate the Total Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. .. Please note that if your Annuity has a maximum Annuity Date requirement, payments that we make under this benefit as of that date will be treated as annuity payments. Other Important Considerations .. Withdrawals under the Highest Daily Lifetime Five benefit are subject to all of the terms and conditions of the Annuity, including any CDSC. .. Withdrawals made while the Highest Daily Lifetime Five Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Highest Daily Lifetime Five Benefit does not directly affect the Account Value or surrender value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity you will receive the current surrender value. .. You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Highest Daily Lifetime Five benefit. The Highest Daily Lifetime Five benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Total Annual Income Amount in the form of periodic benefit payments. .. Upon inception of the benefit, 100% of your Account Value must be allocated to the permitted sub-accounts. However, the asset transfer component of the benefit as described below may transfer Account Value to the Benefit Fixed Rate Account as of the effective date of the benefit in some circumstances. .. You cannot allocate Purchase Payments or transfer Account Value to a Fixed Allocation if you elect this benefit. .. Transfers to and from the Sub-accounts and the Benefit Fixed Rate Option triggered by the asset transfer component of the benefit will not count toward the maximum number of free transfers allowable under an Annuity. .. In general, you must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the Highest Daily Lifetime Five benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. .. The charge for Highest Daily Lifetime Five is 0.60% annually, assessed on a daily basis against the Sub-accounts and as a reduction to the interest rate credited under the Benefit Fixed Rate Account. This charge is in addition to any other fees under the annuity. Election of and Designations under the Program For Highest Daily Lifetime Five, there must be either a single Owner who is the same as the Annuitant, or if the Annuity is entity-owned, there must be a single natural person Annuitant. In either case, the Annuitant must be at least 55 years old. Any change of the Annuitant under the Annuity will result in cancellation of Highest Daily Lifetime Five. Similarly, any change of Owner will result in cancellation of Highest Daily Lifetime Five, except if (a) the new Owner has the same taxpayer identification 89 number as the previous owner (b) both the new Owner and previous Owner are entities or (c) the previous Owner is a natural person and the new Owner is an entity. Highest Daily Lifetime Five can be elected at the time that you purchase your Annuity. However, with respect to XT6, you may elect this benefit at the time you purchase your Annuity only if the CDSC schedule for XT6 Annuities issued on or after November 20, 2006 applies. (See "Summary of Contract Fees and Charges" section of the Prospectus). We also offer existing owners (i.e., those who have already acquired their Annuity) the option to elect Highest Daily Lifetime Five after the Issue Date, subject to our eligibility rules and restrictions. However, for existing Owners of XT6 whose Annuities are subject to the CDSC schedule for Annuities issued prior to November 20, 2006, this benefit may only be elected on or after the first anniversary of the Issue Date. Currently, if you terminate the Highest Daily Lifetime Five benefit, you (a) will not be permitted to re-elect the benefit and (b) may be allowed to elect another lifetime withdrawal benefit only on any anniversary of the Issue Date that is at least 90 calendar days from the date the Highest Daily Lifetime Five Benefit was terminated. We reserve the right to further limit the election frequency in the future. Before making any such change to the election frequency, we will provide prior notice to Owners who have an effective Highest Daily Lifetime Five Benefit. Termination of the Program You may terminate the benefit at any time by notifying us. If you terminate the benefit, any guarantee provided by the benefit will terminate as of the date the termination is effective, and certain restrictions on re-election will apply as described above. The benefit terminates: (i) upon your termination of the benefit (ii) upon your surrender of the Annuity (iii) upon your election to begin receiving annuity payments (iv) upon the death of the Annuitant (v) if both the Account Value and Total Annual Income Amount equal zero or (vi) if you fail to meet our requirements for issuing the benefit. Upon termination of Highest Daily Lifetime Five, we cease deducting the charge for the benefit. With regard to your investment allocations, upon termination we will: (i) leave intact amounts that are held in the variable investment options, and (ii) transfer all amounts held in the Benefit Fixed Rate Account (as defined below) to your variable investment options, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e. in the same proportion as the current balances in your variable investment options). Upon termination, we may limit or prohibit investment in the Fixed Allocations. Return of Principal Guarantee If you have not made a withdrawal before the Tenth Anniversary, we will increase your Account Value on that Tenth Anniversary (or the next Valuation Day, if that anniversary is not a Valuation Day), if the requirements set forth in this paragraph are met. On the Tenth Anniversary, we add: (a)your Account Value on the day that you elected Highest Daily Lifetime Five; and (b)the sum of each Purchase Payment you made (including any Credits with respect to XT6) during the one-year period after you elected the benefit. If the sum of (a) and (b) is greater than your Account Value on the Tenth Anniversary, we increase your Account Value to equal the sum of (a) and (b), by contributing funds from our general account. If the sum of (a) and (b) is less than or equal to your Account Value on the Tenth Anniversary, we make no such adjustment. The amount that we add to your Account Value under this provision will be allocated to each of our variable investment options and the Benefit Fixed Rate Account (described below), in the same proportion that each such investment option bears to your total Account Value, immediately prior to the application of the amount. Any such amount will not be considered a Purchase Payment when calculating your Total Protected Withdrawal Value, your death benefit, or the amount of any other or optional benefit that you may have selected, and therefore will have no direct impact on any such values at the time we add this amount. This potential addition to Account Value is available only if you have elected Highest Daily Lifetime Five and if you meet the conditions set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive the Return of Principal Guarantee. Asset Transfer Component of Highest Daily Lifetime Five As indicated above, we limit the sub-accounts to which you may allocate Account Value if you elect Highest Daily Lifetime Five. For purposes of this benefit, we refer to those permitted sub-accounts as the "Permitted Sub-accounts". As a requirement of participating in Highest Daily Lifetime Five, we require that you participate in our specialized asset transfer program, under which we may transfer Account Value between the Permitted Sub-accounts and a fixed interest rate account that is part of our general account (the "Benefit Fixed Rate Account"). We determine whether to make a transfer, and the amount of any transfer, under a non-discretionary formula, discussed below. The Benefit Fixed Rate Account is available only with this benefit, and thus you may not allocate Purchase Payments to the Benefit Fixed Rate Account. The interest rate that we pay with respect to the Benefit Fixed Rate Account is reduced by an amount that corresponds generally to the charge that we assess against your variable Sub-accounts for Highest Daily Lifetime Five. The Benefit Fixed Rate Account is not subject to the Investment Company Act of 1940 or the Securities Act of 1933. 90 Under the asset transfer component of Highest Daily Lifetime Five, we monitor your Account Value daily and, if necessary, systematically transfer amounts between the Permitted Sub-accounts you have chosen and the Benefit Fixed Rate Account. Any transfer would be made in accordance with a formula, which is set forth in the schedule supplement to the endorsement for this benefit (and also appears in the Appendices to this prospectus). Speaking generally, the formula, which we apply each Valuation Day, operates as follows. The formula starts by identifying your Protected Withdrawal Value for that day and then multiplies that figure by 5%, to produce a projected (i.e., hypothetical) Highest Daily Annual Income Amount. Then, using our actuarial tables, we produce an estimate of the total amount we would target in our allocation model, based on the projected Highest Daily Annual Income Amount each year for the rest of your life. In the formula, we refer to that value as the "Target Value" or "L". If you have already made a withdrawal, your projected Highest Daily Annual Income Amount (and thus your Target Value) would take into account any automatic step-up that was scheduled to occur according to the step-up formula described above. Next, the formula subtracts from the Target Value the amount held within the Benefit Fixed Rate Account on that day, and divides that difference by the amount held within the Permitted Sub-accounts. That ratio, which essentially isolates the amount of your Target Value that is not offset by amounts held within the Benefit Fixed Rate Account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage (currently 83%) it means essentially that too much Target Value is not offset by assets within the Benefit Fixed Rate Account, and therefore we will transfer an amount from your Permitted Sub-accounts to the Benefit Fixed Rate Account. Conversely, if the Target Ratio falls below a certain percentage (currently 77%), then a transfer from the Benefit Fixed Rate Account to the Permitted Sub-accounts would occur. Note that the formula is calculated with reference to the Highest Daily Annual Income Amount, rather than with reference to the Annual Income Amount. As you can glean from the formula, a downturn in the securities markets (i.e., a reduction in the amount held within the Permitted Sub-accounts) may cause us to transfer some of your variable Account Value to the Benefit Fixed Rate Account, because such a reduction will tend to increase the Target Ratio. Moreover, certain market return scenarios involving "flat" returns over a period of time also could result in the transfer of money to the Benefit Fixed Rate Account. In deciding how much to transfer, we use another formula, which essentially seeks to re-balance amounts held in the Permitted Sub-accounts and the Benefit Fixed Rate Account so that the Target Ratio meets a target, which currently is equal to 80%. Once you elect Highest Daily Lifetime Five, the ratios we use will be fixed. For newly issued annuities that elect Highest Daily Lifetime Five and existing annuities that elect Highest Daily Lifetime Five, however, we reserve the right to change the ratios. While you are not notified when your Annuity reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the Benefit Fixed Rate Account. The formula by which the reallocation triggers operate is designed primarily to mitigate the financial risks that we incur in providing the guarantee under Highest Daily Lifetime Five. Depending on the results of the calculation relative to the reallocation triggers, we may, on any day: .. Not make any transfer; or .. If a portion of your Account Value was previously allocated to the Benefit Fixed Rate Account, transfer all or a portion of those amounts to the Permitted Sub-accounts, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e., in the same proportion as the current balances in your variable investment options). Amounts taken out of the Benefit Fixed Rate Account will be withdrawn for this purpose on a last-in, first-out basis (an amount renewed into a new guarantee period under the Benefit Fixed Rate Account will be deemed a new investment for purposes of this last-in, first-out rule); or .. Transfer all or a portion of your Account Value in the Permitted Sub-accounts pro-rata to the Benefit Fixed Rate Account. The interest that you earn on such transferred amount will be equal to the annual rate that we have set for that day, and we will credit the daily equivalent of that annual interest until the earlier of one year from the date of the transfer or the date that such amount in the Benefit Fixed Rate Account is transferred back to the Permitted Sub-accounts. If a significant amount of your Account Value is systematically transferred to the Benefit Fixed Rate Account during periods of market declines or low interest rates, less of your Account Value may be available to participate in the investment experience of the Permitted Sub-accounts if there is a subsequent market recovery. Under the reallocation formula that we employ, it is possible that over time a significant portion, and under certain circumstances all, of your Account Value may be allocated to the Benefit Fixed Rate Account. Note that if your entire Account Value is transferred to the Benefit Fixed Rate Account, then based on the way the formula operates, that value would remain in the Benefit Fixed Rate Account unless you made additional Purchase Payments to the Permitted Sub-Accounts, which could cause Account Value to transfer out of the Benefit Fixed Rate Account. Additional Tax Considerations If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than 5 percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Total Annual Income Amount, which will cause us to increase the Total Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity that are greater than such amounts. In 91 addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. Please note, however, that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn to satisfy required minimum distribution rules, will cause you to lose the ability to receive Enhanced Protected Withdrawal Value and an amount under the Return of Principal Guarantee. As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. However, we do note that if you participate in Highest Daily Lifetime Five through a non-qualified annuity, and your annuity has received Enhanced Protected Withdrawal Value and/or an additional amount under the Return of Principal Guarantee, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (HD 7)/SM/ Highest Daily Lifetime Seven is offered as an alternative to Lifetime Five, Spousal Lifetime Five, and Highest Daily Lifetime Five. Currently, if you elect Highest Daily Lifetime Seven and subsequently terminate the benefit, you may have a waiting period until you can elect another lifetime withdrawal benefit. See "Election of and Designations under the Program" below for details. The income benefit under Highest Daily Lifetime Seven currently is based on a single "designated life" who is at least 55 years old on the date that the benefit is acquired. The Highest Daily Lifetime Seven Benefit is not available if you elect any other optional living benefit, although you may elect any optional death benefit other than the Highest Daily Value death benefit or the Plus40 Life Insurance Rider. As long as your Highest Daily Lifetime Seven Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available investment option(s) with this program. For a more detailed description of the permitted investment options, see the Investment options section of this prospectus. We offer a benefit that guarantees until the death of the single designated life the ability to withdraw an annual amount (the "Annual Income Amount") equal to a percentage of an initial principal value (the "Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, and wish to ensure that market performance will not affect your ability to receive annual payments. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. As discussed below, we require that you participate in our asset transfer program in order to participate in Highest Daily Lifetime Seven, and in Appendix J to this prospectus, we set forth the formula under which we make those asset transfers. As discussed below, a key component of Highest Daily Lifetime Seven is the Protected Withdrawal Value. Because each of the Protected Withdrawal Value and Annual Income Amount is determined in a way that is not solely related to Account Value, it is possible for the Account Value to fall to zero, even though the Annual Income Amount remains. You are guaranteed to be able to withdraw the Annual Income Amount for the rest of your life, provided that you have not made "excess withdrawals." Excess withdrawals, as discussed below, will reduce your Annual Income Amount. Thus, you could experience a scenario in which your Account Value was zero, and, due to your excess withdrawals, your Annual Income Amount also was reduced to zero. In that scenario, no further amount would be payable under Highest Daily Lifetime Seven. Key Feature - Protected Withdrawal Value The Protected Withdrawal Value is used to calculate the initial Annual Income Amount. On the effective date of the benefit , the Protected Withdrawal Value is equal to your Account Value. On each Valuation Day thereafter, until the earlier of the tenth anniversary of benefit election (the "Tenth Anniversary Date") or the date of the first withdrawal, the Protected Withdrawal Value is equal to the "Periodic Value" described in the next paragraph. The "Periodic Value" initially is equal to the Account Value on the effective date of the benefit. On each Valuation Day thereafter, until the earlier of the first withdrawal or the Tenth Anniversary Date, we recalculate the Periodic Value. We stop determining the Periodic Value upon the earlier of your first withdrawal after the effective date of the benefit or the Tenth Anniversary Date. On each Valuation Day (the "Current Valuation Day"), the Periodic Value is equal to the greater of: (1)the Periodic Value for the immediately preceding business day (the "Prior Valuation Day") appreciated at the daily equivalent of 7% annually during the calendar day(s) between the Prior Valuation Day and the Current Valuation Day (i.e., one day for successive Valuation Days, but more than one calendar day for Valuation Days that are separated by weekends and/or holidays), plus the amount of any adjusted Purchase Payment made on the Current Valuation Day; and (2)the Account Value. 92 If you make a withdrawal prior to the Tenth Anniversary Date, the Protected Withdrawal Value on the date of the withdrawal is equal to the greatest of: (a)the Account Value; or (b)the Periodic Value on the date of the withdrawal. If you have not made a withdrawal on or before the Tenth Anniversary Date, your Protected Withdrawal Value subsequent to the Tenth Anniversary Date is equal to the greatest of: (1)the Account Value; or (2)the Periodic Value on the Tenth Anniversary Date, increased for subsequent adjusted Purchase Payments; or (3)the sum of: (a)200% of the Account Value on the effective date of the benefit; (b)200% of all adjusted Purchase Payments made within one year after the effective date of the benefit; and (c)all adjusted Purchase Payments made after one year following the effective date of the benefit up to the date of the first withdrawal. On and after the date of your first withdrawal, your Protected Withdrawal Value is increased by the amount of any subsequent Purchase Payments, is reduced by withdrawals, including your first withdrawal (as described below), and is increased if you qualify for a step-up (as described below). Irrespective of these calculations, your Protected Withdrawal Value will always be at least equal to your Account Value. Key Feature - Annual Income Amount under the Highest Daily Lifetime Seven Benefit The Annual Income Amount is equal to a specified percentage of the Protected Withdrawal Value. The percentage depends on the age of the Annuitant on the date of the first withdrawal after election of the benefit. The percentages are: 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85 and older. Under the Highest Daily Lifetime Seven benefit, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. Withdrawals of any amount up to and including the Annual Income Amount will reduce the Protected Withdrawal Value by the amount of the withdrawal. Withdrawals of Excess Income will reduce the Protected Withdrawal Value by the same ratio as the reduction to the Annual Income Amount. A Purchase Payment that you make will (i) increase the then-existing Annual Income Amount by an amount equal to a percentage of the Purchase Payment (including the amount of any associated Credits) based on the age of the Annuitant at the time of the first withdrawal (the percentages are: 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85 and older) and (ii) increase the Protected Withdrawal Value by the amount of the Purchase Payment (including the amount of any associated Credits). An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto Step-Up feature can result in a larger Annual Income Amount if your Account Value increases subsequent to your first withdrawal. We begin examining the Account Value for purposes of the Highest Quarterly Step-Up starting with the anniversary of the Issue Date of the Annuity (the "Annuity Anniversary") immediately after your first withdrawal under the benefit. Specifically, upon the first such Annuity Anniversary, we identify the Account Value on the Valuation Days corresponding to the end of each quarter that (i) is based on your Annuity Year, rather than a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls within the immediately preceding Annuity Year. If the end of any such quarter falls on a holiday or a weekend, we use the next Valuation Day. Having identified each of those quarter-end Account Values, we then multiply each such value by a percentage that varies based on the age of the Annuitant on the Annuity Anniversary as of which the step-up would occur. The percentages are 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85 and older. Thus, we multiply each quarterly value by the applicable percentage, adjust each such quarterly value for subsequent withdrawals and Purchase Payments, and then select the highest of those values. If the highest of those values exceeds the existing Annual Income Amount, we replace the existing amount with the new, higher amount. Otherwise, we leave the existing Annual Income Amount intact. In later years, (i.e., after the first Annuity Anniversary after the first withdrawal) we determine whether an automatic step-up should occur on each Annuity Anniversary, by performing a similar examination of the Account Values on the end of the four immediately preceding quarters. At the time that we increase your Annual Income Amount, we also increase your Protected Withdrawal Value to equal the highest quarterly value upon which your step-up was based. If, on the date that we implement a Highest Quarterly Auto Step-Up to your Annual Income Amount, the charge for Highest Daily Lifetime Seven has 93 changed for new purchasers, you may be subject to the new charge at the time of such step-up. Prior to increasing your charge for Highest Daily Lifetime Seven upon a step-up, we would notify you, and give you the opportunity to cancel the automatic step-up feature. If you receive notice of a proposed step-up and accompanying fee increase, you should carefully evaluate whether the amount of the step-up justifies the increased fee to which you will be subject. The Highest Daily Lifetime Seven program does not affect your ability to make withdrawals under your Annuity, or limit your ability to request withdrawals that exceed the Annual Income Amount. Under Highest Daily Lifetime Seven, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Annual Income Amount in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. Examples of dollar-for-dollar and proportional reductions, and the Highest Quarterly Auto Step-Up are set forth below. The values depicted here are purely hypothetical, and do not reflect the charges for the Highest Daily Lifetime Seven benefit or any other fees and charges. Assume the following for all three examples: . The Issue Date is December 1, 2007 . The Highest Daily Lifetime Seven benefit is elected on March 5, 2008 . The Annuitant was 70 years old when he/she elected the Highest Daily Lifetime Seven benefit. Dollar-for-dollar reductions On May 2, 2008, the Protected Withdrawal Value is $120,000, resulting in an Annual Income Amount of $6,000 (since the Annuitant is younger than 75 at the time of the 1st withdrawal, the Annual Income Amount is 5% of the Protected Withdrawal Value, in this case 5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the remaining Annual Income Amount for that Annuity Year (up to and including December 1, 2008) is $3,500. This is the result of a dollar-for-dollar reduction of the Annual Income Amount - $6,000 less $2,500 = $3,500. Proportional reductions Continuing the previous example, assume an additional withdrawal of $5,000 occurs on August 6, 2008 and the Account Value at the time of this withdrawal is $110,000. The first $3,500 of this withdrawal reduces the Annual Income Amount for that Annuity Year to $0. The remaining withdrawal amount - $1,500--reduces the Annual Income Amount in future Annuity Years on a proportional basis based on the ratio of the excess withdrawal to the Account Value immediately prior to the excess withdrawal. (Note that if there were other withdrawals in that Annuity Year, each would result in another proportional reduction to the Annual Income Amount). Here is the calculation: Account Value before withdrawal $110,000.00 Less amount of "non" excess withdrawal $ 3,500.00 Account Value immediately before excess withdrawal of $1,500 $106,500.00 Excess withdrawal amount $ 1,500.00 Divided by Account Value immediately before excess withdrawal $106,500.00 Ratio 1.41% Annual Income Amount $ 6,000.00 Less ratio of 1.41% $ 84.51 Annual Income Amount for future Annuity Years $ 5,915.49
Highest Quarterly Auto Step-Up On each Annuity Anniversary date, the Annual Income Amount is stepped-up if the appropriate percentage (based on the Annuitant's age on the Annuity Anniversary) of the highest quarterly value since your first withdrawal (or last Annuity Anniversary in subsequent years), adjusted for withdrawals and additional Purchase Payments, is higher than the Annual Income Amount, adjusted for excess withdrawals and additional Purchase Payments (plus any Credits). Continuing the same example as above, the Annual Income Amount for this Annuity Year is $6,000. However, the excess withdrawal on August 6 reduces this amount to $5,915.49 for future years (see above). For the next Annuity Year, the Annual Income Amount will be stepped-up if 5% (since the youngest Designated Life is younger than 75 on the date of the potential step-up) of the highest quarterly Account Value adjusted for withdrawals, is higher than $5,915.49. Here are the calculations for determining the quarterly values. Only the June 1 value is being adjusted for excess withdrawals as the September 1 and December 1 Valuation Days occur after the excess withdrawal on August 6. 94
Highest Quarterly Value (adjusted with Adjusted Annual Income withdrawal and Purchase Amount (5% of the Date* Account Value Payments)** Highest Quarterly Value) - ----- ------------- ----------------------- ------------------------ June 1, 2008 $118,000.00 $118,000.00 $5,900.00 August 6, 2008 $110,000.00 $112,885.55 $5,644.28 September 1, 2008 $112,000.00 $112,885.55 $5,644.28 December 1, 2008 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The quarterly valuation dates are every three months thereafter - March 1, June 1, September 1, and December 1. In this example, we do not use the March 1 date as the first withdrawal took place after March 1. The Annuity Anniversary Date of December 1 is considered the fourth and final quarterly valuation date for the year. ** In this example, the first quarterly value after the first withdrawal is $118,000 on June 1, yielding an adjusted Annual Income Amount of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The calculations for the adjustments are: . The Account Value of $118,000 on June 1 is first reduced dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income Amount for the Annuity Year), resulting in an adjusted Account Value of $114,500 before the excess withdrawal. . This amount ($114,500) is further reduced by 1.41% (this is the ratio in the above example which is the excess withdrawal divided by the Account Value immediately preceding the excess withdrawal) resulting in a Highest Quarterly Value of $112,885.55. . The adjusted Annual Income Amount is carried forward to the next quarterly anniversary date of September 1. At this time, we compare this amount to 5% of the Account Value on September 1. Since the June 1 adjusted Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to carry $5,644.28 forward to the next and final quarterly anniversary date of December 1. The Account Value on December 1 is $119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28, the adjusted Annual Income Amount is reset to $5,950.00. In this example, 5% of the December 1 value yields the highest amount of $5,950.00. Since this amount is higher than the current year's Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Annual Income Amount for the next Annuity Year, starting on December 2, 2008 and continuing through December 1, 2009, will be stepped-up to $5,950.00. Benefits Under the Highest Daily Lifetime Seven Program .. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount or as a result of the fee that we assess for Highest Daily Lifetime Seven, and amounts are still payable under Highest Daily Lifetime Seven, we will make an additional payment, if any, for that Annuity Year equal to the remaining Annual Income Amount for the Annuity Year. Thus, in that scenario, the remaining Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Annual Income Amount as described in this section. We will make payments until the death of the single designated life. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount, the Highest Daily Lifetime Seven benefit terminates, and no additional payments are made. However, if a withdrawal in the latter scenario was taken to meet required minimum distribution requirements under the Annuity, then the benefit will not terminate, and we will continue to pay the Annual Income Amount in the form of a fixed annuity. .. If Annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving Annuity payments and there is a Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any Annuity option available; or (2)request that, as of the date Annuity payments are to begin, we make Annuity payments each year equal to the Annual Income Amount. We will make payments until the death of the single designated life. We must receive your request in a form acceptable to us at our office. .. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments in the form of a single life fixed annuity with ten payments certain, by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such Annuity payments will be the greater of: (1)the present value of the future Annual Income Amount payments. Such present value will be calculated using the greater of the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. .. If no withdrawal was ever taken, we will calculate the Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. .. Please note that payments that we make under this benefit after the Annuity Anniversary coinciding with or next following the annuitant's 95/th/ birthday will be treated as annuity payments. 95 Other Important Considerations .. Withdrawals under the Highest Daily Lifetime Seven benefit are subject to all of the terms and conditions of the Annuity, including any CDSC. .. Withdrawals made while the Highest Daily Lifetime Seven Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Highest Daily Lifetime Seven Benefit does not directly affect the Account Value or surrender value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity you will receive the current surrender value. .. You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Highest Daily Lifetime Seven benefit. The Highest Daily Lifetime Seven benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. .. Upon inception of the benefit, 100% of your Account Value must be allocated to the permitted Sub-accounts. .. You cannot allocate Purchase Payments or transfer Account Value to the AST Investment Grade Bond Portfolio Sub-account (see description below) if you elect this benefit. A summary description of the AST Investment Grade Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies of The Portfolios?". Upon the initial transfer of your Account Value into the AST Investment Grade Bond Portfolio, we will send a prospectus for that Portfolio to you, along with your confirmation. In addition, you can find a copy of the AST Investment Grade Bond Portfolio prospectus by going to www.prudentialannuities.com. .. Transfers to and from the elected Sub-accounts and an AST Investment Grade Bond Portfolio Sub-account triggered by the asset transfer component of the benefit will not count toward the maximum number of free transfers allowable under an Annuity. .. You must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the Highest Daily Lifetime Seven benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly adopted requirements. Subject to any change in requirements, transfer of Account Value and allocation of additional Purchase Payments may be subject to new investment limitations. .. The fee for Highest Daily Lifetime Seven is 0.60% annually of the Protected Withdrawal Value. We deduct this fee at the end of each quarter, where each such quarter is part of a year that begins on the effective date of the benefit or an anniversary thereafter. Thus, on each such quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation Day), we deduct 0.15% of the Protected Withdrawal Value at the end of the quarter. We deduct the fee pro rata from each of your Sub-accounts including the AST Investment Grade Bond Portfolio Sub-account. Since this fee is based on the Protected Withdrawal Value the fee for Highest Daily Lifetime Seven may be greater than it would have been, had it been based on the Account Value alone. If the fee to be deducted exceeds the current Account Value, we will reduce the Account Value to zero, and continue the benefit as described above. Election of and Designations under the Program For Highest Daily Lifetime Seven, there must be either a single Owner who is the same as the Annuitant, or if the Annuity is entity owned, there must be a single natural person Annuitant. In either case, the Annuitant must be at least 55 years old. Any change of the Annuitant under the Annuity will result in cancellation of Highest Daily Lifetime Seven. Similarly, any change of Owner will result in cancellation of Highest Daily Lifetime Seven, except if (a) the new Owner has the same taxpayer identification number as the previous owner (b) ownership is transferred from a custodian to the Annuitant, or vice versa or (c) ownership is transferred from one entity to another entity. Highest Daily Lifetime Seven can be elected at the time that you purchase your Annuity or after the Issue Date, subject to our eligibility rules and restrictions. Currently, if you terminate the Highest Daily Lifetime Seven benefit, you generally will only be allowed to re-elect the benefit or elect the Spousal Lifetime Five Benefit, the Lifetime Five Income Benefit, the Highest Daily Lifetime Five benefit, or the Spousal Highest Daily Lifetime Seven Income Benefit on any anniversary of the Issue Date that is at least 90 calendar days from the date the Highest Daily Lifetime Seven Benefit was terminated. We reserve the right to further limit the election frequency in the future. We also reserve the right to waive that requirement. Return of Principal Guarantee If you have not made a withdrawal before the Tenth Anniversary, we will increase your Account Value on that Tenth Anniversary (or the next Valuation Day, if that anniversary is not a Valuation Day), if the requirements set forth in this paragraph are met. On the Tenth Anniversary, we add: a) your Account Value on the day that you elected Highest Daily Lifetime Seven; and b) the sum of each Purchase Payment you made (including any Credits) during the one-year period after you elected the benefit. 96 If the sum of (a) and (b) is greater than your Account Value on the Tenth Anniversary, we increase your Account Value to equal the sum of (a) and (b), by contributing funds from our general account. If the sum of (a) and (b) is less than or equal to your Account Value on the Tenth Anniversary, we make no such adjustment. The amount that we add to your Account Value under this provision will be allocated to each of your variable investment options (other than a bond Sub-account used with this benefit), in the same proportion that each such Sub-account bears to your total Account Value, immediately before the application of the amount. Any such amount will not be considered a Purchase Payment when calculating your Protected Withdrawal Value, your death benefit, or the amount of any optional benefit that you may have selected, and therefore will have no direct impact on any such values at the time we add this amount. This potential addition to Account Value is available only if you have elected Highest Daily Lifetime Seven and if you meet the conditions set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive the Return of Principal Guarantee. Termination of the Program You may terminate the benefit at any time by notifying us. If you terminate the benefit, any guarantee provided by the benefit will terminate as of the date the termination is effective, and certain restrictions on re-election will apply as described above. The benefit terminates: (i) upon your termination of the benefit (ii) upon your surrender of the Annuity (iii) upon your election to begin receiving annuity payments (although if you have elected to the Annual Income Amount in the form of Annuity payments, we will continue to pay the Annual Income Amount) (iv) upon the death of the Annuitant (v) if both the Account Value and Annual Income Amount equal zero or (vi) if you cease to meet our requirements for issuing the benefit (see Elections and Designations under the Program). Upon termination of Highest Daily Lifetime Seven other than upon the death of the Annuitant, we impose any accrued fee for the benefit (i.e., the fee for the pro-rated portion of the year since the fee was last assessed), and thereafter we cease deducting the charge for the benefit. With regard to your investment allocations, upon termination we will: (i) leave intact amounts that are held in the variable investment options, and (ii) transfer all amounts held in the AST Investment Grade Bond Portfolio Sub-account to your variable investment options, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e. in the same proportion as the current balances in your variable investment options). Asset Transfer Component of Highest Daily Lifetime Seven As indicated above, we limit the Sub-accounts to which you may allocate Account Value if you elect Highest Daily Lifetime Seven. For purposes of this benefit, we refer to those permitted Sub-accounts as the "Permitted Sub-accounts". As a requirement of participating in Highest Daily Lifetime Seven, we require that you participate in our specialized asset transfer program, under which we may transfer Account Value between the Permitted Sub-accounts and a specified bond fund within the Advanced Series Trust (the "AST Investment Grade Bond Sub-account"). We determine whether to make a transfer, and the amount of any transfer, under a non-discretionary formula, discussed below. The AST Investment Grade Bond Sub-account is available only with this benefit, and thus you may not allocate Purchase Payments to the AST Investment Grade Bond Sub-account. Under the asset transfer component of Highest Daily Lifetime Seven, we monitor your Account Value daily and, if dictated by the formula, systematically transfer amounts between the Permitted Sub-accounts you have chosen and the AST Investment Grade Bond Sub-account. Any transfer would be made in accordance with a formula, which is set forth in the Appendices to this prospectus. Speaking generally, the formula, which we apply each Valuation Day, operates as follows. The formula starts by identifying an income basis for that day and then multiplies that figure by 5%, to produce a projected (i.e., hypothetical) income amount. Note that we use 5% in the formula, irrespective of the Annuitant's attained age. Then we produce an estimate of the total amount we would target in our allocation model, based on the projected income amount and factors set forth in the formula. In the formula, we refer to that value as the "Target Value" or "L". If you have already made a withdrawal, your projected income amount (and thus your Target Value) would take into account any automatic step-up, any subsequent purchase payments, and any excess withdrawals. Next, the formula subtracts from the Target Value the amount held within the AST Investment Grade Bond Sub-account on that day, and divides that difference by the amount held within the Permitted Sub-accounts. That ratio, which essentially isolates the amount of your Target Value that is not offset by amounts held within the AST Investment Grade Bond Sub-account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage (currently 83%), it means essentially that too much Target Value is not offset by assets within the AST Investment Grade Bond Sub-account, and therefore we will transfer an amount from your Permitted Sub-accounts to the AST Investment Grade Bond Sub-account. Conversely, if the Target Ratio falls below a certain percentage (currently 77%), then a transfer from the AST Investment Grade Bond Sub-account to the Permitted Sub-accounts would occur. As you can glean from the formula, a downturn in the securities markets (i.e., a reduction in the amount held within the Permitted Sub-accounts) may cause us to transfer some of your variable Account Value to the AST Investment Grade Bond Sub-account, because such a reduction will tend to increase the Target Ratio. Moreover, certain market return scenarios involving "flat" returns over a period of time also could result in the transfer of money to the AST Investment Grade Bond Sub-account. In deciding how much to transfer, we use another formula, which essentially seeks to re-balance amounts held in the Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that the Target Ratio meets a target, which currently is equal to 80%. Once you elect Highest Daily Lifetime Seven, the ratios we use will be fixed. For newly-issued Annuities that elect Highest Daily Lifetime Seven and existing Annuities that elect Highest Daily Lifetime Seven, however, we reserve the right to change the ratios. 97 While you are not notified when your Annuity reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the AST Investment Grade Bond Sub-account. The formula by which the reallocation triggers operate is designed primarily to mitigate the financial risks that we incur in providing the guarantee under Highest Daily Lifetime Seven. Depending on the results of the calculation relative to the reallocation triggers, we may, on any day: . Not make any transfer; or . If a portion of your Account Value was previously allocated to the AST Investment Grade Bond Sub-account, transfer all or a portion of those amounts to the Permitted Sub-accounts, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e., in the same proportion as the current balances in your variable investment options). Amounts taken out of the AST Investment Grade Bond Sub-account will be withdrawn for this purpose on a last-in, first-out basis; or . Transfer all or a portion of your Account Value in the Permitted Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account. If a significant amount of your Account Value is systematically transferred to the AST Investment Grade Bond Sub-account during periods of market declines or low interest rates, less of your Account Value may be available to participate in the investment experience of the Permitted Sub-accounts if there is a subsequent market recovery. If your entire Account Value is transferred to the AST Investment Grade Bond Sub-account, then based on the way the formula operates, that value would remain in the AST Investment Grade Bond Sub-account unless you made additional Purchase Payments to the Permitted Sub-accounts, which could cause Account Value to transfer out of the AST Investment Grade Bond Sub-account. Additional Tax Considerations If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Annual Income Amount, which will cause us to increase the Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. Please note, however, that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn to satisfy required minimum distribution rules, will cause you to lose the ability to receive the Return of Principal Guarantee and the guaranteed amount described above under "KEY FEATURE - Protected Withdrawal Value". As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. However, we do note that if you participate in Highest Daily Lifetime Seven through a non-qualified annuity, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. SPOUSAL HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (SHD7)/SM/ Spousal Highest Daily Lifetime Seven is the spousal version of Highest Daily Lifetime Seven. Currently, if you elect Spousal Highest Daily Lifetime Seven and subsequently terminate the benefit, you may have a waiting period until you can elect another lifetime withdrawal benefit. See "Election of and Designations under the Program" below for details. Spousal Highest Daily Lifetime Seven must be elected based on two Designated Lives, as described below. Each Designated Life must be at least 59 1/2 years old when the benefit is elected. Spousal Highest Daily Lifetime Seven is not available if you elect any other optional living benefit or optional death benefit. As long as your Spousal Highest Daily Lifetime Seven Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available investment option(s) with this program. For a more detailed description of permitted investment options, see the Investment options section of this prospectus. We offer a benefit that guarantees until the later death of two natural persons who are each other's spouses at the time of election of the benefit and at the first death of one of them (the "Designated Lives", and each, a "Designated Life") the ability to withdraw an annual amount (the "Annual Income Amount") equal to a percentage of an initial principal value (the "Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, wish to 98 ensure that market performance will not affect your ability to receive annual payments, and wish either spouse to be able to continue the Spousal Highest Daily Lifetime Seven benefit after the death of the first spouse. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. As discussed below, we require that you participate in our asset transfer program in order to participate in Spousal Highest Daily Lifetime Seven, and in Appendix J to this prospectus, we set forth the formula under which we make those asset transfers. As discussed below, a key component of Spousal Highest Daily Lifetime Seven is the Protected Withdrawal Value. Because each of the Protected Withdrawal Value and Annual Income Amount is determined in a way that is not solely related to Account Value, it is possible for the Account Value to fall to zero, even though the Annual Income Amount remains. You are guaranteed to be able to withdraw the Annual Income Amount until the death of the second Designated Life, provided that there have not been "excess withdrawals." Excess withdrawals, as discussed below, will reduce your Annual Income Amount. Thus, you could experience a scenario in which your Account Value was zero, and, due to your excess withdrawals, your Annual Income Amount also was reduced to zero. In that scenario, no further amount would be payable under Spousal Highest Daily Lifetime Seven. Key Feature - Protected Withdrawal Value The Protected Withdrawal Value is used to calculate the initial Annual Income Amount. On the effective date of the benefit , the Protected Withdrawal Value is equal to your Account Value. On each Valuation Day thereafter, until the earlier of the tenth anniversary of benefit election (the "Tenth Anniversary Date") or the date of the first withdrawal, the Protected Withdrawal Value is equal to the "Periodic Value" described in the next paragraph. The "Periodic Value" initially is equal to the Account Value on the effective date of the benefit. On each Valuation Day thereafter, until the earlier of the first withdrawal or the Tenth Anniversary Date, we recalculate the Periodic Value. We stop determining the Periodic Value upon the earlier of your first withdrawal after the effective date of the benefit or the Tenth Anniversary Date. On each Valuation Day (the "Current Valuation Day"), the Periodic Value is equal to the greater of: (1)the Periodic Value for the immediately preceding business day (the "Prior Valuation Day") appreciated at the daily equivalent of 7% annually during the calendar day(s) between the Prior Valuation Day and the Current Valuation Day (i.e., one day for successive Valuation Days, but more than one calendar day for Valuation Days that are separated by weekends and/or holidays), plus the amount of any adjusted Purchase Payment made on the Current Valuation Day; and (2)the Account Value. If you make a withdrawal prior to the Tenth Anniversary Date, the Protected Withdrawal Value on the date of the withdrawal is equal to the greatest of: (1)the Account Value; or (2)the Periodic Value on the date of the withdrawal. If you have not made a withdrawal on or before the Tenth Anniversary Date, your Protected Withdrawal Value subsequent to the Tenth Anniversary Date is equal to the greatest of: (1)the Account Value; or (2)the Periodic Value on the Tenth Anniversary Date, increased for subsequent adjusted Purchase Payments; or (3)the sum of: (a)200% of the Account Value on the effective date of the benefit; (b)200% of all adjusted Purchase Payments made within one year after the effective date of the benefit; and (c)all adjusted Purchase Payments made after one year following the effective date of the benefit up to the date of the first withdrawal. On and after the date of your first withdrawal, your Protected Withdrawal Value is increased by the amount of any subsequent Purchase Payments, is reduced by withdrawals, including your first withdrawal (as described below), and is increased if you qualify for a step-up (as described below). Irrespective of these calculations, your Protected Withdrawal Value will always be at least equal to your Account Value. Key Feature - Annual Income Amount under the Spousal Highest Daily Lifetime Seven Benefit The Annual Income Amount is equal to a specified percentage of the Protected Withdrawal Value. The percentage depends on the age of the youngest Designated Life on the date of the first withdrawal after election of the benefit. The percentages are: 5% for ages 79 and younger, 6% for ages 80 to 84, 7% for ages 85 to 89, and 8% for ages 90 and older. We use the age of the youngest Designated Life even if that Designated Life is no longer a participant under the Annuity due to death or divorce. Under the Spousal Highest Daily Lifetime Seven benefit, if your cumulative withdrawals in an Annuity Year are less than or equal to the 99 Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. Withdrawals of any amount up to and including the Annual Income Amount will reduce the Protected Withdrawal Value by the amount of the withdrawal. Withdrawals of Excess Income will reduce the Protected Withdrawal Value by the same ratio as the reduction to the Annual Income Amount. A Purchase Payment that you make will (i) increase the then-existing Annual Income Amount by an amount equal to a percentage of the Purchase Payment (including the amount of any associated Credits) based on the age of the Annuitant at the time of the first withdrawal (the percentages are: 5% for ages 79 and younger, 6% for ages 80-84, 7% for ages 85-89, and 8% for ages 90 and older) and (ii) increase the Protected Withdrawal Value by the amount of the Purchase Payment (including the amount of any associated Credits). An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto Step-Up feature can result in a larger Annual Income Amount if your Account Value increases subsequent to your first withdrawal. We begin examining the Account Value for purposes of the Highest Quarterly Step-Up starting with the anniversary of the Issue Date of the Annuity (the "Annuity Anniversary") immediately after your first withdrawal under the benefit. Specifically, upon the first such Annuity Anniversary, we identify the Account Value on the Valuation Days corresponding to the end of each quarter that (i) is based on your Annuity Year, rather than a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls within the immediately preceding Annuity Year. If the end of any such quarter falls on a holiday or a weekend, we use the next Valuation Day. Having identified each of those quarter-end Account Values, we then multiply each such value by a percentage that varies based on the age of the youngest Designated Life on the Annuity Anniversary as of which the step-up would occur. The percentages are 5% for ages 79 and younger, 6% for ages 80-84, 7% for ages 85-89, and 8% for ages 90 and older. Thus, we multiply each quarterly value by the applicable percentage, adjust each such quarterly value for subsequent withdrawals and Purchase Payments, and then select the highest of those values. If the highest of those values exceeds the existing Annual Income Amount, we replace the existing amount with the new, higher amount. Otherwise, we leave the existing Annual Income Amount intact. In later years, (i.e., after the first Annuity Anniversary after the first withdrawal) we determine whether an automatic step-up should occur on each Annuity Anniversary, by performing a similar examination of the Account Values on the end of the four immediately preceding quarters. At the time that we increase your Annual Income Amount, we also increase your Protected Withdrawal Value to equal the highest quarterly value upon which your step-up was based. If, on the date that we implement a Highest Quarterly Auto Step-Up to your Annual Income Amount, the charge for Spousal Highest Daily Lifetime Seven has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Prior to increasing your charge for Spousal Highest Daily Lifetime Seven upon a step-up, we would notify you, and give you the opportunity to cancel the automatic step-up feature. If you receive notice of a proposed step-up and accompanying fee increase, you should carefully evaluate whether the amount of the step-up justifies the increased fee to which you will be subject. The Spousal Highest Daily Lifetime Seven program does not affect your ability to make withdrawals under your annuity, or limit your ability to request withdrawals that exceed the Annual Income Amount. Under Spousal Highest Daily Lifetime Seven, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Annual Income Amount in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. Examples of dollar-for-dollar and proportional reductions, and the Highest Quarterly Auto Step-Up are set forth below. The values depicted here are purely hypothetical, and do not reflect the charges for the Spousal Highest Daily Lifetime Seven benefit or any other fees and charges. Assume the following for all three examples: . The Issue Date is December 1, 2007 . The Spousal Highest Daily Lifetime Seven benefit is elected on March 5, 2008. . The youngest Designated Life was 70 years old when he/she elected the Spousal Highest Daily Lifetime Seven benefit. Dollar-for-dollar reductions On May 2, 2008, the Protected Withdrawal Value is $120,000, resulting in an Annual Income Amount of $6,000 (since the youngest Designated Life is younger than 80 at the time of the 1st withdrawal, the Annual Income Amount is 5% of the Protected Withdrawal Value, in this case 5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the remaining Annual Income Amount for that Annuity Year (up to and including December 1, 2008) is $3,500. This is the result of a dollar-for-dollar reduction of the Annual Income Amount - $6,000 less $2,500 = $3,500. 100 Proportional reductions Continuing the previous example, assume an additional withdrawal of $5,000 occurs on August 6, 2008 and the Account Value at the time of this withdrawal is $110,000. The first $3,500 of this withdrawal reduces the Annual Income Amount for that Annuity Year to $0. The remaining withdrawal amount - $1,500 - reduces the Annual Income Amount in future Annuity Years on a proportional basis based on the ratio of the excess withdrawal to the Account Value immediately prior to the excess withdrawal. (Note that if there were other withdrawals in that Annuity Year, each would result in another proportional reduction to the Annual Income Amount). Here is the calculation: Account Value before withdrawal $110,000.00 Less amount of "non" excess withdrawal $ 3,500.00 Account Value immediately before excess withdrawal of $1,500 $106,500.00 Excess withdrawal amount $ 1,500.00 Divided by Account Value immediately before excess withdrawal $106,500.00 Ratio 1.41% Annual Income Amount $ 6,000.00 Less ratio of 1.41% $ 84.51 Annual Income Amount for future Annuity Years $ 5,915.49
Highest Quarterly Auto Step-Up On each Annuity Anniversary date, the Annual Income Amount is stepped-up if the appropriate percentage (based on the youngest Designated Life's age on the Annuity Anniversary) of the highest quarterly value since your first withdrawal (or last Annuity Anniversary in subsequent years), adjusted for withdrawals and additional Purchase Payments, is higher than the Annual Income Amount, adjusted for excess withdrawals and additional Purchase Payments (plus any Credits). Continuing the same example as above, the Annual Income Amount for this Annuity Year is $6,000. However, the excess withdrawal on August 6 reduces this amount to $5,915.49 for future years (see above). For the next Annuity Year, the Annual Income Amount will be stepped-up if 5% (since the youngest Designated Life is younger than 80 on the date of the potential step-up) of the highest quarterly Account Value adjusted for withdrawals, is higher than $5,915.49. Here are the calculations for determining the quarterly values. Only the June 1 value is being adjusted for excess withdrawals as the September 1 and December 1 Valuation Days occur after the excess withdrawal on August 6.
Highest Quarterly Value (adjusted with Adjusted Annual withdrawal and Purchase Income Amount (5% of the Date* Account Value Payments)** Highest Quarterly Value) - ----- ------------- ----------------------- ------------------------ June 1, 2008 $118,000.00 $118,000.00 $5,900.00 August 6, 2008 $110,000.00 $112,885.55 $5,644.28 September 1, 2008 $112,000.00 $112,885.55 $5,644.28 December 1, 2008 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The quarterly valuation dates are every three months thereafter -March 1, June 1, September 1, and December 1. In this example, we do not use the March 1 date as the first withdrawal took place after March 1. The Annuity Anniversary Date of December 1 is considered the fourth and final quarterly valuation date for the year. ** In this example, the first quarterly value after the first withdrawal is $118,000 on June 1, yielding an adjusted Annual Income Amount of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The calculations for the adjustments are: . The Account Value of $118,000 on June 1 is first reduced dollar-for-dollar by $3,500 ($3,500 is the remaining Total Annual Income Amount for the Annuity Year), resulting in an adjusted Account Value of $114,500 before the excess withdrawal. . This amount ($114,500) is further reduced by 1.41% (this is the ratio in the above example which is the excess withdrawal divided by the Account Value immediately preceding the excess withdrawal) resulting in a Highest Quarterly Value of $112,885.55. The adjusted Annual Income Amount is carried forward to the next quarterly anniversary date of September 1. At this time, we compare this amount to 5% of the Account Value on September 1. Since the June 1 adjusted Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to carry $5,644.28 forward to the next and final quarterly anniversary date of December 1. The Account Value on December 1 is $119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28, the adjusted Annual Income Amount is reset to $5,950.00. In this example, 5% of the December 1 value yields the highest amount of $5,950.00. Since this amount is higher than the current year's Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Annual Income Amount for the next Annuity Year, starting on December 2, 2008 and continuing through December 1, 2009, will be stepped-up to $5,950.00. 101 Benefits Under the Spousal Highest Daily Lifetime Seven Program .. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount or as a result of the fee that we assess for Spousal Highest Daily Lifetime Seven, and amounts are still payable under Spousal Highest Daily Lifetime Seven, we will make an additional payment, if any, for that Annuity Year equal to the remaining Annual Income Amount for the Annuity Year. Thus, in that scenario, the remaining Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Annual Income Amount as described in this section. We will make payments until the death of the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount, the Spousal Highest Daily Lifetime Seven benefit terminates, and no additional payments will be made. However, if a withdrawal in the latter scenario was taken to meet required minimum distribution requirements under the Annuity, then the benefit will not terminate, and we will continue to pay the Annual Income Amount in the form of a fixed annuity. .. If Annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving Annuity payments and there is a Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any Annuity option available; or (2)request that, as of the date Annuity payments are to begin, we make Annuity payments each year equal to the Annual Income Amount. We will make payments until the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. If, due to death of a Designated Life or divorce prior to annuitization, only a single Designated Life remains, then Annuity payments will be made as a life annuity for the lifetime of the Designated Life. We must receive your request in a form acceptable to us at our office. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments as a joint and survivor or single (as applicable) life fixed annuity with ten payments certain, by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such Annuity payments will be the greater of: (1)the present value of the future Annual Income Amount payments. Such present value will be calculated using the greater of the joint and survivor or single (as applicable) life fixed annuity rates then currently available or the joint and survivor or single (as applicable) life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. .. If no withdrawal was ever taken, we will calculate the Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. .. Please note that payments that we make under this benefit after the Annuity Anniversary coinciding with or next following the older of the owner or Annuitant's 95/th/ birthday, will be treated as annuity payments. Other Important Considerations .. Withdrawals under the Spousal Highest Daily Lifetime Seven benefit are subject to all of the terms and conditions of the Annuity, including any CDSC. .. Withdrawals made while the Spousal Highest Daily Lifetime Seven Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Spousal Highest Daily Lifetime Seven Benefit does not directly affect the Account Value or surrender value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity you will receive the current surrender value. .. You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Spousal Highest Daily Lifetime Seven benefit. The Spousal Highest Daily Lifetime Seven benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. .. Upon inception of the benefit, 100% of your Account Value must be allocated to the permitted Sub-accounts. .. You cannot allocate Purchase Payments or transfer Account Value to the AST Investment Grade Bond Portfolio Sub-account (as described below) if you elect this benefit. A summary description of the AST Investment Grade Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies of The Portfolios?". Upon the initial transfer of your Account Value into the AST Investment Grade Bond Portfolio, we will send a prospectus for that Portfolio to you, along with your confirmation. In addition, you can find a copy of the AST Investment Grade Bond Portfolio prospectus by going to www.prudentialannuities.com. .. You can make withdrawals from your Annuity without purchasing the Spousal Highest Daily Lifetime Seven benefit. The Spousal Highest Daily Lifetime Seven benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. 102 .. Transfers to and from the elected Sub-accounts and the AST Investment Grade Bond Portfolio Sub-account triggered by the asset transfer component of the benefit will not count toward the maximum number of free transfers allowable under an Annuity. .. You must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the Spousal Highest Daily Lifetime Seven benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly adopted requirements. Subject to any change in requirements, transfers of Account Value and allocation of Additional Purchase Payments may be subject to new investment limitations. .. The fee for Spousal Highest Daily Lifetime Seven is 0.75% annually of the Protected Withdrawal Value. We deduct this fee at the end of each quarter, where each such quarter is part of a year that begins on the effective date of the benefit or an anniversary thereafter. Thus, on each such quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation Day), we deduct 0.1875% of the Protected Withdrawal Value at the end of the quarter. We deduct the fee pro rata from each of your Sub-accounts including the AST Investment Grade Bond Sub-account. Since this fee is based on the Protected Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven may be greater than it would have been, had it been based on the Account Value alone. If the fee to be deducted exceeds the current Account Value, we will reduce the Account Value to zero, and continue the benefit as described above. Election of and Designations under the Program Spousal Highest Daily Lifetime Seven can only be elected based on two Designated Lives. Designated Lives must be natural persons who are each other's spouses at the time of election of the program and at the death of the first of the Designated Lives to die. Currently, Spousal Highest Daily Lifetime Seven only may be elected where the Owner, Annuitant, and Beneficiary designations are as follows: .. One Annuity Owner, where the Annuitant and the Owner are the same person and the beneficiary is the Owner's spouse. The Owner/Annuitant and the beneficiary each must be at least 59 1/2 years old at the time of election; or .. Co-Annuity Owners, where the Owners are each other's spouses. The beneficiary designation must be the surviving spouse, or the spouses named equally. One of the owners must be the Annuitant. Each Owner must each be at least 59 1/2 years old at the time of election; or .. One Annuity Owner, where the Owner is a custodial account established to hold retirement assets for the benefit of the Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code (or any successor Code section thereto) ("Custodial Account"), the beneficiary is the Custodial Account, and the spouse of the Annuitant is the Contingent Annuitant. Both the Annuitant and the Contingent Annuitant each must be at least 59 1/2 years old at the time of election. We do not permit a change of Owner under this benefit, except as follows: (a) if one Owner dies and the surviving spousal Owner assumes the Annuity or (b) if the Annuity initially is co-owned, but thereafter the Owner who is not the Annuitant is removed as Owner. We permit changes of beneficiary under this benefit. If the Designated Lives divorce, the Spousal Highest Daily Lifetime Seven benefit may not be divided as part of the divorce settlement or judgment. Nor may the divorcing spouse who retains ownership of the Annuity appoint a new Designated Life upon re-marriage. Spousal Highest Daily Lifetime Seven can be elected at the time that you purchase your Annuity or after the Issue Date, subject to our eligibility rules and restrictions. Currently, if you terminate the Spousal Highest Daily Lifetime Seven benefit, you generally will only be allowed to re-elect the benefit or to elect the Lifetime Five Benefit, the Spousal Lifetime Five Benefit, the Highest Daily Lifetime Five benefit, or the Highest Daily Lifetime Seven Benefit on any anniversary of the Issue Date that is at least 90 calendar days from the date the Spousal Highest Daily Lifetime Seven Benefit was terminated. We reserve the right to further limit the election frequency in the future. We also reserve the right to waive that requirement. Return of Principal Guarantee If you have not made a withdrawal before the Tenth Anniversary, we will increase your Account Value on that Tenth Anniversary (or the next Valuation Day, if that anniversary is not a Valuation Day), if the requirements set forth in this paragraph are met. On the Tenth Anniversary, we add: a) your Account Value on the day that you elected Spousal Highest Daily Lifetime Seven; and b) the sum of each Purchase Payment you made (including any Credits) during the one-year period after you elected the benefit. If the sum of (a) and (b) is greater than your Account Value on the Tenth Anniversary, we increase your Account Value to equal the sum of (a) and (b), by contributing funds from our general account. If the sum of (a) and (b) is less than or equal to your Account Value on the Tenth Anniversary, we make no such adjustment. The amount that we add to your Account Value under this 103 provision will be allocated to each of your variable investment options (other than a bond Sub-account used with this benefit), in the same proportion that each such Sub-account bears to your total Account Value, immediately before the application of the amount. Any such amount will not be considered a Purchase Payment when calculating your Protected Withdrawal Value, your death benefit, or the amount of any optional benefit that you may have selected, and therefore will have no direct impact on any such values at the time we add this amount. This potential addition to Account Value is available only if you have elected Spousal Highest Daily Lifetime Seven and if you meet the conditions set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive the Return of Principal Guarantee. Termination of the Program You may terminate the benefit at any time by notifying us. If you terminate the benefit, any guarantee provided by the benefit will terminate as of the date the termination is effective, and certain restrictions on re-election will apply as described above. The benefit terminates: (i) if upon the death of the first Designated Life, the surviving Designated Life opts to take the death benefit under the Annuity (thus, the benefit does not terminate solely because of the death of the first Designated Life) (ii) upon the death of the second Designated Life, (iii) upon your termination of the benefit (although if you have elected to take annuity payments in the form of the Annual Income Amount, we will continue to pay the Annual Income Amount) (iv) upon your surrender of the Annuity (v) upon your election to begin receiving annuity payments (vi) if both the Account Value and Annual Income Amount equal zero or (vii) if you cease to meet our requirements for issuing the benefit (see Election of and Designations under the Program). Upon termination of Spousal Highest Daily Lifetime Seven other than upon death of a Designated Life, we impose any accrued fee for the benefit (i.e., the fee for the pro-rated portion of the year since the fee was last assessed), and thereafter we cease deducting the charge for the benefit. With regard to your investment allocations, upon termination we will: (i) leave intact amounts that are held in the variable investment options, and (ii) transfer all amounts held in the AST Investment Grade Bond Portfolio Sub-account (as defined below) to your variable investment options, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e. in the same proportion as the current balances in your variable investment options). Asset Transfer Component of Spousal Highest Daily Lifetime Seven As indicated above, we limit the Sub-accounts to which you may allocate Account Value if you elect Spousal Highest Daily Lifetime Seven. For purposes of this benefit, we refer to those permitted Sub-accounts as the "Permitted Sub-accounts". As a requirement of participating in Spousal Highest Daily Lifetime Seven, we require that you participate in our specialized asset transfer program, under which we may transfer Account Value between the Permitted Sub-accounts and a specified bond fund within the Advanced Series Trust (the "AST Investment Grade Bond Sub-account"). We determine whether to make a transfer, and the amount of any transfer, under a non-discretionary formula, discussed below. The AST Investment Grade Bond Sub-account is available only with this benefit, and thus you may not allocate Purchase Payments to the AST Investment Grade Bond Sub-account. Under the asset transfer component of Spousal Highest Daily Lifetime Seven, we monitor your Account Value daily and, if dictated by the formula, systematically transfer amounts between the Permitted Sub-accounts you have chosen and the AST Investment Grade Bond Sub-account. Any transfer would be made in accordance with a formula, which is set forth in the Appendix J to this prospectus. Speaking generally, the formula, which we apply each Valuation Day, operates as follows. The formula starts by identifying an income basis for that day and then multiplies that figure by 5%, to produce a projected (i.e., hypothetical) Highest Daily annual income amount. Note that we use 5% in the formula, irrespective of the youngest Designated Life's attained age. Then we produce an estimate of the total amount we would target in our allocation model, based on the projected income amount and factors set forth in the formula. In the formula, we refer to that value as the "Target Value" or "L". If you have already made a withdrawal, your projected income amount (and thus your Target Value) would take into account any automatic step-up, any subsequent purchase payments, and any excess withdrawals. Next, the formula subtracts from the Target Value the amount held within the AST Investment Grade Bond Sub-account on that day, and divides that difference by the amount held within the Permitted Sub-accounts. That ratio, which essentially isolates the amount of your Target Value that is not offset by amounts held within the AST Investment Grade Bond Sub-account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage (currently 83%), it means essentially that too much Target Value is not offset by assets within the AST Investment Grade Bond Sub-account, and therefore we will transfer an amount from your Permitted Sub-accounts to the AST Investment Grade Bond Sub-account. Conversely, if the Target Ratio falls below a certain percentage (currently 77%), then a transfer from the AST Investment Grade Bond Sub-account to the Permitted Sub-accounts would occur. As you can glean from the formula, a downturn in the securities markets (i.e., a reduction in the amount held within the Permitted Sub-accounts) may cause us to transfer some of your variable Account Value to the AST Investment Grade Bond Sub-account, because such a reduction will tend to increase the Target Ratio. Moreover, certain market return scenarios involving "flat" returns over a period of time also could result in the transfer of money to the AST Investment Grade Bond Sub-account. In deciding how much to transfer, we use another formula, which essentially seeks to re-balance amounts held in the Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that the Target Ratio meets a target, which currently is equal to 80%. Once you elect Spousal Highest Daily Lifetime Seven, the ratios we use will be fixed. For newly-issued Annuities that elect Spousal Highest Daily Lifetime Seven and existing Annuities that elect Spousal Highest Daily Lifetime Seven, however, we reserve the right to change the ratios. 104 While you are not notified when your Annuity reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the AST Investment Grade Bond Sub-account. The formula by which the reallocation triggers operate is designed primarily to mitigate the financial risks that we incur in providing the guarantee under Spousal Highest Daily Lifetime Seven. Depending on the results of the calculation relative to the reallocation triggers, we may, on any day: . Not make any transfer; or . If a portion of your Account Value was previously allocated to the AST Investment Grade Bond Sub-account, transfer all or a portion of those amounts to the Permitted Sub-accounts, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e., in the same proportion as the current balances in your variable investment options). Amounts taken out of the AST Investment Grade Bond Sub-account will be withdrawn for this purpose on a last-in, first-out basis; or . Transfer all or a portion of your Account Value in the Permitted Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account. If a significant amount of your Account Value is systematically transferred to the AST Investment Grade Bond Sub-account during periods of market declines or low interest rates, less of your Account Value may be available to participate in the investment experience of the Permitted Sub-accounts if there is a subsequent market recovery. If your entire Account Value is transferred to the AST Investment Grade Bond Sub-account, then based on the way the formula operates, that value would remain in the AST Investment Grade Bond Sub-account unless you made additional Purchase Payments to the Permitted Sub-accounts, which could cause Account Value to transfer out of the AST Investment Grade Bond Sub-account. Additional Tax Considerations If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Annual Income Amount, which will cause us to increase the Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. Please note, however, that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn to satisfy required minimum distribution rules, will cause you to lose the ability to receive the Return of Principal Guarantee and the guaranteed amount described above under "KEY FEATURE - Protected Withdrawal Value". As indicated, withdrawals made while this benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this benefit here. However, we do note that if you participate in Spousal Highest Daily Lifetime Seven through a non-qualified annuity, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. 105 DEATH BENEFIT WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT? Each Annuity provides a Death Benefit during its accumulation period. If an Annuity is owned by one or more natural persons, the Death Benefit is payable upon the first death of an Owner. If an Annuity is owned by an entity, the Death Benefit is payable upon the Annuitant's death, if there is no Contingent Annuitant. Generally, if a Contingent Annuitant was designated before the Annuitant's death and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and a Death Benefit will not be paid at that time. The person upon whose death the Death Benefit is paid is referred to below as the "decedent." BASIC DEATH BENEFIT Each Annuity provides a basic Death Benefit at no additional charge. The Insurance Charge we deduct daily from your Account Value allocated to the Sub-accounts is used, in part, to pay us for the risk we assume in providing the basic Death Benefit guarantee under an Annuity. Each Annuity also offers four different optional Death Benefits that can be purchased for an additional charge. The additional charge is deducted to compensate Prudential Annuities for providing increased insurance protection under the optional Death Benefits. Notwithstanding the additional protection provided under the optional Death Benefits, the additional cost has the impact of reducing the net performance of the investment options. In addition, with respect to XT6, under certain circumstances, your Death Benefit may be reduced by the amount of any Credits we applied to your Purchase Payments. (See "How are Credits Applied to My Account Value".) Except as noted below for ASL II, the basic Death Benefit is the greater of: . The sum of all Purchase Payments (not including any Credits) less the sum of all proportional withdrawals. . The sum of your Account Value in the Sub-accounts and your Interim Value in the Fixed Allocations (less the amount of any Credits applied within 12-months prior to the date of death, with respect to XT6). With respect to ASL II, if death occurs after the decedent's age 85 or older: the Death Benefit is your Account Value. "Proportional withdrawals" are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. For example, a withdrawal of 50% of Account Value would be considered as a 50% reduction in Purchase Payments for purposes of calculating the basic Death Benefit. OPTIONAL DEATH BENEFITS Four optional Death Benefits are offered for purchase with your Annuity to provide an enhanced level of protection for your beneficiaries. Currently, these benefits are only offered in those jurisdictions where we have received regulatory approval and must be elected at the time that you purchase your Annuity. We may, at a later date, allow existing Annuity Owners to purchase an optional Death Benefit subject to our rules and any changes or restrictions in the benefits. Certain terms and conditions may differ between jurisdictions once approved and if you purchase your Annuity as part of an exchange, replacement or transfer, in whole or in part, from any other Annuity we issue. The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit may only be elected individually, and cannot be elected in combination with any other optional Death Benefit. If you elect Spousal Lifetime Five or Spousal Highest Daily Lifetime Seven, you are not permitted to elect an optional Death Benefit. With respect to XT6, under certain circumstances, each Optional Death Benefit that you elect may be reduced by the amount of Credits applied to your Purchase Payments. Investment Restrictions may apply if you elect certain optional death benefits. See the chart in the "Investment Options" section of the Prospectus for a list of investment options available and permitted with each benefit. Enhanced Beneficiary Protection Optional Death Benefit The Enhanced Beneficiary Protection Optional Death Benefit can provide additional amounts to your Beneficiary that may be used to offset federal and state taxes payable on any taxable gains in your Annuity at the time of your death. Whether this benefit is appropriate for you may depend on your particular circumstances, including other financial resources that may be available to your Beneficiary to pay taxes on your Annuity should you die during the accumulation period. No benefit is payable if death occurs on or after the Annuity Date. The Enhanced Beneficiary Protection Optional Death Benefit provides a benefit that is payable in addition to the basic Death Benefit and certain other optional death benefits you may elect in conjunction with this benefit. If the Annuity has one Owner, the Owner must be age 75 or less at the time the benefit is purchased. If an Annuity has joint Owners, the oldest Owner must be age 75 or less. If an Annuity is owned by an entity, the Annuitant must be age 75 or less. 106 Calculation of Enhanced Beneficiary Protection Optional Death Benefit If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the Death Benefit is calculated as follows: 1. the basic Death Benefit described above; PLUS 2. 40% of your "Growth" under an Annuity, as defined below. "Growth" means the sum of your Account Value in the Sub-accounts and your Interim Value in the Fixed Allocations, minus the total of all Purchase Payments (less the amount of any Credits applied within 12-months prior to the date of death, with respect to XT6) reduced by the sum of all proportional withdrawals. "Proportional withdrawals" are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. For example, a withdrawal of 50% of Account Value would be considered as a 50% reduction in Purchase Payments. The Enhanced Beneficiary Protection Optional Death Benefit is subject to a maximum of 100% of all Purchase Payments applied to an Annuity at least 12 months prior to the death of the decedent that triggers the payment of the Death Benefit. The Enhanced Beneficiary Protection Optional Death Benefit is being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. With respect to XT6, APEX II and ASL II, please see Appendix E for a description of the Enhanced Beneficiary Protection Optional Death Benefit offered before November 18, 2002 in those jurisdictions where we received regulatory approval. Please refer to the section entitled "Tax Considerations" for a discussion of special tax considerations for purchasers of this benefit. The Enhanced Beneficiary Protection Death Benefit is not available if you elect the "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit or the Spousal Lifetime Five Income Benefit. See Appendix B for examples of how the Enhanced Beneficiary Protection Optional Death Benefit is calculated. Highest Anniversary Value Death Benefit ("HAV") If an Annuity has one Owner, the Owner must be age 79 or less at the time the Highest Anniversary Value Optional Death Benefit is purchased. If an Annuity has joint Owners, the oldest Owner must be age 79 or less. If an Annuity is owned by an entity, the Annuitant must be age 79 or less. Certain of the Portfolios offered as Sub-accounts under the Annuity are not available if you elect the Highest Anniversary Value Death Benefit. In addition, we reserve the right to require you to use certain asset allocation model(s) if you elect this death benefit. Calculation of Highest Anniversary Value Death Benefit The HAV Death Benefit depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above; and 2. the Highest Anniversary Value as of the Owner's date of death. If the Owner dies on or after the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above; and 2. the Highest Anniversary Value on the Death Benefit Target Date plus the sum of all Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to date of death in the case of XT6) less the sum of all proportional withdrawals since the Death Benefit Target Date. The amount determined by this calculation is increased by any Purchase Payments received after the Owner's date of death and decreased by any proportional withdrawals since such date. The Highest Anniversary Value Death Benefit described above is currently being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once 107 approved. The Highest Anniversary Value Death Benefit is not available if you elect the "Combination 5% Roll-up and Highest Anniversary Value" or the "Highest Daily Value" Death Benefit. It is also not available with Spousal Lifetime Five or Spousal Highest Daily Lifetime Seven. With respect to XT6, APEX II and ASL II, please see Appendix E for a description of the Guaranteed Minimum Death Benefit offered before November 18, 2002 in those jurisdictions where we received regulatory approval. Please refer to the definition of Death Benefit Target Date below. This death benefit may not be an appropriate feature where the Owner's age is near the age specified in the Death Benefit Target Date. This is because the benefit may not have the same potential for growth as it otherwise would, since there will be fewer contract anniversaries before the death benefit target date is reached. The death benefit target date under this death benefit is earlier than the death benefit target date under the Combination 5% Roll-up and Highest Anniversary Value Death Benefit for Owners who are age 76 or older when an Annuity is issued, which may result in a lower value on the death benefit, since there will be fewer contract anniversaries before the death benefit target date is reached. See Appendix B for examples of how the Highest Anniversary Value Death Benefit is calculated. Combination 5% Roll-up and Highest Anniversary Value Death Benefit If an Annuity has one Owner, the Owner must be age 79 or less at the time the Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If an Annuity has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is owned by an entity, the Annuitant must be age 79 or less. Certain of the Portfolios offered as Sub-accounts under an Annuity are not available if you elect the Combination 5% Roll-up and HAV Death Benefit. If you elect this benefit, you must allocate your Account Value in accordance with the then permitted and available option(s). In addition, we reserve the right to require you to use certain asset allocation model(s) if you elect this Death Benefit. Calculation of the Combination 5% Roll-up and Highest Anniversary Value Death Benefit The Combination 5% Roll-up and HAV Death Benefit equals the greatest of: 1. the basic Death Benefit described above; and 2. the Highest Anniversary Value Death Benefit described above; and 3. 5% Roll-up described below. The calculation of the 5% Roll-up depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date the 5% Roll up is equal to: . all Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to date of death in the case of XT6) increasing at an annual effective interest rate of 5% starting on the date that each Purchase Payment is made and ending on the Owner's date of death; MINUS . the sum of all withdrawals, dollar for dollar up to 5% of the Death Benefit's value as of the prior contract anniversary (or Issue Date if the withdrawal is in the first contract year). Any withdrawals in excess of the 5% dollar for dollar limit are proportional. If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up is equal to: . the 5% Roll-up value as of the Death Benefit Target Date increased by total Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to date of death in the case of XT6) made after the Death Benefit Target Date; MINUS . the sum of all withdrawals which reduce the 5% Roll-up proportionally. In the case of XT6, as indicated, the amounts calculated in Items 1, 2 and 3 above (before, on or after the Death Benefit Target Date) may be reduced by any Credits under certain circumstances. Please refer to the definitions of Death Benefit Target Date below. This Death Benefit may not be an appropriate feature where the Owner's age is near the age specified 108 in the Death Benefit Target Date. This is because the benefit may not have the same potential for growth as it otherwise would, since there will be fewer Annuity anniversaries before the Death Benefit Target Date is reached. The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit described above is currently being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit is not available if you elect any other optional Death Benefit or elect Spousal Lifetime Five or Spousal Highest Daily Lifetime Seven. In the case of XT6, APEX II and ASL II, please see Appendix E for a description of the Guaranteed Minimum Death Benefit offered before November 18, 2002 in those jurisdictions where we received regulatory approval. See Appendix B for examples of how the "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit is calculated. Key Terms Used with the Highest Anniversary Value Death Benefit and the Combination 5% Roll-up and Highest Anniversary Value Death Benefit: . The Death Benefit Target Date for the Highest Anniversary Value Death Benefit is the contract anniversary on or after the 80/th/ birthday of the current Owner, the oldest of either joint Owner or the Annuitant, if entity owned. . The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death Benefit is the later of the contract anniversary on or after the 80/th/ birthday of the current Owner, the oldest of either joint Owner or the Annuitant, if entity owned, or five years after the Issue Date of an Annuity. . The Highest Anniversary Value equals the highest of all previous "Anniversary Values" less proportional withdrawals since such anniversary and plus any Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of XT6) since such anniversary. . The Anniversary Value is the Account Value as of each anniversary of the Issue Date of an Annuity. The Anniversary Value on the Issue Date is equal to your Purchase Payment. (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of XT6) . Proportional withdrawals are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. Proportional withdrawals result in a reduction to the Highest Anniversary Value or 5% Roll-up value by reducing such value in the same proportion as the Account Value was reduced by the withdrawal as of the date the withdrawal occurred. For example, if your Highest Anniversary Value or 5% Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time when your Account Value is equal to $100,000 (a 10% reduction), when calculating the optional Death Benefit we will reduce your Highest Anniversary Value ($ 125,000) by 10% or $12,500. Highest Daily Value Death Benefit ("HDV") If an Annuity has one Owner, the Owner must be age 79 or less at the time the Highest Daily Value Death Benefit is elected. If an Annuity has joint Owners, the older Owner must be age 79 or less. If there are joint Owners, death of the Owner refers to the first to die of the joint Owners. If an Annuity is owned by an entity, the Annuitant must be age 79 or less and death of the Owner refers to the death of the Annuitant. If you elect this benefit, you must allocate your Account Value in accordance with the then permitted and available option(s) with this benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. The HDV Death Benefit depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of XT6); and 2. the HDV as of the Owner's date of death. If the Owner dies on or after the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above; and 2. the HDV on the Death Benefit Target Date plus the sum of all Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of XT6) less the sum of all proportional withdrawals since the Death Benefit Target Date. 109 The amount determined by this calculation is increased by any Purchase Payments received after the Owner's date of death and decreased by any proportional withdrawals since such date. The Highest Daily Value Death Benefit described above is currently being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. The Highest Daily Value Death Benefit is not available if you elect the Guaranteed Return Option, Guaranteed Return Option Plus, Guaranteed Return Option Plus 2008, Highest Daily GRO, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Seven, the "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit, or the Highest Anniversary Value Death Benefit. Key Terms Used with the Highest Daily Value Death Benefit: . The Death Benefit Target Date for the Highest Daily Value Death Benefit is the later of an Annuity anniversary on or after the 80/th/ birthday of the current Owner, or the older of either the joint Owner or the Annuitant, if entity owned, or five years after the Issue Date of an Annuity. . The Highest Daily Value equals the highest of all previous "Daily Values" less proportional withdrawals since such date and plus any Purchase Payments (plus associated Credits in the case of XT6) since such date. . The Daily Value is the Account Value as of the end of each Valuation Day. The Daily Value on the Issue Date is equal to your Purchase Payment (plus associated Credits applied more than twelve (12) months prior to the date of death in the case of XT6). . Proportional withdrawals are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. Proportional withdrawals result in a reduction to the Highest Daily Value by reducing such value in the same proportion as the Account Value was reduced by the withdrawal as of the date the withdrawal occurred. For example, if your Highest Daily Value is $125,000 and you subsequently withdraw $10,000 at a time when your Account Value is equal to $100,000 (a 10% reduction), when calculating the optional Death Benefit we will reduce your Highest Daily Value ($125,000) by 10% or $12,500. Please see Appendix B to this prospectus for a hypothetical example of how the HDV Death Benefit is calculated. Annuities with Joint Owners For Annuities with Joint Owners, the Death Benefits are calculated as shown above except that the age of the oldest of the joint Owners is used to determine the Death Benefit Target Date. NOTE: If you and your spouse own your Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary Beneficiary is the surviving spouse, then the surviving spouse can elect to assume ownership of your Annuity and continue the Annuity instead of receiving the Death Benefit. Annuities Owned by Entities For Annuities owned by an entity, the Death Benefits are calculated as shown above except that the age of the Annuitant is used to determine the Death Benefit Target Date. Payment of the Death Benefit is based on the death of the Annuitant (or Contingent Annuitant, if applicable). Can I terminate the optional Death Benefits? Do the optional Death Benefits terminate under other circumstances? You can terminate the Enhanced Beneficiary Protection Death Benefit and the Highest Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV Death Benefit" and the HDV Death Benefit may not be terminated once elected. The optional Death Benefits will terminate automatically on the Annuity Date. We may also terminate any optional Death Benefit if necessary to comply with our interpretation of the Code and applicable regulations. What are the charges for the optional Death Benefits? We deduct a charge equal to 0.25% per year of the average daily net assets of the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average daily net assets of the Sub-accounts for each of the "Combination 5% Roll-up and HAV Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these benefits to compensate Prudential Annuities for providing increased insurance protection under the optional Death Benefits. The additional annual charge is deducted daily against your Account Value allocated to the Sub-accounts. Please refer to the section entitled "Tax Considerations" for additional considerations in relation to the optional Death Benefit. PRUDENTIAL ANNUITIES' ANNUITY REWARDS What is the Annuity Rewards Benefit in ASAP III, APEX II and XT6? The Annuity Rewards Benefit offers Owners the ability to capture any market gains since the Issue Date of their Annuity as an enhancement to their current Death Benefit so their Beneficiaries will not receive less than an Annuity's value as of the effective 110 date of the benefit. Under the Annuity Rewards Benefit, Prudential Annuities guarantees that the Death Benefit will not be less than: . your Account Value in the Sub-accounts plus the Interim Value in any Fixed Allocations as of the effective date of the benefit . MINUS any proportional withdrawals following the effective date of the benefit . PLUS any additional Purchase Payments applied to your Annuity following the effective date of the benefit. The Annuity Rewards Death Benefit enhancement does not affect the calculation of the basic Death Benefit or any Optional Death Benefits available under an Annuity. If the Death Benefit amount payable under your Annuity's basic Death Benefit or any Optional Death Benefits you purchase is greater than the enhanced Death Benefit under the Annuity Rewards Benefit on the date the Death Benefit is calculated, your Beneficiary will receive the higher amount. Annuity Rewards is not available under ASL II. Who is eligible for the Annuity Rewards benefit? Owners can elect the Annuity Rewards Death Benefit enhancement when there is no longer a CDSC associated with your Annuity. However, the Account Value on the date that the Annuity Rewards benefit is effective, must be greater than the amount that would be payable to the Beneficiary under the Death Benefit (including any amounts payable under any Optional Death Benefit then in effect). The effective date must occur before annuity payments begin. There can only be one effective date for the Annuity Rewards Death Benefit enhancement. There is no additional charge for electing the Annuity Rewards Death Benefit enhancement. PAYMENT OF DEATH BENEFITS Alternative Death Benefit Payment Options - Annuities owned by Individuals (not associated with Tax-Favored Plans) Except in the case of a spousal assumption as described below, upon your death, certain distributions must be made under the contract. The required distributions depend on whether you die before you start taking annuity payments under the contract or after you start taking annuity payments under the contract. If you die on or after the Annuity Date, the remaining portion of the interest in the contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. In the event of your death before the Annuity Date, the Death Benefit must be distributed: . within five (5) years of the date of death; or . as a series of payments not extending beyond the life expectancy of the Beneficiary or over the life of the Beneficiary. Payments under this option must begin within one year of the date of death. Unless you have made an election prior to Death Benefit proceeds becoming due, a Beneficiary can elect to receive the Death Benefit proceeds under the Beneficiary Continuation Option as described below in the section entitled "Beneficiary Continuation Option," as a series of annuity payments. Upon our receipt of proof of death, we will send to the beneficiary materials that list these payment options. Alternative Death Benefit Payment Options - Annuities Held by Tax-Favored Plans The Code provides for alternative death benefit payment options when an Annuity is used as an IRA, 403(b) or other "qualified investment" that requires minimum distributions. Upon your death under an IRA, 403(b) or other "qualified investment", the designated Beneficiary may generally elect to continue the Annuity and receive Required Minimum Distributions under the Annuity instead of receiving the death benefit in a single payment. The available payment options will depend on whether you die before the date Required Minimum Distributions under the Code were to begin, whether you have named a designated beneficiary and whether the Beneficiary is your surviving spouse. . If you die after a designated beneficiary has been named, the death benefit must be distributed by December 31/st/ of the year including the five year anniversary of the date of death, or as periodic payments not extending beyond the life expectancy of the designated beneficiary (provided such payments begin by December 31/st/ of the year following the year of death). However, if your surviving spouse is the beneficiary, the death benefit can be paid out over the life expectancy of your spouse with such payments beginning no later than December 31/st/ of the year following the year of death or December 31/st/ of the year in which you would have reached age 70 1/2, which ever is later. Additionally, if the contract is payable to (or for the benefit of) your surviving spouse, that portion of the contract may be continued with your spouse as the owner. 111 . If you die before a designated beneficiary is named and before the date required minimum distributions must begin under the Code, the death benefit must be paid out within five years from the date of death. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31/st/ of the year following the year of death, such contract is deemed to have no designated beneficiary. . If you die before a designated beneficiary is named and after the date required minimum distributions must begin under the Code, the death benefit must be paid out at least as rapidly as under the method then in effect. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31/st/ of the year following the year of death, such contract is deemed to have no designated beneficiary. A beneficiary has the flexibility to take out more each year than mandated under the required minimum distribution rules. Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment" continue to be tax deferred. Amounts withdrawn each year, including amounts that are required to be withdrawn under the Required Minimum Distribution rules, are subject to tax. You may wish to consult a professional tax advisor for tax advice as to your particular situation. For a Roth IRA, if death occurs before the entire interest is distributed, the death benefit must be distributed under the same rules applied to IRAs where death occurs before the date Required Minimum Distributions must begin under the Code. The tax consequences to the beneficiary may vary among the different death benefit payment options. See the Tax Considerations section of this prospectus, and consult your tax advisor. Beneficiary Continuation Option Instead of receiving the death benefit in a single payment, or under an Annuity Option, a beneficiary may take the death benefit under an alternative death benefit payment option, as provided by the Code and described above under the sections entitled "Payment of Death Benefits" and "Alternative Death Benefit Payment Options - Annuities Held by Tax-Favored Plans." This "Beneficiary Continuation Option" is described below and is available for both qualified Annuities (i.e. annuities sold to an IRA, Roth IRA, SEP IRA, or 403(b)) and non-qualified Annuities. Under the Beneficiary Continuation Option: . The Owner's Annuity will be continued in the Owner's name, for the benefit of the beneficiary. . Beginning on the date we receive an election by the beneficiary to take the death benefit in a form other than a lump sum, the beneficiary will incur a Settlement Service Charge which is an annual charge assessed on a daily basis against the average assets allocated to the Sub-accounts. For non-qualified Annuities the charge is 1.00% per year, and for qualified Annuities the charge is 1.40% per year. . Beginning on the date we receive an election by the beneficiary to take the death benefit in a form other than a lump sum, the beneficiary will incur an annual maintenance fee equal to the lesser of $30 or 2% of Account Value. For non-qualified annuities, the fee will only apply if the Account Value is less than $25,000 at the time the fee is assessed. The fee will not apply if it is assessed 30 days prior to a surrender request. . The initial Account Value will be equal to any death benefit (including any optional death benefit) that would have been payable to the beneficiary if the beneficiary had taken a lump sum distribution. . The available Sub-accounts will be among those available to the Owner at the time of death, however certain Sub-Accounts may not be available. . The beneficiary may request transfers among Sub-accounts, subject to the same limitations and restrictions that applied to the Owner. Transfers in excess of 20 per year will incur a $10 transfer fee. . No Fixed Allocations or fixed interest rate options will be offered for the non-qualified Beneficiary Continuation Options. However, for qualified Annuities, the Fixed Allocations will be those offered at the time the Beneficiary Continuation Option is elected. . No additional Purchase Payments can be applied to the Annuity. . The basic death benefit and any optional benefits elected by the Owner will no longer apply to the beneficiary. . The beneficiary can request a withdrawal of all or a portion of the Account Value at any time, unless the Beneficiary Continuation Option was the payout predetermined by the Owner and the Owner restricted the beneficiary's withdrawal rights. . Withdrawals are not subject to CDSC. . Upon the death of the beneficiary, any remaining Account Value will be paid in a lump sum to the person(s) named by the beneficiary (successor), unless the successor chooses to continue receiving payments. Currently only Investment Options corresponding to Portfolios of the Advanced Series Trust and the ProFund VP are available under the Beneficiary Continuation Option. 112 In addition to the materials referenced above, the Beneficiary will be provided with a prospectus and a settlement agreement describing the Beneficiary Continuation Option. We may pay compensation to the broker-dealer of record on the Annuity based on amounts held in the Beneficiary Continuation Option. Please contact us for additional information on the availability, restrictions and limitations that will apply to a beneficiary under the Beneficiary Continuation Option. Spousal Assumption of Annuity You may name your spouse as your Beneficiary. If you and your spouse own your Annuity jointly, we assume that the sole primary Beneficiary will be the surviving spouse unless you elect an alternative Beneficiary Designation. Unless you elect an alternative Beneficiary Designation, the spouse Beneficiary may elect to assume ownership of the Annuity instead of taking the Death Benefit payment. Any Death Benefit (including any optional Death Benefits) that would have been payable to the Beneficiary will become the new Account Value as of the date we receive due proof of death and any required proof of a spousal relationship. As of the date the assumption is effective, the surviving spouse will have all the rights and benefits that would be available under the Annuity to a new purchaser of the same attained age. For purposes of determining any future Death Benefit for the surviving spouse, the new Account Value will be considered as the initial Purchase Payment. No CDSC will apply to the new Account Value. However, any additional Purchase Payments applied after the date the assumption is effective will be subject to all provisions of the Annuity, including any CDSC that may apply to the additional Purchase Payments. See the section entitled "Managing Your Annuity" - "Spousal Designations" and "Contingent Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant in the case of the death of the Annuitant in an Annuity owned by a Custodial Account. Are there any exceptions to these rules for paying the Death Benefit? Yes, there are exceptions that apply no matter how your Death Benefit is calculated. There are exceptions to the Death Benefit if the decedent was not the Owner or Annuitant as of the Issue Date (or within 60 days thereafter) and did not become the Owner or Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit (including any optional Death Benefit) that applies will be suspended for a two-year period from the date he or she first became Owner or Annuitant. After the two-year suspension period is completed, the Death Benefit is the same as if this person had been an Owner or Annuitant on the Issue Date. When do you determine the Death Benefit? We determine the amount of the Death Benefit as of the date we receive "due proof of death" (and in certain limited circumstances as of the date of death), any instructions we require to determine the method of payment and any other written representations we require to determine the proper payment of the Death Benefit to all Beneficiaries. "Due proof of death" may include a certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death or other satisfactory proof of death. Upon our receipt of "due proof of death" we automatically transfer the Death Benefit to the AST Money Market Sub-account until we further determine the universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries has been determined each eligible Beneficiary may allocate his or her eligible share of the Death Benefit to an eligible annuity payment option. Each Beneficiary must make an election as to the method they wish to receive their portion of the Death Benefit. Absent an election of a Death Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may require written acknowledgment of all named Beneficiaries before we can pay the Death Benefit. During the period from the date of death until we receive all required paper work, the amount of the Death Benefit may be subject to market fluctuations. 113 VALUING YOUR INVESTMENT HOW IS MY ACCOUNT VALUE DETERMINED? During the accumulation period, your Annuity has an Account Value. The Account Value is determined separately for each Sub-account allocation and for each Fixed Allocation. The Account Value is the sum of the values of each Sub-account allocation and the value of each Fixed Allocation. For Annuities with a Highest Daily Lifetime Five election, Account Value also includes the value of any allocation to the Benefit Fixed Rate Account. See the "Living Benefit Programs - Highest Daily Lifetime Five" section of the Prospectus for a description of the Benefit Fixed Rate Account. The Account Value does not reflect any CDSC that may apply to a withdrawal or surrender. With respect to ASAP III and APEX II, the Account Value includes any Loyalty Credit we apply. With respect to XT6, the Account Value includes any Credits we applied to your Purchase Payments which we are entitled to take back under certain circumstances. When determining the Account Value on a day more than 30 days prior to a Fixed Allocation's Maturity Date, the Account Value may include any Market Value Adjustment that would apply to a Fixed Allocation (if withdrawn or transferred) on that day. WHAT IS THE SURRENDER VALUE OF MY ANNUITY? The Surrender Value of your Annuity is the value available to you on any day during the accumulation period. The Surrender Value is defined under "Glossary of Terms" above. HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS? When you allocate Account Value to a Sub-account, you are purchasing units of the Sub-account. Each Sub-account invests exclusively in shares of an underlying Portfolio. The value of the Units fluctuates with the market fluctuations of the Portfolios. The value of the Units also reflects the daily accrual for the Insurance Charge, the Distribution Charge (if applicable), and if you elected one or more optional benefits whose annual charge is deducted daily, the additional charge made for such benefits. There may be several different Unit Prices for each Sub-account to reflect the Insurance Charge, any Distribution Charge and the charges for any optional benefits. The Unit Price for the Units you purchase will be based on the total charges for the benefits that apply to your Annuity. See the section entitled "What Happens to My Units When There is a Change in Daily Asset-Based Charges?" for a detailed discussion of how Units are purchased and redeemed to reflect changes in the daily charges that apply to your Annuity. Each Valuation Day, we determine the price for a Unit of each Sub-account, called the "Unit Price." The Unit Price is used for determining the value of transactions involving Units of the Sub-accounts. We determine the number of Units involved in any transaction by dividing the dollar value of the transaction by the Unit Price of the Sub-account as of the Valuation Day. Example Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the Sub-account. Assume that later, you wish to transfer $3,000 of your Account Value out of that Sub-account and into another Sub-account. On the Valuation Day you request the transfer, the Unit Price of the original Sub-account has increased to $16.79 and the Unit Price of the new Sub-account is $17.83. To transfer $3,000, we sell 178.677 Units at the current Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of the new Sub-account. HOW DO YOU VALUE FIXED ALLOCATIONS? During the Guarantee Period, we use the concept of an Interim Value. The Interim Value can be calculated on any day and is equal to the initial value allocated to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the date calculated. The Interim Value does not include the impact of any Market Value Adjustment. If you made any transfers or withdrawals from a Fixed Allocation, the Interim Value will reflect the withdrawal of those amounts and any interest credited to those amounts before they were withdrawn. To determine the Account Value of a Fixed Allocation on any day more than 30 days prior to its Maturity Date, we multiply the Account Value of the Fixed Allocation times the Market Value Adjustment factor. WHEN DO YOU PROCESS AND VALUE TRANSACTIONS? Prudential Annuities is generally open to process financial transactions on those days that the New York Stock Exchange (NYSE) is open for trading. There may be circumstances where the NYSE does not open on a regularly scheduled date or time or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Generally, financial transactions requested before the close of the NYSE which meet our requirements will be processed according to the value next determined following the close of business. Financial transactions requested on a non-Valuation Day or after the close of the NYSE will be processed based on the value next computed on the next Valuation Day. There may be circumstances when the opening or closing time of the NYSE is different than other major stock exchanges, such as NASDAQ or the American Stock Exchange. Under such circumstances, the closing time of the NYSE will be used when valuing and processing transactions. There may be circumstances where the NYSE is open, however, due to inclement weather, natural disaster or other circumstances beyond our control, our offices may be closed or our business processing capabilities may be restricted. Under those circumstances, your Account Value may fluctuate based on changes in the Unit Values, but you may not be able to transfer Account Value, or make a purchase or redemption request. We have arrangements with certain selling firms, under which receipt by the firm in good order prior to our cut-off time on a given Valuation Day is treated as receipt by us on that Valuation Day for pricing purposes. Currently, we have such an arrangement with Citigroup Global Markets, Inc. 114 The NYSE is closed on the following nationally recognized holidays: New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those dates, we will not process any financial transactions involving purchase or redemption orders. Prudential Annuities will also not process financial transactions involving purchase or redemption orders or transfers on any day that: .. trading on the NYSE is restricted; .. an emergency exists making redemption or valuation of securities held in the separate account impractical; or .. the SEC, by order, permits the suspension or postponement for the protection of security holders. Initial Purchase Payments: We are required to allocate your initial Purchase Payment to the Sub-accounts within two (2) Valuation Days after we receive all of our requirements at our office to issue an Annuity. If we do not have all the required information to allow us to issue your Annuity, we may retain the Purchase Payment while we try to reach you or your representative to obtain all of our requirements. If we are unable to obtain all of our required information within five (5) Valuation Days, we are required to return the Purchase Payment to you at that time, unless you specifically consent to our retaining the Purchase Payment while we gather the required information. Once we obtain the required information, we will invest the Purchase Payment (and any associated Credits with respect to XT6) and issue an Annuity within two (2) Valuation Days. With respect to both your initial Purchase Payment and any subsequent Purchase Payment that is pending investment in our separate account, we may hold the amount temporarily in our general account and may earn interest on such amount. You will not be credited with interest during that period. Additional Purchase Payments: We will apply any additional Purchase Payments (and any associated Credit with respect to XT6) on the Valuation Day that we receive the Purchase Payment at our office with satisfactory allocation instructions. Scheduled Transactions: Scheduled transactions include transfers made in connection with dollar cost averaging, the asset allocation program, auto-rebalancing, systematic withdrawals, systematic investments, required minimum distributions, substantially equal periodic payments under Section 72(t) of the Code, or annuity payments. Scheduled transactions are processed and valued as of the date they are scheduled, unless the scheduled day is not a Valuation Day. In that case, the transaction will be processed and valued on the next Valuation Day, unless (with respect to required minimum distributions, substantially equal periodic payments under Section 72(t) of the Code, systematic withdrawals and annuity payments only), the next Valuation Day falls in the subsequent calendar year, in which case the transaction will be processed and valued on the prior Valuation Day. Unscheduled Transactions: "Unscheduled" transactions include any other non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals or Surrenders. Unscheduled transactions are processed and valued as of the Valuation Day we receive the request at our Office and have all of the required information. Medically-related Surrenders & Death Benefits: Medically-related surrender requests and Death Benefit claims require our review and evaluation before processing. We price such transactions as of the date we receive at our Office all supporting documentation we require for such transactions and that are satisfactory to us. Transactions in ProFunds VP Sub-accounts: Generally, purchase or redemption orders or transfer requests must be received by us by no later than the close of the NYSE to be processed on the current Valuation Day. However, any transfer request involving the ProFunds VP Sub-accounts must be received by us no later than one hour prior to any announced closing of the applicable securities exchange (generally, 3:00 p.m. Eastern time) to be processed on the current Valuation Day. The "cut-off" time for such financial transactions involving a ProFunds VP Sub-account will be extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m. Eastern time) for transactions submitted electronically through Prudential Annuities' Internet website (www. prudentialannuities.com). You cannot request a transaction involving the transfer of units in one of the ProFunds VP Sub-accounts between the applicable "cut-off" time and 4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by us on the next Valuation Day. WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES? Distribution Charge Applicable to ASAP III and XT6: At the end of the Period during which the Distribution Charge applies, your Annuity will become subject to a different daily asset-based charge. We will process a transaction where your Account Value allocated to the Sub-accounts will be used to purchase new Units of the Sub-accounts that reflect the Insurance Charge (and the charge for any optional benefits you have elected) but not the Distribution Charge. The number of Units attributed to your Annuity will be decreased and the Unit Price of each unit of the Sub-accounts in which you invested will be increased. The adjustment in the number of Units and Unit Price will not affect your Account Value. Beginning on that date, your Account Value will be determined based on the change in the value of Units that reflect the Insurance Charge and any other optional benefits that you have elected. 115 Termination of Optional Benefits: Except for the Guaranteed Minimum Income Benefit, the "Combination 5% Roll-up and Highest Anniversary Value Death Benefit" and the Highest Daily Value Death Benefit, which generally cannot be terminated by the owner once elected, if any optional benefit terminates, we will no longer deduct the charge we apply to purchase the optional benefit. Certain optional benefits may be added after you have purchased your Annuity. On the date a charge no longer applies or a charge for an optional benefit begins to be deducted, your Annuity will become subject to a different daily asset-based charge. This change may result in the number of Units attributed to your Annuity and the value of those Units being different than it was before the change; however, the adjustment in the number of Units and Unit Price will not affect your Account Value (although the change in charges that are deducted will affect your Account Value). 116 TAX CONSIDERATIONS The tax considerations associated with an Annuity vary depending on whether the contract is (i) owned by an individual or non-natural person, 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. The information provided is not intended as tax advice. You should consult with a qualified tax advisor for complete information and advice. References to purchase payments below relate to your cost basis in your contract. Generally, your cost basis in a contract not associated with a tax-favored retirement plan is the amount you pay into your contract, or into annuities exchanged for your contract, on an after-tax basis less any withdrawals of such payments. Cost basis for a tax-favored retirement plan is provided only in limited circumstances, such as for contributions to a Roth IRA or nondeductible IRA contributions. The discussion includes a description of certain spousal rights under the contract, and our administration of such spousal rights and related tax reporting accords with our understanding of the Defense of Marriage Act (which defines a "marriage" as a legal union between a man and a woman and a "spouse" as a person of the opposite sex). Depending on the state in which your annuity is issued, we may offer certain spousal benefits to civil union couples. You should be aware, however, that federal tax law does not recognize civil unions. Therefore, we cannot permit a civil union partner to continue the annuity upon the death of the first partner under the annuity's "spousal continuance" provision. Civil union couples should consider that limitation before selecting a spousal benefit under the annuity. NONQUALIFIED ANNUITY CONTRACTS In general, as used in this prospectus, a Nonqualified Annuity is owned by an individual or non-natural person and is not associated with a tax-favored retirement plan. Taxes Payable by You We believe the Annuity 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. Charges for investment advisory fees that are taken from the contract are treated as a partial withdrawal from the contract and will be reported as such to the contract owner. It is possible that the Internal Revenue Service (IRS) would assert that some or all of the charges for the optional benefits under the contract should be treated for federal income tax purposes as a partial withdrawal from the contract. If this were the case, the charge for this benefit could be deemed a withdrawal and treated as taxable to the extent there are earnings in the contract. Additionally, for owners under age 59 1/2, the taxable income attributable to the charge for the benefit could be subject to a tax penalty. If the IRS determines that the charges for one or more benefits under the contract are taxable withdrawals, then the sole or surviving owner will be provided with a notice from us describing available alternatives regarding these benefits. You must commence annuity payments no later than the first day of the calendar month next following the maximum Annuity date for your Contract. Please refer to your Annuity Contract for the applicable maximum Annuity date. For some of our contracts, you are able to choose to defer the Annuity Date beyond the default Annuity date described in your Contract. However, the IRS may not then consider your contract to be an annuity under the tax law. Taxes on Withdrawals and Surrender If you make a withdrawal from your contract or surrender it before annuity payments begin, the amount you receive will be taxed as ordinary income, rather than as return of purchase payments, until all gain has been withdrawn. Once all gain has been withdrawn, payments will be treated as a nontaxable return of purchase payments until all purchase payments have been returned. After all purchase payments are returned, all subsequent amounts will be taxed as ordinary income. You will generally be taxed on any withdrawals from the contract while you are alive even if the withdrawal is paid to someone else. Withdrawals under any of the optional living benefit programs or as a systematic payment are taxed under these rules. If you assign or pledge all or part of your contract as collateral for a loan, the part assigned generally will be treated as a withdrawal. If you transfer your contract for less than full consideration, such as by gift, you will also trigger tax on any gain in the contract. This rule does not apply if you transfer the contract to your spouse or under most circumstances if you transfer the contract incident to divorce. If you choose to receive payments under an interest payment option, or a beneficiary chooses to receive a death benefit under an interest payment option, that election will be treated, for tax purposes, as surrendering your Annuity and will immediately subject any gain in the contract to income tax. 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 117 received tax-free) and the denominator of which is the total expected payments under the contract. After the full amount of your purchase payments have been recovered tax-free, the full amount of the annuity payments will be taxable. If annuity payments stop due to the death of the annuitant before the full amount of your purchase payments have been recovered, a tax deduction may be allowed for the unrecovered amount. Tax Penalty for Early Withdrawal from a Nonqualified Annuity Contract You may owe a 10% tax penalty on the taxable part of distributions received from your Nonqualified Annuity contract before you attain age 59 1/2. Amounts are not subject to this tax penalty if: .. the amount is paid on or after you reach age 59 1/2 or die; .. the amount received is attributable to your becoming disabled; .. generally the amount paid or received is in the form of substantially equal payments not less frequently than annually (please note that substantially equal payments must continue until the later of reaching age 59 1/2 or 5 years and modification of payments during that time period will result in retroactive application of the 10% tax penalty); or .. the amount received is paid under an immediate annuity contract (in which annuity payments begin within one year of purchase). Other exceptions to this tax may apply. You should consult your tax advisor for further details. Special Rules in Relation to Tax-free Exchanges Under Section 1035 Section 1035 of the Internal Revenue Code of 1986, as amended (Code), permits certain tax-free exchanges of a life insurance, annuity or endowment contract for an annuity. Partial surrenders may be treated in the same way as tax-free 1035 exchanges of entire contracts, therefore avoiding current taxation of any gains in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS has reserved the right to treat transactions it considers abusive as ineligible for this favorable partial 1035 exchange treatment. In Revenue Procedure 2008-24, the IRS has indicated that where there is a surrender or distribution from either the initial annuity contract or receiving annuity contract within 12 months of the date on which the partial exchange was completed, the transfer will retroactively be treated as a taxable distribution from the initial annuity contract and a contribution to the receiving annuity contract. Tax free exchange treatment will be retained if the subsequent surrender or distribution would be eligible for an exception to the 10% federal income tax penalty, other than the exceptions for substantially equal periodic payments or distributions under an immediate annuity. It is unclear how the IRS will treat a partial exchange from a life insurance, endowment, or annuity contract into an immediate annuity. As of the date of this prospectus, we will accept a partial 1035 exchange from a non-qualified annuity into an immediate annuity as a "tax-free" exchange for future tax reporting purposes, except to the extent that we, as a reporting and withholding agent, believe that we would be expected to deem the transaction to be abusive. However, some insurance companies may not recognize these partial surrenders as tax-free exchanges and may report them as taxable distributions to the extent of any gain distributed as well as subjecting the taxable portion of the distribution to the 10% tax penalty. We strongly urge you to discuss any transaction of this type with your tax advisor before proceeding with the transaction. If an Annuity is purchased through a tax-free exchange of a life insurance, annuity or endowment contract that was purchased prior to August 14, 1982, then any purchase payments made to the original contract prior to August 14, 1982 will be treated as made to the new contract prior to that date. Generally, such pre-August 14, 1982 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% tax penalty. Taxes Payable by Beneficiaries The Death Benefit options are subject to income tax to the extent the distribution exceeds the cost basis in the contract. The value of the Death Benefit, as determined under federal law, is also included in the owner's estate. Generally, the same tax rules described above would also apply to amounts received by your beneficiary. Choosing any option other than a lump sum Death Benefit may defer taxes. Certain minimum distribution requirements apply upon your death, as discussed further below in the Annuity Qualification section. Tax consequences to the beneficiary vary depending upon the Death Benefit payment option selected. Generally, for payment of the Death Benefit .. As a lump sum payment: the beneficiary is taxed on gain in the contract. .. Within 5 years of death of owner: the beneficiary is taxed as amounts are withdrawn (in this case gain is treated as being distributed first). .. Under an annuity or annuity settlement option with distribution beginning within one year of the date of death of the owner: the beneficiary is taxed on each payment (part will be treated as gain and part as return of purchase payments). Considerations for Contingent Annuitants: We may allow the naming of a contingent annuitant when a Nonqualified Annuity contract is held by a pension plan or a tax favored retirement plan. In such a situation, the Annuity may no longer qualify for tax deferral where the Annuity contract continues after the death of the Annuitant. 118 Reporting and Withholding on Distributions Taxable amounts distributed from an Annuity are subject to federal and state income tax reporting and withholding. In general, we will withhold federal income tax from the taxable portion of such distribution based on the type of distribution. In the case of an annuity or similar periodic payment, we will withhold as if you are a married individual with three (3) exemptions unless you designate a different withholding status. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In the case of all other distributions, we will withhold at a 10% rate. You may generally elect not to have tax withheld from your payments. An election out of withholding must be made on forms that we provide. State income tax withholding rules vary and we will withhold based on the rules of your State of residence. Special tax rules apply to withholding for nonresident aliens, and we generally withhold income tax for nonresident aliens at a 30% rate. A different withholding rate may be applicable to a nonresident alien based on the terms of an existing income tax treaty between the United States and the nonresident alien's country. Please refer to the discussion below regarding withholding rules for a Qualified Annuity. Regardless of the amount withheld by us, you are liable for payment of federal and state income tax on the taxable portion of annuity distributions. You should consult with your tax advisor regarding the payment of the correct amount of these income taxes and potential liability if you fail to pay such taxes. Entity Owners Where a contract is held by a non-natural person (e.g. a corporation), other than as an agent or nominee for a natural person (or in other limited circumstances), the contract will not be taxed as an annuity and increases in the value of the contract over its cost basis will be subject to tax annually. Where a contract is issued to a trust, and such trust is characterized as a grantor trust under the Internal Revenue Code, such contract shall not be considered to be held by a non-natural person and will generally be subject to the tax reporting and withholding requirements for a Nonqualified Annuity. Where a contract is structured so that it is owned by a grantor trust but the annuitant is not the grantor, then the contract is required to terminate upon the death of the grantor if the grantor pre-deceases the annuitant under Section 72(s) of the Code. Under this circumstance, the contract value will be paid out to the beneficiary and it is not eligible for the death benefit provided under the contract. Annuity Qualification Diversification And Investor Control. In order to qualify for the tax rules applicable to annuity contracts described above, the assets underlying the Sub-accounts of an Annuity must be diversified, according to certain rules under the Internal Revenue Code. Each portfolio is required to diversify its investments each quarter so that no more than 55% of the value of its assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. Generally, securities of a single issuer are treated as one investment and obligations of each U.S. Government agency and instrumentality (such as the Government National Mortgage Association) are treated as issued by separate issuers. In addition, any security issued, guaranteed or insured (to the extent so guaranteed or insured) by the United States or an instrumentality of the U.S. will be treated as a security issued by the U.S. Government or its instrumentality, where applicable. We believe the portfolios underlying the variable investment options of the Annuity meet these diversification requirements. An additional requirement for qualification for the tax treatment described above is that we, and not you as the contract owner, must have sufficient control over the underlying assets to be treated as the owner of the underlying assets for tax purposes. While we also believe these investor control rules will be met, the Treasury Department may promulgate guidelines under which a variable annuity will not be treated as an annuity for tax purposes if persons with ownership rights have excessive control over the investments underlying such variable annuity. It is unclear whether such guidelines, if in fact promulgated, would have retroactive effect. It is also unclear what effect, if any, such guidelines might have on transfers between the investment options offered pursuant to this Prospectus. We reserve the right to take any action, including modifications to your Annuity or the investment options, required to comply with such guidelines if promulgated. Any such changes will apply uniformly to affected owners and will be made with such notice to affected owners as is feasible under the circumstances. Required Distributions Upon Your Death for Nonqualified Annuity Contracts. Upon your death, certain distributions must be made under the contract. The required distributions depend on whether you die before you start taking annuity payments under the contract or after you start taking annuity payments under the contract. If you die on or after the Annuity Date, the remaining portion of the interest in the contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. If you die before the Annuity Date, the entire interest in the contract must be distributed within 5 years after the date of death, or as periodic payments over a period not extending beyond the life or life expectancy of such designated beneficiary (provided such payments begin within one year of your death). Your designated beneficiary is the person to whom benefit rights under the contract pass by reason of death, and must be a natural person in order to elect a periodic payment option based on life expectancy or a period exceeding five years. Additionally, if the Annuity 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. For Nonqualified annuity contracts owned by a non-natural person, the required distribution rules apply upon the death of the annuitant. This means that for a contract held by a 119 non-natural person (such as a trust) for which there is named a co-annuitant, then such required distributions will be triggered by the death of the first co-annuitants to die. Changes In Your Annuity. We reserve the right to make any changes we deem necessary to assure that your Annuity qualifies as an annuity contract for tax purposes. Any such changes will apply to all contract owners and you will be given notice to the extent feasible under the circumstances. Qualified Annuity Contracts In general, as used in this prospectus, a Qualified Annuity is an Annuity contract with applicable endorsements for a tax-favored plan or a Nonqualified Annuity contract held by a tax-favored retirement plan. The following is a general discussion of the tax considerations for Qualified Annuity contracts. This Annuity may or may not be available for all types of the tax-favored retirement plans discussed below. This discussion assumes that you have satisfied the eligibility requirements for any tax-favored retirement plan. Please consult your Financial Professional prior to purchase to confirm if this contract is available for a particular type of tax-favored retirement plan or whether we will accept the type of contribution you intend for this contract. A Qualified annuity may typically be purchased for use in connection with: .. Individual retirement accounts and annuities (IRAs) which are subject to Sections 408(a) and 408(b) of the Code; .. Roth IRAs under Section 408A of the Code; .. A corporate Pension or Profit-sharing plan (subject to 401(a) of the Code); .. H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the Code); .. Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax Deferred Annuities or TDAs); .. Section 457 plans (subject to 457 of the Code). A Nonqualified annuity may also be purchased by a 401(a) trust or custodial IRA or Roth IRA account, or a Section 457 plan, which can hold other permissible assets. The terms and administration of the trust or custodial account or plan in accordance with the laws and regulations for 401(a) plans, IRAs or Roth IRAs, or a Section 457 plan, as applicable, are the responsibility of the applicable trustee or custodian. You should be aware that tax favored plans such as IRAs generally provide income tax deferral regardless of whether they invest in annuity contracts. This means that when a tax favored plan invests in an annuity contract, it generally does not result in any additional tax benefits (such as income tax deferral and income tax free transfers). Types of Tax-favored Plans IRAs. If you buy an Annuity for use as an IRA, we will provide you a copy of the prospectus and contract. The "IRA Disclosure Statement" and "Roth IRA Disclosure Statement" which accompany the prospectus contain 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 Annuity by notifying us in writing, and we will refund all of the purchase payments under the Annuity (or, if provided by applicable state law, the amount credited under the Annuity, if greater), less any applicable federal and state income tax withholding. Contributions Limits/Rollovers. Subject to the minimum purchase payment requirements of an Annuity, you may purchase an Annuity for an IRA in connection with a "rollover" of amounts from a qualified retirement plan, as a transfer from another IRA, by making a single contribution consisting of your IRA contributions and catch-up contributions, if applicable, attributable to the prior year and the current year during the period from January 1 to April 15, or as a current year contribution. In 2008 the contribution limit is $5,000. After 2008 the contribution amount will be indexed for inflation. The tax law also provides for a catch-up provision for individuals who are age 50 and above, allowing these individuals an additional $1,000 contribution each year. The catch-up amount is not indexed for inflation. 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 an Annuity, you can make regular IRA contributions under the Annuity (to the extent permitted by law). However, if you make such regular IRA contributions, you should note that you will not be able to treat the contract as a "conduit IRA," which means that you will not retain possible favorable tax treatment if you subsequently "roll over" the contract funds originally derived from a qualified retirement plan or TDA into another Section 401(a) plan or TDA. In some circumstances, non-spouse beneficiaries may directly roll over to an IRA amounts due from qualified plans, 403(b) plans, and governmental 457(b) plans. 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); 120 .. Your rights as owner are non-forfeitable; .. You cannot sell, assign or pledge the contract; .. The annual contribution you pay cannot be greater than the maximum amount allowed by law, including catch-up contributions if applicable (which does not include any rollover amounts); .. The date on which required minimum distributions must begin cannot be later than April 1st of the calendar year after the calendar year you turn age 70 1/2; and .. Death and annuity payments must meet "required minimum distribution" rules 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 regarding a Nonqualified Annuity. In addition to this normal tax liability, you may also be liable for the following, depending on your actions: .. A 10% early withdrawal penalty described below; .. Liability for "prohibited transactions" if you, for example, borrow against the value of an IRA; or .. Failure to take a required minimum distribution, also 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) $46,000 in 2008 ($45,000 in 2007) or (b) 25% of your taxable compensation paid by the contributing employer (not including the employer's SEP contribution as compensation for these purposes). However, for these purposes, compensation in excess of certain limits established by the IRS will not be considered. In 2008, this limit is $230,000 ($225,000 for 2007); .. SEPs must satisfy certain participation and nondiscrimination requirements not generally applicable to IRAs; and .. SEPs that contain a salary reduction or "SARSEP" provision prior to 1997 may permit salary deferrals up to $15,500 in 2008 with the employer making these contributions to the SEP. However, no new "salary reduction" or "SARSEPs" can be established after 1996. Individuals participating in a SARSEP who are age 50 or above by the end of the year will be permitted to contribute an additional $5,000 in 2008. These amounts are indexed for inflation. These Annuities are not available for SARSEPs. You will also be provided the same information, and have the same "free look" period, as you would have if you purchased the contract for a standard IRA. ROTH IRAs. The "Roth IRA Disclosure Statement" contains information about eligibility, contribution limits, tax particulars and other Roth IRA information. Like standard IRAs, income within a Roth IRA accumulates tax-free, and contributions are subject to specific limits. Roth IRAs have, however, the following differences: .. Contributions to a Roth IRA cannot be deducted from your gross income; .. "Qualified distributions" from a Roth IRA are excludable from gross income. A "qualified distribution" is a distribution that satisfies two requirements: (1) the distribution must be made (a) after the owner of the IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's disability; or (d) for a qualified first time homebuyer distribution within the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that is at least five tax years after the first year for which a contribution was made to any Roth IRA established for the owner or five years after a rollover, transfer, or conversion was made from a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not qualified distributions will be treated as made first from contributions and then from earnings and earnings will be taxed generally in the same manner as distributions from a traditional IRA. .. If eligible (including meeting income limitations and earnings requirements), you may make contributions to a Roth IRA after attaining age 70 1/2, and distributions are not required to begin upon attaining such age or at any time thereafter. Subject to the minimum purchase payment requirements of an Annuity, if you meet certain income limitations you may purchase an Annuity for a Roth IRA in connection with a "rollover" of amounts of another traditional IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA by making a single contribution consisting of your Roth IRA contributions and catch-up contributions, if applicable, attributable to the prior year and the current year during the period from January 1 to April 15 of the current year, or with a current contribution. The Code permits persons who meet certain income limitations (generally, adjusted gross income under $100,000) who are not married filing a separate return and who receive certain qualifying distributions from such non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover" of all or any part of the amount of such distribution to a Roth IRA which they establish. Beginning January 2008, an individual receiving an eligible rollover distribution from an employer sponsored retirement plan under sections 401(a) or 403(b) of the Code can directly roll over contributions to a Roth IRA, subject to the same income limits. This conversion triggers current taxation (but is not subject to a 10% early distribution penalty). Once an Annuity has been purchased, regular Roth IRA contributions will be accepted to the extent permitted by law. In addition, an individual receiving an eligible rollover distribution from a designated Roth account under an employer plan may roll over the distribution to a Roth IRA even if the individual is not eligible to make regular contributions to a Roth IRA. Until 2010, participants with an adjusted gross income greater than $100,000 are not permitted to roll over funds from an employer plan , including a Roth 401(k) distribution, to a Roth IRA. 121 TDAs. You may own a Tax Deferred Annuity (also known as a TDA, Tax Sheltered Annuity (TSA), 403(b) plan or 403(b) annuity) 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 your rights (or your 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 $15,500 in 2008. Individuals participating in a TDA who are age 50 or above by the end of the year will be permitted to contribute an additional $5,000 in 2008. This amount is indexed for inflation. Further, you may roll over TDA amounts to another TDA or an IRA. You may also roll over TDA amounts to a qualified retirement plan, a SEP and a 457 government plan. A contract may generally only qualify as a TDA if distributions of salary deferrals (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, not including 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. Final regulations related to 403(b) contracts were issued in 2007. Under these final regulations, certain contract exchanges may be accepted only if the employer and the issuer have entered into the required information-sharing agreements. Such agreements must be in place by January 1, 2009. We do not currently accept transfers of funds under 403(b) contracts. Funds can only be added to the contract as a current salary deferral under an agreement with your employer or as a direct rollover from another employer plan. We intend to begin accepting such transfers in the future when we can comply with the new regulations. Required Minimum Distributions and Payment Options If you hold the contract under an IRA (or other tax-favored plan), required minimum distribution rules must be satisfied. This means that generally payments must start by April 1 of the year after the year you reach age 70 1/2 and must be made for each year thereafter. For a TDA or a 401(a) plan for which the participant is not a greater than 5% owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount of the payment must at least equal the minimum required under the IRS rules. Several choices are available for calculating the minimum amount. More information on the mechanics of this calculation is available on request. Please contact us at a reasonable time before the IRS deadline so that a timely distribution is made. Please note that there is a 50% tax penalty on the amount of any required minimum distribution not made in a timely manner. Required minimum distributions are calculated based on the sum of the Account Value and the actuarial value of any additional death benefits and benefits from optional riders that you have purchased under the contract. As a result, the required minimum distributions may be larger than if the calculation were based on the Account Value only, which may in turn result in an earlier (but not before the required beginning date) distribution of amounts under the Annuity and an increased amount of taxable income distributed to the Annuity owner, and a reduction of death benefits and the benefits of any optional riders. You can use the Minimum Distribution option to satisfy the required minimum distribution rules for an Annuity without either beginning annuity payments or surrendering the Annuity. We will distribute to you the required minimum distribution amount, less any other partial withdrawals that you made during the year. Such amount will be based on the value of the contract as of December 31 of the prior year, but is determined without regard to other contracts you may own. Although the IRS rules determine the required amount to be distributed from your IRA each year, certain payment alternatives are still available to you. If you own more than one IRA, you can choose to satisfy your minimum distribution requirement for each of your IRAs by withdrawing that amount from any of your IRAs. If you inherit more than one IRA or more than one Roth IRA from the same owner, similar rules apply. Required Distributions Upon Your Death for Qualified Annuity Contracts Upon your death under an IRA, Roth IRA, 403(b) or other employer sponsored plan, the designated beneficiary may generally elect to continue the contract and receive required minimum distributions under the contract instead of receiving the death benefit in a single payment. The available payment options will depend on whether you die before the date required minimum distributions under the Code were to begin, whether you have named a designated beneficiary and whether that beneficiary is your surviving spouse. 122 .. If you die after a designated beneficiary has been named, the death benefit must be distributed by December 31/st/ of the year including the five year anniversary of the date of death, or as periodic payments not extending beyond the life or life expectancy of the designated beneficiary (as long as payments begin by December 31/st/ of the year following the year of death). However, if your surviving spouse is the beneficiary, the death benefit can be paid out over the life or life expectancy of your spouse with such payments beginning no later than December 31/st/ of the year following the year of death or December 31/st/ of the year in which you would have reached age 70 1/2, which ever is later. Additionally, if the contract is payable to (or for the benefit of) your surviving spouse, that portion of the contract may be continued with your spouse as the owner. .. If you die before a designated beneficiary is named and before the date required minimum distributions must begin under the Code, the death benefit must be paid out by December 31st of the year including the five year anniversary of the date of death. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31st of the year following the year of death, such contract is deemed to have no designated beneficiary. A designated beneficiary may elect to apply the rules for no designated beneficiary if those would provide a smaller payment requirement. .. If you die before a designated beneficiary is named and after the date required minimum distributions must begin under the Code, the death benefit must be paid out at least as rapidly as under the method then in effect. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31st of the year following the year of death, such contract is deemed to have no designated beneficiary. A designated beneficiary may elect to apply the rules for no designated beneficiary if those would provide a smaller payment requirement. A beneficiary has the flexibility to take out more each year than mandated under the required minimum distribution rules. Until withdrawn, amounts in a Qualified Annuity contract continue to be tax deferred. Amounts withdrawn each year, including amounts that are required to be withdrawn under the required minimum distribution rules, are subject to tax. You may wish to consult a professional tax advisor for tax advice as to your particular situation. For a Roth IRA, if death occurs before the entire interest is distributed, the death benefit must be distributed under the same rules applied to IRAs where death occurs before the date required minimum distributions must begin under the Code. Tax Penalty for Early Withdrawals from Qualified Annuity Contracts You may owe a 10% tax penalty on the taxable part of distributions received from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age 59 1/2. Amounts are not subject to this tax penalty if: .. the amount is paid on or after you reach age 59 1/2 or die; .. the amount received is attributable to your becoming disabled; or .. generally the amount paid or received is in the form of substantially equal payments not less frequently than annually. (Please note that substantially equal payments must continue until the later of reaching age 59 1/2 or 5 years. Modification of payments during that time period will result in retroactive application of the 10% tax penalty.) Other exceptions to this tax may apply. You should consult your tax advisor for further details. Withholding We will withhold federal income tax at the rate of 20% for any eligible rollover distribution paid by us to or for a plan participant, unless such distribution is "directly" rolled over into another qualified plan, IRA (including the IRA variations described above), SEP, 457 government plan or TDA. An eligible rollover distribution is defined under the tax law as a distribution from an employer plan under 401(a), a TDA or a 457 governmental plan, excluding any distribution that is part of a series of substantially equal payments (at least annually) made over the life expectancy of the employee or the joint life expectancies of the employee and his designated beneficiary, any distribution made for a specified period of 10 years or more, any distribution that is a required minimum distribution and any hardship distribution. Regulations also specify certain other items which are not considered eligible rollover distributions. 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: .. 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. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default; and .. For all other distributions, we will withhold at a 10% rate. We will provide you with forms and instructions concerning the right to elect that no amount be withheld from payments in the ordinary course. However, you should know that, in any event, you are liable for payment of federal income taxes on the taxable portion of the distributions, and you should consult with your tax advisor to find out more information on your potential liability if you fail to pay such taxes. There may be additional state income tax withholding requirements. 123 ERISA Requirements ERISA (the "Employee Retirement Income Security Act of 1974") and the Code prevent a fiduciary and other "parties in interest" with respect to a plan (and, for these purposes, an IRA would also constitute a "plan") from receiving any benefit from any party dealing with the plan, as a result of the sale of the contract. Administrative exemptions under ERISA generally permit the sale of insurance/annuity products to plans, provided that certain information is disclosed to the person purchasing the contract. This information has to do primarily with the fees, charges, discounts and other costs related to the contract, as well as any commissions paid to any agent selling the contract. Information about any applicable fees, charges, discounts, penalties or adjustments may be found in the applicable sections of this Prospectus. Information about sales representatives and commissions may be found in the sections of this Prospectus addressing distribution of the Annuities. Other relevant information required by the exemptions is contained in the contract and accompanying documentation. Please consult with your tax advisor if you have any questions about ERISA and these disclosure requirements. Spousal Consent Rules for Retirement Plans - Qualified Contracts If you are married at the time your payments commence, you may be required by federal law to choose an income option that provides survivor annuity income to your spouse, unless your spouse waives that right. Similarly, if you are married at the time of your death, federal law may require all or a portion of the Death Benefit to be paid to your spouse, even if you designated someone else as your beneficiary. A brief explanation of the applicable rules follows. For more information, consult the terms of your retirement arrangement. Defined Benefit Plans and Money Purchase Pension Plans. If you are married at the time your payments commence, federal law requires that benefits be paid to you in the form of a "qualified joint and survivor annuity" (QJSA), unless you and your spouse waive that right, in writing. Generally, this means that you will receive a reduced payment during your life and, upon your death, your spouse will receive at least one-half of what you were receiving for life. You may elect to receive another income option if your spouse consents to the election and waives his or her right to receive the QJSA. If your spouse consents to the alternative form of payment, your spouse may not receive any benefits from the plan upon your death. Federal law also requires that the plan pay a Death Benefit to your spouse if you are married and die before you begin receiving your benefit. This benefit must be available in the form of an annuity for your spouse's lifetime and is called a "qualified pre-retirement survivor annuity" (QPSA). If the plan pays Death Benefits to other beneficiaries, you may elect to have a beneficiary other than your spouse receive the Death Benefit, but only if your spouse consents to the election and waives his or her right to receive the QPSA. If your spouse consents to the alternate beneficiary, your spouse will receive no benefits from the plan upon your death. Any QPSA waiver prior to your attaining age 35 will become null and void on the first day of the calendar year in which you attain age 35, if still employed. Defined Contribution Plans (including 401(k) Plans and ERISA 403(b) Annuities). Spousal consent to a distribution is generally not required. Upon your death, your spouse will receive the entire Death Benefit, even if you designated someone else as your beneficiary, unless your spouse consents in writing to waive this right. Also, if you are married and elect an annuity as a periodic income option, federal law requires that you receive a QJSA (as described above), unless you and your spouse consent to waive this right. IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a distribution usually is not required. Upon your death, any Death Benefit will be paid to your designated beneficiary. Additional Information For additional information about federal tax law requirements applicable to IRAs and Roth IRAs, see the IRA Disclosure Statement or Roth IRA Disclosure Statement, as applicable. Generation-skipping Transfers If you transfer your contract to a person two or more generations younger than you (such as a grandchild or grandniece) or to a person that is more than 37 1/2 years younger than you, there may be generation-skipping transfer tax consequences. 124 GENERAL INFORMATION HOW WILL I RECEIVE STATEMENTS AND REPORTS? We send any statements and reports required by applicable law or regulation to you at your last known address of record. You should therefore give us prompt notice of any address change. We reserve the right, to the extent permitted by law and subject to your prior consent, to provide any prospectus, prospectus supplements, confirmations, statements and reports required by applicable law or regulation to you through our Internet Website at www.prudentialannuities.com or any other electronic means, including diskettes or CD ROMs. We send a confirmation statement to you each time a transaction is made affecting Account Value, such as making additional Purchase Payments, transfers, exchanges or withdrawals. We may also send quarterly statements detailing the activity affecting your Annuity during the calendar quarter. We may confirm regularly scheduled transactions, including, but not limited to, the Annual Maintenance Fee, Systematic Withdrawals (including 72(t) payments and required minimum distributions), electronic funds transfer, Dollar Cost Averaging, and static rebalancing, in quarterly statements instead of confirming them immediately. You should review the information in these statements carefully. You may request additional reports. We reserve the right to charge up to $50 for each such additional report. We may also send an annual report and a semi-annual report containing applicable financial statements for the Separate Account and the Portfolios, as of December 31 and June 30, respectively, to Owners or, with your prior consent, make such documents available electronically through our Internet Website or other electronic means. WHO IS PRUDENTIAL ANNUITIES? Prudential Annuities Life Assurance Corporation, a Prudential Financial Company, ("Prudential Annuities") is a stock life insurance company domiciled in Connecticut with licenses in all 50 states, the District of Columbia and Puerto Rico. Prudential Annuities is a wholly-owned subsidiary of Prudential Annuities, Inc., whose ultimate parent is Prudential Financial, Inc. Prudential Annuities markets its products to broker-dealers and financial planners through an internal field marketing staff. In addition, Prudential Annuities markets through and in conjunction with financial institutions such as banks that are permitted directly, or through affiliates, to sell annuities. Prudential Annuities offers a wide array of annuities, including (1) deferred variable annuities that are registered with the SEC, including fixed interest rate annuities that are offered as a companion to certain of our variable annuities and are registered because of their market value adjustment feature and (2) fixed annuities that are not registered with the SEC. In addition, Prudential Annuities has in force a relatively small block of variable life insurance policies and immediate variable annuities, but it no longer actively sells such policies. No company other than Prudential Annuities has any legal responsibility to pay amounts that it owes under its annuity and variable life insurance contracts. However, Prudential Financial exercises significant influence over the operations and capital structure of Prudential Annuities. Prudential Annuities conducts the bulk of its operations through staff employed by it or by affiliated companies within the Prudential Financial family. Certain discrete functions have been delegated to non-affiliates that could be deemed "service providers" under the Investment Company Act of 1940. The entities engaged by Prudential Annuities may change over time. As of December 31, 2007, non-affiliated entities that could be deemed service providers to Prudential Annuities and/or another insurer within the Prudential Annuities business unit consisted of the following: ADP (proxy tabulation services) located at 100 Burma Road Jersey City, New Jersey 07305, Alliance-One Services Inc. (administration of variable life policies) located at 55 Hartland Street East Hartford CT 06108, BISYS Retirement Services (qualified plan administrator) located at 200 Dryden Road, Dresher, PA 19025, Blue Frog Solutions, Inc. (order entry systems provider) located at 555 SW 12th Ave, Suite 202 Pompano Beach, FL 33069, EBIX Inc. (order-entry system) located at 5 Concourse Parkway Suite 3200 Atlanta, GA 30328, Diversified Information Technologies Inc. (records management) located at 123 Wyoming Ave Scranton, PA 18503, Fosdick Fulfillment Corp. (fulfillment of prospectuses and marketing materials) located at 26 Barnes Industrial Park Road North Wallingford, CT 06492, Insurance Technologies (annuity illustrations) located at Two South Cascade Avenue, Suite 200 Colorado Springs, CO 80903, Lason Systems Inc. (contract printing and mailing) located at 1305 Stephenson Highway Troy, MI 48083, Morningstar Associates LLC (asset allocation recommendations) located at 225 West Wacker Drive Chicago, IL 60606, Pershing LLC (order-entry systems provider) located at One Pershing Plaza Jersey City, NJ 07399, Personix (printing and fulfillment of confirmations and client statements) located at 13100 North Promenade Boulevard Stafford, TX 77477, RR Donnelley Receivables Inc. (printing annual reports and prospectuses) located at 111 South Wacker Drive Chicago, IL 60606-4301, Stanton Group (qualified plan administrator) located at Two Pine Tree Drive Suite 400 Arden Hills, MN 55112 Attention: Alerus Retirement Solutions, State Street (accumulation unit value calculations) located at State Street Financial Center One Lincoln Street Boston, Massachusetts 02111, The Harty Press, Inc. (printing and fulfillment of marketing materials) located at 25 James Street New Haven, CT 06513, VG Reed & Sons Inc. (printing and fulfillment of annual reports) located at 1002 South 12/th/ Street Louisville, KY 40210, William B. Meyer (printing and fulfillment of prospectuses and marketing materials) located at 255 Long Beach Boulevard Stratford, CT 06615. 125 WHAT ARE SEPARATE ACCOUNTS? The separate accounts are where Prudential Annuities sets aside and invests the assets of some of our annuities. In the accumulation period, assets supporting Account Values of the Annuities are held in a separate account established under the laws of the State of Connecticut. We are the legal owner of assets in the separate accounts. In the payout period, assets supporting fixed annuity payments and any adjustable annuity payments we make available are held in our general account. Assets supporting variable annuity payment options may be invested in our separate accounts. Income, gains and losses from assets allocated to these separate accounts are credited to or charged against each such separate account without regard to other income, gains or losses of Prudential Annuities or of any other of our separate accounts. These assets may only be charged with liabilities which arise from the Annuities issued by Prudential Annuities. The amount of our obligation in relation to allocations to the Sub-accounts is based on the investment performance of such Sub-accounts. However, the obligations themselves are our general corporate obligations. Separate Account B During the accumulation period, the assets supporting obligations based on allocations to the Sub-accounts are held in Sub-accounts of Prudential Annuities Life Assurance Corporation Variable Account B, also referred to as "Separate Account B". Separate Account B was established by us pursuant to Connecticut law on November 25, 1987. Separate Account B also holds assets of other annuities issued by us with values and benefits that vary according to the investment performance of Separate Account B. Separate Account B consists of multiple Sub-accounts. Each Sub-account invests only in a single mutual fund or mutual fund portfolio. The name of each Sub-account generally corresponds to the name of the underlying Portfolio. Each Sub-account in Separate Account B may have several different Unit Prices to reflect the Insurance Charge, Distribution Charge (when applicable) and the charges for any optional benefits that are offered under the Annuities issued by us through Separate Account B. Separate Account B is registered with the SEC under the Investment Company Act of 1940 ("Investment Company Act") as a unit investment trust, which is a type of investment company. The SEC does not supervise investment policies, management or practices of Separate Account B. We reserve the right to make changes to the Sub-accounts available under the Annuities as we determine appropriate. We may offer new Sub-accounts, eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may also close Sub-accounts to additional Purchase Payments on existing Annuities or close Sub-accounts for Annuities purchased on or after specified dates. We may also substitute an underlying mutual fund or portfolio of an underlying mutual fund for another underlying mutual fund or portfolio of an underlying mutual fund, subject to our receipt of any exemptive relief that we are required to obtain under the Investment Company Act. We will notify Owners of changes we make to the Sub-accounts available under their Annuity. Values and benefits based on allocations to the Sub-accounts will vary with the investment performance of the underlying mutual funds or fund portfolios, as applicable. We do not guarantee the investment results of any Sub-account. Your Account Value allocated to the Sub-accounts may increase or decrease. You bear the entire investment risk. There is no assurance that the Account Value of your Annuity will equal or be greater than the total of the Purchase Payments you make to us. Separate Account D During the accumulation period, assets supporting our obligations based on Fixed Allocations are held in Prudential Annuities Life Assurance Corporation Separate Account D, also referred to as "Separate Account D". Such obligations are based on the fixed interest rates we credit to Fixed Allocations and the terms of the Annuities. These obligations do not depend on the investment performance of the assets in Separate Account D. Separate Account D was established by us pursuant to Connecticut law. There are no units in Separate Account D. The Fixed Allocations are guaranteed by our general account. An Annuity Owner who allocates a portion of their Account Value to Separate Account D does not participate in the investment gain or loss on assets maintained in Separate Account D. Such gain or loss accrues solely to us. We retain the risk that the value of the assets in Separate Account D may drop below the reserves and other liabilities we must maintain. Should the value of the assets in Separate Account D drop below the reserve and other liabilities we must maintain in relation to the annuities supported by such assets, we will transfer assets from our general account to Separate Account D to make up the difference. We have the right to transfer to our general account any assets of Separate Account D in excess of such reserves and other liabilities. We maintain assets in Separate Account D supporting a number of annuities we offer. We may employ investment managers to manage the assets maintained in Separate Account D. Each manager we employ is responsible for investment management of a different portion of Separate Account D. From time to time additional investment managers may be employed or investment managers may cease being employed. We are under no obligation to employ or continue to employ any investment manager(s) and have sole discretion over the investment managers we retain. We are not obligated to invest according to specific guidelines or strategies except as may be required by Connecticut and other state insurance laws. 126 WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS? Each underlying mutual fund is registered as an open-end management investment company under the Investment Company Act. Shares of the underlying mutual fund portfolios are sold to separate accounts of life insurance companies offering variable annuity and variable life insurance products. The shares may also be sold directly to qualified pension and retirement plans. Voting Rights We are the legal owner of the shares of the underlying mutual funds in which the Sub-accounts invest. However, under SEC rules, you have voting rights in relation to Account Value maintained in the Sub-accounts. If an underlying mutual fund portfolio requests a vote of shareholders, we will vote our shares based on instructions received from Owners with Account Value allocated to that Sub-account. Owners have the right to vote an amount equal to the number of shares attributable to their contracts. If we do not receive voting instructions in relation to certain shares, we will vote those shares in the same manner and proportion as the shares for which we have received instructions. This voting procedure is sometimes referred to as "mirror voting" because, as indicated in the immediately preceding sentence, we mirror the votes that are actually cast, rather than decide on our own how to vote. In addition, because all the shares of a given mutual fund held within our separate account are legally owned by us, we intend to vote all of such shares when that underlying fund seeks a vote of its shareholders. As such, all such shares will be counted towards whether there is a quorum at the underlying fund's shareholder meeting and towards the ultimate outcome of the vote. Thus, under "mirror voting," it is possible that the votes of a small percentage of contractholders who actually vote will determine the ultimate outcome. We will furnish those Owners who have Account Value allocated to a Sub-account whose underlying mutual fund portfolio has requested a "proxy" vote with proxy materials and the necessary forms to provide us with their voting instructions. Generally, you will be asked to provide instructions for us to vote on matters such as changes in a fundamental investment strategy, adoption of a new investment advisory agreement, or matters relating to the structure of the underlying mutual fund that require a vote of shareholders. Advanced Series Trust (the "Trust") has obtained an exemption from the Securities and Exchange Commission that permits its co-investment advisers, AST Investment Services, Inc. and Prudential Investments LLC, subject to approval by the Board of Trustees of the Trust, to change sub-advisors for a Portfolio and to enter into new sub-advisory agreements, without obtaining shareholder approval of the changes. This exemption (which is similar to exemptions granted to other investment companies that are organized in a similar manner as the Trust) is intended to facilitate the efficient supervision and management of the sub-advisors by AST Investment Services, Inc., Prudential Investments LLC and the Trustees. The Trust is required, under the terms of the exemption, to provide certain information to shareholders following these types of changes. We may add new Sub-accounts that invest in a series of underlying funds other than the Trust that is managed by an affiliate. Such series of funds may have a similar order from the SEC. You also should review the prospectuses for the other underlying funds in which various Sub-accounts invest as to whether they have obtained similar orders from the SEC. Material Conflicts It is possible that differences may occur between companies that offer shares of an underlying mutual fund portfolio to their respective separate accounts issuing variable annuities and/or variable life insurance products. Differences may also occur surrounding the offering of an underlying mutual fund portfolio to variable life insurance policies and variable annuity contracts that we offer. Under certain circumstances, these differences could be considered "material conflicts," in which case we would take necessary action to protect persons with voting rights under our variable annuity contracts and variable life insurance policies against persons with voting rights under other insurance companies' variable insurance products. If a "material conflict" were to arise between owners of variable annuity contracts and variable life insurance policies issued by us we would take necessary action to treat such persons equitably in resolving the conflict. "Material conflicts" could arise due to differences in voting instructions between owners of variable life insurance and variable annuity contracts of the same or different companies. We monitor any potential conflicts that may exist. Service Fees Payable to Prudential Annuities Prudential Annuities or our affiliates have entered into agreements with the investment adviser or distributor of the underlying Portfolios. Under the terms of these agreements, Prudential Annuities, or our affiliates may provide administrative and support services to the Portfolios for which it receives a fee of up to 0.75% (currently) of the average assets allocated to the Portfolios under each Annuity from the investment adviser, distributor and/or the fund. These agreements may be different for each underlying mutual fund whose portfolios are offered as Sub-accounts. In addition, an investment adviser, sub-adviser or distributor of the underlying Portfolios may also compensate us by providing reimbursement, defraying the costs of, or paying directly for, among other things, marketing and/or administrative services and/or other services they provide in connection with the Annuity. These services may include, but are not limited to: sponsoring or co-sponsoring various promotional, educational or marketing meetings and seminars attended by distributors, wholesalers, and/or broker dealer firms' registered representatives, and creating marketing material discussing the contract, available options, and underlying Portfolios. The amounts paid depend on the nature of the meetings, the number of meetings attended by the adviser, sub-adviser, or distributor, the number of participants and attendees at the meetings, the costs expected to be incurred, and the level of the adviser's, sub-adviser's or distributor's participation. These payments or reimbursements may not be offered by all advisers, sub-advisers, or distributor and the amounts of such payments may vary between and among each adviser, sub-adviser and distributor depending on their respective participation. 127 During 2007, with regard to amounts that were paid under these kinds of arrangements, the amounts ranged from approximately $750 to approximately $981,102. These amounts may have been paid to one or more Prudential-affiliated insurers issuing individual variable annuities. WHO DISTRIBUTES ANNUITIES OFFERED BY PRUDENTIAL ANNUITIES? Prudential Annuities Distributors, Inc. (PAD), a wholly-owned subsidiary of Prudential Annuities, Inc., is the distributor and principal underwriter of the Annuities offered through this prospectus. PAD acts as the distributor of a number of annuity and life insurance products, and is the co-distributor of the Advanced Series Trust. PAD's principal business address is One Corporate Drive, Shelton, Connecticut 06484. PAD is registered as a broker-dealer under the Securities Exchange Act of 1934 (Exchange Act), and is a member of the Financial Industry Regulatory Authority (FINRA). Each Annuity is offered on a continuous basis. PAD enters into distribution agreements with broker-dealers who are registered under the Exchange Act and with entities that may offer the Annuities but are exempt from registration ("firms"). Applications for each Annuity are solicited by registered representatives of those firms. Such representatives will also be our appointed insurance agents under state insurance law. In addition, PAD may offer the Annuities directly to potential purchasers. Prudential Annuities sells its annuity products through multiple distribution channels, including (1) independent broker-dealer firms and financial planners; (2) broker-dealers that are members of the New York Stock Exchange, including "wirehouse" and regional broker-dealer firms; and (3) broker-dealers affiliated with banks or that specialize in marketing to customers of banks. Although we are active in each of those distribution channels, the majority of our sales have come from the independent broker-dealer firms and financial planners. On June 1, 2006, The Prudential Insurance Company of America, an affiliate of Prudential Annuities, acquired the variable annuity business of The Allstate Corporation ("Allstate"), which included exclusive access to the Allstate affiliated broker-dealer. We began selling variable annuities through the Allstate affiliated broker-dealer registered representatives in the third quarter of 2006. Commissions are paid to firms on sales of the Annuities according to one or more schedules. The individual representative will receive a portion of the compensation, depending on the practice of his or her firm. Commissions are generally based on a percentage of Purchase Payments made, up to a maximum of 7.0% for ASAP III, 6.0% for XT6, 5.5% for APEX II and 2.0% for ASL II. Alternative compensation schedules are available that provide a lower initial commission plus ongoing annual compensation based on all or a portion of the Account Value. We may also provide compensation to the distributing firm for providing ongoing service to you in relation to your Annuity. Commissions and other compensation paid in relation to your Annuity do not result in any additional charge to you or to the Separate Account. In addition, in an effort to promote the sale of our products (which may include the placement of Prudential Annuities and/or the Annuities on a preferred or recommended company or product list and/or access to the firm's registered representatives), we or PAD may enter into compensation arrangements with certain broker-dealer firms with respect to certain or all registered representatives of such firms under which such firms may receive separate compensation or reimbursement for, among other things, training of sales personnel and/or marketing and/or administrative services and/or other services they provide. These services may include, but are not limited to: educating customers of the firm on the Annuity's features; conducting due diligence and analysis, providing office access, operations and systems support; holding seminars intended to educate the firm's registered representatives and make them more knowledgeable about the Annuities; providing a dedicated marketing coordinator; providing priority sales desk support; and providing expedited marketing compliance approval. To the extent permitted by FINRA rules and other applicable laws and regulations, PAD may pay or allow other promotional incentives or payments in the form of cash or non-cash compensation. These arrangements may not be offered to all firms and the terms of such arrangements may differ between firms. A list of the firms to whom Prudential Annuities pays an amount under these arrangements is provided below. You should note that firms and individual registered representatives and branch managers within some firms participating in one of these compensation arrangements might receive greater compensation for selling the Annuities than for selling a different annuity that is not eligible for these compensation arrangements. While compensation is generally taken into account as an expense in considering the charges applicable to an annuity product, any such compensation will be paid by us or PAD and will not result in any additional charge to you. Overall compensation paid to the distributing firm does not exceed, based on actuarial assumptions, 8.5% of the total Purchase Payments made. Your registered representative can provide you with more information about the compensation arrangements that apply upon the sale of the Annuity. Further information about the firms that are part of these compensation arrangements appears in the Statement of Additional Information, which is available without charge upon request. We or PAD also may compensate third-party vendors, for services that such vendors render to broker-dealer firms. To the extent permitted by the FINRA rules and other applicable laws and regulations, PAD may pay or allow other promotional incentives or payments in the forms of cash or non-cash compensation. These arrangements may not be offered to all firms and the terms of such arrangements may differ between firms. The list below identifies three general types of payments that PAD pays which are broadly defined as follows: .. Percentage Payments based upon "Assets under Management" or "AUM": This type of payment is a percentage payment that is based upon the total amount held in all Prudential Annuities products that were sold through the firm. 128 .. Percentage Payments based upon sales: This type of payment is a percentage payment that is based upon the total amount of money received as purchase payments under Prudential Annuities annuity products sold through the firm. .. Fixed Payments: These types of payments are made directly to or in sponsorship of the firm (or its affiliated broker-dealers). Examples of arrangements under which such payments may be made currently include, but are not limited to: sponsorships, conferences (national, regional and top producer), speaker fees, promotional items and reimbursements to firms for marketing activities or services paid by the firms and/or their individual representatives. The amount of these payments varies widely because some payments may encompass only a single event, such as a conference, and others have a much broader scope. In addition, we may make payments upon the initiation of a relationship for systems, operational and other support. The list below includes the names of the firms (or their affiliated broker/dealers) that we are aware (as of December 31, 2007) received payment with respect to annuity business during 2007 (or as to which a payment amount was accrued during 2007). The firms listed below include payments in connection with products issued by Prudential Annuities Life Assurance Corporation. Your registered representative can provide you with more information about the compensation arrangements that apply upon the sale of the contract. During 2007, the least amount paid, and greatest amount paid, were $46 and $8,664,735, respectively. Name of Firm: 1717 Capital Management Co. Commonwealth Financial Group HBW Securities 1st Global Capital Corporation Commonwealth Financial Network Hornor, Townsend & Kent A.G. Edwards & Sons Contemporary Fin'l Solutions Huntington Investment Services Advantage Capital Corporation Crown Capital Securities, L.P. ICC AICPA Cumberland Brokerage Corporation IFMG Securities, Inc. AIG Financial Advisors Inc CUNA Brokerage IMS Securities, Inc. Allegheny Investments LTD. CUSO Financial Services, L.P. Independent Financial Group, LLC Allegiant Securities LLC Deutsche Infinex Investments Inc. Alliance Bernstein EDI Financial ING Financial Advisors, LLC Alliance Financial Group, Inc. ePlanning Securities, Inc. ING Financial Partners, LLC Allianz Equity Services, Inc. Institutional Securities Corp. Allstate Financial Srvcs, LLC Ferris Baker Watts, Inc InterSecurities, Inc. Almax Financial Solutions, LLC FFP Securities, Inc. Invest Financial Corporation Alternative Wealth Strategies Financial Network Investments Corp. Investacorp American General Securities, Inc. Financial Planning Consultants Investment Centers of America AMERICAN PORTFOLIO FIN SVCS Financial West Group Investment Management Corp INC Fintegra, LLC Investment Planners, Inc. Ameritas Investment Corp First Allied Securities, Inc. Investment Professionals Arrowhead Investment Center First Financial Services Investors Capital Corporation Associated Securities First Heartland Capital, Inc. Investors Security Co, Inc. AXA Advisors First Montauk Securities Corp. ISG Equity Sales BancorpSouth Investment Services, First Trust Portfolios J.W. Cole Financial, Inc. Inc. First Western Advisors Janney Montgomery Scott, LLC. BB&T Investments Foothill Securities, Inc. JB Hanauer BCG Securities, Inc. Fortune Financial Services, Inc. Jefferson Pilot Securities Co. Benefit Funding Services Group Founders Financial Securities JJB Hilliard Lyons Berthel Fisher & Company Fox & Co. Investments, Inc. Key Investment Services LLC Brecek & Young Advisors, Inc. Freedom Investors Corp. KMS FINANCIAL SERVICES, INC Broker Dealer Financial FSC Securities Corp Kovack Securities, Inc Brookstone Securities, Inc. FSIC Leaders Group Inc. Brookstreet Securities Corp. Garden State Securities, Inc. Legacy Advisors, LLC Butler Freeman Tally Fn Gp LLC Gary Goldberg & Co. Legacy Financial Services, Inc. Cadaret, Grant & Co., Inc. Geneos Wealth Management, Inc. Legend Equities Corporation Calton & Associates, Inc Genworth Financial Securities Legend Securities, Inc. Cambridge Investment Research, Inc. Corporation Leonard & Company Cantella & Co., Inc Girard Securities, Inc. Lewis Financial Group, L.C. Capital Analysts Goldman Sachs Asset Management Lincoln Financial Advisors Capital Financial Services Great American Advisors, Inc. Lincoln Investment Planning Capital Investment Group GunnAllen Financial, Inc. Linsco Private Ledger Corp Capital One Investments GWN Securities, Inc. Lombard Securities Inc. Capital Securities Management, H&R Block Financial Advisors, Inc. M Holdings Securities, Inc Centaurus Financial, Inc. H. Beck, Inc. Main Street Securities, LLC CFD Investments, Inc. Hantz Financial Services, Inc. MarketMax Citigroup Global Markets Inc Harbour Investments, Inc. Medallion Investment Services City Securities Corporation Hazard & Siegel, Inc. MFS - --------------------------------------------------------------------------------------------------------------
129 Michigan Securities, Inc. R. Seelaus & Co., Inc. TFS Securities, Inc. MML Investors Services, Inc. Rampart Financial Services Inc The Investment Center, Inc. Money Concepts Capital Corp. Raymond James & Associates Tower Square Securities Inc Moors & Cabot, Inc Raymond James Financial Services Transamerica Financial Advisors Morgan Keegan RBC Dain Rauscher Triad Advisors, Inc. MTL Equity Products, Inc. Resource Horizon Group, LLC Trustmont Financial Group, Inc. Multi Financial Securities Corp. Resource Marketing UBS Financial Services, Inc. Mutual Service Corporation Rhodes Securities, Inc. United Planners Financial Services of Mutual Trust Co. of America Sec RNR Securities, L.L.C. America National Planning Corporation Robert W. Baird & Co., Inc. United Securities Alliance, Inc. Neuberger/Berman Royal Alliance USA Financial Securities Corporation New England Securities Ryan Beck & Co, Inc. UVEST Financial Services Group, Inc. Next Financial Group, Inc. Rydex Distributors Inc Valley National Investments, Inc. NFP Securities, Inc. SAIC Veritrust Financial LLC North Ridge Securities Corp. Sammons Securities VSR Financial Services, Inc. Oppenheimer & Co, Inc. Saunders Discount Brokerage Wachovia Bank Pacific West Securities, Inc. Scottsdale Capital Advisors Wachovia Wirehouse Packerland Brokerage Svcs, Inc Securian Financial Services, Inc. Wall Street Financial Group Partnervest Securities, Inc. Securities America, Inc. Walnut Street Securities Paulson Investment Company, Inc. Securities Service Network Waterstone Financial Group Inc Planmember Securities Corporation Sentra/Spelman Waterstone Investor Services PNC Investment Sigma Financial Corporation Webster Investment Services, Inc. Preferred Financial Group Signator Investor, Inc Wellstone Securities, LLC Presidential Brokerage SII Investments, Inc. Westcom Financial Services PrimeVest Financial Services Silver Oaks Securities Wilbanks Securities, Inc. Principal Financial Group Stanford Group Company Williams Financial Group ProEquities, Inc Stifel Nicolaus & Co., Inc. Woodbury Financial Services, Inc. Prospera Financial Svcs, Inc. Summit Brokerage Services, Inc World Choice Securities, Inc. Pruco Securities Summit Equities, Incorporated World Equity Group, Inc. Prudential Annuities SunAmerica Securities World Group Securities, Inc. Prudential Financial Sunset Financial Services, Inc Worth Financial Group, Inc. Prudential Securities Incorporated SWS Financial Services, Inc WRP Investments, Inc. QA3 Financial Corp. Synergy Investment Group, LLC Your Money Matters Brokerage Questar Capital Corporation T. Rowe Price Associates - ----------------------------------------------------------------------------------------------------------------
On July 1, 2003, Prudential Financial combined its retail securities brokerage and clearing operations with those of Wachovia Corporation ("Wachovia") and formed Wachovia Securities Financial Holdings, LLC ("Wachovia Securities"), a joint venture headquartered in Richmond, Virginia. Wachovia is the majority owner and Prudential Financial, indirectly through subsidiaries, is a minority owner of Wachovia Securities. Wachovia and Wachovia Securities are key distribution partners for certain products of Prudential Financial affiliates, including mutual funds and individual annuities that are distributed through their financial advisors, bank channel and independent channel. In addition, Prudential Financial is a service provider to the managed account platform and certain wrap-fee programs offered by Wachovia Securities. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Prudential Annuities publishes annual and quarterly reports that are filed with the SEC. These reports contain financial information about Prudential Annuities that is annually audited by an independent registered public accounting firm. Prudential Annuities' annual report for the year ended December 31, 2007, together with subsequent periodic reports that Prudential Annuities files with the SEC, are incorporated by reference into this prospectus. You can obtain copies, at no cost, of any and all of this information, including the Prudential Annuities annual report that is not ordinarily mailed to contract owners, the more current reports and any subsequently filed documents at no cost by contacting us at Prudential Annuities - Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176 (Telephone: 203-926-1888). The SEC file number for Prudential Annuities is 33-44202. You may read and copy any filings made by Prudential Annuities with the SEC at the SEC's Public Reference Room at 100 F Street, N.E. Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling (202) 551-8090. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. FINANCIAL STATEMENTS The financial statements of the separate account and Prudential Annuities Life Assurance Corporation are included in the Statement of Additional Information. 130 HOW TO CONTACT US You can contact us by: .. calling our Customer Service Team at 1-800-752-6342 during our normal business hours, Monday through Friday, or our telephone automated response system at 1-800-766-4530. .. writing to us via regular mail at Prudential Annuities, P.O. Box 7960, Philadelphia, PA 19176 OR for express mail Prudential Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to send mail to the proper address may result in a delay in our receiving and processing your request. .. accessing information about your Annuity through our Internet Website at www.prudentialannuities.com. You can obtain account information by calling our automated response system and at www.prudentialannuities.com, our Internet Website. Our Customer Service representatives are also available during business hours to provide you with information about your account. You can request certain transactions through our telephone voice response system, our Internet Website or through a customer service representative. You can provide authorization for a third party, including your attorney-in-fact acting pursuant to a power of attorney or your Financial Professional, to access your account information and perform certain transactions on your account. You will need to complete a form provided by us which identifies those transactions that you wish to authorize via telephonic and electronic means and whether you wish to authorize a third party to perform any such transactions. Please note that unless you tell us otherwise, we deem that all transactions that are directed by your Financial Professional with respect to your Annuity have been authorized by you. We require that you or your representative provide proper identification before performing transactions over the telephone or through our Internet Website. This may include a Personal Identification Number (PIN) that will be provided to you upon issue of your Annuity or you may establish or change your PIN by calling our automated response system and at www.prudentialannuities.com, our Internet Website. Any third party that you authorize to perform financial transactions on your account will be assigned a PIN for your account. Transactions requested via telephone are recorded. To the extent permitted by law, we will not be responsible for any claims, loss, liability or expense in connection with a transaction requested by telephone or other electronic means if we acted on such transaction instructions after following reasonable procedures to identify those persons authorized to perform transactions on your Annuity using verification methods which may include a request for your Social Security number, PIN or other form of electronic identification. We may be liable for losses due to unauthorized or fraudulent instructions if we did not follow such procedures. Prudential Annuities does not guarantee access to telephonic, facsimile, Internet or any other electronic information or that we will be able to accept transaction instructions via such means at all times. Regular and/or express mail will be the only means by which we will accept transaction instructions when telephonic, facsimile, Internet or any other electronic means are unavailable or delayed. Prudential Annuities reserves the right to limit, restrict or terminate telephonic, facsimile, Internet or any other electronic transaction privileges at any time. INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. LEGAL PROCEEDINGS We are subject to legal and regulatory actions in the ordinary course of our businesses, including class action lawsuits. Our pending legal and regulatory actions include proceedings specific to us and proceedings generally applicable to business practices in the industry in which we operate. We are subject to class action lawsuits and other litigation alleging, among other things, that we made improper or inadequate disclosures in connection with the sale of annuity products or charged excessive or impermissible fees on these products, recommended unsuitable products to customers, mishandled customer accounts or breached fiduciary duties to customers. We are also subject to litigation arising out of our general business activities, such as our investments and contracts, and could be exposed to claims or litigation concerning certain business or process patents. Regulatory authorities from time to time make inquiries and conduct investigations and examinations relating particularly to us and our products. In addition, we, along with other participants in the business in which we engage, may be subject from time to time to investigations, examinations and inquiries, in some cases industry- wide, concerning issues or matters upon which such regulators have determined to focus. In some of our pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of a litigation or regulatory matter, and the amount or range of potential loss at any particular time, is inherently uncertain. The following is a summary of certain pending proceedings. We have commenced a remediation program to correct errors in the administration of approximately 11,000 annuity contracts issued by us. The owners of these contracts did not receive notification that the contracts were approaching or past their designated annuitization date or default annuitization date (both dates referred to as the "contractual annuity date") and the contracts were not annuitized at their contractual annuity dates. Some of these contracts also were affected by data integrity errors resulting in incorrect contractual annuity dates. The lack of notice and the data integrity errors, as reflected on the annuities administrative 131 system, all occurred before the acquisition of Prudential Annuities by Prudential Financial, Inc. (the "Acquisition"). The remediation and administrative costs of the remediation program are subject to the indemnification provisions of the agreement (the "Acquisition Agreement") pursuant to which Prudential Financial, Inc. acquired Prudential Annuities from Skandia Insurance Company Ltd. (publ) ("Skandia"). Commencing in 2003, we received formal requests for information from the SEC and the New York Attorney General ("NYAG") relating to market timing in variable annuities by us and certain affiliated companies. In connection with these investigations, with the approval of Skandia an offer was made by us to the authorities investigating our companies, the SEC and NYAG, to settle these matters by paying restitution and a civil penalty of $95 million in the aggregate. While not assured, we believe these discussions are likely to lead to settlements with these authorities by us or our affiliates. Any regulatory settlement involving us and certain affiliates would be subject to the indemnification provisions of the Acquisition Agreement pursuant to which Prudential Financial, Inc. purchased Prudential Annuities and certain affiliates in May 2003 from Skandia. If achieved, settlement of the matters relating to us and certain affiliates also could involve continuing monitoring, changes to and/or supervision of business practices, findings that may adversely affect existing or cause additional litigation, adverse publicity and other adverse impacts to our businesses. During the third quarter of 2004, we identified a system generated calculation error in our annuity contract administration system that existed prior to the Acquisition. This error related to the calculation of amounts due to customers for certain transactions subject to a market value adjustment upon the surrender or transfer of monies out of their annuity contract's fixed allocation options. The error resulted in an underpayment to policyholders, as well as additional anticipated costs to us associated with remediation, breakage and other costs. Our consultants have developed the systems functionality to compute remediation amounts and are in the process of running the computations on affected contracts. We contacted state insurance regulators and commenced Phase I of our outreach to customers on November 12, 2007. We have advised Skandia that a portion of the remediation and related administrative costs are subject to the indemnification provisions of the Acquisition Agreement. From January 2006 to May 2007, thirty complaints were filed in 17/th/ Judicial Circuit Court, Broward County, Florida alleging misrepresentations in the sale of annuities against us and in certain of the cases, the two brokers who sold the annuities. The complaints allege that the brokers represented that any losses in the annuities would be insured or paid by a state guaranty fund and purport to state claims of breach of fiduciary duty, negligence, fraud, fraudulent inducement, negligent misrepresentation and seek damages in unspecified amounts but in excess of $15,000 per case. The matter is subject to the indemnification provisions of the Acquisition Agreement. Our litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, the outcomes cannot be predicted. It is possible that the results of operations or the cash flow of Prudential Annuities in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of our litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on our financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on our financial position. It should be noted that the judgments, settlements and expenses associated with many of these lawsuits, administrative and regulatory matters, and contingencies, including certain claims described above, may, in whole or in part, after satisfaction of certain retention requirements, fall within Skandia's indemnification obligations to Prudential Financial and its subsidiaries under the terms of the Acquisition Agreement. Those obligations of Skandia provide for indemnification of certain judgments, settlements, and costs and expenses associated with lawsuits and other claims against Prudential Annuities ("matters"), and apply only to matters, or groups of related matters, for which the costs and expenses exceed $25,000 individually. Additionally, those obligations only apply to such otherwise indemnifiable losses that exceed $10 million in the aggregate, subject to reduction for insurance proceeds, certain accruals and any realized tax benefit applicable to such amounts, and those obligations do not apply to the extent that such aggregate exceeds $1 billion. We are in discussions with Skandia regarding the satisfaction of the $10 million deductible. 132 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION The following are the contents of the Statement of Additional Information: General Information about Prudential Annuities Prudential Annuities Life Assurance Corporation Prudential Annuities Life Assurance Corporation Variable Account B Prudential Annuities Life Assurance Corporation Separate Account D Principal Underwriter/Distributor - Prudential Annuities Distributors, Inc. How the Unit Price is Determined Additional Information on Fixed Allocations How We Calculate the Market Value Adjustment General Information Voting Rights Modification Deferral of Transactions Misstatement of Age or Sex Ending the Offer Annuitization Experts Legal Experts Financial Statements
133 APPENDIX A - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B Separate Account B consists of multiple Sub-accounts that are available as investment options for the Prudential Annuities Annuities. Each Sub-account invests only in a single mutual fund or mutual fund portfolio. All or some of these Sub-accounts are available as investment options for other variable annuities we offer pursuant to different prospectuses. Unit Prices And Numbers Of Units. The following tables show for each Annuity: (a) the historical Unit Price, corresponding to the Annuity features bearing the highest and lowest combinations of asset-based charges*, as of the dates shown, for Units in each of the Sub-accounts of Separate Account B that are being offered pursuant to this Prospectus**; and (b) the number of Units outstanding for each such Sub-account as of the dates shown. The period for each year begins on January 1 and ends on December 31. Since November 18, 2002, we have been determining, on a daily basis, multiple Unit Prices for each Sub-account of Separate Account B. We compute multiple Unit Prices because several of our variable annuities invest in the same Sub-accounts, and these annuities deduct varying charges that correspond to each combination of the applicable Insurance Charge, Distribution Charge (when applicable) and the charges for each optional benefit. Where an asset-based charge corresponding to a particular Sub-account within a new annuity product is identical to that in the same Sub-account within an existing annuity, the Unit Price for the new annuity will be identical to that of the existing annuity. In such cases, we will for reference purposes depict, in the condensed financial information for the new annuity, Unit Prices of the existing annuity. To the extent a Sub-account commenced operations during a particular calendar year, the Unit Price as of the end of the period reflects only the partial year results from the commencement of operations until December 31st of the applicable year. When a Unit Price was first calculated for a particular Sub-account, we set the price of that Unit at $10.00 per Unit. Thereafter, Unit Prices vary based on market performance. Unit Prices and Units are provided for Sub-accounts that commenced operations prior to January 1, 2008. * Note: While a unit price is reflected for the maximum combination of asset based charges for each Sub-account, not all Sub-accounts are available if you elect certain optional benefits. ** The remaining unit values appear in the Statement of Additional Information, which you may obtain free of charge by sending in the request form at the end of the Prospectus or contacting us at 1-800-752-6342. ASAP III Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2000 to 12/31/2000 $8.99 33,897 1/1/2001 to 12/31/2001 $8.99 $6.86 136,976 1/1/2002 to 12/31/2002 $6.86 $5.53 153,652 1/1/2003 to 12/31/2003 $5.53 $7.13 362,254 1/1/2004 to 12/31/2004 $7.13 $8.24 553,542 1/1/2005 to 12/31/2005 $8.24 $9.04 1,051,557 1/1/2006 to 12/31/2006 $9.04 $10.96 1,002,727 1/1/2007 to 12/31/2007 $10.96 $11.84 985,495 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2000 to 12/31/2000 $18.68 6,782 1/1/2001 to 12/31/2001 $18.68 $14.10 5,277 1/1/2002 to 12/31/2002 $14.10 $10.35 7,064 1/1/2003 to 12/31/2003 $10.35 $14.32 1,166,396 1/1/2004 to 12/31/2004 $14.32 $16.42 1,953,908 1/1/2005 to 12/31/2005 $16.42 $18.90 2,113,594 1/1/2006 to 12/31/2006 $18.90 $22.58 1,664,525 1/1/2007 to 12/31/2007 $22.58 $26.55 1,428,930
A-1
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST International Value 1/1/2000 to 12/31/2000 $8.08 20,311 1/1/2001 to 12/31/2001 $8.08 $5.41 29,954 1/1/2002 to 12/31/2002 $5.41 $4.43 32,967 1/1/2003 to 12/31/2003 $4.43 $5.86 91,736 1/1/2004 to 12/31/2004 $5.86 $7.01 233,045 1/1/2005 to 12/31/2005 $7.01 $7.87 402,497 1/1/2006 to 12/31/2006 $7.87 $9.90 593,098 1/1/2007 to 12/31/2007 $9.90 $11.52 794,549 - -------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2000 to 12/31/2000 $9.72 23,151 1/1/2001 to 12/31/2001 $9.72 $8.64 49,536 1/1/2002 to 12/31/2002 $8.64 $7.48 46,925 1/1/2003 to 12/31/2003 $7.48 $9.40 123,219 1/1/2004 to 12/31/2004 $9.40 $10.98 213,485 1/1/2005 to 12/31/2005 $10.98 $11.67 218,705 1/1/2006 to 12/31/2006 $11.67 $14.32 349,460 1/1/2007 to 12/31/2007 $14.32 $15.47 339,584 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2000 to 12/31/2000 $20.25 978 1/1/2001 to 12/31/2001 $20.25 $18.70 2,439 1/1/2002 to 12/31/2002 $18.70 $12.12 6,331 1/1/2003 to 12/31/2003 $12.12 $17.38 145,364 1/1/2004 to 12/31/2004 $17.38 $15.97 107,136 1/1/2005 to 12/31/2005 $15.97 $16.00 126,824 1/1/2006 to 12/31/2006 $16.00 $17.80 111,114 1/1/2007 to 12/31/2007 $17.80 $18.83 118,021 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2000 to 12/31/2000 $9.17 35,743 1/1/2001 to 12/31/2001 $9.17 $6.48 41,602 1/1/2002 to 12/31/2002 $6.48 $4.71 44,611 1/1/2003 to 12/31/2003 $4.71 $6.86 258,089 1/1/2004 to 12/31/2004 $6.86 $7.41 293,384 1/1/2005 to 12/31/2005 $7.41 $7.35 267,925 1/1/2006 to 12/31/2006 $7.35 $7.82 344,893 1/1/2007 to 12/31/2007 $7.82 $9.17 382,635 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2000 to 12/31/2000 $9.08 243 1/1/2001 to 12/31/2001 $9.08 $7.12 10,912 1/1/2002 to 12/31/2002 $7.12 $4.98 25,040 1/1/2003 to 12/31/2003 $4.98 $8.33 859,909 1/1/2004 to 12/31/2004 $8.33 $10.12 1,169,995 1/1/2005 to 12/31/2005 $10.12 $10.94 1,386,930 1/1/2006 to 12/31/2006 $10.94 $12.20 1,165,926 1/1/2007 to 12/31/2007 $12.20 $13.39 1,078,773
A-2
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------ AST Small-Cap Value 1/1/2000 to 12/31/2000 $11.41 15,339 1/1/2001 to 12/31/2001 $11.41 $12.06 33,608 1/1/2002 to 12/31/2002 $12.06 $10.79 66,744 1/1/2003 to 12/31/2003 $10.79 $14.47 962,965 1/1/2004 to 12/31/2004 $14.47 $16.64 1,293,786 1/1/2005 to 12/31/2005 $16.64 $17.52 1,484,712 1/1/2006 to 12/31/2006 $17.52 $20.77 1,198,255 1/1/2007 to 12/31/2007 $20.77 $19.36 1,176,566 - ------------------------------------------------------------------------------------------ AST DeAM Small-Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- $7.69 124 1/1/2003 to 12/31/2003 $7.69 $10.89 131,066 1/1/2004 to 12/31/2004 $10.89 $13.13 138,078 1/1/2005 to 12/31/2005 $13.13 $13.12 187,206 1/1/2006 to 12/31/2006 $13.12 $15.54 201,904 1/1/2007 to 12/31/2007 $15.54 $12.62 180,260 - ------------------------------------------------------------------------------------------ AST Goldman Sachs Mid-Cap Growth 1/1/2000 to 12/31/2000 $7.03 2,473 1/1/2001 to 12/31/2001 $7.03 $4.15 17,882 1/1/2002 to 12/31/2002 $4.15 $2.98 28,812 1/1/2003 to 12/31/2003 $2.98 $3.87 1,535,565 1/1/2004 to 12/31/2004 $3.87 $4.44 2,232,502 1/1/2005 to 12/31/2005 $4.44 $4.60 2,666,933 1/1/2006 to 12/31/2006 $4.60 $4.83 2,231,991 1/1/2007 to 12/31/2007 $4.83 $5.69 2,097,846 - ------------------------------------------------------------------------------------------ AST Neuberger Berman Mid-Cap Growth 1/1/2000 to 12/31/2000 $9.71 36,882 1/1/2001 to 12/31/2001 $9.71 $7.11 51,711 1/1/2002 to 12/31/2002 $7.11 $4.83 56,712 1/1/2003 to 12/31/2003 $4.83 $6.23 371,267 1/1/2004 to 12/31/2004 $6.23 $7.14 555,160 1/1/2005 to 12/31/2005 $7.14 $8.00 771,461 1/1/2006 to 12/31/2006 $8.00 $9.01 697,877 1/1/2007 to 12/31/2007 $9.01 $10.88 971,242 - ------------------------------------------------------------------------------------------ AST Neuberger Berman Mid-Cap Value 1/1/2000 to 12/31/2000 $12.13 16,574 1/1/2001 to 12/31/2001 $12.13 $11.62 56,219 1/1/2002 to 12/31/2002 $11.62 $10.26 69,657 1/1/2003 to 12/31/2003 $10.26 $13.82 781,348 1/1/2004 to 12/31/2004 $13.82 $16.76 1,116,503 1/1/2005 to 12/31/2005 $16.76 $18.55 1,303,740 1/1/2006 to 12/31/2006 $18.55 $20.28 1,086,861 1/1/2007 to 12/31/2007 $20.28 $20.66 975,347 - ------------------------------------------------------------------------------------------ AST Alger All-Cap Growth 1/1/2000 to 12/31/2000 $8.68 30,915 1/1/2001 to 12/31/2001 $8.68 $7.14 56,649 1/1/2002 to 12/31/2002 $7.14 $4.53 61,001 1/1/2003 to 12/31/2003 $4.53 $6.06 200,264 1/1/2004 to 12/31/2004 $6.06 $6.49 214,092 1/1/2005 to 12/2/2005 $6.49 $7.48 0
A-3
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2000 to 12/31/2000 $10.07 12,895 1/1/2001 to 12/31/2001 $10.07 $9.72 26,857 1/1/2002 to 12/31/2002 $9.72 $7.61 38,982 1/1/2003 to 12/31/2003 $7.61 $10.21 140,873 1/1/2004 to 12/31/2004 $10.21 $11.63 256,401 1/1/2005 to 12/31/2005 $11.63 $12.11 192,419 1/1/2006 to 12/31/2006 $12.11 $13.66 174,411 1/1/2007 to 12/31/2007 $13.66 $13.86 156,606 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2000 to 12/31/2000 $11.24 -- 1/1/2001 to 12/31/2001 $11.24 $11.18 1,879 1/1/2002 to 12/31/2002 $11.18 $10.42 4,994 1/1/2003 to 12/31/2003 $10.42 $13.75 75,013 1/1/2004 to 12/31/2004 $13.75 $17.81 192,336 1/1/2005 to 12/31/2005 $17.81 $23.11 254,041 1/1/2006 to 12/31/2006 $23.11 $26.44 291,510 1/1/2007 to 12/31/2007 $26.44 $36.68 378,258 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2000 to 12/31/2000 $8.46 97,356 1/1/2001 to 12/31/2001 $8.46 $7.12 106,762 1/1/2002 to 12/31/2002 $7.12 $4.86 106,056 1/1/2003 to 12/31/2003 $4.86 $5.93 263,698 1/1/2004 to 12/31/2004 $5.93 $6.19 326,194 1/1/2005 to 12/31/2005 $6.19 $7.12 512,012 1/1/2006 to 12/31/2006 $7.12 $7.43 608,747 1/1/2007 to 12/31/2007 $7.43 $7.94 919,355 - -------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2000 to 12/31/2000 $9.68 3,089 1/1/2001 to 12/31/2001 $9.68 $7.48 47,656 1/1/2002 to 12/31/2002 $7.48 $5.31 112,701 1/1/2003 to 12/31/2003 $5.31 $6.44 893,170 1/1/2004 to 12/31/2004 $6.44 $7.04 791,823 1/1/2005 to 12/31/2005 $7.04 $7.39 1,025,239 1/1/2006 to 12/31/2006 $7.39 $8.01 758,550 1/1/2007 to 12/31/2007 $8.01 $9.10 686,498 - -------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2000 to 12/31/2000 $10.09 114,992 1/1/2001 to 12/31/2001 $10.09 $7.80 182,904 1/1/2002 to 12/31/2002 $7.80 $6.50 228,033 1/1/2003 to 12/31/2003 $6.50 $8.46 4,075,719 1/1/2004 to 12/31/2004 $8.46 $9.67 5,717,404 1/1/2005 to 12/31/2005 $9.67 $10.20 7,048,021 1/1/2006 to 12/31/2006 $10.20 $10.80 5,983,458 1/1/2007 to 12/31/2007 $10.80 $12.26 5,638,342 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2000 to 12/31/2000 $7.90 235,747 1/1/2001 to 12/31/2001 $7.90 $5.33 404,404 1/1/2002 to 12/31/2002 $5.33 $3.69 405,437 1/1/2003 to 12/31/2003 $3.69 $4.57 604,491 1/1/2004 to 12/31/2004 $4.57 $4.68 733,920 1/1/2005 to 12/31/2005 $4.68 $4.77 657,833 1/1/2006 to 12/31/2006 $4.77 $5.18 791,152 1/1/2007 to 12/31/2007 $5.18 $5.84 1,134,004
A-4
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2000 to 12/31/2000 $9.83 442 1/1/2001 to 12/31/2001 $9.83 $9.17 1,696 1/1/2002 to 12/31/2002 $9.17 $7.67 7,126 1/1/2003 to 12/31/2003 $7.67 $9.58 85,554 1/1/2004 to 12/31/2004 $9.58 $11.18 191,637 1/1/2005 to 12/31/2005 $11.18 $12.07 242,789 1/1/2006 to 12/31/2006 $12.07 $14.51 524,592 1/1/2007 to 12/31/2007 $14.51 $14.50 421,188 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $9.64 -- 1/1/2002 to 12/31/2002 $9.64 $7.14 37,810 1/1/2003 to 12/31/2003 $7.14 $8.89 137,293 1/1/2004 to 12/31/2004 $8.89 $9.66 194,363 1/1/2005 to 12/2/2005 $9.66 $10.72 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $10.05 18,453 1/1/2002 to 12/31/2002 $10.05 $8.61 82,054 1/1/2003 to 12/31/2003 $8.61 $10.91 453,569 1/1/2004 to 12/31/2004 $10.91 $12.28 603,508 1/1/2005 to 12/31/2005 $12.28 $12.79 635,232 1/1/2006 to 12/31/2006 $12.79 $15.33 815,109 1/1/2007 to 12/31/2007 $15.33 $14.60 776,427 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2000 to 12/31/2000 $11.57 16,557 1/1/2001 to 12/31/2001 $11.57 $11.75 16,487 1/1/2002 to 12/31/2002 $11.75 $11.91 25,464 1/1/2003 to 12/31/2003 $11.91 $16.17 149,582 1/1/2004 to 12/31/2004 $16.17 $22.03 281,181 1/1/2005 to 12/31/2005 $22.03 $24.98 223,264 1/1/2006 to 12/31/2006 $24.98 $33.72 265,912 1/1/2007 to 12/31/2007 $33.72 $26.66 201,539 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2000 to 12/31/2000 $9.46 9,941 1/1/2001 to 12/31/2001 $9.46 $8.41 39,414 1/1/2002 to 12/31/2002 $8.41 $6.59 90,506 1/1/2003 to 12/31/2003 $6.59 $8.28 554,156 1/1/2004 to 12/31/2004 $8.28 $8.99 642,882 1/1/2005 to 12/31/2005 $8.99 $9.20 851,019 1/1/2006 to 12/31/2006 $9.20 $10.23 842,745 1/1/2007 to 12/31/2007 $10.23 $10.31 958,429 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2000 to 12/31/2000 $9.36 70,887 1/1/2001 to 12/31/2001 $9.36 $8.47 113,372 1/1/2002 to 12/31/2002 $8.47 $6.70 124,168 1/1/2003 to 12/31/2003 $6.70 $8.52 339,653 1/1/2004 to 12/31/2004 $8.52 $9.48 613,910 1/1/2005 to 12/31/2005 $9.48 $9.79 626,417 1/1/2006 to 12/31/2006 $9.79 $11.30 579,491 1/1/2007 to 12/31/2007 $11.30 $11.15 493,545
A-5
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2000 to 12/31/2000 $10.53 34,439 1/1/2001 to 12/31/2001 $10.53 $10.35 205,232 1/1/2002 to 12/31/2002 $10.35 $7.84 142,152 1/1/2003 to 12/31/2003 $7.84 $10.25 3,076,626 1/1/2004 to 12/31/2004 $10.25 $11.24 4,119,501 1/1/2005 to 12/31/2005 $11.24 $11.63 5,200,126 1/1/2006 to 12/31/2006 $11.63 $13.46 3,863,961 1/1/2007 to 12/31/2007 $13.46 $13.98 3,567,122 - --------------------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2000 to 12/31/2000 $10.32 8,596 1/1/2001 to 12/31/2001 $10.32 $9.31 44,212 1/1/2002 to 12/31/2002 $9.31 $7.59 44,419 1/1/2003 to 12/31/2003 $7.59 $8.99 204,589 1/1/2004 to 12/31/2004 $8.99 $10.25 417,314 1/1/2005 to 12/31/2005 $10.25 $10.77 694,885 1/1/2006 to 12/31/2006 $10.77 $12.60 680,203 1/1/2007 to 12/31/2007 $12.60 $12.07 680,350 - --------------------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2000 to 12/31/2000 $10.14 30,678 1/1/2001 to 12/31/2001 $10.14 $8.84 38,208 1/1/2002 to 12/31/2002 $8.84 $7.38 34,451 1/1/2003 to 12/31/2003 $7.38 $8.71 61,801 1/1/2004 to 12/31/2004 $8.71 $9.55 78,619 1/1/2005 to 12/31/2005 $9.55 $10.09 80,896 1/1/2006 to 12/31/2006 $10.09 $11.07 97,906 1/1/2007 to 12/31/2007 $11.07 $11.15 378,693 - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2000 to 12/31/2000 $9.87 1,725 1/1/2001 to 12/31/2001 $9.87 $9.38 4,905 1/1/2002 to 12/31/2002 $9.38 $8.36 5,490 1/1/2003 to 12/31/2003 $8.36 $9.81 115,095 1/1/2004 to 12/31/2004 $9.81 $10.56 146,721 1/1/2005 to 12/31/2005 $10.56 $10.91 173,191 1/1/2006 to 12/31/2006 $10.91 $11.82 174,226 1/1/2007 to 12/31/2007 $11.82 $12.71 214,498 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2000 to 12/31/2000 $10.12 2,412 1/1/2001 to 12/31/2001 $10.12 $9.52 13,152 1/1/2002 to 12/31/2002 $9.52 $8.47 13,799 1/1/2003 to 12/31/2003 $8.47 $10.37 222,150 1/1/2004 to 12/31/2004 $10.37 $11.39 357,085 1/1/2005 to 12/31/2005 $11.39 $11.77 558,395 1/1/2006 to 12/31/2006 $11.77 $13.08 665,726 1/1/2007 to 12/31/2007 $13.08 $13.73 949,867
A-6
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2000 to 12/31/2000 $10.70 -- 1/1/2001 to 12/31/2001 $10.70 $10.84 16,390 1/1/2002 to 12/31/2002 $10.84 $12.32 36,987 1/1/2003 to 12/31/2003 $12.32 $13.73 289,862 1/1/2004 to 12/31/2004 $13.73 $14.73 657,913 1/1/2005 to 12/31/2005 $14.73 $13.89 938,585 1/1/2006 to 12/31/2006 $13.89 $14.58 836,914 1/1/2007 to 12/31/2007 $14.58 $15.79 874,210 - -------------------------------------------------------------------------------------- AST High Yield 1/1/2000 to 12/31/2000 $9.37 12,929 1/1/2001 to 12/31/2001 $9.37 $9.27 45,297 1/1/2002 to 12/31/2002 $9.27 $9.16 73,614 1/1/2003 to 12/31/2003 $9.16 $10.99 906,947 1/1/2004 to 12/31/2004 $10.99 $12.06 957,756 1/1/2005 to 12/31/2005 $12.06 $12.04 873,440 1/1/2006 to 12/31/2006 $12.04 $13.12 1,019,726 1/1/2007 to 12/31/2007 $13.12 $13.28 683,986 - -------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2000 to 12/31/2000 $10.13 425 1/1/2001 to 12/31/2001 $10.13 $10.30 16,628 1/1/2002 to 12/31/2002 $10.30 $10.22 43,077 1/1/2003 to 12/31/2003 $10.22 $11.98 814,135 1/1/2004 to 12/31/2004 $11.98 $12.71 1,012,739 1/1/2005 to 12/31/2005 $12.71 $12.69 1,294,706 1/1/2006 to 12/31/2006 $12.69 $13.76 1,196,608 1/1/2007 to 12/31/2007 $13.76 $14.42 1,051,089 - -------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2000 to 12/31/2000 $10.97 37,918 1/1/2001 to 12/31/2001 $10.97 $11.80 275,317 1/1/2002 to 12/31/2002 $11.80 $12.72 362,294 1/1/2003 to 12/31/2003 $12.72 $13.23 2,301,863 1/1/2004 to 12/31/2004 $13.23 $13.72 3,074,732 1/1/2005 to 12/31/2005 $13.72 $13.88 1,924,370 1/1/2006 to 12/31/2006 $13.88 $14.22 2,004,498 1/1/2007 to 12/31/2007 $14.22 $15.21 2,344,694 - -------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2000 to 12/31/2000 $10.59 1,940 1/1/2001 to 12/31/2001 $10.59 $11.29 112,948 1/1/2002 to 12/31/2002 $11.29 $10.09 38,260 1/1/2003 to 12/31/2003 $10.09 $12.08 956,856 1/1/2004 to 12/31/2004 $12.08 $12.18 2,189,975 1/1/2005 to 12/31/2005 $12.18 $12.22 2,996,257 1/1/2006 to 12/31/2006 $12.22 $12.53 2,687,532 1/1/2007 to 12/31/2007 $12.53 $13.21 2,594,813 - -------------------------------------------------------------------------------------- AST Money Market 1/1/2000 to 12/31/2000 $10.32 29,567 1/1/2001 to 12/31/2001 $10.32 $10.57 179,509 1/1/2002 to 12/31/2002 $10.57 $10.57 403,604 1/1/2003 to 12/31/2003 $10.57 $10.51 1,245,396 1/1/2004 to 12/31/2004 $10.51 $10.46 1,663,940 1/1/2005 to 12/31/2005 $10.46 $10.62 3,179,376 1/1/2006 to 12/31/2006 $10.62 $10.96 3,505,960 1/1/2007 to 12/31/2007 $10.96 $11.36 4,361,361
A-7
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2000 to 12/31/2000 $8.19 3,293 1/1/2001 to 12/31/2001 $8.19 $7.53 6,555 1/1/2002 to 12/31/2002 $7.53 $6.71 6,530 1/1/2003 to 12/31/2003 $6.71 $10.59 122,136 1/1/2004 to 12/31/2004 $10.59 $12.52 264,541 1/1/2005 to 12/31/2005 $12.52 $16.26 351,335 1/1/2006 to 12/31/2006 $16.26 $21.61 316,324 1/1/2007 to 12/31/2007 $21.61 $30.63 435,146 - ------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2000 to 12/31/2000 $17.01 -- 1/1/2001 to 12/31/2001 $17.01 $15.89 1,992 1/1/2002 to 12/31/2002 $15.89 $12.67 1,063 1/1/2003 to 12/31/2003 $12.67 $15.79 10,586 1/1/2004 to 12/31/2004 $15.79 $17.32 19,612 1/1/2005 to 12/31/2005 $17.32 $18.02 23,574 1/1/2006 to 12/31/2006 $18.02 $21.10 23,739 1/1/2007 to 12/31/2007 $21.10 $21.43 20,467 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2000 to 12/31/2000 $9.99 22,264 1/1/2001 to 12/31/2001 $9.99 $6.80 15,825 1/1/2002 to 12/31/2002 $6.80 $4.57 18,808 1/1/2003 to 12/31/2003 $4.57 $6.22 137,600 1/1/2004 to 12/31/2004 $6.22 $6.96 188,184 1/1/2005 to 12/31/2005 $6.96 $7.61 135,001 1/1/2006 to 12/31/2006 $7.61 $8.73 124,196 1/1/2007 to 12/31/2007 $8.73 $9.67 132,861 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2000 to 12/31/2000 $7.98 25,984 1/1/2001 to 12/31/2001 $7.98 $4.27 35,767 1/1/2002 to 12/31/2002 $4.27 $2.24 30,448 1/1/2003 to 12/31/2003 $2.24 $3.21 42,720 1/1/2004 to 12/31/2004 $3.21 $3.32 78,567 1/1/2005 to 12/31/2005 $3.32 $3.35 77,941 1/1/2006 to 12/31/2006 $3.35 $3.65 254,798 1/1/2007 to 12/31/2007 $3.65 $3.89 126,039 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2000 to 12/31/2000 $13.14 32,969 1/1/2001 to 12/31/2001 $13.14 $11.35 27,104 1/1/2002 to 12/31/2002 $11.35 $8.46 19,405 1/1/2003 to 12/31/2003 $8.46 $10.68 59,116 1/1/2004 to 12/31/2004 $10.68 $11.34 92,506 1/1/2005 to 12/31/2005 $11.34 $12.12 106,295 1/1/2006 to 12/31/2006 $12.12 $12.59 110,470 1/1/2007 to 12/31/2007 $12.59 $13.91 109,826
A-8
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2000 to 12/31/2000 $12.38 9,786 1/1/2001 to 12/31/2001 $12.38 $11.02 8,536 1/1/2002 to 12/31/2002 $11.02 $9.26 7,204 1/1/2003 to 12/31/2003 $9.26 $11.85 48,538 1/1/2004 to 12/31/2004 $11.85 $12.72 44,091 1/1/2005 to 12/31/2005 $12.72 $13.30 48,007 1/1/2006 to 12/31/2006 $13.30 $15.30 89,614 1/1/2007 to 12/31/2007 $15.30 $11.75 53,310 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $10.46 24,847 1/1/2004 to 12/31/2004 $10.46 $12.31 62,400 1/1/2005 to 12/31/2005 $12.31 $14.10 130,750 1/1/2006 to 12/31/2006 $14.10 $17.15 182,002 1/1/2007 to 12/31/2007 $17.15 $19.47 167,896 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2000 to 12/31/2000 $9.35 -- 1/1/2001 to 12/31/2001 $9.35 $8.49 5,085 1/1/2002 to 12/31/2002 $8.49 $6.10 5,427 1/1/2003 to 12/31/2003 $6.10 $9.16 69,344 1/1/2004 to 12/31/2004 $9.16 $9.57 92,559 1/1/2005 to 4/15/2005 $9.57 $8.53 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $9.04 -- 1/1/2002 to 12/31/2002 $9.04 -- -- 1/1/2003 to 12/31/2003 -- $9.21 15,743 1/1/2004 to 12/31/2004 $9.21 $9.75 26,849 1/1/2005 to 12/31/2005 $9.75 $10.00 18,356 1/1/2006 to 12/31/2006 $10.00 $10.47 19,700 1/1/2007 to 12/31/2007 $10.47 $11.58 38,907 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.47 64,775 1/1/2006 to 12/31/2006 $11.47 $12.58 72,371 1/1/2007 to 12/31/2007 $12.58 $13.79 85,135 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2000 to 12/31/2000 $9.30 -- 1/1/2001 to 12/31/2001 $9.30 $6.97 7,317 1/1/2002 to 12/31/2002 $6.97 $5.11 2,539 1/1/2003 to 12/31/2003 $5.11 $7.00 75,543 1/1/2004 to 12/31/2004 $7.00 $7.90 201,444 1/1/2005 to 12/31/2005 $7.90 $8.43 76,381 1/1/2006 to 12/31/2006 $8.43 $9.79 370,628 1/1/2007 to 12/31/2007 $9.79 $11.07 331,218
A-9
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Asia 30 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $12.66 47,272 1/1/2004 to 12/31/2004 $12.66 $12.43 63,254 1/1/2005 to 12/31/2005 $12.43 $14.67 83,233 1/1/2006 to 12/31/2006 $14.67 $20.18 235,779 1/1/2007 to 12/31/2007 $20.18 $29.44 204,415 - ------------------------------------------------------------------------------------ ProFund VP--Japan 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.09 28,579 1/1/2004 to 12/31/2004 $9.09 $9.65 87,251 1/1/2005 to 12/31/2005 $9.65 $13.51 165,707 1/1/2006 to 12/31/2006 $13.51 $14.79 117,156 1/1/2007 to 12/31/2007 $14.79 $13.14 54,211 - ------------------------------------------------------------------------------------ ProFund VP--Banks 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $10.97 8,886 1/1/2004 to 12/31/2004 $10.97 $12.11 12,480 1/1/2005 to 12/31/2005 $12.11 $11.94 44,665 1/1/2006 to 12/31/2006 $11.94 $13.61 35,707 1/1/2007 to 12/31/2007 $13.61 $9.77 12,962 - ------------------------------------------------------------------------------------ ProFund VP--Basic Materials 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $11.02 53,759 1/1/2004 to 12/31/2004 $11.02 $12.00 42,597 1/1/2005 to 12/31/2005 $12.00 $12.13 53,592 1/1/2006 to 12/31/2006 $12.13 $13.84 67,645 1/1/2007 to 12/31/2007 $13.84 $17.86 199,608 - ------------------------------------------------------------------------------------ ProFund VP--Biotechnology 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $8.38 3,279 1/1/2002 to 12/31/2002 $8.38 $5.17 460 1/1/2003 to 12/31/2003 $5.17 $7.14 20,329 1/1/2004 to 12/31/2004 $7.14 $7.73 32,726 1/1/2005 to 12/31/2005 $7.73 $9.11 73,804 1/1/2006 to 12/31/2006 $9.11 $8.63 56,416 1/1/2007 to 12/31/2007 $8.63 $8.42 165,309 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Services 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.10 13,935 1/1/2004 to 12/31/2004 $9.10 $9.67 20,288 1/1/2005 to 12/31/2005 $9.67 $9.10 3,866 1/1/2006 to 12/31/2006 $9.10 $10.06 15,819 1/1/2007 to 12/31/2007 $10.06 $9.12 5,165
A-10
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Consumer Goods 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.71 3,821 1/1/2004 to 12/31/2004 $9.71 $10.47 7,578 1/1/2005 to 12/31/2005 $10.47 $10.31 6,876 1/1/2006 to 12/31/2006 $10.31 $11.46 39,408 1/1/2007 to 12/31/2007 $11.46 $12.18 150,560 - ------------------------------------------------------------------------------------ ProFund VP--Oil & Gas 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $9.20 -- 1/1/2002 to 12/31/2002 $9.20 -- -- 1/1/2003 to 12/31/2003 -- $9.10 50,155 1/1/2004 to 12/31/2004 $9.10 $11.62 186,654 1/1/2005 to 12/31/2005 $11.62 $15.07 278,771 1/1/2006 to 12/31/2006 $15.07 $17.96 226,319 1/1/2007 to 12/31/2007 $17.96 $23.49 230,618 - ------------------------------------------------------------------------------------ ProFund VP--Financial 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $9.23 8,154 1/1/2002 to 12/31/2002 $9.23 $7.76 3,258 1/1/2003 to 12/31/2003 $7.76 $9.88 32,283 1/1/2004 to 12/31/2004 $9.88 $10.77 70,662 1/1/2005 to 12/31/2005 $10.77 $11.06 43,105 1/1/2006 to 12/31/2006 $11.06 $12.81 108,064 1/1/2007 to 12/31/2007 $12.81 $10.23 27,930 - ------------------------------------------------------------------------------------ ProFund VP--Healthcare 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $9.37 2,564 1/1/2002 to 12/31/2002 $9.37 $7.15 1,235 1/1/2003 to 12/31/2003 $7.15 $8.29 23,591 1/1/2004 to 12/31/2004 $8.29 $8.38 91,641 1/1/2005 to 12/31/2005 $8.38 $8.77 83,943 1/1/2006 to 12/31/2006 $8.77 $9.12 179,877 1/1/2007 to 12/31/2007 $9.12 $9.60 255,222 - ------------------------------------------------------------------------------------ ProFund VP--Industrial 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $10.08 11,186 1/1/2004 to 12/31/2004 $10.08 $11.27 22,333 1/1/2005 to 12/31/2005 $11.27 $11.40 9,851 1/1/2006 to 12/31/2006 $11.40 $12.57 21,635 1/1/2007 to 12/31/2007 $12.57 $13.87 15,320 - ------------------------------------------------------------------------------------ ProFund VP--Internet 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $15.10 8,287 1/1/2004 to 12/31/2004 $15.10 $18.08 20,851 1/1/2005 to 12/31/2005 $18.08 $19.18 46,724 1/1/2006 to 12/31/2006 $19.18 $19.20 6,326 1/1/2007 to 12/31/2007 $19.20 $20.89 16,744
A-11
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Pharmaceuticals 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $8.95 24,743 1/1/2004 to 12/31/2004 $8.95 $8.02 27,913 1/1/2005 to 12/31/2005 $8.02 $7.62 36,753 1/1/2006 to 12/31/2006 $7.62 $8.44 116,086 1/1/2007 to 12/31/2007 $8.44 $8.53 85,082 - ------------------------------------------------------------------------------------- ProFund VP--Precious Metals 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- $9.73 1,179 1/1/2003 to 12/31/2003 $9.73 $13.38 89,687 1/1/2004 to 12/31/2004 $13.38 $11.90 102,230 1/1/2005 to 12/31/2005 $11.90 $14.84 200,315 1/1/2006 to 12/31/2006 $14.84 $15.74 233,772 1/1/2007 to 12/31/2007 $15.74 $19.03 203,953 - ------------------------------------------------------------------------------------- ProFund VP--Real Estate 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $10.78 2,306 1/1/2002 to 12/31/2002 $10.78 $10.65 2,230 1/1/2003 to 12/31/2003 $10.65 $14.00 18,355 1/1/2004 to 12/31/2004 $14.00 $17.58 53,006 1/1/2005 to 12/31/2005 $17.58 $18.54 31,980 1/1/2006 to 12/31/2006 $18.54 $24.25 61,873 1/1/2007 to 12/31/2007 $24.25 $19.25 39,817 - ------------------------------------------------------------------------------------- ProFund VP--Semiconductor 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.58 17,621 1/1/2004 to 12/31/2004 $9.58 $7.23 52,485 1/1/2005 to 12/31/2005 $7.23 $7.76 68,309 1/1/2006 to 12/31/2006 $7.76 $7.12 9,658 1/1/2007 to 12/31/2007 $7.12 $7.53 18,356 - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $5.92 12,704 1/1/2002 to 12/31/2002 $5.92 -- -- 1/1/2003 to 12/31/2003 -- $5.00 74,180 1/1/2004 to 12/31/2004 $5.00 $4.91 88,720 1/1/2005 to 12/31/2005 $4.91 $4.91 109,698 1/1/2006 to 12/31/2006 $4.91 $5.24 74,232 1/1/2007 to 12/31/2007 $5.24 $5.92 199,048 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $7.11 -- 1/1/2002 to 12/31/2002 $7.11 -- -- 1/1/2003 to 12/31/2003 -- $4.41 30,179 1/1/2004 to 12/31/2004 $4.41 $5.04 118,731 1/1/2005 to 12/31/2005 $5.04 $4.64 45,279 1/1/2006 to 12/31/2006 $4.64 $6.16 207,252 1/1/2007 to 12/31/2007 $6.16 $6.59 120,262
A-12
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Utilities 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $8.13 -- 1/1/2002 to 12/31/2002 $8.13 $6.11 491 1/1/2003 to 12/31/2003 $6.11 $7.32 18,902 1/1/2004 to 12/31/2004 $7.32 $8.75 79,702 1/1/2005 to 12/31/2005 $8.75 $9.77 213,813 1/1/2006 to 12/31/2006 $9.77 $11.51 237,712 1/1/2007 to 12/31/2007 $11.51 $13.16 338,965 - ------------------------------------------------------------------------------------ ProFund VP--Bull 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.91 394,427 1/1/2004 to 12/31/2004 $9.91 $10.65 412,259 1/1/2005 to 12/31/2005 $10.65 $10.80 384,503 1/1/2006 to 12/31/2006 $10.80 $12.12 306,353 1/1/2007 to 12/31/2007 $12.12 $12.40 217,866 - ------------------------------------------------------------------------------------ ProFund VP--Bear 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $11.55 -- 1/1/2002 to 12/31/2002 $11.55 $13.78 2,012 1/1/2003 to 12/31/2003 $13.78 $10.26 28,299 1/1/2004 to 12/31/2004 $10.26 $9.09 16,155 1/1/2005 to 12/31/2005 $9.09 $8.86 35,612 1/1/2006 to 12/31/2006 $8.86 $8.09 56,286 1/1/2007 to 12/31/2007 $8.09 $8.04 56,088 - ------------------------------------------------------------------------------------ ProFund VP--Ultra Bull 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $7.48 -- 1/1/2002 to 12/31/2002 $7.48 $4.72 2,988 1/1/2003 to 12/31/2003 $4.72 $7.13 56,257 1/1/2004 to 12/31/2004 $7.13 $8.25 305,666 1/1/2005 to 12/31/2005 $8.25 $8.36 82,031 1/1/2006 to 12/31/2006 $8.36 $10.16 91,153 1/1/2007 to 12/31/2007 $10.16 $10.11 117,940 - ------------------------------------------------------------------------------------ ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- $5.77 -- 1/1/2002 to 12/31/2002 $5.77 -- -- 1/1/2003 to 12/31/2003 -- $5.07 257,947 1/1/2004 to 12/31/2004 $5.07 $5.44 293,311 1/1/2005 to 12/31/2005 $5.44 $5.38 234,956 1/1/2006 to 12/31/2006 $5.38 $5.60 266,020 1/1/2007 to 12/31/2007 $5.60 $6.50 383,014
A-13
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- $11.03 934 1/1/2003 to 12/31/2003 $11.03 $6.83 40,617 1/1/2004 to 12/31/2004 $6.83 $5.99 77,280 1/1/2005 to 12/31/2005 $5.99 $5.97 77,757 1/1/2006 to 12/31/2006 $5.97 $5.81 53,401 1/1/2007 to 12/31/2007 $5.81 $5.08 37,820 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2000 to 12/31/2000 $4.06 3,787 1/1/2001 to 12/31/2001 $4.06 $1.25 58,556 1/1/2002 to 12/31/2002 $1.25 -- -- 1/1/2003 to 12/31/2003 -- $0.77 890,270 1/1/2004 to 12/31/2004 $0.77 $0.87 6,405,048 1/1/2005 to 12/31/2005 $0.87 $0.82 7,044,313 1/1/2006 to 12/31/2006 $0.82 $0.85 6,941,343 1/1/2007 to 12/31/2007 $0.85 $1.08 6,538,979 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $10.30 59,964 1/1/2004 to 12/31/2004 $10.30 $11.80 87,968 1/1/2005 to 12/31/2005 $11.80 $12.68 86,401 1/1/2006 to 12/31/2006 $12.68 $14.06 216,242 1/1/2007 to 12/31/2007 $14.06 $14.02 130,141 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.75 24,107 1/1/2004 to 12/31/2004 $9.75 $10.70 80,520 1/1/2005 to 12/31/2005 $10.70 $11.75 181,173 1/1/2006 to 12/31/2006 $11.75 $12.06 55,706 1/1/2007 to 12/31/2007 $12.06 $13.31 89,654 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.62 34,556 1/1/2004 to 12/31/2004 $9.62 $12.13 115,073 1/1/2005 to 12/31/2005 $12.13 $14.12 150,869 1/1/2006 to 12/31/2006 $14.12 $15.42 133,297 1/1/2007 to 12/31/2007 $15.42 $16.14 93,025
A-14
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $9.46 105,751 1/1/2004 to 12/31/2004 $9.46 $11.22 123,988 1/1/2005 to 12/31/2005 $11.22 $11.52 53,564 1/1/2006 to 12/31/2006 $11.52 $13.36 181,265 1/1/2007 to 12/31/2007 $13.36 $12.24 56,109 - ------------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $10.23 65,882 1/1/2004 to 12/31/2004 $10.23 $12.11 237,000 1/1/2005 to 12/31/2005 $12.11 $12.86 341,834 1/1/2006 to 12/31/2006 $12.86 $13.79 103,542 1/1/2007 to 12/31/2007 $13.79 $14.17 70,944 - ------------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2000 to 12/31/2000 $9.32 3,174 1/1/2001 to 12/31/2001 $9.32 $8.50 -- 1/1/2002 to 12/31/2002 $8.50 $4.82 953 1/1/2003 to 12/31/2003 $4.82 $9.49 60,051 1/1/2004 to 12/31/2004 $9.49 $12.28 143,175 1/1/2005 to 12/31/2005 $12.28 $12.10 52,922 1/1/2006 to 12/31/2006 $12.10 $15.06 56,197 1/1/2007 to 12/31/2007 $15.06 $12.91 55,859 - ------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- $11.59 1,005 1/1/2003 to 12/31/2003 $11.59 $11.15 20,058 1/1/2004 to 12/31/2004 $11.15 $11.91 42,782 1/1/2005 to 12/31/2005 $11.91 $12.83 119,421 1/1/2006 to 12/31/2006 $12.83 $12.09 50,469 1/1/2007 to 12/31/2007 $12.09 $13.15 250,069 - ------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $7.61 78,428 1/1/2004 to 12/31/2004 $7.61 $6.70 266,169 1/1/2005 to 12/31/2005 $6.70 $6.09 302,975 1/1/2006 to 12/31/2006 $6.09 $6.63 268,688 1/1/2007 to 12/31/2007 $6.63 $6.20 268,294 - ------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.59 299,437 1/1/2006 to 12/31/2006 $10.59 $11.46 27,550 1/1/2007 to 12/31/2007 $11.46 $11.90 350,487
A-15
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2000 to 12/31/2000 $7.44 32,451 1/1/2001 to 12/31/2001 $7.44 $4.73 31,543 1/1/2002 to 12/31/2002 $4.73 $2.95 23,080 1/1/2003 to 12/31/2003 $2.95 $3.99 22,064 1/1/2004 to 12/31/2004 $3.99 $4.38 33,075 1/1/2005 to 12/31/2005 $4.38 $4.35 14,496 1/1/2006 to 12/31/2006 $4.35 $4.47 19,492 1/1/2007 to 12/31/2007 $4.47 $4.67 73,318 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $13.20 476,951 1/1/2004 to 12/31/2004 $13.20 $14.64 695,591 1/1/2005 to 12/31/2005 $14.64 $15.50 732,182 1/1/2006 to 12/31/2006 $15.50 $17.07 751,781 1/1/2007 to 12/31/2007 $17.07 $18.45 676,438 - --------------------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $12.05 10,069 1/1/2004 to 12/31/2004 $12.05 $12.35 24,245 1/1/2005 to 12/31/2005 $12.35 $11.81 25,001 1/1/2006 to 12/31/2006 $11.81 $14.64 50,230 1/1/2007 to 12/31/2007 $14.64 $14.55 42,707 - --------------------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.79 290,982 1/1/2006 to 12/31/2006 $9.79 $11.42 415,893 1/1/2007 to 12/31/2007 $11.42 $11.40 397,672 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $12.96 8,569 1/1/2004 to 12/31/2004 $12.96 $16.05 22,405 1/1/2005 to 12/31/2005 $16.05 $17.46 52,338 1/1/2006 to 12/31/2006 $17.46 $23.87 152,515 1/1/2007 to 12/31/2007 $23.87 $26.71 239,619
A-16
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $11.89 5,532 1/1/2004 to 12/31/2004 $11.89 $13.34 43,536 1/1/2005 to 12/31/2005 $13.34 $13.72 46,537 1/1/2006 to 12/31/2006 $13.72 $13.94 45,207 1/1/2007 to 12/31/2007 $13.94 $14.35 57,244 - --------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $12.54 7,266 1/1/2005 to 12/31/2005 $12.54 $12.79 10,385 1/1/2006 to 12/31/2006 $12.79 $13.76 15,488 1/1/2007 to 12/31/2007 $13.76 $16.54 27,898 - --------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $16.61 33,213 1/1/2005 to 12/31/2005 $16.61 $19.64 130,528 1/1/2006 to 12/31/2006 $19.64 $19.95 178,140 1/1/2007 to 12/31/2007 $19.95 $23.28 204,229 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.35 98,334 1/1/2006 to 12/31/2006 $10.35 $11.14 87,853 1/1/2007 to 12/31/2007 $11.14 $11.77 111,093 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 3,839 1/1/2005 to 12/31/2005 $10.37 $10.55 131,175 1/1/2006 to 12/31/2006 $10.55 $12.37 296,094 1/1/2007 to 12/31/2007 $12.37 $12.23 172,527 - --------------------------------------------------------------------------------------- Profund VP Short Mid Cap 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.70 571 1/1/2005 to 12/31/2005 $9.70 $8.67 975 1/1/2006 to 12/31/2006 $8.67 $8.26 4,948 1/1/2007 to 12/31/2007 $8.26 $7.92 17,295
A-17
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ---------------------------------------------------------------------------------------------------- Profund VP Short Small-Cap 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.55 7,859 1/1/2005 to 12/31/2005 $9.55 $9.15 11,578 1/1/2006 to 12/31/2006 $9.15 $7.97 6,984 1/1/2007 to 12/31/2007 $7.97 $8.23 35,184 - ---------------------------------------------------------------------------------------------------- SP International Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.53 18,568 1/1/2005 to 12/31/2005 $10.53 $12.10 32,119 1/1/2006 to 12/31/2006 $12.10 $14.47 100,114 1/1/2007 to 12/31/2007 $14.47 $17.08 109,207 - ---------------------------------------------------------------------------------------------------- AST Aggressive Asset Allocation Portfolio 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.00 171,403 1/1/2006 to 12/31/2006 $10.00 $11.42 1,094,157 1/1/2007 to 12/31/2007 $11.42 $12.36 1,458,079 - ---------------------------------------------------------------------------------------------------- AST Capital Growth Asset Allocation Portfolio 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.01 403,183 1/1/2006 to 12/31/2006 $10.01 $11.24 4,226,992 1/1/2007 to 12/31/2007 $11.24 $12.18 5,738,690 - ---------------------------------------------------------------------------------------------------- AST Balanced Asset Allocation Portfolio 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.02 405,782 1/1/2006 to 12/31/2006 $10.02 $11.06 3,716,970 1/1/2007 to 12/31/2007 $11.06 $11.93 5,006,440 - ---------------------------------------------------------------------------------------------------- AST Conservative Asset Allocation Portfolio 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.03 53,897 1/1/2006 to 12/31/2006 $10.03 $10.95 1,008,771 1/1/2007 to 12/31/2007 $10.95 $11.79 1,635,321
A-18
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ AST Preservation Asset Allocation Portfolio 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.04 215,279 1/1/2006 to 12/31/2006 $10.04 $10.70 443,968 1/1/2007 to 12/31/2007 $10.70 $11.49 649,597 - ------------------------------------------------------------------------------------------------------------ AST Advanced Strategies Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.69 795,953 1/1/2007 to 12/31/2007 $10.69 $11.56 1,509,134 - ------------------------------------------------------------------------------------------------------------ AST First Trust Balanced Target Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.61 563,523 1/1/2007 to 12/31/2007 $10.61 $11.38 1,273,685 - ------------------------------------------------------------------------------------------------------------ AST First Trust Capital Appreciation Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.52 510,953 1/1/2007 to 12/31/2007 $10.52 $11.57 1,352,476 - ------------------------------------------------------------------------------------------------------------ AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.51 31,450 - ------------------------------------------------------------------------------------------------------------ AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.04 0 - ------------------------------------------------------------------------------------------------------------ AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.19 0 - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 0 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.00 7,406 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 48,832
* Denotes the start date of these sub-accounts. ASAP III Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV and EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2005 to 12/31/2005 $10.57 0 1/1/2006 to 12/31/2006 $10.57 $12.64 0 1/1/2007 to 12/31/2007 $12.64 $13.47 0 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2005 to 12/31/2005 $11.20 0 1/1/2006 to 12/31/2006 $11.20 $13.19 0 1/1/2007 to 12/31/2007 $13.19 $15.30 0
A-19
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST International Value 1/1/2005 to 12/31/2005 $10.62 0 1/1/2006 to 12/31/2006 $10.62 $13.19 0 1/1/2007 to 12/31/2007 $13.19 $15.13 0 - -------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2005 to 12/31/2005 $10.39 0 1/1/2006 to 12/31/2006 $10.39 $12.59 0 1/1/2007 to 12/31/2007 $12.59 $13.41 0 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2005 to 12/31/2005 $10.35 0 1/1/2006 to 12/31/2006 $10.35 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $11.84 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2005 to 12/31/2005 $10.23 0 1/1/2006 to 12/31/2006 $10.23 $10.74 0 1/1/2007 to 12/31/2007 $10.74 $12.41 0 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2005 to 12/31/2005 $10.87 0 1/1/2006 to 12/31/2006 $10.87 $11.96 0 1/1/2007 to 12/31/2007 $11.96 $12.95 0 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2005 to 12/31/2005 $10.56 0 1/1/2006 to 12/31/2006 $10.56 $12.35 0 1/1/2007 to 12/31/2007 $12.35 $11.35 0 - -------------------------------------------------------------------------------------------- AST DeAM Small-Cap Value 1/1/2005 to 12/31/2005 $9.94 0 1/1/2006 to 12/31/2006 $9.94 $11.61 0 1/1/2007 to 12/31/2007 $11.61 $9.30 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2005 to 12/31/2005 $10.49 0 1/1/2006 to 12/31/2006 $10.49 $10.86 0 1/1/2007 to 12/31/2007 $10.86 $12.63 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Growth 1/1/2005 to 12/31/2005 $11.25 0 1/1/2006 to 12/31/2006 $11.25 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $14.87 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2005 to 12/31/2005 $10.80 0 1/1/2006 to 12/31/2006 $10.80 $11.65 0 1/1/2007 to 12/31/2007 $11.65 $11.70 0 - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 1/1/2005 to 12/2/2005 $11.63 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2005 to 12/31/2005 $10.27 0 1/1/2006 to 12/31/2006 $10.27 $11.43 0 1/1/2007 to 12/31/2007 $11.43 $11.44 0 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2005 to 12/31/2005 $11.65 0 1/1/2006 to 12/31/2006 $11.65 $13.14 0 1/1/2007 to 12/31/2007 $13.14 $17.98 0
A-20
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2005 to 12/31/2005 $12.02 0 1/1/2006 to 12/31/2006 $12.02 $12.37 0 1/1/2007 to 12/31/2007 $12.37 $13.04 0 - ----------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2005 to 12/31/2005 $10.67 0 1/1/2006 to 12/31/2006 $10.67 $11.40 0 1/1/2007 to 12/31/2007 $11.40 $12.78 0 - ----------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2005 to 12/31/2005 $10.82 0 1/1/2006 to 12/31/2006 $10.82 $11.30 0 1/1/2007 to 12/31/2007 $11.30 $12.65 0 - ----------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2005 to 12/31/2005 $10.67 0 1/1/2006 to 12/31/2006 $10.67 $11.44 0 1/1/2007 to 12/31/2007 $11.44 $12.69 0 - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2005 to 12/31/2005 $10.63 0 1/1/2006 to 12/31/2006 $10.63 $12.60 0 1/1/2007 to 12/31/2007 $12.60 $12.42 0 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2005 to 12/31/2005 $11.24 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2005 to 12/31/2005 $10.23 0 1/1/2006 to 12/31/2006 $10.23 $12.09 0 1/1/2007 to 12/31/2007 $12.09 $11.36 0 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2005 to 12/31/2005 $11.92 0 1/1/2006 to 12/31/2006 $11.92 $15.88 0 1/1/2007 to 12/31/2007 $15.88 $12.38 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2005 to 12/31/2005 $10.32 0 1/1/2006 to 12/31/2006 $10.32 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $11.25 0 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2005 to 12/31/2005 $10.25 0 1/1/2006 to 12/31/2006 $10.25 $11.67 0 1/1/2007 to 12/31/2007 $11.67 $11.35 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2005 to 12/31/2005 $10.18 0 1/1/2006 to 12/31/2006 $10.18 $11.63 0 1/1/2007 to 12/31/2007 $11.63 $11.91 0 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2005 to 12/31/2005 $10.47 0 1/1/2006 to 12/31/2006 $10.47 $12.08 0 1/1/2007 to 12/31/2007 $12.08 $11.42 0 - ----------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2005 to 12/31/2005 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $11.41 0 1/1/2007 to 12/31/2007 $11.41 $11.33 0
A-21
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2005 to 12/31/2005 $10.23 0 1/1/2006 to 12/31/2006 $10.23 $10.93 0 1/1/2007 to 12/31/2007 $10.93 $11.60 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2005 to 12/31/2005 $10.27 0 1/1/2006 to 12/31/2006 $10.27 $11.26 0 1/1/2007 to 12/31/2007 $11.26 $11.66 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2005 to 12/31/2005 $9.37 0 1/1/2006 to 12/31/2006 $9.37 $9.70 0 1/1/2007 to 12/31/2007 $9.70 $10.36 0 - --------------------------------------------------------------------------------------------------------- AST High Yield 1/1/2005 to 12/31/2005 $9.78 0 1/1/2006 to 12/31/2006 $9.78 $10.51 0 1/1/2007 to 12/31/2007 $10.51 $10.49 0 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2005 to 12/31/2005 $9.87 0 1/1/2006 to 12/31/2006 $9.87 $10.56 0 1/1/2007 to 12/31/2007 $10.56 $10.91 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2005 to 12/31/2005 $10.07 0 1/1/2006 to 12/31/2006 $10.07 $10.17 0 1/1/2007 to 12/31/2007 $10.17 $10.73 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2005 to 12/31/2005 $9.98 0 1/1/2006 to 12/31/2006 $9.98 $10.09 0 1/1/2007 to 12/31/2007 $10.09 $10.49 0 - --------------------------------------------------------------------------------------------------------- AST Money Market 1/1/2005 to 12/31/2005 $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.21 0 1/1/2007 to 12/31/2007 $10.21 $10.43 0 - --------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2005 to 12/31/2005 $11.97 0 1/1/2006 to 12/31/2006 $11.97 $15.69 0 1/1/2007 to 12/31/2007 $15.69 $21.92 0 - --------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2005 to 12/31/2005 $10.12 0 1/1/2006 to 12/31/2006 $10.12 $11.68 0 1/1/2007 to 12/31/2007 $11.68 $11.70 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2005 to 12/31/2005 $10.83 0 1/1/2006 to 12/31/2006 $10.83 $12.25 0 1/1/2007 to 12/31/2007 $12.25 $13.38 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2005 to 12/31/2005 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.45 0 1/1/2007 to 12/31/2007 $11.45 $12.01 0
A-22
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2005 to 12/31/2005 $11.08 0 1/1/2006 to 12/31/2006 $11.08 $11.36 0 1/1/2007 to 12/31/2007 $11.36 $12.37 0 - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2005 to 12/31/2005 $10.66 0 1/1/2006 to 12/31/2006 $10.66 $12.09 0 1/1/2007 to 12/31/2007 $12.09 $9.16 0 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2005 to 12/31/2005 $10.92 0 1/1/2006 to 12/31/2006 $10.92 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.67 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2005 to 4/15/2005 $9.26 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $10.87 0 1/1/2007 to 12/31/2007 $10.87 $11.86 0 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2005 to 12/31/2005 $11.36 0 1/1/2006 to 12/31/2006 $11.36 $12.29 0 1/1/2007 to 12/31/2007 $12.29 $13.29 0 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2005 to 12/31/2005 $10.45 0 1/1/2006 to 12/31/2006 $10.45 $11.96 0 1/1/2007 to 12/31/2007 $11.96 $13.35 0 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 1/1/2005 to 12/31/2005 $11.13 0 1/1/2006 to 12/31/2006 $11.13 $15.11 0 1/1/2007 to 12/31/2007 $15.11 $21.73 0 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 1/1/2005 to 12/31/2005 $13.42 0 1/1/2006 to 12/31/2006 $13.42 $14.49 0 1/1/2007 to 12/31/2007 $14.49 $12.70 0 - ----------------------------------------------------------------------------------------- ProFund VP--Banks 1/1/2005 to 12/31/2005 $10.13 0 1/1/2006 to 12/31/2006 $10.13 $11.39 0 1/1/2007 to 12/31/2007 $11.39 $8.07 0 - ----------------------------------------------------------------------------------------- ProFund VP--Basic Materials 1/1/2005 to 12/31/2005 $9.51 0 1/1/2006 to 12/31/2006 $9.51 $10.70 0 1/1/2007 to 12/31/2007 $10.70 $13.61 0 - ----------------------------------------------------------------------------------------- ProFund VP--Biotechnology 1/1/2005 to 12/31/2005 $13.53 0 1/1/2006 to 12/31/2006 $13.53 $12.64 0 1/1/2007 to 12/31/2007 $12.64 $12.17 0 - ----------------------------------------------------------------------------------------- ProFund VP--Consumer Services 1/1/2005 to 12/31/2005 $9.70 0 1/1/2006 to 12/31/2006 $9.70 $10.58 0 1/1/2007 to 12/31/2007 $10.58 $9.45 0
A-23
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Consumer Goods 1/1/2005 to 12/31/2005 $9.76 0 1/1/2006 to 12/31/2006 $9.76 $10.71 0 1/1/2007 to 12/31/2007 $10.71 $11.22 0 - ------------------------------------------------------------------------------------- ProFund VP--Oil & Gas 1/1/2005 to 12/31/2005 $10.96 0 1/1/2006 to 12/31/2006 $10.96 $12.88 0 1/1/2007 to 12/31/2007 $12.88 $16.61 0 - ------------------------------------------------------------------------------------- ProFund VP--Financial 1/1/2005 to 12/31/2005 $10.56 0 1/1/2006 to 12/31/2006 $10.56 $12.07 0 1/1/2007 to 12/31/2007 $12.07 $9.51 0 - ------------------------------------------------------------------------------------- ProFund VP--Healthcare 1/1/2005 to 12/31/2005 $10.49 0 1/1/2006 to 12/31/2006 $10.49 $10.76 0 1/1/2007 to 12/31/2007 $10.76 $11.17 0 - ------------------------------------------------------------------------------------- ProFund VP--Industrial 1/1/2005 to 12/31/2005 $10.10 0 1/1/2006 to 12/31/2006 $10.10 $10.98 0 1/1/2007 to 12/31/2007 $10.98 $11.95 0 - ------------------------------------------------------------------------------------- ProFund VP--Internet 1/1/2005 to 12/31/2005 $12.76 0 1/1/2006 to 12/31/2006 $12.76 $12.59 0 1/1/2007 to 12/31/2007 $12.59 $13.51 0 - ------------------------------------------------------------------------------------- ProFund VP--Pharmaceuticals 1/1/2005 to 12/31/2005 $9.47 0 1/1/2006 to 12/31/2006 $9.47 $10.35 0 1/1/2007 to 12/31/2007 $10.35 $10.31 0 - ------------------------------------------------------------------------------------- ProFund VP--Precious Metals 1/1/2005 to 12/31/2005 $12.04 0 1/1/2006 to 12/31/2006 $12.04 $12.59 0 1/1/2007 to 12/31/2007 $12.59 $15.01 0 - ------------------------------------------------------------------------------------- ProFund VP--Real Estate 1/1/2005 to 12/31/2005 $11.21 0 1/1/2006 to 12/31/2006 $11.21 $14.47 0 1/1/2007 to 12/31/2007 $14.47 $11.33 0 - ------------------------------------------------------------------------------------- ProFund VP -Semiconductor 1/1/2005 to 12/31/2005 $10.68 0 1/1/2006 to 12/31/2006 $10.68 $9.67 0 1/1/2007 to 12/31/2007 $9.67 $10.08 0 - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2005 to 12/31/2005 $10.57 0 1/1/2006 to 12/31/2006 $10.57 $11.13 0 1/1/2007 to 12/31/2007 $11.13 $12.40 0 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2005 to 12/31/2005 $9.77 0 1/1/2006 to 12/31/2006 $9.77 $12.78 0 1/1/2007 to 12/31/2007 $12.78 $13.49 0 - ------------------------------------------------------------------------------------- ProFund VP--Utilities 1/1/2005 to 12/31/2005 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $12.35 0 1/1/2007 to 12/31/2007 $12.35 $13.93 0
A-24
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP--Bull 1/1/2005 to 12/31/2005 $10.15 0 1/1/2006 to 12/31/2006 $10.15 $11.24 0 1/1/2007 to 12/31/2007 $11.24 $11.34 0 - --------------------------------------------------------------------------------------- ProFund VP--Bear 1/1/2005 to 12/31/2005 $9.57 0 1/1/2006 to 12/31/2006 $9.57 $8.63 0 1/1/2007 to 12/31/2007 $8.63 $8.45 0 - --------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 1/1/2005 to 12/31/2005 $10.28 0 1/1/2006 to 12/31/2006 $10.28 $12.32 0 1/1/2007 to 12/31/2007 $12.32 $12.10 0 - --------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 1/1/2005 to 12/31/2005 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $10.88 0 1/1/2007 to 12/31/2007 $10.88 $12.46 0 - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2005 to 12/31/2005 $9.17 0 1/1/2006 to 12/31/2006 $9.17 $8.81 0 1/1/2007 to 12/31/2007 $8.81 $7.59 0 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2005 to 12/31/2005 $11.08 0 1/1/2006 to 12/31/2006 $11.08 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $14.16 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 1/1/2005 to 12/31/2005 $10.63 0 1/1/2006 to 12/31/2006 $10.63 $11.63 0 1/1/2007 to 12/31/2007 $11.63 $11.44 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 1/1/2005 to 12/31/2005 $10.79 0 1/1/2006 to 12/31/2006 $10.79 $10.93 0 1/1/2007 to 12/31/2007 $10.93 $11.89 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 1/1/2005 to 12/31/2005 $11.42 0 1/1/2006 to 12/31/2006 $11.42 $12.31 0 1/1/2007 to 12/31/2007 $12.31 $12.70 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 1/1/2005 to 12/31/2005 $10.33 0 1/1/2006 to 12/31/2006 $10.33 $11.82 0 1/1/2007 to 12/31/2007 $11.82 $10.68 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 1/1/2005 to 12/31/2005 $10.51 0 1/1/2006 to 12/31/2006 $10.51 $11.13 0 1/1/2007 to 12/31/2007 $11.13 $11.28 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2005 to 12/31/2005 $10.69 0 1/1/2006 to 12/31/2006 $10.69 $13.13 0 1/1/2007 to 12/31/2007 $13.13 $11.10 0
A-25
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2005 to 12/31/2005 $10.58 0 1/1/2006 to 12/31/2006 $10.58 $9.84 0 1/1/2007 to 12/31/2007 $9.84 $10.55 0 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2005 to 12/31/2005 $9.11 0 1/1/2006 to 12/31/2006 $9.11 $9.78 0 1/1/2007 to 12/31/2007 $9.78 $9.03 0 - --------------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2005 to 12/31/2005 $10.49 0 1/1/2006 to 12/31/2006 $10.49 $11.20 0 1/1/2007 to 12/31/2007 $11.20 $11.47 0 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2005 to 12/31/2005 $9.77 0 1/1/2006 to 12/31/2006 $9.77 $9.90 0 1/1/2007 to 12/31/2007 $9.90 $10.19 0 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2005 to 12/31/2005 $10.47 0 1/1/2006 to 12/31/2006 $10.47 $11.37 0 1/1/2007 to 12/31/2007 $11.37 $12.12 0 - --------------------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2005 to 12/31/2005 $9.56 0 1/1/2006 to 12/31/2006 $9.56 $11.70 0 1/1/2007 to 12/31/2007 $11.70 $11.47 0 - --------------------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2005 to 12/31/2005 $9.70 0 1/1/2006 to 12/31/2006 $9.70 $11.16 0 1/1/2007 to 12/31/2007 $11.16 $10.99 0 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2005 to 12/31/2005 $10.86 0 1/1/2006 to 12/31/2006 $10.86 $14.65 0 1/1/2007 to 12/31/2007 $14.65 $16.17 0 - --------------------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2005 to 12/31/2005 $10.51 0 1/1/2006 to 12/31/2006 $10.51 $10.54 0 1/1/2007 to 12/31/2007 $10.54 $10.69 0 - --------------------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2005 to 12/31/2005 $10.78 0 1/1/2006 to 12/31/2006 $10.78 $11.44 0 1/1/2007 to 12/31/2007 $11.44 $13.56 0 - --------------------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2005 to 12/31/2005 $11.14 0 1/1/2006 to 12/31/2006 $11.14 $11.17 0 1/1/2007 to 12/31/2007 $11.17 $12.85 0 - --------------------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2005 to 12/31/2005 $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.64 0 1/1/2007 to 12/31/2007 $10.64 $11.09 0
A-26
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2005 to 12/31/2005 $10.23 0 1/1/2006 to 12/31/2006 $10.23 $11.83 0 1/1/2007 to 12/31/2007 $11.83 $11.54 0 - ----------------------------------------------------------------------------------------------------- Profund VP Short Mid Cap 1/1/2005 to 12/31/2005 $8.97 0 1/1/2006 to 12/31/2006 $8.97 $8.42 0 1/1/2007 to 12/31/2007 $8.42 $7.96 0 - ----------------------------------------------------------------------------------------------------- Profund VP Short Small-Cap 1/1/2005 to 12/31/2005 $9.20 0 1/1/2006 to 12/31/2006 $9.20 $7.90 0 1/1/2007 to 12/31/2007 $7.90 $8.05 0 - ----------------------------------------------------------------------------------------------------- SP International Growth 1/1/2005 to 12/31/2005 $11.21 0 1/1/2006 to 12/31/2006 $11.21 $13.22 0 1/1/2007 to 12/31/2007 $13.22 $15.39 0 - ----------------------------------------------------------------------------------------------------- AST Aggressive Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $11.26 0 1/1/2007 to 12/31/2007 $11.26 $12.01 0 - ----------------------------------------------------------------------------------------------------- AST Capital Growth Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.00 0 1/1/2006 to 12/31/2006 $10.00 $11.07 0 1/1/2007 to 12/31/2007 $11.07 $11.83 0 - ----------------------------------------------------------------------------------------------------- AST Balanced Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.01 0 1/1/2006 to 12/31/2006 $10.01 $10.90 0 1/1/2007 to 12/31/2007 $10.90 $11.59 0 - ----------------------------------------------------------------------------------------------------- AST Conservative Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $11.46 0 - ----------------------------------------------------------------------------------------------------- AST Preservation Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.03 0 1/1/2006 to 12/31/2006 $10.03 $10.55 0 1/1/2007 to 12/31/2007 $10.55 $11.17 0 - ----------------------------------------------------------------------------------------------------- AST Advanced Strategies Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.58 0 1/1/2007 to 12/31/2007 $10.58 $11.28 0 - ----------------------------------------------------------------------------------------------------- AST First Trust Balanced Target Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $11.10 0 - ----------------------------------------------------------------------------------------------------- AST First Trust Capital Appreciation Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.40 0 1/1/2007 to 12/31/2007 $10.40 $11.29 0 - ----------------------------------------------------------------------------------------------------- AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.49 0 - ----------------------------------------------------------------------------------------------------- AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.03 0 - ----------------------------------------------------------------------------------------------------- AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.18 0
A-27
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.16 0 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.99 0 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.97 0
* Denotes the start date of these sub-accounts. APEX II Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 $8.56 2,569,506 1/1/2003 to 12/31/2003 $8.56 $11.00 2,415,394 1/1/2004 to 12/31/2004 $11.00 $12.67 3,227,381 1/1/2005 to 12/31/2005 $12.67 $13.84 5,621,836 1/1/2006 to 12/31/2006 $13.84 $16.71 4,715,269 1/1/2007 to 12/31/2007 $16.71 $17.98 4,504,935 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 $9.72 835,523 1/1/2003 to 12/31/2003 $9.72 $13.39 5,547,558 1/1/2004 to 12/31/2004 $13.39 $15.30 11,265,469 1/1/2005 to 12/31/2005 $15.30 $17.54 12,141,522 1/1/2006 to 12/31/2006 $17.54 $20.87 9,628,446 1/1/2007 to 12/31/2007 $20.87 $24.43 8,347,423 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 $8.19 269,995 1/1/2003 to 12/31/2003 $8.19 $10.79 1,201,268 1/1/2004 to 12/31/2004 $10.79 $12.84 1,897,469 1/1/2005 to 12/31/2005 $12.84 $14.36 2,013,544 1/1/2006 to 12/31/2006 $14.36 $18.00 3,305,620 1/1/2007 to 12/31/2007 $18.00 $20.85 4,044,519 - --------------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2002 to 12/31/2002 $9.04 969,509 1/1/2003 to 12/31/2003 $9.04 $11.30 1,393,001 1/1/2004 to 12/31/2004 $11.30 $13.16 2,276,801 1/1/2005 to 12/31/2005 $13.16 $13.92 1,907,776 1/1/2006 to 12/31/2006 $13.92 $17.02 2,905,252 1/1/2007 to 12/31/2007 $17.02 $18.31 2,119,181 - --------------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 $6.92 1,970,250 1/1/2003 to 12/31/2003 $6.92 $9.89 3,292,593 1/1/2004 to 12/31/2004 $9.89 $9.05 2,242,129 1/1/2005 to 12/31/2005 $9.05 $9.04 2,134,730 1/1/2006 to 12/31/2006 $9.04 $10.01 1,867,490 1/1/2007 to 12/31/2007 $10.01 $10.55 1,740,242
A-28
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 $7.67 639,695 1/1/2003 to 12/31/2003 $7.67 $11.13 1,682,193 1/1/2004 to 12/31/2004 $11.13 $11.98 1,618,719 1/1/2005 to 12/31/2005 $11.98 $11.83 1,385,430 1/1/2006 to 12/31/2006 $11.83 $12.53 1,174,654 1/1/2007 to 12/31/2007 $12.53 $14.63 1,215,825 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 $7.64 1,255,415 1/1/2003 to 12/31/2003 $7.64 $12.74 3,085,373 1/1/2004 to 12/31/2004 $12.74 $15.42 4,808,453 1/1/2005 to 12/31/2005 $15.42 $16.60 5,464,856 1/1/2006 to 12/31/2006 $16.60 $18.43 4,641,175 1/1/2007 to 12/31/2007 $18.43 $20.16 4,026,646 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Small-Cap Value 1/1/2002 to 12/31/2002 $9.26 1,492,775 1/1/2003 to 12/31/2003 $9.26 $12.85 1,504,296 1/1/2004 to 12/31/2004 $12.85 $15.19 1,541,896 1/1/2005 to 12/31/2005 $15.19 $15.68 1,243,642 1/1/2006 to 12/31/2006 $15.68 $18.08 1,000,596 1/1/2007 to 12/31/2007 $18.08 $16.87 758,170 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2002 to 12/31/2002 $9.30 6,141,523 1/1/2003 to 12/31/2003 $9.30 $12.42 10,183,346 1/1/2004 to 12/31/2004 $12.42 $14.22 10,785,030 1/1/2005 to 12/31/2005 $14.22 $14.91 11,285,282 1/1/2006 to 12/31/2006 $14.91 $17.61 9,098,178 1/1/2007 to 12/31/2007 $17.61 $16.34 8,130,632 - -------------------------------------------------------------------------------------------- AST DeAM Small-Cap Value 1/1/2002 to 12/31/2002 $7.66 423,387 1/1/2003 to 12/31/2003 $7.66 $10.81 1,134,865 1/1/2004 to 12/31/2004 $10.81 $12.99 2,143,020 1/1/2005 to 12/31/2005 $12.99 $12.92 2,106,236 1/1/2006 to 12/31/2006 $12.92 $15.25 1,874,276 1/1/2007 to 12/31/2007 $15.25 $12.33 1,578,237 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.97 1,273,118 1/1/2003 to 12/31/2003 $7.97 $10.31 3,027,057 1/1/2004 to 12/31/2004 $10.31 $11.80 4,375,813 1/1/2005 to 12/31/2005 $11.80 $12.16 5,391,424 1/1/2006 to 12/31/2006 $12.16 $12.71 4,189,111 1/1/2007 to 12/31/2007 $12.71 $14.92 3,918,725 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.41 2,175,250 1/1/2003 to 12/31/2003 $7.41 $9.51 3,415,318 1/1/2004 to 12/31/2004 $9.51 $10.86 4,715,301 1/1/2005 to 12/31/2005 $10.86 $12.12 5,728,446 1/1/2006 to 12/31/2006 $12.12 $13.59 5,378,198 1/1/2007 to 12/31/2007 $13.59 $16.34 6,560,811
A-29
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 $8.96 5,118,558 1/1/2003 to 12/31/2003 $8.96 $12.01 8,530,129 1/1/2004 to 12/31/2004 $12.01 $14.51 11,461,684 1/1/2005 to 12/31/2005 $14.51 $15.99 12,260,007 1/1/2006 to 12/31/2006 $15.99 $17.42 9,574,218 1/1/2007 to 12/31/2007 $17.42 $17.67 8,191,847 - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 1/1/2002 to 12/31/2002 $6.80 658,419 1/1/2003 to 12/31/2003 $6.80 $9.07 2,002,166 1/1/2004 to 12/31/2004 $9.07 $9.67 1,798,457 1/1/2005 to 12/2/2005 $9.67 $11.10 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2002 to 12/31/2002 $8.17 1,200,225 1/1/2003 to 12/31/2003 $8.17 $10.91 2,513,413 1/1/2004 to 12/31/2004 $10.91 $12.38 2,587,064 1/1/2005 to 12/31/2005 $12.38 $12.83 1,988,252 1/1/2006 to 12/31/2006 $12.83 $14.42 1,907,063 1/1/2007 to 12/31/2007 $14.42 $14.57 1,540,522 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2002 to 12/31/2002 $9.59 724,670 1/1/2003 to 12/31/2003 $9.59 $12.59 2,011,627 1/1/2004 to 12/31/2004 $12.59 $16.25 2,040,188 1/1/2005 to 12/31/2005 $16.25 $21.00 3,677,614 1/1/2006 to 12/31/2006 $21.00 $23.93 2,942,718 1/1/2007 to 12/31/2007 $23.93 $33.07 3,950,105 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 $7.46 1,869,353 1/1/2003 to 12/31/2003 $7.46 $9.08 2,098,873 1/1/2004 to 12/31/2004 $9.08 $9.44 2,378,881 1/1/2005 to 12/31/2005 $9.44 $10.81 3,925,740 1/1/2006 to 12/31/2006 $10.81 $11.23 4,132,529 1/1/2007 to 12/31/2007 $11.23 $11.96 5,137,246 - -------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 $7.58 2,930,432 1/1/2003 to 12/31/2003 $7.58 $9.16 4,784,269 1/1/2004 to 12/31/2004 $9.16 $9.97 4,529,834 1/1/2005 to 12/31/2005 $9.97 $10.43 5,915,443 1/1/2006 to 12/31/2006 $10.43 $11.25 4,572,301 1/1/2007 to 12/31/2007 $11.25 $12.73 3,902,210 - -------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 $8.32 10,144,317 1/1/2003 to 12/31/2003 $8.32 $10.78 20,138,164 1/1/2004 to 12/31/2004 $10.78 $12.26 28,117,310 1/1/2005 to 12/31/2005 $12.26 $12.88 32,140,125 1/1/2006 to 12/31/2006 $12.88 $13.59 26,497,526 1/1/2007 to 12/31/2007 $13.59 $15.36 23,963,028 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2002 to 12/31/2002 $7.67 1,349,939 1/1/2003 to 12/31/2003 $7.67 $9.45 2,053,023 1/1/2004 to 12/31/2004 $9.45 $9.64 2,785,100 1/1/2005 to 12/31/2005 $9.64 $9.80 2,531,900 1/1/2006 to 12/31/2006 $9.80 $10.60 2,498,654 1/1/2007 to 12/31/2007 $10.60 $11.88 2,806,534
A-30
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2002 to 12/31/2002 $8.66 664,649 1/1/2003 to 12/31/2003 $8.66 $10.78 1,072,256 1/1/2004 to 12/31/2004 $10.78 $12.53 2,351,197 1/1/2005 to 12/31/2005 $12.53 $13.47 2,585,881 1/1/2006 to 12/31/2006 $13.47 $16.13 4,397,725 1/1/2007 to 12/31/2007 $16.13 $16.05 3,751,417 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2002 to 12/31/2002 $7.99 965,912 1/1/2003 to 12/31/2003 $7.99 $9.91 1,387,072 1/1/2004 to 12/31/2004 $9.91 $10.72 1,620,391 1/1/2005 to 12/2/2005 $10.72 $11.86 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 $8.76 6,005,922 1/1/2003 to 12/31/2003 $8.76 $11.06 3,621,862 1/1/2004 to 12/31/2004 $11.06 $12.39 4,643,022 1/1/2005 to 12/31/2005 $12.39 $12.86 4,311,857 1/1/2006 to 12/31/2006 $12.86 $15.34 5,318,094 1/1/2007 to 12/31/2007 $15.34 $14.55 4,469,636 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2002 to 12/31/2002 $10.08 1,563,489 1/1/2003 to 12/31/2003 $10.08 $13.63 3,097,315 1/1/2004 to 12/31/2004 $13.63 $18.49 4,080,179 1/1/2005 to 12/31/2005 $18.49 $20.88 3,749,124 1/1/2006 to 12/31/2006 $20.88 $28.08 3,925,105 1/1/2007 to 12/31/2007 $28.08 $22.11 2,254,421 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2002 to 12/31/2002 $8.17 3,662,406 1/1/2003 to 12/31/2003 $8.17 $10.23 5,442,511 1/1/2004 to 12/31/2004 $10.23 $11.07 6,845,369 1/1/2005 to 12/31/2005 $11.07 $11.27 6,774,078 1/1/2006 to 12/31/2006 $11.27 $12.48 6,255,253 1/1/2007 to 12/31/2007 $12.48 $12.53 5,371,782 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2002 to 12/31/2002 $8.25 1,751,136 1/1/2003 to 12/31/2003 $8.25 $10.45 2,115,438 1/1/2004 to 12/31/2004 $10.45 $11.57 4,670,846 1/1/2005 to 12/31/2005 $11.57 $11.90 4,205,655 1/1/2006 to 12/31/2006 $11.90 $13.68 3,984,557 1/1/2007 to 12/31/2007 $13.68 $13.44 3,435,528 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 $8.06 6,667,373 1/1/2003 to 12/31/2003 $8.06 $10.50 21,264,670 1/1/2004 to 12/31/2004 $10.50 $11.46 25,850,506 1/1/2005 to 12/31/2005 $11.46 $11.81 31,190,346 1/1/2006 to 12/31/2006 $11.81 $13.62 23,350,650 1/1/2007 to 12/31/2007 $13.62 $14.08 19,997,748 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 $8.34 2,110,071 1/1/2003 to 12/31/2003 $8.34 $9.83 2,647,064 1/1/2004 to 12/31/2004 $9.83 $11.17 3,717,848 1/1/2005 to 12/31/2005 $11.17 $11.69 5,245,455 1/1/2006 to 12/31/2006 $11.69 $13.62 5,568,043 1/1/2007 to 12/31/2007 $13.62 $13.00 4,973,375
A-31
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2002 to 12/31/2002 $8.71 847,517 1/1/2003 to 12/31/2003 $8.71 $10.24 898,161 1/1/2004 to 12/31/2004 $10.24 $11.19 1,061,887 1/1/2005 to 12/31/2005 $11.19 $11.77 1,055,033 1/1/2006 to 12/31/2006 $11.77 $12.86 1,120,866 1/1/2007 to 12/31/2007 $12.86 $12.90 2,745,236 - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2002 to 12/31/2002 $9.14 1,126,058 1/1/2003 to 12/31/2003 $9.14 $10.69 2,045,205 1/1/2004 to 12/31/2004 $10.69 $11.46 2,335,598 1/1/2005 to 12/31/2005 $11.46 $11.79 2,294,531 1/1/2006 to 12/31/2006 $11.79 $12.72 2,165,859 1/1/2007 to 12/31/2007 $12.72 $13.62 2,277,264 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2002 to 12/31/2002 $9.09 921,329 1/1/2003 to 12/31/2003 $9.09 $11.09 2,243,566 1/1/2004 to 12/31/2004 $11.09 $12.13 3,551,315 1/1/2005 to 12/31/2005 $12.13 $12.49 4,192,626 1/1/2006 to 12/31/2006 $12.49 $13.82 4,776,442 1/1/2007 to 12/31/2007 $13.82 $14.45 6,387,795 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 $11.34 1,739,313 1/1/2003 to 12/31/2003 $11.34 $12.59 2,962,471 1/1/2004 to 12/31/2004 $12.59 $13.45 4,717,822 1/1/2005 to 12/31/2005 $13.45 $12.64 6,261,824 1/1/2006 to 12/31/2006 $12.64 $13.21 6,093,700 1/1/2007 to 12/31/2007 $13.21 $14.24 6,452,566 - --------------------------------------------------------------------------------------------------------- AST High Yield 1/1/2002 to 12/31/2002 $9.71 5,592,940 1/1/2003 to 12/31/2003 $9.71 $11.61 12,201,163 1/1/2004 to 12/31/2004 $11.61 $12.69 13,717,128 1/1/2005 to 12/31/2005 $12.69 $12.62 9,658,908 1/1/2006 to 12/31/2006 $12.62 $13.70 9,653,937 1/1/2007 to 12/31/2007 $13.70 $13.80 6,461,538 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 $9.94 4,146,530 1/1/2003 to 12/31/2003 $9.94 $11.61 7,751,236 1/1/2004 to 12/31/2004 $11.61 $12.26 8,369,008 1/1/2005 to 12/31/2005 $12.26 $12.20 12,427,806 1/1/2006 to 12/31/2006 $12.20 $13.17 10,147,675 1/1/2007 to 12/31/2007 $13.17 $13.74 8,365,789 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 $10.57 20,544,075 1/1/2003 to 12/31/2003 $10.57 $10.95 26,287,388 1/1/2004 to 12/31/2004 $10.95 $11.31 33,208,757 1/1/2005 to 12/31/2005 $11.31 $11.40 22,436,395 1/1/2006 to 12/31/2006 $11.40 $11.63 21,700,661 1/1/2007 to 12/31/2007 $11.63 $12.39 21,645,194
A-32
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 $10.34 11,274,642 1/1/2003 to 12/31/2003 $10.34 $10.51 15,242,856 1/1/2004 to 12/31/2004 $10.51 $10.55 21,299,789 1/1/2005 to 12/31/2005 $10.55 $10.54 28,031,653 1/1/2006 to 12/31/2006 $10.54 $10.76 22,394,558 1/1/2007 to 12/31/2007 $10.76 $11.31 20,392,150 - ------------------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 $9.96 36,255,772 1/1/2003 to 12/31/2003 $9.96 $9.86 32,730,501 1/1/2004 to 12/31/2004 $9.86 $9.78 29,870,585 1/1/2005 to 12/31/2005 $9.78 $9.88 42,442,274 1/1/2006 to 12/31/2006 $9.88 $10.16 46,325,237 1/1/2007 to 12/31/2007 $10.16 $10.48 56,111,128 - ------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2002 to 12/31/2002 $8.66 283,466 1/1/2003 to 12/31/2003 $8.66 $13.60 1,763,660 1/1/2004 to 12/31/2004 $13.60 $16.02 2,103,950 1/1/2005 to 12/31/2005 $16.02 $20.72 3,395,891 1/1/2006 to 12/31/2006 $20.72 $27.43 2,835,328 1/1/2007 to 12/31/2007 $27.43 $38.71 3,344,620 - ------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2002 to 12/31/2002 $8.25 196,720 1/1/2003 to 12/31/2003 $8.25 $10.23 314,757 1/1/2004 to 12/31/2004 $10.23 $11.18 590,808 1/1/2005 to 12/31/2005 $11.18 $11.59 534,649 1/1/2006 to 12/31/2006 $11.59 $13.51 582,613 1/1/2007 to 12/31/2007 $13.51 $13.66 497,296 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2002 to 12/31/2002 $7.09 543,762 1/1/2003 to 12/31/2003 $7.09 $9.61 889,464 1/1/2004 to 12/31/2004 $9.61 $10.72 668,032 1/1/2005 to 12/31/2005 $10.72 $11.67 602,064 1/1/2006 to 12/31/2006 $11.67 $13.33 605,730 1/1/2007 to 12/31/2007 $13.33 $14.70 631,476 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2002 to 12/31/2002 $5.50 293,307 1/1/2003 to 12/31/2003 $5.50 $7.87 578,651 1/1/2004 to 12/31/2004 $7.87 $8.09 512,424 1/1/2005 to 12/31/2005 $8.09 $8.13 453,391 1/1/2006 to 12/31/2006 $8.13 $8.84 513,442 1/1/2007 to 12/31/2007 $8.84 $9.36 630,739 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2002 to 12/31/2002 $8.00 475,873 1/1/2003 to 12/31/2003 $8.00 $10.05 698,364 1/1/2004 to 12/31/2004 $10.05 $10.64 937,586 1/1/2005 to 12/31/2005 $10.64 $11.31 1,131,375 1/1/2006 to 12/31/2006 $11.31 $11.71 1,250,782 1/1/2007 to 12/31/2007 $11.71 $12.88 1,163,277
A-33
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2002 to 12/31/2002 $8.76 366,258 1/1/2003 to 12/31/2003 $8.76 $11.17 607,265 1/1/2004 to 12/31/2004 $11.17 $11.94 585,185 1/1/2005 to 12/31/2005 $11.94 $12.43 1,042,992 1/1/2006 to 12/31/2006 $12.43 $14.24 778,674 1/1/2007 to 12/31/2007 $14.24 $10.89 465,175 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 $8.15 113,389 1/1/2003 to 12/31/2003 $8.15 $11.65 189,143 1/1/2004 to 12/31/2004 $11.65 $13.66 414,631 1/1/2005 to 12/31/2005 $13.66 $15.59 689,816 1/1/2006 to 12/31/2006 $15.59 $18.88 1,081,552 1/1/2007 to 12/31/2007 $18.88 $21.35 1,401,663 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2002 to 12/31/2002 $7.44 127,728 1/1/2003 to 12/31/2003 $7.44 $11.12 815,621 1/1/2004 to 12/31/2004 $11.12 $11.58 702,642 1/1/2005 to 4/15/2005 $11.58 $10.31 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 $7.78 39,943 1/1/2003 to 12/31/2003 $7.78 $10.71 404,789 1/1/2004 to 12/31/2004 $10.71 $11.29 570,123 1/1/2005 to 12/31/2005 $11.29 $11.53 281,775 1/1/2006 to 12/31/2006 $11.53 $12.03 241,307 1/1/2007 to 12/31/2007 $12.03 $13.24 249,298 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2002 to 12/31/2002 $0.00 0 1/1/2003 to 12/31/2003 $0.00 $0.00 0 1/1/2004 to 12/31/2004 $0.00 -- -- 1/1/2005 to 12/31/2005 -- $11.44 606,614 1/1/2006 to 12/31/2006 $11.44 $12.49 553,827 1/1/2007 to 12/31/2007 $12.49 $13.64 604,401 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2002 to 12/31/2002 $7.93 292,396 1/1/2003 to 12/31/2003 $7.93 $10.83 2,116,400 1/1/2004 to 12/31/2004 $10.83 $12.17 1,812,435 1/1/2005 to 12/31/2005 $12.17 $12.94 1,133,421 1/1/2006 to 12/31/2006 $12.94 $14.95 2,790,577 1/1/2007 to 12/31/2007 $14.95 $16.85 1,487,885 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 1/1/2002 to 12/31/2002 $7.75 281,993 1/1/2003 to 12/31/2003 $7.75 $12.57 942,605 1/1/2004 to 12/31/2004 $12.57 $12.30 896,010 1/1/2005 to 12/31/2005 $12.30 $14.45 1,723,105 1/1/2006 to 12/31/2006 $14.45 $19.80 3,073,769 1/1/2007 to 12/31/2007 $19.80 $28.77 2,473,589 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 1/1/2002 to 12/31/2002 $7.24 65,845 1/1/2003 to 12/31/2003 $7.24 $9.03 426,718 1/1/2004 to 12/31/2004 $9.03 $9.55 710,879 1/1/2005 to 12/31/2005 $9.55 $13.31 3,413,955 1/1/2006 to 12/31/2006 $13.31 $14.51 1,650,266 1/1/2007 to 12/31/2007 $14.51 $12.85 552,230
A-34
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Banks 1/1/2002 to 12/31/2002 $8.56 101,136 1/1/2003 to 12/31/2003 $8.56 $10.90 93,067 1/1/2004 to 12/31/2004 $10.90 $11.98 229,711 1/1/2005 to 12/31/2005 $11.98 $11.77 351,876 1/1/2006 to 12/31/2006 $11.77 $13.35 402,883 1/1/2007 to 12/31/2007 $13.35 $9.55 389,926 - ------------------------------------------------------------------------------------ ProFund VP--Basic Materials 1/1/2002 to 12/31/2002 $8.46 76,331 1/1/2003 to 12/31/2003 $8.46 $10.95 1,512,864 1/1/2004 to 12/31/2004 $10.95 $11.87 529,237 1/1/2005 to 12/31/2005 $11.87 $11.96 681,692 1/1/2006 to 12/31/2006 $11.96 $13.58 779,466 1/1/2007 to 12/31/2007 $13.58 $17.45 2,684,333 - ------------------------------------------------------------------------------------ ProFund VP--Biotechnology 1/1/2002 to 12/31/2002 $7.09 130,082 1/1/2003 to 12/31/2003 $7.09 $9.75 208,971 1/1/2004 to 12/31/2004 $9.75 $10.52 757,678 1/1/2005 to 12/31/2005 $10.52 $12.34 697,686 1/1/2006 to 12/31/2006 $12.34 $11.64 393,923 1/1/2007 to 12/31/2007 $11.64 $11.31 609,746 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Services 1/1/2002 to 12/31/2002 $7.25 128,022 1/1/2003 to 12/31/2003 $7.25 $9.04 136,269 1/1/2004 to 12/31/2004 $9.04 $9.56 430,620 1/1/2005 to 12/31/2005 $9.56 $8.97 86,431 1/1/2006 to 12/31/2006 $8.97 $9.88 192,639 1/1/2007 to 12/31/2007 $9.88 $8.91 67,292 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Goods 1/1/2002 to 12/31/2002 $8.28 148,446 1/1/2003 to 12/31/2003 $8.28 $9.64 58,425 1/1/2004 to 12/31/2004 $9.64 $10.36 369,007 1/1/2005 to 12/31/2005 $10.36 $10.15 161,037 1/1/2006 to 12/31/2006 $10.15 $11.25 548,567 1/1/2007 to 12/31/2007 $11.25 $11.90 715,235 - ------------------------------------------------------------------------------------ ProFund VP--Oil & Gas 1/1/2002 to 12/31/2002 $8.71 299,833 1/1/2003 to 12/31/2003 $8.71 $10.48 1,225,844 1/1/2004 to 12/31/2004 $10.48 $13.33 1,856,882 1/1/2005 to 12/31/2005 $13.33 $17.22 2,573,776 1/1/2006 to 12/31/2006 $17.22 $20.43 2,251,126 1/1/2007 to 12/31/2007 $20.43 $26.61 2,322,451 - ------------------------------------------------------------------------------------ ProFund VP--Financial 1/1/2002 to 12/31/2002 $8.85 221,377 1/1/2003 to 12/31/2003 $8.85 $11.23 398,159 1/1/2004 to 12/31/2004 $11.23 $12.19 553,342 1/1/2005 to 12/31/2005 $12.19 $12.46 616,873 1/1/2006 to 12/31/2006 $12.46 $14.38 913,872 1/1/2007 to 12/31/2007 $14.38 $11.44 498,292
A-35
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Healthcare 1/1/2002 to 12/31/2002 $7.94 388,508 1/1/2003 to 12/31/2003 $7.94 $9.17 707,449 1/1/2004 to 12/31/2004 $9.17 $9.23 1,318,525 1/1/2005 to 12/31/2005 $9.23 $9.63 2,175,821 1/1/2006 to 12/31/2006 $9.63 $9.96 2,106,409 1/1/2007 to 12/31/2007 $9.96 $10.44 2,120,859 - ------------------------------------------------------------------------------------ ProFund VP--Industrial 1/1/2002 to 12/31/2002 $7.93 12,642 1/1/2003 to 12/31/2003 $7.93 $10.01 318,339 1/1/2004 to 12/31/2004 $10.01 $11.15 253,411 1/1/2005 to 12/31/2005 $11.15 $11.23 211,677 1/1/2006 to 12/31/2006 $11.23 $12.33 242,684 1/1/2007 to 12/31/2007 $12.33 $13.55 708,921 - ------------------------------------------------------------------------------------ ProFund VP--Internet 1/1/2002 to 12/31/2002 $8.57 306,572 1/1/2003 to 12/31/2003 $8.57 $15.00 206,876 1/1/2004 to 12/31/2004 $15.00 $17.89 992,879 1/1/2005 to 12/31/2005 $17.89 $18.90 467,320 1/1/2006 to 12/31/2006 $18.90 $18.84 200,072 1/1/2007 to 12/31/2007 $18.84 $20.42 435,015 - ------------------------------------------------------------------------------------ ProFund VP--Pharmaceuticals 1/1/2002 to 12/31/2002 $8.56 136,559 1/1/2003 to 12/31/2003 $8.56 $8.89 266,978 1/1/2004 to 12/31/2004 $8.89 $7.93 527,336 1/1/2005 to 12/31/2005 $7.93 $7.51 515,768 1/1/2006 to 12/31/2006 $7.51 $8.28 716,678 1/1/2007 to 12/31/2007 $8.28 $8.33 492,538 - ------------------------------------------------------------------------------------ ProFund VP--Precious Metals 1/1/2002 to 12/31/2002 $9.70 1,175,651 1/1/2003 to 12/31/2003 $9.70 $13.29 1,329,806 1/1/2004 to 12/31/2004 $13.29 $11.77 1,479,384 1/1/2005 to 12/31/2005 $11.77 $14.62 2,426,530 1/1/2006 to 12/31/2006 $14.62 $15.44 2,487,596 1/1/2007 to 12/31/2007 $15.44 $18.60 3,177,702 - ------------------------------------------------------------------------------------ ProFund VP--Real Estate 1/1/2002 to 12/31/2002 $9.86 441,318 1/1/2003 to 12/31/2003 $9.86 $12.91 462,906 1/1/2004 to 12/31/2004 $12.91 $16.15 1,816,706 1/1/2005 to 12/31/2005 $16.15 $16.96 501,989 1/1/2006 to 12/31/2006 $16.96 $22.10 926,728 1/1/2007 to 12/31/2007 $22.10 $17.47 505,436 - ------------------------------------------------------------------------------------ ProFund VP--Semiconductor 1/1/2002 to 12/31/2002 $5.14 93,241 1/1/2003 to 12/31/2003 $5.14 $9.51 423,958 1/1/2004 to 12/31/2004 $9.51 $7.15 694,352 1/1/2005 to 12/31/2005 $7.15 $7.64 746,085 1/1/2006 to 12/31/2006 $7.64 $6.98 339,250 1/1/2007 to 12/31/2007 $6.98 $7.35 272,048
A-36
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2002 to 12/31/2002 $6.03 254,131 1/1/2003 to 12/31/2003 $6.03 $8.66 497,972 1/1/2004 to 12/31/2004 $8.66 $8.48 727,580 1/1/2005 to 12/31/2005 $8.48 $8.45 577,739 1/1/2006 to 12/31/2006 $8.45 $8.98 673,628 1/1/2007 to 12/31/2007 $8.98 $10.10 1,668,456 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2002 to 12/31/2002 $7.15 272,408 1/1/2003 to 12/31/2003 $7.15 $7.21 398,350 1/1/2004 to 12/31/2004 $7.21 $8.19 460,848 1/1/2005 to 12/31/2005 $8.19 $7.52 456,586 1/1/2006 to 12/31/2006 $7.52 $9.93 1,277,316 1/1/2007 to 12/31/2007 $9.93 $10.59 1,098,402 - ------------------------------------------------------------------------------------- ProFund VP--Utilities 1/1/2002 to 12/31/2002 $7.83 521,419 1/1/2003 to 12/31/2003 $7.83 $9.34 618,427 1/1/2004 to 12/31/2004 $9.34 $11.13 1,060,939 1/1/2005 to 12/31/2005 $11.13 $12.37 1,996,877 1/1/2006 to 12/31/2006 $12.37 $14.51 2,195,309 1/1/2007 to 12/31/2007 $14.51 $16.52 3,808,582 - ------------------------------------------------------------------------------------- ProFund VP--Bull 1/1/2002 to 12/31/2002 $7.97 954,792 1/1/2003 to 12/31/2003 $7.97 $9.84 3,563,562 1/1/2004 to 12/31/2004 $9.84 $10.53 8,215,357 1/1/2005 to 12/31/2005 $10.53 $10.64 7,846,866 1/1/2006 to 12/31/2006 $10.64 $11.90 7,031,661 1/1/2007 to 12/31/2007 $11.90 $12.12 4,013,033 - ------------------------------------------------------------------------------------- ProFund VP--Bear 1/1/2002 to 12/31/2002 $11.38 1,532,543 1/1/2003 to 12/31/2003 $11.38 $8.44 1,886,515 1/1/2004 to 12/31/2004 $8.44 $7.45 1,202,243 1/1/2005 to 12/31/2005 $7.45 $7.23 2,169,662 1/1/2006 to 12/31/2006 $7.23 $6.57 1,868,606 1/1/2007 to 12/31/2007 $6.57 $6.50 1,722,065 - ------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 1/1/2002 to 12/31/2002 $6.78 297,435 1/1/2003 to 12/31/2003 $6.78 $10.20 1,431,345 1/1/2004 to 12/31/2004 $10.20 $11.76 2,817,803 1/1/2005 to 12/31/2005 $11.76 $11.87 1,158,025 1/1/2006 to 12/31/2006 $11.87 $14.36 1,596,920 1/1/2007 to 12/31/2007 $14.36 $14.24 1,964,725 - ------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 1/1/2002 to 12/31/2002 $6.45 1,346,852 1/1/2003 to 12/31/2003 $6.45 $9.32 4,445,234 1/1/2004 to 12/31/2004 $9.32 $9.94 4,885,351 1/1/2005 to 12/31/2005 $9.94 $9.80 2,467,486 1/1/2006 to 12/31/2006 $9.80 $10.16 1,764,614 1/1/2007 to 12/31/2007 $10.16 $11.76 2,265,084
A-37
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2002 to 12/31/2002 $11.00 433,181 1/1/2003 to 12/31/2003 $11.00 $6.78 1,535,439 1/1/2004 to 12/31/2004 $6.78 $5.93 908,064 1/1/2005 to 12/31/2005 $5.93 $5.88 2,494,112 1/1/2006 to 12/31/2006 $5.88 $5.70 1,891,265 1/1/2007 to 12/31/2007 $5.70 $4.96 860,024 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2002 to 12/31/2002 $3.53 1,003,123 1/1/2003 to 12/31/2003 $3.53 $7.03 3,410,589 1/1/2004 to 12/31/2004 $7.03 $7.89 6,592,447 1/1/2005 to 12/31/2005 $7.89 $7.47 4,740,165 1/1/2006 to 12/31/2006 $7.47 $7.70 2,319,572 1/1/2007 to 12/31/2007 $7.70 $9.73 4,024,405 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 1/1/2002 to 12/31/2002 $7.66 438,387 1/1/2003 to 12/31/2003 $7.66 $10.23 1,455,513 1/1/2004 to 12/31/2004 $10.23 $11.67 2,632,869 1/1/2005 to 12/31/2005 $11.67 $12.49 2,164,543 1/1/2006 to 12/31/2006 $12.49 $13.80 1,978,580 1/1/2007 to 12/31/2007 $13.80 $13.70 1,436,105 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.70 439,054 1/1/2003 to 12/31/2003 $7.70 $9.69 1,009,867 1/1/2004 to 12/31/2004 $9.69 $10.58 2,220,901 1/1/2005 to 12/31/2005 $10.58 $11.58 5,059,311 1/1/2006 to 12/31/2006 $11.58 $11.84 1,594,539 1/1/2007 to 12/31/2007 $11.84 $13.01 2,101,505 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 1/1/2002 to 12/31/2002 $5.71 477,953 1/1/2003 to 12/31/2003 $5.71 $9.55 1,112,311 1/1/2004 to 12/31/2004 $9.55 $11.99 3,106,849 1/1/2005 to 12/31/2005 $11.99 $13.91 1,935,487 1/1/2006 to 12/31/2006 $13.91 $15.14 1,588,771 1/1/2007 to 12/31/2007 $15.14 $15.77 1,072,846 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 1/1/2002 to 12/31/2002 $7.09 994,778 1/1/2003 to 12/31/2003 $7.09 $9.39 5,144,632 1/1/2004 to 12/31/2004 $9.39 $11.10 4,088,760 1/1/2005 to 12/31/2005 $11.10 $11.35 1,398,442 1/1/2006 to 12/31/2006 $11.35 $13.11 2,446,357 1/1/2007 to 12/31/2007 $13.11 $11.96 714,107 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 1/1/2002 to 12/31/2002 $7.69 772,260 1/1/2003 to 12/31/2003 $7.69 $10.16 3,868,951 1/1/2004 to 12/31/2004 $10.16 $11.98 4,677,820 1/1/2005 to 12/31/2005 $11.98 $12.67 4,579,887 1/1/2006 to 12/31/2006 $12.67 $13.54 1,643,633 1/1/2007 to 12/31/2007 $13.54 $13.85 676,467
A-38
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2002 to 12/31/2002 $6.14 212,085 1/1/2003 to 12/31/2003 $6.14 $12.04 1,702,558 1/1/2004 to 12/31/2004 $12.04 $15.52 5,098,565 1/1/2005 to 12/31/2005 $15.52 $15.23 816,755 1/1/2006 to 12/31/2006 $15.23 $18.87 1,580,595 1/1/2007 to 12/31/2007 $18.87 $16.11 527,856 - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2002 to 12/31/2002 $11.56 2,486,854 1/1/2003 to 12/31/2003 $11.56 $11.08 731,470 1/1/2004 to 12/31/2004 $11.08 $11.79 1,051,158 1/1/2005 to 12/31/2005 $11.79 $12.64 2,312,868 1/1/2006 to 12/31/2006 $12.64 $11.86 821,668 1/1/2007 to 12/31/2007 $11.86 $12.85 2,443,725 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2002 to 12/31/2002 $8.02 165,792 1/1/2003 to 12/31/2003 $8.02 $7.56 1,817,924 1/1/2004 to 12/31/2004 $7.56 $6.63 5,314,528 1/1/2005 to 12/31/2005 $6.63 $6.00 3,415,324 1/1/2006 to 12/31/2006 $6.00 $6.50 4,567,551 1/1/2007 to 12/31/2007 $6.50 $6.06 1,806,294 - --------------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2002 to 12/31/2002 $0.00 0 1/1/2003 to 12/31/2003 $0.00 $0.00 0 1/1/2004 to 12/31/2004 $0.00 -- 0 1/1/2005 to 12/31/2005 -- $10.56 899,141 1/1/2006 to 12/31/2006 $10.56 $11.38 1,207,864 1/1/2007 to 12/31/2007 $11.38 $11.78 898,024 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2002 to 12/31/2002 $6.80 19,826 1/1/2003 to 12/31/2003 $6.80 $9.16 66,435 1/1/2004 to 12/31/2004 $9.16 $10.03 91,924 1/1/2005 to 12/31/2005 $10.03 $9.92 87,726 1/1/2006 to 12/31/2006 $9.92 $10.15 100,227 1/1/2007 to 12/31/2007 $10.15 $10.55 106,856 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $11.85 311,233 1/1/2005 to 12/31/2005 $11.85 $12.84 590,605 1/1/2006 to 12/31/2006 $12.84 $17.48 1,507,757 1/1/2007 to 12/31/2007 $17.48 $19.49 2,078,809 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $11.32 1,777,316 1/1/2005 to 12/31/2005 $11.32 $11.94 2,420,873 1/1/2006 to 12/31/2006 $11.94 $13.10 2,772,210 1/1/2007 to 12/31/2007 $13.10 $14.10 2,203,754
A-39
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.66 82,809 1/1/2005 to 12/31/2005 $10.66 $10.83 134,177 1/1/2006 to 12/31/2006 $10.83 $11.60 199,508 1/1/2007 to 12/31/2007 $11.60 $13.88 403,709 - --------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.75 173,851 1/1/2005 to 12/31/2005 $10.75 $11.01 304,840 1/1/2006 to 12/31/2006 $11.01 $11.14 290,152 1/1/2007 to 12/31/2007 $11.14 $11.42 274,858 - --------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.48 155,695 1/1/2005 to 12/31/2005 $10.48 $9.98 194,864 1/1/2006 to 12/31/2006 $9.98 $12.32 481,064 1/1/2007 to 12/31/2007 $12.32 $12.20 235,030 - --------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.76 1,240,527 1/1/2006 to 12/31/2006 $9.76 $11.34 2,310,768 1/1/2007 to 12/31/2007 $11.34 $11.28 2,000,024 - --------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $12.59 389,792 1/1/2005 to 12/31/2005 $12.59 $14.82 1,068,339 1/1/2006 to 12/31/2006 $14.82 $15.00 1,119,827 1/1/2007 to 12/31/2007 $15.00 $17.43 1,173,103 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 72,725 1/1/2005 to 12/31/2005 $10.37 $10.30 2,620,751 1/1/2006 to 12/31/2006 $10.30 $11.05 2,181,106 1/1/2007 to 12/31/2007 $11.05 $11.62 2,009,820 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 159,605 1/1/2005 to 12/31/2005 $10.37 $10.51 2,141,308 1/1/2006 to 12/31/2006 $10.51 $12.26 4,023,312 1/1/2007 to 12/31/2007 $12.26 $12.08 1,984,257
A-40
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ---------------------------------------------------------------------------------------------------- Profund VP Short Mid Cap 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.70 39,360 1/1/2005 to 12/31/2005 $9.70 $8.64 364,782 1/1/2006 to 12/31/2006 $8.64 $8.18 254,207 1/1/2007 to 12/31/2007 $8.18 $7.82 131,223 - ---------------------------------------------------------------------------------------------------- Profund VP Short Small-Cap 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.54 136,809 1/1/2005 to 12/31/2005 $9.54 $9.11 220,843 1/1/2006 to 12/31/2006 $9.11 $7.90 560,897 1/1/2007 to 12/31/2007 $7.90 $8.12 1,000,449 - ---------------------------------------------------------------------------------------------------- SP International Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.53 269,671 1/1/2005 to 12/31/2005 $10.53 $12.05 672,243 1/1/2006 to 12/31/2006 $12.05 $14.35 742,865 1/1/2007 to 12/31/2007 $14.35 $16.87 828,104 - ---------------------------------------------------------------------------------------------------- AST Aggressive Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.00 649,829 1/1/2006 to 12/31/2006 $10.00 $11.38 5,212,589 1/1/2007 to 12/31/2007 $11.38 $12.26 8,022,912 - ---------------------------------------------------------------------------------------------------- AST Capital Growth Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.01 2,586,012 1/1/2006 to 12/31/2006 $10.01 $11.19 23,048,850 1/1/2007 to 12/31/2007 $11.19 $12.07 31,465,957 - ---------------------------------------------------------------------------------------------------- AST Balanced Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.02 2,726,484 1/1/2006 to 12/31/2006 $10.02 $11.01 21,829,919 1/1/2007 to 12/31/2007 $11.01 $11.83 30,616,578 - ---------------------------------------------------------------------------------------------------- AST Conservative Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.03 685,724 1/1/2006 to 12/31/2006 $10.03 $10.90 7,315,279 1/1/2007 to 12/31/2007 $10.90 $11.70 12,873,620
A-41
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ AST Preservation Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.04 115,215 1/1/2006 to 12/31/2006 $10.04 $10.66 3,303,256 1/1/2007 to 12/31/2007 $10.66 $11.40 7,359,596 - ------------------------------------------------------------------------------------------------------------ AST Advanced Strategies Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.66 5,258,474 1/1/2007 to 12/31/2007 $10.66 $11.48 8,525,849 - ------------------------------------------------------------------------------------------------------------ AST First Trust Balanced Target Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.58 3,781,525 1/1/2007 to 12/31/2007 $10.58 $11.30 7,801,920 - ------------------------------------------------------------------------------------------------------------ AST First Trust Capital Appreciation Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.48 3,795,562 1/1/2007 to 12/31/2007 $10.48 $11.49 7,899,326 - ------------------------------------------------------------------------------------------------------------ AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.51 120,901 - ------------------------------------------------------------------------------------------------------------ AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.04 74,936 - ------------------------------------------------------------------------------------------------------------ AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.19 157,014 - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 39,143 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.00 50,892 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 213,630
* Denotes the start date of these sub-accounts. APEX II Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV, and EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 3/14/2005* to 12/31/2005 $9.91 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $13.32 0 - --------------------------------------------------------------------------------------------------- AST International Growth 3/14/2005* to 12/31/2005 $9.92 $11.16 0 1/1/2006 to 12/31/2006 $11.16 $13.10 0 1/1/2007 to 12/31/2007 $13.10 $15.12 0 - --------------------------------------------------------------------------------------------------- AST International Value 3/14/2005* to 12/31/2005 $9.92 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.95 0
A-42
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST MFS Global Equity 3/14/2005* to 12/31/2005 $9.96 $10.36 0 1/1/2006 to 12/31/2006 $10.36 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $13.25 0 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 3/14/2005* to 12/31/2005 $10.04 $10.31 0 1/1/2006 to 12/31/2006 $10.31 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $11.71 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 3/14/2005* to 12/31/2005 $10.01 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.66 0 1/1/2007 to 12/31/2007 $10.66 $12.27 0 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 3/14/2005* to 12/31/2005 $10.00 $10.84 0 1/1/2006 to 12/31/2006 $10.84 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $12.80 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Small-Cap Value 3/14/2005* to 12/31/2005 $10.05 $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $10.92 0 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 3/14/2005* to 12/31/2005 $10.05 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $11.22 0 - -------------------------------------------------------------------------------------------- AST DeAM Small-Cap Value 3/14/2005* to 12/31/2005 $10.04 $9.90 0 1/1/2006 to 12/31/2006 $9.90 $11.53 0 1/1/2007 to 12/31/2007 $11.53 $9.19 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 3/14/2005* to 12/31/2005 $10.00 $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.78 0 1/1/2007 to 12/31/2007 $10.78 $12.48 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Growth 3/14/2005* to 12/31/2005 $10.05 $11.21 0 1/1/2006 to 12/31/2006 $11.21 $12.40 0 1/1/2007 to 12/31/2007 $12.40 $14.70 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 3/14/2005* to 12/31/2005 $10.02 $10.76 0 1/1/2006 to 12/31/2006 $10.76 $11.56 0 1/1/2007 to 12/31/2007 $11.56 $11.57 0 - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 3/14/2005* to 12/2/2005 $10.09 $11.59 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 3/14/2005* to 12/31/2005 $10.06 $10.24 0 1/1/2006 to 12/31/2006 $10.24 $11.34 0 1/1/2007 to 12/31/2007 $11.34 $11.31 0 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 3/14/2005* to 12/31/2005 $10.00 $11.61 0 1/1/2006 to 12/31/2006 $11.61 $13.05 0 1/1/2007 to 12/31/2007 $13.05 $17.78 0
A-43
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 3/14/2005* to 12/31/2005 $10.02 $11.98 0 1/1/2006 to 12/31/2006 $11.98 $12.28 0 1/1/2007 to 12/31/2007 $12.28 $12.89 0 - ----------------------------------------------------------------------------------------------- AST MFS Growth 3/14/2005* to 12/31/2005 $10.04 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $12.63 0 - ----------------------------------------------------------------------------------------------- AST Marsico Capital Growth 3/14/2005* to 12/31/2005 $10.12 $10.78 0 1/1/2006 to 12/31/2006 $10.78 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $12.50 0 - ----------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 3/14/2005* to 12/31/2005 $10.03 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $12.55 0 - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 3/14/2005* to 12/31/2005 $10.08 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $12.51 0 1/1/2007 to 12/31/2007 $12.51 $12.28 0 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 3/14/2005* to 12/2/2005 $10.05 $11.21 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 3/14/2005* to 12/31/2005 $10.08 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $11.22 0 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 3/14/2005* to 12/31/2005 $10.15 $11.88 0 1/1/2006 to 12/31/2006 $11.88 $15.76 0 1/1/2007 to 12/31/2007 $15.76 $12.24 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 3/14/2005* to 12/31/2005 $10.05 $10.28 0 1/1/2006 to 12/31/2006 $10.28 $11.23 0 1/1/2007 to 12/31/2007 $11.23 $11.12 0 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 3/14/2005* to 12/31/2005 $10.07 $10.22 0 1/1/2006 to 12/31/2006 $10.22 $11.58 0 1/1/2007 to 12/31/2007 $11.58 $11.22 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 3/14/2005* to 12/31/2005 $10.05 $10.15 0 1/1/2006 to 12/31/2006 $10.15 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.77 0 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 3/14/2005* to 12/31/2005 $10.08 $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.99 0 1/1/2007 to 12/31/2007 $11.99 $11.29 0 - ----------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 3/14/2005* to 12/31/2005 $10.01 $10.50 0 1/1/2006 to 12/31/2006 $10.50 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $11.20 0
A-44
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 3/14/2005* to 12/31/2005 $10.04 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.85 0 1/1/2007 to 12/31/2007 $10.85 $11.46 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 3/14/2005* to 12/31/2005 $10.03 $10.24 0 1/1/2006 to 12/31/2006 $10.24 $11.17 0 1/1/2007 to 12/31/2007 $11.17 $11.52 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 3/14/2005* to 12/31/2005 $9.95 $9.34 0 1/1/2006 to 12/31/2006 $9.34 $9.63 0 1/1/2007 to 12/31/2007 $9.63 $10.24 0 - --------------------------------------------------------------------------------------------------------- AST High Yield 3/14/2005* to 12/31/2005 $9.98 $9.75 0 1/1/2006 to 12/31/2006 $9.75 $10.43 0 1/1/2007 to 12/31/2007 $10.43 $10.37 0 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 3/14/2005* to 12/31/2005 $10.00 $9.84 0 1/1/2006 to 12/31/2006 $9.84 $10.48 0 1/1/2007 to 12/31/2007 $10.48 $10.78 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 3/14/2005* to 12/31/2005 $9.99 $10.04 0 1/1/2006 to 12/31/2006 $10.04 $10.10 0 1/1/2007 to 12/31/2007 $10.10 $10.61 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 3/14/2005* to 12/31/2005 $10.00 $9.94 0 1/1/2006 to 12/31/2006 $9.94 $10.01 0 1/1/2007 to 12/31/2007 $10.01 $10.37 0 - --------------------------------------------------------------------------------------------------------- AST Money Market 3/14/2005* to 12/31/2005 $10.00 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $10.13 0 1/1/2007 to 12/31/2007 $10.13 $10.31 0 - --------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 3/14/2005* to 12/31/2005 $9.88 $11.93 0 1/1/2006 to 12/31/2006 $11.93 $15.57 0 1/1/2007 to 12/31/2007 $15.57 $21.67 0 - --------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 3/14/2005* to 12/31/2005 $10.07 $10.08 0 1/1/2006 to 12/31/2006 $10.08 $11.60 0 1/1/2007 to 12/31/2007 $11.60 $11.57 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 3/14/2005* to 12/31/2005 $10.05 $10.80 0 1/1/2006 to 12/31/2006 $10.80 $12.16 0 1/1/2007 to 12/31/2007 $12.16 $13.23 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 3/14/2005* to 12/31/2005 $10.00 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $11.36 0 1/1/2007 to 12/31/2007 $11.36 $11.87 0
A-45
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 3/14/2005* to 12/31/2005 $10.06 $11.04 0 1/1/2006 to 12/31/2006 $11.04 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $12.23 0 - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 3/14/2005* to 12/31/2005 $10.06 $10.62 0 1/1/2006 to 12/31/2006 $10.62 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $9.05 0 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 3/14/2005* to 12/31/2005 $9.90 $10.88 0 1/1/2006 to 12/31/2006 $10.88 $13.00 0 1/1/2007 to 12/31/2007 $13.00 $14.50 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 3/14/2005* to 4/15/2005 $10.02 $9.26 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 3/14/2005* to 12/31/2005 $10.02 $10.50 0 1/1/2006 to 12/31/2006 $10.50 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $11.72 0 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 3/14/2005* to 12/31/2005 -- $11.33 0 1/1/2006 to 12/31/2006 $11.33 $12.20 0 1/1/2007 to 12/31/2007 $12.20 $13.14 0 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 3/14/2005* to 12/31/2005 $9.99 $10.41 0 1/1/2006 to 12/31/2006 $10.41 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $13.19 0 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 3/14/2005* to 12/31/2005 $9.99 $11.10 0 1/1/2006 to 12/31/2006 $11.10 $14.99 0 1/1/2007 to 12/31/2007 $14.99 $21.48 0 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 3/14/2005* to 12/31/2005 $9.95 $13.38 0 1/1/2006 to 12/31/2006 $13.38 $14.38 0 1/1/2007 to 12/31/2007 $14.38 $12.56 0 - ----------------------------------------------------------------------------------------- ProFund VP--Banks 3/14/2005* to 12/31/2005 $10.08 $10.10 0 1/1/2006 to 12/31/2006 $10.10 $11.31 0 1/1/2007 to 12/31/2007 $11.31 $7.98 0 - ----------------------------------------------------------------------------------------- ProFund VP--Basic Materials 3/14/2005* to 12/31/2005 $9.98 $9.48 0 1/1/2006 to 12/31/2006 $9.48 $10.62 0 1/1/2007 to 12/31/2007 $10.62 $13.46 0 - ----------------------------------------------------------------------------------------- ProFund VP--Biotechnology 3/14/2005* to 12/31/2005 $10.48 $13.48 0 1/1/2006 to 12/31/2006 $13.48 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $12.03 0 - ----------------------------------------------------------------------------------------- ProFund VP--Consumer Services 3/14/2005* to 12/31/2005 $10.04 $9.66 0 1/1/2006 to 12/31/2006 $9.66 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $9.34 0
A-46
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------- ProFund VP--Consumer Goods 3/14/2005* to 12/31/2005 $10.03 $9.73 0 1/1/2006 to 12/31/2006 $9.73 $10.63 0 1/1/2007 to 12/31/2007 $10.63 $11.09 0 - -------------------------------------------------------------------------------------- ProFund VP--Oil & Gas 3/14/2005* to 12/31/2005 $10.07 $10.92 0 1/1/2006 to 12/31/2006 $10.92 $12.78 0 1/1/2007 to 12/31/2007 $12.78 $16.42 0 - -------------------------------------------------------------------------------------- ProFund VP--Financial 3/14/2005* to 12/31/2005 $10.08 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $11.98 0 1/1/2007 to 12/31/2007 $11.98 $9.40 0 - -------------------------------------------------------------------------------------- ProFund VP--Healthcare 3/14/2005* to 12/31/2005 $10.09 $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.68 0 1/1/2007 to 12/31/2007 $10.68 $11.04 0 - -------------------------------------------------------------------------------------- ProFund VP--Industrial 3/14/2005* to 12/31/2005 $10.06 $10.06 0 1/1/2006 to 12/31/2006 $10.06 $10.90 0 1/1/2007 to 12/31/2007 $10.90 $11.81 0 - -------------------------------------------------------------------------------------- ProFund VP--Internet 3/14/2005* to 12/31/2005 $9.94 $12.71 0 1/1/2006 to 12/31/2006 $12.71 $12.50 0 1/1/2007 to 12/31/2007 $12.50 $13.36 0 - -------------------------------------------------------------------------------------- ProFund VP--Pharmaceuticals 3/14/2005* to 12/31/2005 $10.02 $9.44 0 1/1/2006 to 12/31/2006 $9.44 $10.27 0 1/1/2007 to 12/31/2007 $10.27 $10.19 0 - -------------------------------------------------------------------------------------- ProFund VP--Precious Metals 3/14/2005* to 12/31/2005 $9.89 $12.00 0 1/1/2006 to 12/31/2006 $12.00 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $14.84 0 - -------------------------------------------------------------------------------------- ProFund VP--Real Estate 3/14/2005* to 12/31/2005 $10.15 $11.17 0 1/1/2006 to 12/31/2006 $11.17 $14.36 0 1/1/2007 to 12/31/2007 $14.36 $11.20 0 - -------------------------------------------------------------------------------------- ProFund VP--Semiconductor 3/14/2005* to 12/31/2005 $10.04 $10.65 0 1/1/2006 to 12/31/2006 $10.65 $9.60 0 1/1/2007 to 12/31/2007 $9.60 $9.97 0 - -------------------------------------------------------------------------------------- ProFund VP--Technology 3/14/2005* to 12/31/2005 $10.03 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $11.05 0 1/1/2007 to 12/31/2007 $11.05 $12.26 0 - -------------------------------------------------------------------------------------- ProFund VP--Telecommunications 3/14/2005* to 12/31/2005 $10.03 $9.74 0 1/1/2006 to 12/31/2006 $9.74 $12.68 0 1/1/2007 to 12/31/2007 $12.68 $13.33 0 - -------------------------------------------------------------------------------------- ProFund VP--Utilities 3/14/2005* to 12/31/2005 $10.17 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $13.77 0
A-47
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP--Bull 3/14/2005* to 12/31/2005 $10.05 $10.12 0 1/1/2006 to 12/31/2006 $10.12 $11.16 0 1/1/2007 to 12/31/2007 $11.16 $11.21 0 - --------------------------------------------------------------------------------------- ProFund VP--Bear 3/14/2005* to 12/31/2005 $9.94 $9.54 0 1/1/2006 to 12/31/2006 $9.54 $8.56 0 1/1/2007 to 12/31/2007 $8.56 $8.35 0 - --------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 3/14/2005* to 12/31/2005 $10.11 $10.25 0 1/1/2006 to 12/31/2006 $10.25 $12.23 0 1/1/2007 to 12/31/2007 $12.23 $11.96 0 - --------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 3/14/2005* to 12/31/2005 $10.06 $10.55 0 1/1/2006 to 12/31/2006 $10.55 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $12.31 0 - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 3/14/2005* to 12/31/2005 $9.94 $9.14 0 1/1/2006 to 12/31/2006 $9.14 $8.75 0 1/1/2007 to 12/31/2007 $8.75 $7.50 0 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 3/14/2005* to 12/31/2005 $10.15 $11.04 0 1/1/2006 to 12/31/2006 $11.04 $11.23 0 1/1/2007 to 12/31/2007 $11.23 $14.00 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 3/14/2005* to 12/31/2005 $10.09 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.31 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 3/14/2005* to 12/31/2005 $10.06 $10.76 0 1/1/2006 to 12/31/2006 $10.76 $10.85 0 1/1/2007 to 12/31/2007 $10.85 $11.76 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 3/14/2005* to 12/31/2005 $10.15 $11.38 0 1/1/2006 to 12/31/2006 $11.38 $12.22 0 1/1/2007 to 12/31/2007 $12.22 $12.55 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 3/14/2005* to 12/31/2005 $10.04 $10.30 0 1/1/2006 to 12/31/2006 $10.30 $11.73 0 1/1/2007 to 12/31/2007 $11.73 $10.55 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 3/14/2005* to 12/31/2005 $10.04 $10.48 0 1/1/2006 to 12/31/2006 $10.48 $11.05 0 1/1/2007 to 12/31/2007 $11.05 $11.15 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 3/14/2005* to 12/31/2005 $10.11 $10.66 0 1/1/2006 to 12/31/2006 $10.66 $13.03 0 1/1/2007 to 12/31/2007 $13.03 $10.97 0
A-48
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 3/14/2005* to 12/31/2005 $10.08 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $9.76 0 1/1/2007 to 12/31/2007 $9.76 $10.43 0 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 3/14/2005* to 12/31/2005 $9.91 $9.08 0 1/1/2006 to 12/31/2006 $9.08 $9.71 0 1/1/2007 to 12/31/2007 $9.71 $8.92 0 - --------------------------------------------------------------------------------------------------- Access VP High Yield 3/14/2005* to 12/31/2005 -- $10.47 0 1/1/2006 to 12/31/2006 $10.47 $11.12 0 1/1/2007 to 12/31/2007 $11.12 $11.35 0 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 3/14/2005* to 12/31/2005 $10.00 $9.74 0 1/1/2006 to 12/31/2006 $9.74 $9.83 0 1/1/2007 to 12/31/2007 $9.83 $10.07 0 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 3/14/2005* to 12/31/2005 $10.03 $10.83 0 1/1/2006 to 12/31/2006 $10.83 $14.54 0 1/1/2007 to 12/31/2007 $14.54 $15.99 0 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 3/14/2005* to 12/31/2005 $10.02 $10.43 0 1/1/2006 to 12/31/2006 $10.43 $11.29 0 1/1/2007 to 12/31/2007 $11.29 $11.98 0 - --------------------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 3/14/2005* to 12/31/2005 $10.06 $10.75 0 1/1/2006 to 12/31/2006 $10.75 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $13.40 0 - --------------------------------------------------------------------------------------------------- First Trust S&P Target 24 3/14/2005* to 12/31/2005 $10.10 $10.48 0 1/1/2006 to 12/31/2006 $10.48 $10.46 0 1/1/2007 to 12/31/2007 $10.46 $10.57 0 - --------------------------------------------------------------------------------------------------- First Trust The Dow Target 10 3/14/2005* to 12/31/2005 $10.03 $9.53 0 1/1/2006 to 12/31/2006 $9.53 $11.61 0 1/1/2007 to 12/31/2007 $11.61 $11.33 0 - --------------------------------------------------------------------------------------------------- First Trust Dow Target Dividend 3/14/2005* to 12/31/2005 -- $9.67 0 1/1/2006 to 12/31/2006 $9.67 $11.08 0 1/1/2007 to 12/31/2007 $11.08 $10.87 0 - --------------------------------------------------------------------------------------------------- First Trust Value Line Target 25 3/14/2005* to 12/31/2005 $10.00 $11.11 0 1/1/2006 to 12/31/2006 $11.11 $11.08 0 1/1/2007 to 12/31/2007 $11.08 $12.71 0 - --------------------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 3/14/2005* to 12/31/2005 $10.03 $9.98 0 1/1/2006 to 12/31/2006 $9.98 $10.56 0 1/1/2007 to 12/31/2007 $10.56 $10.96 0 - --------------------------------------------------------------------------------------------------- Profund VP Large-Cap Value 3/14/2005* to 12/31/2005 $10.07 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $11.74 0 1/1/2007 to 12/31/2007 $11.74 $11.40 0
A-49
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ Profund VP Short Mid Cap 3/14/2005* to 12/31/2005 $9.93 $8.94 0 1/1/2006 to 12/31/2006 $8.94 $8.36 0 1/1/2007 to 12/31/2007 $8.36 $7.87 0 - ------------------------------------------------------------------------------------------------------------ Profund VP Short Small-Cap 3/14/2005* to 12/31/2005 $9.95 $9.17 0 1/1/2006 to 12/31/2006 $9.17 $7.84 0 1/1/2007 to 12/31/2007 $7.84 $7.95 0 - ------------------------------------------------------------------------------------------------------------ SP International Growth 3/14/2005* to 12/31/2005 $9.93 $11.18 0 1/1/2006 to 12/31/2006 $11.18 $13.12 0 1/1/2007 to 12/31/2007 $13.12 $15.22 0 - ------------------------------------------------------------------------------------------------------------ AST Aggressive Asset Allocation Portfolio 12/05/2005* to 12/31/2005 $10.00 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $11.91 0 - ------------------------------------------------------------------------------------------------------------ AST Capital Growth Asset Allocation Portfolio 12/05/2005* to 12/31/2005 $10.00 $10.00 0 1/1/2006 to 12/31/2006 $10.00 $11.02 2,672 1/1/2007 to 12/31/2007 $11.02 $11.73 10,225 - ------------------------------------------------------------------------------------------------------------ AST Balanced Asset Allocation Portfolio 12/05/2005* to 12/31/2005 $10.00 $10.01 0 1/1/2006 to 12/31/2006 $10.01 $10.85 18,249 1/1/2007 to 12/31/2007 $10.85 $11.49 19,931 - ------------------------------------------------------------------------------------------------------------ AST Conservative Asset Allocation Portfolio 12/05/2005* to 12/31/2005 $10.00 $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.74 0 1/1/2007 to 12/31/2007 $10.74 $11.36 4,610 - ------------------------------------------------------------------------------------------------------------ AST Preservation Asset Allocation Portfolio 12/05/2005* to 12/31/2005 $10.00 $10.03 0 1/1/2006 to 12/31/2006 $10.03 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $11.07 0 - ------------------------------------------------------------------------------------------------------------ AST Advanced Strategies Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.54 0 1/1/2007 to 12/31/2007 $10.54 $11.20 7,920 - ------------------------------------------------------------------------------------------------------------ AST First Trust Balanced Target Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.47 0 1/1/2007 to 12/31/2007 $10.47 $11.02 5,264 - ------------------------------------------------------------------------------------------------------------ AST First Trust Capital Appreciation Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.37 0 1/1/2007 to 12/31/2007 $10.37 $11.20 5,929 - ------------------------------------------------------------------------------------------------------------ AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.49 0 - ------------------------------------------------------------------------------------------------------------ AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.02 0 - ------------------------------------------------------------------------------------------------------------ AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 0 - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.15 0 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 0 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.96 0
* Denotes the start date of these sub-accounts. A-50 ASXT SIX Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 $8.56 2,569,506 1/1/2003 to 12/31/2003 $8.56 $11.00 2,415,394 1/1/2004 to 12/31/2004 $11.00 $12.67 3,227,381 1/1/2005 to 12/31/2005 $12.67 $13.84 5,621,836 1/1/2006 to 12/31/2006 $13.84 $16.71 4,715,269 1/1/2007 to 12/31/2007 $16.71 $17.98 4,504,935 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 $9.72 835,523 1/1/2003 to 12/31/2003 $9.72 $13.39 5,547,558 1/1/2004 to 12/31/2004 $13.39 $15.30 11,265,469 1/1/2005 to 12/31/2005 $15.30 $17.54 12,141,522 1/1/2006 to 12/31/2006 $17.54 $20.87 9,628,446 1/1/2007 to 12/31/2007 $20.87 $24.43 8,347,423 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 $8.19 269,995 1/1/2003 to 12/31/2003 $8.19 $10.79 1,201,268 1/1/2004 to 12/31/2004 $10.79 $12.84 1,897,469 1/1/2005 to 12/31/2005 $12.84 $14.36 2,013,544 1/1/2006 to 12/31/2006 $14.36 $18.00 3,305,620 1/1/2007 to 12/31/2007 $18.00 $20.85 4,044,519 - --------------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2002 to 12/31/2002 $9.04 969,509 1/1/2003 to 12/31/2003 $9.04 $11.30 1,393,001 1/1/2004 to 12/31/2004 $11.30 $13.16 2,276,801 1/1/2005 to 12/31/2005 $13.16 $13.92 1,907,776 1/1/2006 to 12/31/2006 $13.92 $17.02 2,905,252 1/1/2007 to 12/31/2007 $17.02 $18.31 2,119,181 - --------------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 $6.92 1,970,250 1/1/2003 to 12/31/2003 $6.92 $9.89 3,292,593 1/1/2004 to 12/31/2004 $9.89 $9.05 2,242,129 1/1/2005 to 12/31/2005 $9.05 $9.04 2,134,730 1/1/2006 to 12/31/2006 $9.04 $10.01 1,867,490 1/1/2007 to 12/31/2007 $10.01 $10.55 1,740,242 - --------------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 $7.67 639,695 1/1/2003 to 12/31/2003 $7.67 $11.13 1,682,193 1/1/2004 to 12/31/2004 $11.13 $11.98 1,618,719 1/1/2005 to 12/31/2005 $11.98 $11.83 1,385,430 1/1/2006 to 12/31/2006 $11.83 $12.53 1,174,654 1/1/2007 to 12/31/2007 $12.53 $14.63 1,215,825
A-51
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------ AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 $7.64 1,255,415 1/1/2003 to 12/31/2003 $7.64 $12.74 3,085,373 1/1/2004 to 12/31/2004 $12.74 $15.42 4,808,453 1/1/2005 to 12/31/2005 $15.42 $16.60 5,464,856 1/1/2006 to 12/31/2006 $16.60 $18.43 4,641,175 1/1/2007 to 12/31/2007 $18.43 $20.16 4,026,646 - ------------------------------------------------------------------------------------------ AST Goldman Sachs Small-Cap Value 1/1/2002 to 12/31/2002 $9.26 1,492,775 1/1/2003 to 12/31/2003 $9.26 $12.85 1,504,296 1/1/2004 to 12/31/2004 $12.85 $15.19 1,541,896 1/1/2005 to 12/31/2005 $15.19 $15.68 1,243,642 1/1/2006 to 12/31/2006 $15.68 $18.08 1,000,596 1/1/2007 to 12/31/2007 $18.08 $16.87 758,170 - ------------------------------------------------------------------------------------------ AST Small-Cap Value 1/1/2002 to 12/31/2002 $9.30 6,141,523 1/1/2003 to 12/31/2003 $9.30 $12.42 10,183,346 1/1/2004 to 12/31/2004 $12.42 $14.22 10,785,030 1/1/2005 to 12/31/2005 $14.22 $14.91 11,285,282 1/1/2006 to 12/31/2006 $14.91 $17.61 9,098,178 1/1/2007 to 12/31/2007 $17.61 $16.34 8,130,632 - ------------------------------------------------------------------------------------------ AST DeAM Small-Cap Value 1/1/2002 to 12/31/2002 $7.66 423,387 1/1/2003 to 12/31/2003 $7.66 $10.81 1,134,865 1/1/2004 to 12/31/2004 $10.81 $12.99 2,143,020 1/1/2005 to 12/31/2005 $12.99 $12.92 2,106,236 1/1/2006 to 12/31/2006 $12.92 $15.25 1,874,276 1/1/2007 to 12/31/2007 $15.25 $12.33 1,578,237 - ------------------------------------------------------------------------------------------ AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.97 1,273,118 1/1/2003 to 12/31/2003 $7.97 $10.31 3,027,057 1/1/2004 to 12/31/2004 $10.31 $11.80 4,375,813 1/1/2005 to 12/31/2005 $11.80 $12.16 5,391,424 1/1/2006 to 12/31/2006 $12.16 $12.71 4,189,111 1/1/2007 to 12/31/2007 $12.71 $14.92 3,918,725 - ------------------------------------------------------------------------------------------ AST Neuberger Berman Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.41 2,175,250 1/1/2003 to 12/31/2003 $7.41 $9.51 3,415,318 1/1/2004 to 12/31/2004 $9.51 $10.86 4,715,301 1/1/2005 to 12/31/2005 $10.86 $12.12 5,728,446 1/1/2006 to 12/31/2006 $12.12 $13.59 5,378,198 1/1/2007 to 12/31/2007 $13.59 $16.34 6,560,811 - ------------------------------------------------------------------------------------------ AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 $8.96 5,118,558 1/1/2003 to 12/31/2003 $8.96 $12.01 8,530,129 1/1/2004 to 12/31/2004 $12.01 $14.51 11,461,684 1/1/2005 to 12/31/2005 $14.51 $15.99 12,260,007 1/1/2006 to 12/31/2006 $15.99 $17.42 9,574,218 1/1/2007 to 12/31/2007 $17.42 $17.67 8,191,847
A-52
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 1/1/2002 to 12/31/2002 $6.80 658,419 1/1/2003 to 12/31/2003 $6.80 $9.07 2,002,166 1/1/2004 to 12/31/2004 $9.07 $9.67 1,798,457 1/1/2005 to 12/2/2005 $9.67 $11.10 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2002 to 12/31/2002 $8.17 1,200,225 1/1/2003 to 12/31/2003 $8.17 $10.91 2,513,413 1/1/2004 to 12/31/2004 $10.91 $12.38 2,587,064 1/1/2005 to 12/31/2005 $12.38 $12.83 1,988,252 1/1/2006 to 12/31/2006 $12.83 $14.42 1,907,063 1/1/2007 to 12/31/2007 $14.42 $14.57 1,540,522 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2002 to 12/31/2002 $9.59 724,670 1/1/2003 to 12/31/2003 $9.59 $12.59 2,011,627 1/1/2004 to 12/31/2004 $12.59 $16.25 2,040,188 1/1/2005 to 12/31/2005 $16.25 $21.00 3,677,614 1/1/2006 to 12/31/2006 $21.00 $23.93 2,942,718 1/1/2007 to 12/31/2007 $23.93 $33.07 3,950,105 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 $7.46 1,869,353 1/1/2003 to 12/31/2003 $7.46 $9.08 2,098,873 1/1/2004 to 12/31/2004 $9.08 $9.44 2,378,881 1/1/2005 to 12/31/2005 $9.44 $10.81 3,925,740 1/1/2006 to 12/31/2006 $10.81 $11.23 4,132,529 1/1/2007 to 12/31/2007 $11.23 $11.96 5,137,246 - -------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 $7.58 2,930,432 1/1/2003 to 12/31/2003 $7.58 $9.16 4,784,269 1/1/2004 to 12/31/2004 $9.16 $9.97 4,529,834 1/1/2005 to 12/31/2005 $9.97 $10.43 5,915,443 1/1/2006 to 12/31/2006 $10.43 $11.25 4,572,301 1/1/2007 to 12/31/2007 $11.25 $12.73 3,902,210 - -------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 $8.32 10,144,317 1/1/2003 to 12/31/2003 $8.32 $10.78 20,138,164 1/1/2004 to 12/31/2004 $10.78 $12.26 28,117,310 1/1/2005 to 12/31/2005 $12.26 $12.88 32,140,125 1/1/2006 to 12/31/2006 $12.88 $13.59 26,497,526 1/1/2007 to 12/31/2007 $13.59 $15.36 23,963,028 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2002 to 12/31/2002 $7.67 1,349,939 1/1/2003 to 12/31/2003 $7.67 $9.45 2,053,023 1/1/2004 to 12/31/2004 $9.45 $9.64 2,785,100 1/1/2005 to 12/31/2005 $9.64 $9.80 2,531,900 1/1/2006 to 12/31/2006 $9.80 $10.60 2,498,654 1/1/2007 to 12/31/2007 $10.60 $11.88 2,806,534 - -------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2002 to 12/31/2002 $8.66 664,649 1/1/2003 to 12/31/2003 $8.66 $10.78 1,072,256 1/1/2004 to 12/31/2004 $10.78 $12.53 2,351,197 1/1/2005 to 12/31/2005 $12.53 $13.47 2,585,881 1/1/2006 to 12/31/2006 $13.47 $16.13 4,397,725 1/1/2007 to 12/31/2007 $16.13 $16.05 3,751,417
A-53
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2002 to 12/31/2002 $7.99 965,912 1/1/2003 to 12/31/2003 $7.99 $9.91 1,387,072 1/1/2004 to 12/31/2004 $9.91 $10.72 1,620,391 1/1/2005 to 12/2/2005 $10.72 $11.86 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 $8.76 6,005,922 1/1/2003 to 12/31/2003 $8.76 $11.06 3,621,862 1/1/2004 to 12/31/2004 $11.06 $12.39 4,643,022 1/1/2005 to 12/31/2005 $12.39 $12.86 4,311,857 1/1/2006 to 12/31/2006 $12.86 $15.34 5,318,094 1/1/2007 to 12/31/2007 $15.34 $14.55 4,469,636 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2002 to 12/31/2002 $10.08 1,563,489 1/1/2003 to 12/31/2003 $10.08 $13.63 3,097,315 1/1/2004 to 12/31/2004 $13.63 $18.49 4,080,179 1/1/2005 to 12/31/2005 $18.49 $20.88 3,749,124 1/1/2006 to 12/31/2006 $20.88 $28.08 3,925,105 1/1/2007 to 12/31/2007 $28.08 $22.11 2,254,421 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2002 to 12/31/2002 $8.17 3,662,406 1/1/2003 to 12/31/2003 $8.17 $10.23 5,442,511 1/1/2004 to 12/31/2004 $10.23 $11.07 6,845,369 1/1/2005 to 12/31/2005 $11.07 $11.27 6,774,078 1/1/2006 to 12/31/2006 $11.27 $12.48 6,255,253 1/1/2007 to 12/31/2007 $12.48 $12.53 5,371,782 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2002 to 12/31/2002 $8.25 1,751,136 1/1/2003 to 12/31/2003 $8.25 $10.45 2,115,438 1/1/2004 to 12/31/2004 $10.45 $11.57 4,670,846 1/1/2005 to 12/31/2005 $11.57 $11.90 4,205,655 1/1/2006 to 12/31/2006 $11.90 $13.68 3,984,557 1/1/2007 to 12/31/2007 $13.68 $13.44 3,435,528 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 $8.06 6,667,373 1/1/2003 to 12/31/2003 $8.06 $10.50 21,264,670 1/1/2004 to 12/31/2004 $10.50 $11.46 25,850,506 1/1/2005 to 12/31/2005 $11.46 $11.81 31,190,346 1/1/2006 to 12/31/2006 $11.81 $13.62 23,350,650 1/1/2007 to 12/31/2007 $13.62 $14.08 19,997,748 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 $8.34 2,110,071 1/1/2003 to 12/31/2003 $8.34 $9.83 2,647,064 1/1/2004 to 12/31/2004 $9.83 $11.17 3,717,848 1/1/2005 to 12/31/2005 $11.17 $11.69 5,245,455 1/1/2006 to 12/31/2006 $11.69 $13.62 5,568,043 1/1/2007 to 12/31/2007 $13.62 $13.00 4,973,375
A-54
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2002 to 12/31/2002 $8.71 847,517 1/1/2003 to 12/31/2003 $8.71 $10.24 898,161 1/1/2004 to 12/31/2004 $10.24 $11.19 1,061,887 1/1/2005 to 12/31/2005 $11.19 $11.77 1,055,033 1/1/2006 to 12/31/2006 $11.77 $12.86 1,120,866 1/1/2007 to 12/31/2007 $12.86 $12.90 2,745,236 - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2002 to 12/31/2002 $9.14 1,126,058 1/1/2003 to 12/31/2003 $9.14 $10.69 2,045,205 1/1/2004 to 12/31/2004 $10.69 $11.46 2,335,598 1/1/2005 to 12/31/2005 $11.46 $11.79 2,294,531 1/1/2006 to 12/31/2006 $11.79 $12.72 2,165,859 1/1/2007 to 12/31/2007 $12.72 $13.62 2,277,264 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2002 to 12/31/2002 $9.09 921,329 1/1/2003 to 12/31/2003 $9.09 $11.09 2,243,566 1/1/2004 to 12/31/2004 $11.09 $12.13 3,551,315 1/1/2005 to 12/31/2005 $12.13 $12.49 4,192,626 1/1/2006 to 12/31/2006 $12.49 $13.82 4,776,442 1/1/2007 to 12/31/2007 $13.82 $14.45 6,387,795 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 $11.34 1,739,313 1/1/2003 to 12/31/2003 $11.34 $12.59 2,962,471 1/1/2004 to 12/31/2004 $12.59 $13.45 4,717,822 1/1/2005 to 12/31/2005 $13.45 $12.64 6,261,824 1/1/2006 to 12/31/2006 $12.64 $13.21 6,093,700 1/1/2007 to 12/31/2007 $13.21 $14.24 6,452,566 - --------------------------------------------------------------------------------------------------------- AST High Yield 1/1/2002 to 12/31/2002 $9.71 5,592,940 1/1/2003 to 12/31/2003 $9.71 $11.61 12,201,163 1/1/2004 to 12/31/2004 $11.61 $12.69 13,717,128 1/1/2005 to 12/31/2005 $12.69 $12.62 9,658,908 1/1/2006 to 12/31/2006 $12.62 $13.70 9,653,937 1/1/2007 to 12/31/2007 $13.70 $13.80 6,461,538 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 $9.94 4,146,530 1/1/2003 to 12/31/2003 $9.94 $11.61 7,751,236 1/1/2004 to 12/31/2004 $11.61 $12.26 8,369,008 1/1/2005 to 12/31/2005 $12.26 $12.20 12,427,806 1/1/2006 to 12/31/2006 $12.20 $13.17 10,147,675 1/1/2007 to 12/31/2007 $13.17 $13.74 8,365,789 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 $10.57 20,544,075 1/1/2003 to 12/31/2003 $10.57 $10.95 26,287,388 1/1/2004 to 12/31/2004 $10.95 $11.31 33,208,757 1/1/2005 to 12/31/2005 $11.31 $11.40 22,436,395 1/1/2006 to 12/31/2006 $11.40 $11.63 21,700,661 1/1/2007 to 12/31/2007 $11.63 $12.39 21,645,194
A-55
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 $10.34 11,274,642 1/1/2003 to 12/31/2003 $10.34 $10.51 15,242,856 1/1/2004 to 12/31/2004 $10.51 $10.55 21,299,789 1/1/2005 to 12/31/2005 $10.55 $10.54 28,031,653 1/1/2006 to 12/31/2006 $10.54 $10.76 22,394,558 1/1/2007 to 12/31/2007 $10.76 $11.31 20,392,150 - ------------------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 $9.96 36,255,772 1/1/2003 to 12/31/2003 $9.96 $9.86 32,730,501 1/1/2004 to 12/31/2004 $9.86 $9.78 29,870,585 1/1/2005 to 12/31/2005 $9.78 $9.88 42,442,274 1/1/2006 to 12/31/2006 $9.88 $10.16 46,325,237 1/1/2007 to 12/31/2007 $10.16 $10.48 56,111,128 - ------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2002 to 12/31/2002 $8.66 283,466 1/1/2003 to 12/31/2003 $8.66 $13.60 1,763,660 1/1/2004 to 12/31/2004 $13.60 $16.02 2,103,950 1/1/2005 to 12/31/2005 $16.02 $20.72 3,395,891 1/1/2006 to 12/31/2006 $20.72 $27.43 2,835,328 1/1/2007 to 12/31/2007 $27.43 $38.71 3,344,620 - ------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2002 to 12/31/2002 $8.25 196,720 1/1/2003 to 12/31/2003 $8.25 $10.23 314,757 1/1/2004 to 12/31/2004 $10.23 $11.18 590,808 1/1/2005 to 12/31/2005 $11.18 $11.59 534,649 1/1/2006 to 12/31/2006 $11.59 $13.51 582,613 1/1/2007 to 12/31/2007 $13.51 $13.66 497,296 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2002 to 12/31/2002 $7.09 543,762 1/1/2003 to 12/31/2003 $7.09 $9.61 889,464 1/1/2004 to 12/31/2004 $9.61 $10.72 668,032 1/1/2005 to 12/31/2005 $10.72 $11.67 602,064 1/1/2006 to 12/31/2006 $11.67 $13.33 605,730 1/1/2007 to 12/31/2007 $13.33 $14.70 631,476 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2002 to 12/31/2002 $5.50 293,307 1/1/2003 to 12/31/2003 $5.50 $7.87 578,651 1/1/2004 to 12/31/2004 $7.87 $8.09 512,424 1/1/2005 to 12/31/2005 $8.09 $8.13 453,391 1/1/2006 to 12/31/2006 $8.13 $8.84 513,442 1/1/2007 to 12/31/2007 $8.84 $9.36 630,739 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2002 to 12/31/2002 $8.00 475,873 1/1/2003 to 12/31/2003 $8.00 $10.05 698,364 1/1/2004 to 12/31/2004 $10.05 $10.64 937,586 1/1/2005 to 12/31/2005 $10.64 $11.31 1,131,375 1/1/2006 to 12/31/2006 $11.31 $11.71 1,250,782 1/1/2007 to 12/31/2007 $11.71 $12.88 1,163,277
A-56
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2002 to 12/31/2002 $8.76 366,258 1/1/2003 to 12/31/2003 $8.76 $11.17 607,265 1/1/2004 to 12/31/2004 $11.17 $11.94 585,185 1/1/2005 to 12/31/2005 $11.94 $12.43 1,042,992 1/1/2006 to 12/31/2006 $12.43 $14.24 778,674 1/1/2007 to 12/31/2007 $14.24 $10.89 465,175 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 $8.15 113,389 1/1/2003 to 12/31/2003 $8.15 $11.65 189,143 1/1/2004 to 12/31/2004 $11.65 $13.66 414,631 1/1/2005 to 12/31/2005 $13.66 $15.59 689,816 1/1/2006 to 12/31/2006 $15.59 $18.88 1,081,552 1/1/2007 to 12/31/2007 $18.88 $21.35 1,401,663 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2002 to 12/31/2002 $7.44 127,728 1/1/2003 to 12/31/2003 $7.44 $11.12 815,621 1/1/2004 to 12/31/2004 $11.12 $11.58 702,642 1/1/2005 to 4/15/2005 $11.58 $10.31 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 $7.78 39,943 1/1/2003 to 12/31/2003 $7.78 $10.71 404,789 1/1/2004 to 12/31/2004 $10.71 $11.29 570,123 1/1/2005 to 12/31/2005 $11.29 $11.53 281,775 1/1/2006 to 12/31/2006 $11.53 $12.03 241,307 1/1/2007 to 12/31/2007 $12.03 $13.24 249,298 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.44 606,614 1/1/2006 to 12/31/2006 $11.44 $12.49 553,827 1/1/2007 to 12/31/2007 $12.49 $13.64 604,401 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2002 to 12/31/2002 $7.93 292,396 1/1/2003 to 12/31/2003 $7.93 $10.83 2,116,400 1/1/2004 to 12/31/2004 $10.83 $12.17 1,812,435 1/1/2005 to 12/31/2005 $12.17 $12.94 1,133,421 1/1/2006 to 12/31/2006 $12.94 $14.95 2,790,577 1/1/2007 to 12/31/2007 $14.95 $16.85 1,487,885 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 1/1/2002 to 12/31/2002 $7.75 281,993 1/1/2003 to 12/31/2003 $7.75 $12.57 942,605 1/1/2004 to 12/31/2004 $12.57 $12.30 896,010 1/1/2005 to 12/31/2005 $12.30 $14.45 1,723,105 1/1/2006 to 12/31/2006 $14.45 $19.80 3,073,769 1/1/2007 to 12/31/2007 $19.80 $28.77 2,473,589 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 1/1/2002 to 12/31/2002 $7.24 65,845 1/1/2003 to 12/31/2003 $7.24 $9.03 426,718 1/1/2004 to 12/31/2004 $9.03 $9.55 710,879 1/1/2005 to 12/31/2005 $9.55 $13.31 3,413,955 1/1/2006 to 12/31/2006 $13.31 $14.51 1,650,266 1/1/2007 to 12/31/2007 $14.51 $12.85 552,230
A-57
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Banks 1/1/2002 to 12/31/2002 $8.56 101,136 1/1/2003 to 12/31/2003 $8.56 $10.90 93,067 1/1/2004 to 12/31/2004 $10.90 $11.98 229,711 1/1/2005 to 12/31/2005 $11.98 $11.77 351,876 1/1/2006 to 12/31/2006 $11.77 $13.35 402,883 1/1/2007 to 12/31/2007 $13.35 $9.55 389,926 - ------------------------------------------------------------------------------------ ProFund VP--Basic Materials 1/1/2002 to 12/31/2002 $8.46 76,331 1/1/2003 to 12/31/2003 $8.46 $10.95 1,512,864 1/1/2004 to 12/31/2004 $10.95 $11.87 529,237 1/1/2005 to 12/31/2005 $11.87 $11.96 681,692 1/1/2006 to 12/31/2006 $11.96 $13.58 779,466 1/1/2007 to 12/31/2007 $13.58 $17.45 2,684,333 - ------------------------------------------------------------------------------------ ProFund VP--Biotechnology 1/1/2002 to 12/31/2002 $7.09 130,082 1/1/2003 to 12/31/2003 $7.09 $9.75 208,971 1/1/2004 to 12/31/2004 $9.75 $10.52 757,678 1/1/2005 to 12/31/2005 $10.52 $12.34 697,686 1/1/2006 to 12/31/2006 $12.34 $11.64 393,923 1/1/2007 to 12/31/2007 $11.64 $11.31 609,746 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Services 1/1/2002 to 12/31/2002 $7.25 128,022 1/1/2003 to 12/31/2003 $7.25 $9.04 136,269 1/1/2004 to 12/31/2004 $9.04 $9.56 430,620 1/1/2005 to 12/31/2005 $9.56 $8.97 86,431 1/1/2006 to 12/31/2006 $8.97 $9.88 192,639 1/1/2007 to 12/31/2007 $9.88 $8.91 67,292 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Goods 1/1/2002 to 12/31/2002 $8.28 148,446 1/1/2003 to 12/31/2003 $8.28 $9.64 58,425 1/1/2004 to 12/31/2004 $9.64 $10.36 369,007 1/1/2005 to 12/31/2005 $10.36 $10.15 161,037 1/1/2006 to 12/31/2006 $10.15 $11.25 548,567 1/1/2007 to 12/31/2007 $11.25 $11.90 715,235 - ------------------------------------------------------------------------------------ ProFund VP--Oil & Gas 1/1/2002 to 12/31/2002 $8.71 299,833 1/1/2003 to 12/31/2003 $8.71 $10.48 1,225,844 1/1/2004 to 12/31/2004 $10.48 $13.33 1,856,882 1/1/2005 to 12/31/2005 $13.33 $17.22 2,573,776 1/1/2006 to 12/31/2006 $17.22 $20.43 2,251,126 1/1/2007 to 12/31/2007 $20.43 $26.61 2,322,451 - ------------------------------------------------------------------------------------ ProFund VP--Financial 1/1/2002 to 12/31/2002 $8.85 221,377 1/1/2003 to 12/31/2003 $8.85 $11.23 398,159 1/1/2004 to 12/31/2004 $11.23 $12.19 553,342 1/1/2005 to 12/31/2005 $12.19 $12.46 616,873 1/1/2006 to 12/31/2006 $12.46 $14.38 913,872 1/1/2007 to 12/31/2007 $14.38 $11.44 498,292
A-58
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Healthcare 1/1/2002 to 12/31/2002 $7.94 388,508 1/1/2003 to 12/31/2003 $7.94 $9.17 707,449 1/1/2004 to 12/31/2004 $9.17 $9.23 1,318,525 1/1/2005 to 12/31/2005 $9.23 $9.63 2,175,821 1/1/2006 to 12/31/2006 $9.63 $9.96 2,106,409 1/1/2007 to 12/31/2007 $9.96 $10.44 2,120,859 - ------------------------------------------------------------------------------------ ProFund VP--Industrial 1/1/2002 to 12/31/2002 $7.93 12,642 1/1/2003 to 12/31/2003 $7.93 $10.01 318,339 1/1/2004 to 12/31/2004 $10.01 $11.15 253,411 1/1/2005 to 12/31/2005 $11.15 $11.23 211,677 1/1/2006 to 12/31/2006 $11.23 $12.33 242,684 1/1/2007 to 12/31/2007 $12.33 $13.55 708,921 - ------------------------------------------------------------------------------------ ProFund VP--Internet 1/1/2002 to 12/31/2002 $8.57 306,572 1/1/2003 to 12/31/2003 $8.57 $15.00 206,876 1/1/2004 to 12/31/2004 $15.00 $17.89 992,879 1/1/2005 to 12/31/2005 $17.89 $18.90 467,320 1/1/2006 to 12/31/2006 $18.90 $18.84 200,072 1/1/2007 to 12/31/2007 $18.84 $20.42 435,015 - ------------------------------------------------------------------------------------ ProFund VP--Pharmaceuticals 1/1/2002 to 12/31/2002 $8.56 136,559 1/1/2003 to 12/31/2003 $8.56 $8.89 266,978 1/1/2004 to 12/31/2004 $8.89 $7.93 527,336 1/1/2005 to 12/31/2005 $7.93 $7.51 515,768 1/1/2006 to 12/31/2006 $7.51 $8.28 716,678 1/1/2007 to 12/31/2007 $8.28 $8.33 492,538 - ------------------------------------------------------------------------------------ ProFund VP--Precious Metals 1/1/2002 to 12/31/2002 $9.70 1,175,651 1/1/2003 to 12/31/2003 $9.70 $13.29 1,329,806 1/1/2004 to 12/31/2004 $13.29 $11.77 1,479,384 1/1/2005 to 12/31/2005 $11.77 $14.62 2,426,530 1/1/2006 to 12/31/2006 $14.62 $15.44 2,487,596 1/1/2007 to 12/31/2007 $15.44 $18.60 3,177,702 - ------------------------------------------------------------------------------------ ProFund VP--Real Estate 1/1/2002 to 12/31/2002 $9.86 441,318 1/1/2003 to 12/31/2003 $9.86 $12.91 462,906 1/1/2004 to 12/31/2004 $12.91 $16.15 1,816,706 1/1/2005 to 12/31/2005 $16.15 $16.96 501,989 1/1/2006 to 12/31/2006 $16.96 $22.10 926,728 1/1/2007 to 12/31/2007 $22.10 $17.47 505,436 - ------------------------------------------------------------------------------------ ProFund VP--Semiconductor 1/1/2002 to 12/31/2002 $5.14 93,241 1/1/2003 to 12/31/2003 $5.14 $9.51 423,958 1/1/2004 to 12/31/2004 $9.51 $7.15 694,352 1/1/2005 to 12/31/2005 $7.15 $7.64 746,085 1/1/2006 to 12/31/2006 $7.64 $6.98 339,250 1/1/2007 to 12/31/2007 $6.98 $7.35 272,048
A-59
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2002 to 12/31/2002 $6.03 254,131 1/1/2003 to 12/31/2003 $6.03 $8.66 497,972 1/1/2004 to 12/31/2004 $8.66 $8.48 727,580 1/1/2005 to 12/31/2005 $8.48 $8.45 577,739 1/1/2006 to 12/31/2006 $8.45 $8.98 673,628 1/1/2007 to 12/31/2007 $8.98 $10.10 1,668,456 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2002 to 12/31/2002 $7.15 272,408 1/1/2003 to 12/31/2003 $7.15 $7.21 398,350 1/1/2004 to 12/31/2004 $7.21 $8.19 460,848 1/1/2005 to 12/31/2005 $8.19 $7.52 456,586 1/1/2006 to 12/31/2006 $7.52 $9.93 1,277,316 1/1/2007 to 12/31/2007 $9.93 $10.59 1,098,402 - ------------------------------------------------------------------------------------- ProFund VP--Utilities 1/1/2002 to 12/31/2002 $7.83 521,419 1/1/2003 to 12/31/2003 $7.83 $9.34 618,427 1/1/2004 to 12/31/2004 $9.34 $11.13 1,060,939 1/1/2005 to 12/31/2005 $11.13 $12.37 1,996,877 1/1/2006 to 12/31/2006 $12.37 $14.51 2,195,309 1/1/2007 to 12/31/2007 $14.51 $16.52 3,808,582 - ------------------------------------------------------------------------------------- ProFund VP--Bull 1/1/2002 to 12/31/2002 $7.97 954,792 1/1/2003 to 12/31/2003 $7.97 $9.84 3,563,562 1/1/2004 to 12/31/2004 $9.84 $10.53 8,215,357 1/1/2005 to 12/31/2005 $10.53 $10.64 7,846,866 1/1/2006 to 12/31/2006 $10.64 $11.90 7,031,661 1/1/2007 to 12/31/2007 $11.90 $12.12 4,013,033 - ------------------------------------------------------------------------------------- ProFund VP--Bear 1/1/2002 to 12/31/2002 $11.38 1,532,543 1/1/2003 to 12/31/2003 $11.38 $8.44 1,886,515 1/1/2004 to 12/31/2004 $8.44 $7.45 1,202,243 1/1/2005 to 12/31/2005 $7.45 $7.23 2,169,662 1/1/2006 to 12/31/2006 $7.23 $6.57 1,868,606 1/1/2007 to 12/31/2007 $6.57 $6.50 1,722,065 - ------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 1/1/2002 to 12/31/2002 $6.78 297,435 1/1/2003 to 12/31/2003 $6.78 $10.20 1,431,345 1/1/2004 to 12/31/2004 $10.20 $11.76 2,817,803 1/1/2005 to 12/31/2005 $11.76 $11.87 1,158,025 1/1/2006 to 12/31/2006 $11.87 $14.36 1,596,920 1/1/2007 to 12/31/2007 $14.36 $14.24 1,964,725 - ------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 1/1/2002 to 12/31/2002 $6.45 1,346,852 1/1/2003 to 12/31/2003 $6.45 $9.32 4,445,234 1/1/2004 to 12/31/2004 $9.32 $9.94 4,885,351 1/1/2005 to 12/31/2005 $9.94 $9.80 2,467,486 1/1/2006 to 12/31/2006 $9.80 $10.16 1,764,614 1/1/2007 to 12/31/2007 $10.16 $11.76 2,265,084
A-60
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2002 to 12/31/2002 $11.00 433,181 1/1/2003 to 12/31/2003 $11.00 $6.78 1,535,439 1/1/2004 to 12/31/2004 $6.78 $5.93 908,064 1/1/2005 to 12/31/2005 $5.93 $5.88 2,494,112 1/1/2006 to 12/31/2006 $5.88 $5.70 1,891,265 1/1/2007 to 12/31/2007 $5.70 $4.96 860,024 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2002 to 12/31/2002 $3.53 1,003,123 1/1/2003 to 12/31/2003 $3.53 $7.03 3,410,589 1/1/2004 to 12/31/2004 $7.03 $7.89 6,592,447 1/1/2005 to 12/31/2005 $7.89 $7.47 4,740,165 1/1/2006 to 12/31/2006 $7.47 $7.70 2,319,572 1/1/2007 to 12/31/2007 $7.70 $9.73 4,024,405 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 1/1/2002 to 12/31/2002 $7.66 438,387 1/1/2003 to 12/31/2003 $7.66 $10.23 1,455,513 1/1/2004 to 12/31/2004 $10.23 $11.67 2,632,869 1/1/2005 to 12/31/2005 $11.67 $12.49 2,164,543 1/1/2006 to 12/31/2006 $12.49 $13.80 1,978,580 1/1/2007 to 12/31/2007 $13.80 $13.70 1,436,105 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.70 439,054 1/1/2003 to 12/31/2003 $7.70 $9.69 1,009,867 1/1/2004 to 12/31/2004 $9.69 $10.58 2,220,901 1/1/2005 to 12/31/2005 $10.58 $11.58 5,059,311 1/1/2006 to 12/31/2006 $11.58 $11.84 1,594,539 1/1/2007 to 12/31/2007 $11.84 $13.01 2,101,505 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 1/1/2002 to 12/31/2002 $5.71 477,953 1/1/2003 to 12/31/2003 $5.71 $9.55 1,112,311 1/1/2004 to 12/31/2004 $9.55 $11.99 3,106,849 1/1/2005 to 12/31/2005 $11.99 $13.91 1,935,487 1/1/2006 to 12/31/2006 $13.91 $15.14 1,588,771 1/1/2007 to 12/31/2007 $15.14 $15.77 1,072,846 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 1/1/2002 to 12/31/2002 $7.09 994,778 1/1/2003 to 12/31/2003 $7.09 $9.39 5,144,632 1/1/2004 to 12/31/2004 $9.39 $11.10 4,088,760 1/1/2005 to 12/31/2005 $11.10 $11.35 1,398,442 1/1/2006 to 12/31/2006 $11.35 $13.11 2,446,357 1/1/2007 to 12/31/2007 $13.11 $11.96 714,107 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 1/1/2002 to 12/31/2002 $7.69 772,260 1/1/2003 to 12/31/2003 $7.69 $10.16 3,868,951 1/1/2004 to 12/31/2004 $10.16 $11.98 4,677,820 1/1/2005 to 12/31/2005 $11.98 $12.67 4,579,887 1/1/2006 to 12/31/2006 $12.67 $13.54 1,643,633 1/1/2007 to 12/31/2007 $13.54 $13.85 676,467
A-61
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2002 to 12/31/2002 $6.14 212,085 1/1/2003 to 12/31/2003 $6.14 $12.04 1,702,558 1/1/2004 to 12/31/2004 $12.04 $15.52 5,098,565 1/1/2005 to 12/31/2005 $15.52 $15.23 816,755 1/1/2006 to 12/31/2006 $15.23 $18.87 1,580,595 1/1/2007 to 12/31/2007 $18.87 $16.11 527,856 - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2002 to 12/31/2002 $11.56 2,486,854 1/1/2003 to 12/31/2003 $11.56 $11.08 731,470 1/1/2004 to 12/31/2004 $11.08 $11.79 1,051,158 1/1/2005 to 12/31/2005 $11.79 $12.64 2,312,868 1/1/2006 to 12/31/2006 $12.64 $11.86 821,668 1/1/2007 to 12/31/2007 $11.86 $12.85 2,443,725 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2002 to 12/31/2002 $8.02 165,792 1/1/2003 to 12/31/2003 $8.02 $7.56 1,817,924 1/1/2004 to 12/31/2004 $7.56 $6.63 5,314,528 1/1/2005 to 12/31/2005 $6.63 $6.00 3,415,324 1/1/2006 to 12/31/2006 $6.00 $6.50 4,567,551 1/1/2007 to 12/31/2007 $6.50 $6.06 1,806,294 - --------------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.56 899,141 1/1/2006 to 12/31/2006 $10.56 $11.38 1,207,864 1/1/2007 to 12/31/2007 $11.38 $11.78 898,024 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2002 to 12/31/2002 $6.80 19,826 1/1/2003 to 12/31/2003 $6.80 $9.16 66,435 1/1/2004 to 12/31/2004 $9.16 $10.03 91,924 1/1/2005 to 12/31/2005 $10.03 $9.92 87,726 1/1/2006 to 12/31/2006 $9.92 $10.15 100,227 1/1/2007 to 12/31/2007 $10.15 $10.55 106,856 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $11.85 311,233 1/1/2005 to 12/31/2005 $11.85 $12.84 590,605 1/1/2006 to 12/31/2006 $12.84 $17.48 1,507,757 1/1/2007 to 12/31/2007 $17.48 $19.49 2,078,809 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $11.32 1,777,316 1/1/2005 to 12/31/2005 $11.32 $11.94 2,420,873 1/1/2006 to 12/31/2006 $11.94 $13.10 2,772,210 1/1/2007 to 12/31/2007 $13.10 $14.10 2,203,754
A-62
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.66 82,809 1/1/2005 to 12/31/2005 $10.66 $10.83 134,177 1/1/2006 to 12/31/2006 $10.83 $11.60 199,508 1/1/2007 to 12/31/2007 $11.60 $13.88 403,709 - --------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.75 173,851 1/1/2005 to 12/31/2005 $10.75 $11.01 304,840 1/1/2006 to 12/31/2006 $11.01 $11.14 290,152 1/1/2007 to 12/31/2007 $11.14 $11.42 274,858 - --------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.48 155,695 1/1/2005 to 12/31/2005 $10.48 $9.98 194,864 1/1/2006 to 12/31/2006 $9.98 $12.32 481,064 1/1/2007 to 12/31/2007 $12.32 $12.20 235,030 - --------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.76 1,240,527 1/1/2006 to 12/31/2006 $9.76 $11.34 2,310,768 1/1/2007 to 12/31/2007 $11.34 $11.28 2,000,024 - --------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $12.59 389,792 1/1/2005 to 12/31/2005 $12.59 $14.82 1,068,339 1/1/2006 to 12/31/2006 $14.82 $15.00 1,119,827 1/1/2007 to 12/31/2007 $15.00 $17.43 1,173,103 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 72,725 1/1/2005 to 12/31/2005 $10.37 $10.30 2,620,751 1/1/2006 to 12/31/2006 $10.30 $11.05 2,181,106 1/1/2007 to 12/31/2007 $11.05 $11.62 2,009,820 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 159,605 1/1/2005 to 12/31/2005 $10.37 $10.51 2,141,308 1/1/2006 to 12/31/2006 $10.51 $12.26 4,023,312 1/1/2007 to 12/31/2007 $12.26 $12.08 1,984,257
A-63
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ---------------------------------------------------------------------------------------------------- Profund VP Short Mid Cap 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.70 39,360 1/1/2005 to 12/31/2005 $9.70 $8.64 364,782 1/1/2006 to 12/31/2006 $8.64 $8.18 254,207 1/1/2007 to 12/31/2007 $8.18 $7.82 131,223 - ---------------------------------------------------------------------------------------------------- Profund VP Short Small-Cap 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.54 136,809 1/1/2005 to 12/31/2005 $9.54 $9.11 220,843 1/1/2006 to 12/31/2006 $9.11 $7.90 560,897 1/1/2007 to 12/31/2007 $7.90 $8.12 1,000,449 - ---------------------------------------------------------------------------------------------------- SP International Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.53 269,671 1/1/2005 to 12/31/2005 $10.53 $12.05 672,243 1/1/2006 to 12/31/2006 $12.05 $14.35 742,865 1/1/2007 to 12/31/2007 $14.35 $16.87 828,104 - ---------------------------------------------------------------------------------------------------- AST Aggressive Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.00 649,829 1/1/2006 to 12/31/2006 $10.00 $11.38 5,212,589 1/1/2007 to 12/31/2007 $11.38 $12.26 8,022,912 - ---------------------------------------------------------------------------------------------------- AST Capital Growth Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.01 2,586,012 1/1/2006 to 12/31/2006 $10.01 $11.19 23,048,850 1/1/2007 to 12/31/2007 $11.19 $12.07 31,465,957 - ---------------------------------------------------------------------------------------------------- AST Balanced Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.02 2,726,484 1/1/2006 to 12/31/2006 $10.02 $11.01 21,829,919 1/1/2007 to 12/31/2007 $11.01 $11.83 30,616,578 - ---------------------------------------------------------------------------------------------------- AST Conservative Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.03 685,724 1/1/2006 to 12/31/2006 $10.03 $10.90 7,315,279 1/1/2007 to 12/31/2007 $10.90 $11.70 12,873,620
A-64
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ AST Preservation Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.04 115,215 1/1/2006 to 12/31/2006 $10.04 $10.66 3,303,256 1/1/2007 to 12/31/2007 $10.66 $11.40 7,359,596 - ------------------------------------------------------------------------------------------------------------ AST Advanced Strategies Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.66 5,258,474 1/1/2007 to 12/31/2007 $10.66 $11.48 8,525,849 - ------------------------------------------------------------------------------------------------------------ AST First Trust Balanced Target Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.58 3,781,525 1/1/2007 to 12/31/2007 $10.58 $11.30 7,801,920 - ------------------------------------------------------------------------------------------------------------ AST First Trust Capital Appreciation Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.48 3,795,562 1/1/2007 to 12/31/2007 $10.48 $11.49 7,899,326 - ------------------------------------------------------------------------------------------------------------ AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.51 120,901 - ------------------------------------------------------------------------------------------------------------ AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.04 74,936 - ------------------------------------------------------------------------------------------------------------ AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.19 157,014 - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 39,143 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.00 50,892 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 213,630
* Denotes the start date of these sub-accounts. ASXT SIX Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV, and EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $13.32 0 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2005 to 12/31/2005 $11.16 0 1/1/2006 to 12/31/2006 $11.16 $13.10 0 1/1/2007 to 12/31/2007 $13.10 $15.12 0 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2005 to 12/31/2005 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.95 0
A-65
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2005 to 12/31/2005 $10.36 0 1/1/2006 to 12/31/2006 $10.36 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $13.25 0 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2005 to 12/31/2005 $10.31 0 1/1/2006 to 12/31/2006 $10.31 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $11.71 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.66 0 1/1/2007 to 12/31/2007 $10.66 $12.27 0 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2005 to 12/31/2005 $10.84 0 1/1/2006 to 12/31/2006 $10.84 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $12.80 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Small-Cap Value 1/1/2005 to 12/31/2005 $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $10.92 0 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $11.22 0 - -------------------------------------------------------------------------------------------- AST DeAM Small-Cap Value 1/1/2005 to 12/31/2005 $9.90 0 1/1/2006 to 12/31/2006 $9.90 $11.53 0 1/1/2007 to 12/31/2007 $11.53 $9.19 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2005 to 12/31/2005 $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.78 0 1/1/2007 to 12/31/2007 $10.78 $12.48 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Growth 1/1/2005 to 12/31/2005 $11.21 0 1/1/2006 to 12/31/2006 $11.21 $12.40 0 1/1/2007 to 12/31/2007 $12.40 $14.70 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2005 to 12/31/2005 $10.76 0 1/1/2006 to 12/31/2006 $10.76 $11.56 0 1/1/2007 to 12/31/2007 $11.56 $11.57 0 - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 1/1/2005 to 12/2/2005 $11.59 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2005 to 12/31/2005 $10.24 0 1/1/2006 to 12/31/2006 $10.24 $11.34 0 1/1/2007 to 12/31/2007 $11.34 $11.31 0 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2005 to 12/31/2005 $11.61 0 1/1/2006 to 12/31/2006 $11.61 $13.05 0 1/1/2007 to 12/31/2007 $13.05 $17.78 0
A-66
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2005 to 12/31/2005 $11.98 0 1/1/2006 to 12/31/2006 $11.98 $12.28 0 1/1/2007 to 12/31/2007 $12.28 $12.89 0 - ----------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2005 to 12/31/2005 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $12.63 0 - ----------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2005 to 12/31/2005 $10.78 0 1/1/2006 to 12/31/2006 $10.78 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $12.50 0 - ----------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2005 to 12/31/2005 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $12.55 0 - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2005 to 12/31/2005 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $12.51 0 1/1/2007 to 12/31/2007 $12.51 $12.28 0 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2005 to 12/2/2005 $11.21 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $11.22 0 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2005 to 12/31/2005 $11.88 0 1/1/2006 to 12/31/2006 $11.88 $15.76 0 1/1/2007 to 12/31/2007 $15.76 $12.24 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2005 to 12/31/2005 $10.28 0 1/1/2006 to 12/31/2006 $10.28 $11.23 0 1/1/2007 to 12/31/2007 $11.23 $11.12 0 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2005 to 12/31/2005 $10.22 0 1/1/2006 to 12/31/2006 $10.22 $11.58 0 1/1/2007 to 12/31/2007 $11.58 $11.22 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2005 to 12/31/2005 $10.15 0 1/1/2006 to 12/31/2006 $10.15 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.77 0 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2005 to 12/31/2005 $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.99 0 1/1/2007 to 12/31/2007 $11.99 $11.29 0 - ----------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2005 to 12/31/2005 $10.50 0 1/1/2006 to 12/31/2006 $10.50 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $11.20 0
A-67
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.85 0 1/1/2007 to 12/31/2007 $10.85 $11.46 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2005 to 12/31/2005 $10.24 0 1/1/2006 to 12/31/2006 $10.24 $11.17 0 1/1/2007 to 12/31/2007 $11.17 $11.52 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2005 to 12/31/2005 $9.34 0 1/1/2006 to 12/31/2006 $9.34 $9.63 0 1/1/2007 to 12/31/2007 $9.63 $10.24 0 - --------------------------------------------------------------------------------------------------------- AST High Yield 1/1/2005 to 12/31/2005 $9.75 0 1/1/2006 to 12/31/2006 $9.75 $10.43 0 1/1/2007 to 12/31/2007 $10.43 $10.37 0 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2005 to 12/31/2005 $9.84 0 1/1/2006 to 12/31/2006 $9.84 $10.48 0 1/1/2007 to 12/31/2007 $10.48 $10.78 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2005 to 12/31/2005 $10.04 0 1/1/2006 to 12/31/2006 $10.04 $10.10 0 1/1/2007 to 12/31/2007 $10.10 $10.61 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2005 to 12/31/2005 $9.94 0 1/1/2006 to 12/31/2006 $9.94 $10.01 0 1/1/2007 to 12/31/2007 $10.01 $10.37 0 - --------------------------------------------------------------------------------------------------------- AST Money Market 1/1/2005 to 12/31/2005 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $10.13 0 1/1/2007 to 12/31/2007 $10.13 $10.31 0 - --------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2005 to 12/31/2005 $11.93 0 1/1/2006 to 12/31/2006 $11.93 $15.57 0 1/1/2007 to 12/31/2007 $15.57 $21.67 0 - --------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2005 to 12/31/2005 $10.08 0 1/1/2006 to 12/31/2006 $10.08 $11.60 0 1/1/2007 to 12/31/2007 $11.60 $11.57 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2005 to 12/31/2005 $10.80 0 1/1/2006 to 12/31/2006 $10.80 $12.16 0 1/1/2007 to 12/31/2007 $12.16 $13.23 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2005 to 12/31/2005 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $11.36 0 1/1/2007 to 12/31/2007 $11.36 $11.87 0
A-68
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2005 to 12/31/2005 $11.04 0 1/1/2006 to 12/31/2006 $11.04 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $12.23 0 - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2005 to 12/31/2005 $10.62 0 1/1/2006 to 12/31/2006 $10.62 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $9.05 0 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2005 to 12/31/2005 $10.88 0 1/1/2006 to 12/31/2006 $10.88 $13.00 0 1/1/2007 to 12/31/2007 $13.00 $14.50 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2005 to 4/15/2005 $9.26 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2005 to 12/31/2005 $10.50 0 1/1/2006 to 12/31/2006 $10.50 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $11.72 0 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2005 to 12/31/2005 $11.33 0 1/1/2006 to 12/31/2006 $11.33 $12.20 0 1/1/2007 to 12/31/2007 $12.20 $13.14 0 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2005 to 12/31/2005 $10.41 0 1/1/2006 to 12/31/2006 $10.41 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $13.19 0 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 1/1/2005 to 12/31/2005 $11.10 0 1/1/2006 to 12/31/2006 $11.10 $14.99 0 1/1/2007 to 12/31/2007 $14.99 $21.48 0 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 1/1/2005 to 12/31/2005 $13.38 0 1/1/2006 to 12/31/2006 $13.38 $14.38 0 1/1/2007 to 12/31/2007 $14.38 $12.56 0 - ----------------------------------------------------------------------------------------- ProFund VP--Banks 1/1/2005 to 12/31/2005 $10.10 0 1/1/2006 to 12/31/2006 $10.10 $11.31 0 1/1/2007 to 12/31/2007 $11.31 $7.98 0 - ----------------------------------------------------------------------------------------- ProFund VP--Basic Materials 1/1/2005 to 12/31/2005 $9.48 0 1/1/2006 to 12/31/2006 $9.48 $10.62 0 1/1/2007 to 12/31/2007 $10.62 $13.46 0 - ----------------------------------------------------------------------------------------- ProFund VP--Biotechnology 1/1/2005 to 12/31/2005 $13.48 0 1/1/2006 to 12/31/2006 $13.48 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $12.03 0 - ----------------------------------------------------------------------------------------- ProFund VP--Consumer Services 1/1/2005 to 12/31/2005 $9.66 0 1/1/2006 to 12/31/2006 $9.66 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $9.34 0
A-69
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Consumer Goods 1/1/2005 to 12/31/2005 $9.73 0 1/1/2006 to 12/31/2006 $9.73 $10.63 0 1/1/2007 to 12/31/2007 $10.63 $11.09 0 - ------------------------------------------------------------------------------------- ProFund VP--Oil & Gas 1/1/2005 to 12/31/2005 $10.92 0 1/1/2006 to 12/31/2006 $10.92 $12.78 0 1/1/2007 to 12/31/2007 $12.78 $16.42 0 - ------------------------------------------------------------------------------------- ProFund VP--Financial 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $11.98 0 1/1/2007 to 12/31/2007 $11.98 $9.40 0 - ------------------------------------------------------------------------------------- ProFund VP--Healthcare 1/1/2005 to 12/31/2005 $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.68 0 1/1/2007 to 12/31/2007 $10.68 $11.04 0 - ------------------------------------------------------------------------------------- ProFund VP--Industrial 1/1/2005 to 12/31/2005 $10.06 0 1/1/2006 to 12/31/2006 $10.06 $10.90 0 1/1/2007 to 12/31/2007 $10.90 $11.81 0 - ------------------------------------------------------------------------------------- ProFund VP--Internet 1/1/2005 to 12/31/2005 $12.71 0 1/1/2006 to 12/31/2006 $12.71 $12.50 0 1/1/2007 to 12/31/2007 $12.50 $13.36 0 - ------------------------------------------------------------------------------------- ProFund VP--Pharmaceuticals 1/1/2005 to 12/31/2005 $9.44 0 1/1/2006 to 12/31/2006 $9.44 $10.27 0 1/1/2007 to 12/31/2007 $10.27 $10.19 0 - ------------------------------------------------------------------------------------- ProFund VP--Precious Metals 1/1/2005 to 12/31/2005 $12.00 0 1/1/2006 to 12/31/2006 $12.00 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $14.84 0 - ------------------------------------------------------------------------------------- ProFund VP--Real Estate 1/1/2005 to 12/31/2005 $11.17 0 1/1/2006 to 12/31/2006 $11.17 $14.36 0 1/1/2007 to 12/31/2007 $14.36 $11.20 0 - ------------------------------------------------------------------------------------- ProFund VP--Semiconductor 1/1/2005 to 12/31/2005 $10.65 0 1/1/2006 to 12/31/2006 $10.65 $9.60 0 1/1/2007 to 12/31/2007 $9.60 $9.97 0 - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2005 to 12/31/2005 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $11.05 0 1/1/2007 to 12/31/2007 $11.05 $12.26 0 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2005 to 12/31/2005 $9.74 0 1/1/2006 to 12/31/2006 $9.74 $12.68 0 1/1/2007 to 12/31/2007 $12.68 $13.33 0 - ------------------------------------------------------------------------------------- ProFund VP--Utilities 1/1/2005 to 12/31/2005 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $13.77 0
A-70
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP--Bull 1/1/2005 to 12/31/2005 $10.12 0 1/1/2006 to 12/31/2006 $10.12 $11.16 0 1/1/2007 to 12/31/2007 $11.16 $11.21 0 - --------------------------------------------------------------------------------------- ProFund VP--Bear 1/1/2005 to 12/31/2005 $9.54 0 1/1/2006 to 12/31/2006 $9.54 $8.56 0 1/1/2007 to 12/31/2007 $8.56 $8.35 0 - --------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 1/1/2005 to 12/31/2005 $10.25 0 1/1/2006 to 12/31/2006 $10.25 $12.23 0 1/1/2007 to 12/31/2007 $12.23 $11.96 0 - --------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 1/1/2005 to 12/31/2005 $10.55 0 1/1/2006 to 12/31/2006 $10.55 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $12.31 0 - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2005 to 12/31/2005 $9.14 0 1/1/2006 to 12/31/2006 $9.14 $8.75 0 1/1/2007 to 12/31/2007 $8.75 $7.50 0 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2005 to 12/31/2005 $11.04 0 1/1/2006 to 12/31/2006 $11.04 $11.23 0 1/1/2007 to 12/31/2007 $11.23 $14.00 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 1/1/2005 to 12/31/2005 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.31 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 1/1/2005 to 12/31/2005 $10.76 0 1/1/2006 to 12/31/2006 $10.76 $10.85 0 1/1/2007 to 12/31/2007 $10.85 $11.76 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 1/1/2005 to 12/31/2005 $11.38 0 1/1/2006 to 12/31/2006 $11.38 $12.22 0 1/1/2007 to 12/31/2007 $12.22 $12.55 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 1/1/2005 to 12/31/2005 $10.30 0 1/1/2006 to 12/31/2006 $10.30 $11.73 0 1/1/2007 to 12/31/2007 $11.73 $10.55 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 1/1/2005 to 12/31/2005 $10.48 0 1/1/2006 to 12/31/2006 $10.48 $11.05 0 1/1/2007 to 12/31/2007 $11.05 $11.15 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2005 to 12/31/2005 $10.66 0 1/1/2006 to 12/31/2006 $10.66 $13.03 0 1/1/2007 to 12/31/2007 $13.03 $10.97 0
A-71
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2005 to 12/31/2005 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $9.76 0 1/1/2007 to 12/31/2007 $9.76 $10.43 0 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2005 to 12/31/2005 $9.08 0 1/1/2006 to 12/31/2006 $9.08 $9.71 0 1/1/2007 to 12/31/2007 $9.71 $8.92 0 - --------------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2005 to 12/31/2005 $10.47 0 1/1/2006 to 12/31/2006 $10.47 $11.12 0 1/1/2007 to 12/31/2007 $11.12 $11.35 0 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2005 to 12/31/2005 $9.74 0 1/1/2006 to 12/31/2006 $9.74 $9.83 0 1/1/2007 to 12/31/2007 $9.83 $10.07 0 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2005 to 12/31/2005 $10.83 0 1/1/2006 to 12/31/2006 $10.83 $14.54 0 1/1/2007 to 12/31/2007 $14.54 $15.99 0 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2005 to 12/31/2005 $10.43 0 1/1/2006 to 12/31/2006 $10.43 $11.29 0 1/1/2007 to 12/31/2007 $11.29 $11.98 0 - --------------------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2005 to 12/31/2005 $10.75 0 1/1/2006 to 12/31/2006 $10.75 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $13.40 0 - --------------------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2005 to 12/31/2005 $10.48 0 1/1/2006 to 12/31/2006 $10.48 $10.46 0 1/1/2007 to 12/31/2007 $10.46 $10.57 0 - --------------------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2005 to 12/31/2005 $9.53 0 1/1/2006 to 12/31/2006 $9.53 $11.61 0 1/1/2007 to 12/31/2007 $11.61 $11.33 0 - --------------------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2005 to 12/31/2005 $9.67 0 1/1/2006 to 12/31/2006 $9.67 $11.08 0 1/1/2007 to 12/31/2007 $11.08 $10.87 0 - --------------------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2005 to 12/31/2005 $11.11 0 1/1/2006 to 12/31/2006 $11.11 $11.08 0 1/1/2007 to 12/31/2007 $11.08 $12.71 0 - --------------------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2005 to 12/31/2005 $9.98 0 1/1/2006 to 12/31/2006 $9.98 $10.56 0 1/1/2007 to 12/31/2007 $10.56 $10.96 0
A-72
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $11.74 0 1/1/2007 to 12/31/2007 $11.74 $11.40 0 - ----------------------------------------------------------------------------------------------------- Profund VP Short Mid Cap 1/1/2005 to 12/31/2005 $8.94 0 1/1/2006 to 12/31/2006 $8.94 $8.36 0 1/1/2007 to 12/31/2007 $8.36 $7.87 0 - ----------------------------------------------------------------------------------------------------- Profund VP Short Small-Cap 1/1/2005 to 12/31/2005 $9.17 0 1/1/2006 to 12/31/2006 $9.17 $7.84 0 1/1/2007 to 12/31/2007 $7.84 $7.95 0 - ----------------------------------------------------------------------------------------------------- SP International Growth 1/1/2005 to 12/31/2005 $11.18 0 1/1/2006 to 12/31/2006 $11.18 $13.12 0 1/1/2007 to 12/31/2007 $13.12 $15.22 0 - ----------------------------------------------------------------------------------------------------- AST Aggressive Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $11.91 0 - ----------------------------------------------------------------------------------------------------- AST Capital Growth Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.00 0 1/1/2006 to 12/31/2006 $10.00 $11.02 2,672 1/1/2007 to 12/31/2007 $11.02 $11.73 10,225 - ----------------------------------------------------------------------------------------------------- AST Balanced Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.01 0 1/1/2006 to 12/31/2006 $10.01 $10.85 18,249 1/1/2007 to 12/31/2007 $10.85 $11.49 19,931 - ----------------------------------------------------------------------------------------------------- AST Conservative Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.74 0 1/1/2007 to 12/31/2007 $10.74 $11.36 4,610 - ----------------------------------------------------------------------------------------------------- AST Preservation Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.03 0 1/1/2006 to 12/31/2006 $10.03 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $11.07 0 - ----------------------------------------------------------------------------------------------------- AST Advanced Strategies Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.54 0 1/1/2007 to 12/31/2007 $10.54 $11.20 7,920 - ----------------------------------------------------------------------------------------------------- AST First Trust Balanced Target Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.47 0 1/1/2007 to 12/31/2007 $10.47 $11.02 5,264 - ----------------------------------------------------------------------------------------------------- AST First Trust Capital Appreciation Portfolio 3/20/2006* to 12/31/2006 $10.00 $10.37 0 1/1/2007 to 12/31/2007 $10.37 $11.20 5,929 - ----------------------------------------------------------------------------------------------------- AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.49 0 - ----------------------------------------------------------------------------------------------------- AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.02 0 - ----------------------------------------------------------------------------------------------------- AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 0
A-73
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.15 0 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 0 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.96 0
* Denotes the start date of these sub-accounts. ASL II Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 $8.56 2,569,506 1/1/2003 to 12/31/2003 $8.56 $11.00 2,415,394 1/1/2004 to 12/31/2004 $11.00 $12.67 3,227,381 1/1/2005 to 12/31/2005 $12.67 $13.84 5,621,836 1/1/2006 to 12/31/2006 $13.84 $16.71 4,715,269 1/1/2007 to 12/31/2007 $16.71 $17.98 4,504,935 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 $9.72 835,523 1/1/2003 to 12/31/2003 $9.72 $13.39 5,547,558 1/1/2004 to 12/31/2004 $13.39 $15.30 11,265,469 1/1/2005 to 12/31/2005 $15.30 $17.54 12,141,522 1/1/2006 to 12/31/2006 $17.54 $20.87 9,628,446 1/1/2007 to 12/31/2007 $20.87 $24.43 8,347,423 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 $8.19 269,995 1/1/2003 to 12/31/2003 $8.19 $10.79 1,201,268 1/1/2004 to 12/31/2004 $10.79 $12.84 1,897,469 1/1/2005 to 12/31/2005 $12.84 $14.36 2,013,544 1/1/2006 to 12/31/2006 $14.36 $18.00 3,305,620 1/1/2007 to 12/31/2007 $18.00 $20.85 4,044,519 - --------------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2002 to 12/31/2002 $9.04 969,509 1/1/2003 to 12/31/2003 $9.04 $11.30 1,393,001 1/1/2004 to 12/31/2004 $11.30 $13.16 2,276,801 1/1/2005 to 12/31/2005 $13.16 $13.92 1,907,776 1/1/2006 to 12/31/2006 $13.92 $17.02 2,905,252 1/1/2007 to 12/31/2007 $17.02 $18.31 2,119,181 - --------------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 $6.92 1,970,250 1/1/2003 to 12/31/2003 $6.92 $9.89 3,292,593 1/1/2004 to 12/31/2004 $9.89 $9.05 2,242,129 1/1/2005 to 12/31/2005 $9.05 $9.04 2,134,730 1/1/2006 to 12/31/2006 $9.04 $10.01 1,867,490 1/1/2007 to 12/31/2007 $10.01 $10.55 1,740,242
A-74
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 $7.67 639,695 1/1/2003 to 12/31/2003 $7.67 $11.13 1,682,193 1/1/2004 to 12/31/2004 $11.13 $11.98 1,618,719 1/1/2005 to 12/31/2005 $11.98 $11.83 1,385,430 1/1/2006 to 12/31/2006 $11.83 $12.53 1,174,654 1/1/2007 to 12/31/2007 $12.53 $14.63 1,215,825 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 $7.64 1,255,415 1/1/2003 to 12/31/2003 $7.64 $12.74 3,085,373 1/1/2004 to 12/31/2004 $12.74 $15.42 4,808,453 1/1/2005 to 12/31/2005 $15.42 $16.60 5,464,856 1/1/2006 to 12/31/2006 $16.60 $18.43 4,641,175 1/1/2007 to 12/31/2007 $18.43 $20.16 4,026,646 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Small-Cap Value 1/1/2002 to 12/31/2002 $9.26 1,492,775 1/1/2003 to 12/31/2003 $9.26 $12.85 1,504,296 1/1/2004 to 12/31/2004 $12.85 $15.19 1,541,896 1/1/2005 to 12/31/2005 $15.19 $15.68 1,243,642 1/1/2006 to 12/31/2006 $15.68 $18.08 1,000,596 1/1/2007 to 12/31/2007 $18.08 $16.87 758,170 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2002 to 12/31/2002 $9.30 6,141,523 1/1/2003 to 12/31/2003 $9.30 $12.42 10,183,346 1/1/2004 to 12/31/2004 $12.42 $14.22 10,785,030 1/1/2005 to 12/31/2005 $14.22 $14.91 11,285,282 1/1/2006 to 12/31/2006 $14.91 $17.61 9,098,178 1/1/2007 to 12/31/2007 $17.61 $16.34 8,130,632 - -------------------------------------------------------------------------------------------- AST DeAM Small-Cap Value 1/1/2002 to 12/31/2002 $7.66 423,387 1/1/2003 to 12/31/2003 $7.66 $10.81 1,134,865 1/1/2004 to 12/31/2004 $10.81 $12.99 2,143,020 1/1/2005 to 12/31/2005 $12.99 $12.92 2,106,236 1/1/2006 to 12/31/2006 $12.92 $15.25 1,874,276 1/1/2007 to 12/31/2007 $15.25 $12.33 1,578,237 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.97 1,273,118 1/1/2003 to 12/31/2003 $7.97 $10.31 3,027,057 1/1/2004 to 12/31/2004 $10.31 $11.80 4,375,813 1/1/2005 to 12/31/2005 $11.80 $12.16 5,391,424 1/1/2006 to 12/31/2006 $12.16 $12.71 4,189,111 1/1/2007 to 12/31/2007 $12.71 $14.92 3,918,725 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.41 2,175,250 1/1/2003 to 12/31/2003 $7.41 $9.51 3,415,318 1/1/2004 to 12/31/2004 $9.51 $10.86 4,715,301 1/1/2005 to 12/31/2005 $10.86 $12.12 5,728,446 1/1/2006 to 12/31/2006 $12.12 $13.59 5,378,198 1/1/2007 to 12/31/2007 $13.59 $16.34 6,560,811
A-75
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 $8.96 5,118,558 1/1/2003 to 12/31/2003 $8.96 $12.01 8,530,129 1/1/2004 to 12/31/2004 $12.01 $14.51 11,461,684 1/1/2005 to 12/31/2005 $14.51 $15.99 12,260,007 1/1/2006 to 12/31/2006 $15.99 $17.42 9,574,218 1/1/2007 to 12/31/2007 $17.42 $17.67 8,191,847 - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 1/1/2002 to 12/31/2002 $6.80 658,419 1/1/2003 to 12/31/2003 $6.80 $9.07 2,002,166 1/1/2004 to 12/31/2004 $9.07 $9.67 1,798,457 1/1/2005 to 12/2/2005 $9.67 $11.10 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2002 to 12/31/2002 $8.17 1,200,225 1/1/2003 to 12/31/2003 $8.17 $10.91 2,513,413 1/1/2004 to 12/31/2004 $10.91 $12.38 2,587,064 1/1/2005 to 12/31/2005 $12.38 $12.83 1,988,252 1/1/2006 to 12/31/2006 $12.83 $14.42 1,907,063 1/1/2007 to 12/31/2007 $14.42 $14.57 1,540,522 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2002 to 12/31/2002 $9.59 724,670 1/1/2003 to 12/31/2003 $9.59 $12.59 2,011,627 1/1/2004 to 12/31/2004 $12.59 $16.25 2,040,188 1/1/2005 to 12/31/2005 $16.25 $21.00 3,677,614 1/1/2006 to 12/31/2006 $21.00 $23.93 2,942,718 1/1/2007 to 12/31/2007 $23.93 $33.07 3,950,105 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 $7.46 1,869,353 1/1/2003 to 12/31/2003 $7.46 $9.08 2,098,873 1/1/2004 to 12/31/2004 $9.08 $9.44 2,378,881 1/1/2005 to 12/31/2005 $9.44 $10.81 3,925,740 1/1/2006 to 12/31/2006 $10.81 $11.23 4,132,529 1/1/2007 to 12/31/2007 $11.23 $11.96 5,137,246 - -------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 $7.58 2,930,432 1/1/2003 to 12/31/2003 $7.58 $9.16 4,784,269 1/1/2004 to 12/31/2004 $9.16 $9.97 4,529,834 1/1/2005 to 12/31/2005 $9.97 $10.43 5,915,443 1/1/2006 to 12/31/2006 $10.43 $11.25 4,572,301 1/1/2007 to 12/31/2007 $11.25 $12.73 3,902,210 - -------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 $8.32 10,144,317 1/1/2003 to 12/31/2003 $8.32 $10.78 20,138,164 1/1/2004 to 12/31/2004 $10.78 $12.26 28,117,310 1/1/2005 to 12/31/2005 $12.26 $12.88 32,140,125 1/1/2006 to 12/31/2006 $12.88 $13.59 26,497,526 1/1/2007 to 12/31/2007 $13.59 $15.36 23,963,028 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2002 to 12/31/2002 $7.67 1,349,939 1/1/2003 to 12/31/2003 $7.67 $9.45 2,053,023 1/1/2004 to 12/31/2004 $9.45 $9.64 2,785,100 1/1/2005 to 12/31/2005 $9.64 $9.80 2,531,900 1/1/2006 to 12/31/2006 $9.80 $10.60 2,498,654 1/1/2007 to 12/31/2007 $10.60 $11.88 2,806,534
A-76
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2002 to 12/31/2002 $8.66 664,649 1/1/2003 to 12/31/2003 $8.66 $10.78 1,072,256 1/1/2004 to 12/31/2004 $10.78 $12.53 2,351,197 1/1/2005 to 12/31/2005 $12.53 $13.47 2,585,881 1/1/2006 to 12/31/2006 $13.47 $16.13 4,397,725 1/1/2007 to 12/31/2007 $16.13 $16.05 3,751,417 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2002 to 12/31/2002 $7.99 965,912 1/1/2003 to 12/31/2003 $7.99 $9.91 1,387,072 1/1/2004 to 12/31/2004 $9.91 $10.72 1,620,391 1/1/2005 to 12/2/2005 $10.72 $11.86 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 $8.76 6,005,922 1/1/2003 to 12/31/2003 $8.76 $11.06 3,621,862 1/1/2004 to 12/31/2004 $11.06 $12.39 4,643,022 1/1/2005 to 12/31/2005 $12.39 $12.86 4,311,857 1/1/2006 to 12/31/2006 $12.86 $15.34 5,318,094 1/1/2007 to 12/31/2007 $15.34 $14.55 4,469,636 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2002 to 12/31/2002 $10.08 1,563,489 1/1/2003 to 12/31/2003 $10.08 $13.63 3,097,315 1/1/2004 to 12/31/2004 $13.63 $18.49 4,080,179 1/1/2005 to 12/31/2005 $18.49 $20.88 3,749,124 1/1/2006 to 12/31/2006 $20.88 $28.08 3,925,105 1/1/2007 to 12/31/2007 $28.08 $22.11 2,254,421 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2002 to 12/31/2002 $8.17 3,662,406 1/1/2003 to 12/31/2003 $8.17 $10.23 5,442,511 1/1/2004 to 12/31/2004 $10.23 $11.07 6,845,369 1/1/2005 to 12/31/2005 $11.07 $11.27 6,774,078 1/1/2006 to 12/31/2006 $11.27 $12.48 6,255,253 1/1/2007 to 12/31/2007 $12.48 $12.53 5,371,782 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2002 to 12/31/2002 $8.25 1,751,136 1/1/2003 to 12/31/2003 $8.25 $10.45 2,115,438 1/1/2004 to 12/31/2004 $10.45 $11.57 4,670,846 1/1/2005 to 12/31/2005 $11.57 $11.90 4,205,655 1/1/2006 to 12/31/2006 $11.90 $13.68 3,984,557 1/1/2007 to 12/31/2007 $13.68 $13.44 3,435,528 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 $8.06 6,667,373 1/1/2003 to 12/31/2003 $8.06 $10.50 21,264,670 1/1/2004 to 12/31/2004 $10.50 $11.46 25,850,506 1/1/2005 to 12/31/2005 $11.46 $11.81 31,190,346 1/1/2006 to 12/31/2006 $11.81 $13.62 23,350,650 1/1/2007 to 12/31/2007 $13.62 $14.08 19,997,748 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 $8.34 2,110,071 1/1/2003 to 12/31/2003 $8.34 $9.83 2,647,064 1/1/2004 to 12/31/2004 $9.83 $11.17 3,717,848 1/1/2005 to 12/31/2005 $11.17 $11.69 5,245,455 1/1/2006 to 12/31/2006 $11.69 $13.62 5,568,043 1/1/2007 to 12/31/2007 $13.62 $13.00 4,973,375
A-77
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2002 to 12/31/2002 $8.71 847,517 1/1/2003 to 12/31/2003 $8.71 $10.24 898,161 1/1/2004 to 12/31/2004 $10.24 $11.19 1,061,887 1/1/2005 to 12/31/2005 $11.19 $11.77 1,055,033 1/1/2006 to 12/31/2006 $11.77 $12.86 1,120,866 1/1/2007 to 12/31/2007 $12.86 $12.90 2,745,236 - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2002 to 12/31/2002 $9.14 1,126,058 1/1/2003 to 12/31/2003 $9.14 $10.69 2,045,205 1/1/2004 to 12/31/2004 $10.69 $11.46 2,335,598 1/1/2005 to 12/31/2005 $11.46 $11.79 2,294,531 1/1/2006 to 12/31/2006 $11.79 $12.72 2,165,859 1/1/2007 to 12/31/2007 $12.72 $13.62 2,277,264 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2002 to 12/31/2002 $9.09 921,329 1/1/2003 to 12/31/2003 $9.09 $11.09 2,243,566 1/1/2004 to 12/31/2004 $11.09 $12.13 3,551,315 1/1/2005 to 12/31/2005 $12.13 $12.49 4,192,626 1/1/2006 to 12/31/2006 $12.49 $13.82 4,776,442 1/1/2007 to 12/31/2007 $13.82 $14.45 6,387,795 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 $11.34 1,739,313 1/1/2003 to 12/31/2003 $11.34 $12.59 2,962,471 1/1/2004 to 12/31/2004 $12.59 $13.45 4,717,822 1/1/2005 to 12/31/2005 $13.45 $12.64 6,261,824 1/1/2006 to 12/31/2006 $12.64 $13.21 6,093,700 1/1/2007 to 12/31/2007 $13.21 $14.24 6,452,566 - --------------------------------------------------------------------------------------------------------- AST High Yield 1/1/2002 to 12/31/2002 $9.71 5,592,940 1/1/2003 to 12/31/2003 $9.71 $11.61 12,201,163 1/1/2004 to 12/31/2004 $11.61 $12.69 13,717,128 1/1/2005 to 12/31/2005 $12.69 $12.62 9,658,908 1/1/2006 to 12/31/2006 $12.62 $13.70 9,653,937 1/1/2007 to 12/31/2007 $13.70 $13.80 6,461,538 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 $9.94 4,146,530 1/1/2003 to 12/31/2003 $9.94 $11.61 7,751,236 1/1/2004 to 12/31/2004 $11.61 $12.26 8,369,008 1/1/2005 to 12/31/2005 $12.26 $12.20 12,427,806 1/1/2006 to 12/31/2006 $12.20 $13.17 10,147,675 1/1/2007 to 12/31/2007 $13.17 $13.74 8,365,789 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 $10.57 20,544,075 1/1/2003 to 12/31/2003 $10.57 $10.95 26,287,388 1/1/2004 to 12/31/2004 $10.95 $11.31 33,208,757 1/1/2005 to 12/31/2005 $11.31 $11.40 22,436,395 1/1/2006 to 12/31/2006 $11.40 $11.63 21,700,661 1/1/2007 to 12/31/2007 $11.63 $12.39 21,645,194
A-78
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 $10.34 11,274,642 1/1/2003 to 12/31/2003 $10.34 $10.51 15,242,856 1/1/2004 to 12/31/2004 $10.51 $10.55 21,299,789 1/1/2005 to 12/31/2005 $10.55 $10.54 28,031,653 1/1/2006 to 12/31/2006 $10.54 $10.76 22,394,558 1/1/2007 to 12/31/2007 $10.76 $11.31 20,392,150 - ------------------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 $9.96 36,255,772 1/1/2003 to 12/31/2003 $9.96 $9.86 32,730,501 1/1/2004 to 12/31/2004 $9.86 $9.78 29,870,585 1/1/2005 to 12/31/2005 $9.78 $9.88 42,442,274 1/1/2006 to 12/31/2006 $9.88 $10.16 46,325,237 1/1/2007 to 12/31/2007 $10.16 $10.48 56,111,128 - ------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2002 to 12/31/2002 $8.66 283,466 1/1/2003 to 12/31/2003 $8.66 $13.60 1,763,660 1/1/2004 to 12/31/2004 $13.60 $16.02 2,103,950 1/1/2005 to 12/31/2005 $16.02 $20.72 3,395,891 1/1/2006 to 12/31/2006 $20.72 $27.43 2,835,328 1/1/2007 to 12/31/2007 $27.43 $38.71 3,344,620 - ------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2002 to 12/31/2002 $8.25 196,720 1/1/2003 to 12/31/2003 $8.25 $10.23 314,757 1/1/2004 to 12/31/2004 $10.23 $11.18 590,808 1/1/2005 to 12/31/2005 $11.18 $11.59 534,649 1/1/2006 to 12/31/2006 $11.59 $13.51 582,613 1/1/2007 to 12/31/2007 $13.51 $13.66 497,296 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2002 to 12/31/2002 $7.09 543,762 1/1/2003 to 12/31/2003 $7.09 $9.61 889,464 1/1/2004 to 12/31/2004 $9.61 $10.72 668,032 1/1/2005 to 12/31/2005 $10.72 $11.67 602,064 1/1/2006 to 12/31/2006 $11.67 $13.33 605,730 1/1/2007 to 12/31/2007 $13.33 $14.70 631,476 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2002 to 12/31/2002 $5.50 293,307 1/1/2003 to 12/31/2003 $5.50 $7.87 578,651 1/1/2004 to 12/31/2004 $7.87 $8.09 512,424 1/1/2005 to 12/31/2005 $8.09 $8.13 453,391 1/1/2006 to 12/31/2006 $8.13 $8.84 513,442 1/1/2007 to 12/31/2007 $8.84 $9.36 630,739 - ------------------------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2002 to 12/31/2002 $8.00 475,873 1/1/2003 to 12/31/2003 $8.00 $10.05 698,364 1/1/2004 to 12/31/2004 $10.05 $10.64 937,586 1/1/2005 to 12/31/2005 $10.64 $11.31 1,131,375 1/1/2006 to 12/31/2006 $11.31 $11.71 1,250,782 1/1/2007 to 12/31/2007 $11.71 $12.88 1,163,277
A-79
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2002 to 12/31/2002 $8.76 366,258 1/1/2003 to 12/31/2003 $8.76 $11.17 607,265 1/1/2004 to 12/31/2004 $11.17 $11.94 585,185 1/1/2005 to 12/31/2005 $11.94 $12.43 1,042,992 1/1/2006 to 12/31/2006 $12.43 $14.24 778,674 1/1/2007 to 12/31/2007 $14.24 $10.89 465,175 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 $8.15 113,389 1/1/2003 to 12/31/2003 $8.15 $11.65 189,143 1/1/2004 to 12/31/2004 $11.65 $13.66 414,631 1/1/2005 to 12/31/2005 $13.66 $15.59 689,816 1/1/2006 to 12/31/2006 $15.59 $18.88 1,081,552 1/1/2007 to 12/31/2007 $18.88 $21.35 1,401,663 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2002 to 12/31/2002 $7.44 127,728 1/1/2003 to 12/31/2003 $7.44 $11.12 815,621 1/1/2004 to 12/31/2004 $11.12 $11.58 702,642 1/1/2005 to 4/15/2005 $11.58 $10.31 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 $7.78 39,943 1/1/2003 to 12/31/2003 $7.78 $10.71 404,789 1/1/2004 to 12/31/2004 $10.71 $11.29 570,123 1/1/2005 to 12/31/2005 $11.29 $11.53 281,775 1/1/2006 to 12/31/2006 $11.53 $12.03 241,307 1/1/2007 to 12/31/2007 $12.03 $13.24 249,298 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.44 606,614 1/1/2006 to 12/31/2006 $11.44 $12.49 553,827 1/1/2007 to 12/31/2007 $12.49 $13.64 604,401 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2002 to 12/31/2002 $7.93 292,396 1/1/2003 to 12/31/2003 $7.93 $10.83 2,116,400 1/1/2004 to 12/31/2004 $10.83 $12.17 1,812,435 1/1/2005 to 12/31/2005 $12.17 $12.94 1,133,421 1/1/2006 to 12/31/2006 $12.94 $14.95 2,790,577 1/1/2007 to 12/31/2007 $14.95 $16.85 1,487,885 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 1/1/2002 to 12/31/2002 $7.75 281,993 1/1/2003 to 12/31/2003 $7.75 $12.57 942,605 1/1/2004 to 12/31/2004 $12.57 $12.30 896,010 1/1/2005 to 12/31/2005 $12.30 $14.45 1,723,105 1/1/2006 to 12/31/2006 $14.45 $19.80 3,073,769 1/1/2007 to 12/31/2007 $19.80 $28.77 2,473,589 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 1/1/2002 to 12/31/2002 $7.24 65,845 1/1/2003 to 12/31/2003 $7.24 $9.03 426,718 1/1/2004 to 12/31/2004 $9.03 $9.55 710,879 1/1/2005 to 12/31/2005 $9.55 $13.31 3,413,955 1/1/2006 to 12/31/2006 $13.31 $14.51 1,650,266 1/1/2007 to 12/31/2007 $14.51 $12.85 552,230
A-80
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Banks 1/1/2002 to 12/31/2002 $8.56 101,136 1/1/2003 to 12/31/2003 $8.56 $10.90 93,067 1/1/2004 to 12/31/2004 $10.90 $11.98 229,711 1/1/2005 to 12/31/2005 $11.98 $11.77 351,876 1/1/2006 to 12/31/2006 $11.77 $13.35 402,883 1/1/2007 to 12/31/2007 $13.35 $9.55 389,926 - ------------------------------------------------------------------------------------ ProFund VP--Basic Materials 1/1/2002 to 12/31/2002 $8.46 76,331 1/1/2003 to 12/31/2003 $8.46 $10.95 1,512,864 1/1/2004 to 12/31/2004 $10.95 $11.87 529,237 1/1/2005 to 12/31/2005 $11.87 $11.96 681,692 1/1/2006 to 12/31/2006 $11.96 $13.58 779,466 1/1/2007 to 12/31/2007 $13.58 $17.45 2,684,333 - ------------------------------------------------------------------------------------ ProFund VP--Biotechnology 1/1/2002 to 12/31/2002 $7.09 130,082 1/1/2003 to 12/31/2003 $7.09 $9.75 208,971 1/1/2004 to 12/31/2004 $9.75 $10.52 757,678 1/1/2005 to 12/31/2005 $10.52 $12.34 697,686 1/1/2006 to 12/31/2006 $12.34 $11.64 393,923 1/1/2007 to 12/31/2007 $11.64 $11.31 609,746 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Services 1/1/2002 to 12/31/2002 $7.25 128,022 1/1/2003 to 12/31/2003 $7.25 $9.04 136,269 1/1/2004 to 12/31/2004 $9.04 $9.56 430,620 1/1/2005 to 12/31/2005 $9.56 $8.97 86,431 1/1/2006 to 12/31/2006 $8.97 $9.88 192,639 1/1/2007 to 12/31/2007 $9.88 $8.91 67,292 - ------------------------------------------------------------------------------------ ProFund VP--Consumer Goods 1/1/2002 to 12/31/2002 $8.28 148,446 1/1/2003 to 12/31/2003 $8.28 $9.64 58,425 1/1/2004 to 12/31/2004 $9.64 $10.36 369,007 1/1/2005 to 12/31/2005 $10.36 $10.15 161,037 1/1/2006 to 12/31/2006 $10.15 $11.25 548,567 1/1/2007 to 12/31/2007 $11.25 $11.90 715,235 - ------------------------------------------------------------------------------------ ProFund VP--Oil & Gas 1/1/2002 to 12/31/2002 $8.71 299,833 1/1/2003 to 12/31/2003 $8.71 $10.48 1,225,844 1/1/2004 to 12/31/2004 $10.48 $13.33 1,856,882 1/1/2005 to 12/31/2005 $13.33 $17.22 2,573,776 1/1/2006 to 12/31/2006 $17.22 $20.43 2,251,126 1/1/2007 to 12/31/2007 $20.43 $26.61 2,322,451 - ------------------------------------------------------------------------------------ ProFund VP--Financial 1/1/2002 to 12/31/2002 $8.85 221,377 1/1/2003 to 12/31/2003 $8.85 $11.23 398,159 1/1/2004 to 12/31/2004 $11.23 $12.19 553,342 1/1/2005 to 12/31/2005 $12.19 $12.46 616,873 1/1/2006 to 12/31/2006 $12.46 $14.38 913,872 1/1/2007 to 12/31/2007 $14.38 $11.44 498,292
A-81
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------ ProFund VP--Healthcare 1/1/2002 to 12/31/2002 $7.94 388,508 1/1/2003 to 12/31/2003 $7.94 $9.17 707,449 1/1/2004 to 12/31/2004 $9.17 $9.23 1,318,525 1/1/2005 to 12/31/2005 $9.23 $9.63 2,175,821 1/1/2006 to 12/31/2006 $9.63 $9.96 2,106,409 1/1/2007 to 12/31/2007 $9.96 $10.44 2,120,859 - ------------------------------------------------------------------------------------ ProFund VP--Industrial 1/1/2002 to 12/31/2002 $7.93 12,642 1/1/2003 to 12/31/2003 $7.93 $10.01 318,339 1/1/2004 to 12/31/2004 $10.01 $11.15 253,411 1/1/2005 to 12/31/2005 $11.15 $11.23 211,677 1/1/2006 to 12/31/2006 $11.23 $12.33 242,684 1/1/2007 to 12/31/2007 $12.33 $13.55 708,921 - ------------------------------------------------------------------------------------ ProFund VP--Internet 1/1/2002 to 12/31/2002 $8.57 306,572 1/1/2003 to 12/31/2003 $8.57 $15.00 206,876 1/1/2004 to 12/31/2004 $15.00 $17.89 992,879 1/1/2005 to 12/31/2005 $17.89 $18.90 467,320 1/1/2006 to 12/31/2006 $18.90 $18.84 200,072 1/1/2007 to 12/31/2007 $18.84 $20.42 435,015 - ------------------------------------------------------------------------------------ ProFund VP--Pharmaceuticals 1/1/2002 to 12/31/2002 $8.56 136,559 1/1/2003 to 12/31/2003 $8.56 $8.89 266,978 1/1/2004 to 12/31/2004 $8.89 $7.93 527,336 1/1/2005 to 12/31/2005 $7.93 $7.51 515,768 1/1/2006 to 12/31/2006 $7.51 $8.28 716,678 1/1/2007 to 12/31/2007 $8.28 $8.33 492,538 - ------------------------------------------------------------------------------------ ProFund VP--Precious Metals 1/1/2002 to 12/31/2002 $9.70 1,175,651 1/1/2003 to 12/31/2003 $9.70 $13.29 1,329,806 1/1/2004 to 12/31/2004 $13.29 $11.77 1,479,384 1/1/2005 to 12/31/2005 $11.77 $14.62 2,426,530 1/1/2006 to 12/31/2006 $14.62 $15.44 2,487,596 1/1/2007 to 12/31/2007 $15.44 $18.60 3,177,702 - ------------------------------------------------------------------------------------ ProFund VP--Real Estate 1/1/2002 to 12/31/2002 $9.86 441,318 1/1/2003 to 12/31/2003 $9.86 $12.91 462,906 1/1/2004 to 12/31/2004 $12.91 $16.15 1,816,706 1/1/2005 to 12/31/2005 $16.15 $16.96 501,989 1/1/2006 to 12/31/2006 $16.96 $22.10 926,728 1/1/2007 to 12/31/2007 $22.10 $17.47 505,436 - ------------------------------------------------------------------------------------ ProFund VP--Semiconductor 1/1/2002 to 12/31/2002 $5.14 93,241 1/1/2003 to 12/31/2003 $5.14 $9.51 423,958 1/1/2004 to 12/31/2004 $9.51 $7.15 694,352 1/1/2005 to 12/31/2005 $7.15 $7.64 746,085 1/1/2006 to 12/31/2006 $7.64 $6.98 339,250 1/1/2007 to 12/31/2007 $6.98 $7.35 272,048
A-82
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2002 to 12/31/2002 $6.03 254,131 1/1/2003 to 12/31/2003 $6.03 $8.66 497,972 1/1/2004 to 12/31/2004 $8.66 $8.48 727,580 1/1/2005 to 12/31/2005 $8.48 $8.45 577,739 1/1/2006 to 12/31/2006 $8.45 $8.98 673,628 1/1/2007 to 12/31/2007 $8.98 $10.10 1,668,456 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2002 to 12/31/2002 $7.15 272,408 1/1/2003 to 12/31/2003 $7.15 $7.21 398,350 1/1/2004 to 12/31/2004 $7.21 $8.19 460,848 1/1/2005 to 12/31/2005 $8.19 $7.52 456,586 1/1/2006 to 12/31/2006 $7.52 $9.93 1,277,316 1/1/2007 to 12/31/2007 $9.93 $10.59 1,098,402 - ------------------------------------------------------------------------------------- ProFund VP--Utilities 1/1/2002 to 12/31/2002 $7.83 521,419 1/1/2003 to 12/31/2003 $7.83 $9.34 618,427 1/1/2004 to 12/31/2004 $9.34 $11.13 1,060,939 1/1/2005 to 12/31/2005 $11.13 $12.37 1,996,877 1/1/2006 to 12/31/2006 $12.37 $14.51 2,195,309 1/1/2007 to 12/31/2007 $14.51 $16.52 3,808,582 - ------------------------------------------------------------------------------------- ProFund VP--Bull 1/1/2002 to 12/31/2002 $7.97 954,792 1/1/2003 to 12/31/2003 $7.97 $9.84 3,563,562 1/1/2004 to 12/31/2004 $9.84 $10.53 8,215,357 1/1/2005 to 12/31/2005 $10.53 $10.64 7,846,866 1/1/2006 to 12/31/2006 $10.64 $11.90 7,031,661 1/1/2007 to 12/31/2007 $11.90 $12.12 4,013,033 - ------------------------------------------------------------------------------------- ProFund VP--Bear 1/1/2002 to 12/31/2002 $11.38 1,532,543 1/1/2003 to 12/31/2003 $11.38 $8.44 1,886,515 1/1/2004 to 12/31/2004 $8.44 $7.45 1,202,243 1/1/2005 to 12/31/2005 $7.45 $7.23 2,169,662 1/1/2006 to 12/31/2006 $7.23 $6.57 1,868,606 1/1/2007 to 12/31/2007 $6.57 $6.50 1,722,065 - ------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 1/1/2002 to 12/31/2002 $6.78 297,435 1/1/2003 to 12/31/2003 $6.78 $10.20 1,431,345 1/1/2004 to 12/31/2004 $10.20 $11.76 2,817,803 1/1/2005 to 12/31/2005 $11.76 $11.87 1,158,025 1/1/2006 to 12/31/2006 $11.87 $14.36 1,596,920 1/1/2007 to 12/31/2007 $14.36 $14.24 1,964,725 - ------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 1/1/2002 to 12/31/2002 $6.45 1,346,852 1/1/2003 to 12/31/2003 $6.45 $9.32 4,445,234 1/1/2004 to 12/31/2004 $9.32 $9.94 4,885,351 1/1/2005 to 12/31/2005 $9.94 $9.80 2,467,486 1/1/2006 to 12/31/2006 $9.80 $10.16 1,764,614 1/1/2007 to 12/31/2007 $10.16 $11.76 2,265,084
A-83
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------ ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2002 to 12/31/2002 $11.00 433,181 1/1/2003 to 12/31/2003 $11.00 $6.78 1,535,439 1/1/2004 to 12/31/2004 $6.78 $5.93 908,064 1/1/2005 to 12/31/2005 $5.93 $5.88 2,494,112 1/1/2006 to 12/31/2006 $5.88 $5.70 1,891,265 1/1/2007 to 12/31/2007 $5.70 $4.96 860,024 - ------------------------------------------------------------------------------------------ ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2002 to 12/31/2002 $3.53 1,003,123 1/1/2003 to 12/31/2003 $3.53 $7.03 3,410,589 1/1/2004 to 12/31/2004 $7.03 $7.89 6,592,447 1/1/2005 to 12/31/2005 $7.89 $7.47 4,740,165 1/1/2006 to 12/31/2006 $7.47 $7.70 2,319,572 1/1/2007 to 12/31/2007 $7.70 $9.73 4,024,405 - ------------------------------------------------------------------------------------------ ProFund VP--Mid-Cap Value formerly, ProFund VP Mid-Cap Value 1/1/2002 to 12/31/2002 $7.66 438,387 1/1/2003 to 12/31/2003 $7.66 $10.23 1,455,513 1/1/2004 to 12/31/2004 $10.23 $11.67 2,632,869 1/1/2005 to 12/31/2005 $11.67 $12.49 2,164,543 1/1/2006 to 12/31/2006 $12.49 $13.80 1,978,580 1/1/2007 to 12/31/2007 $13.80 $13.70 1,436,105 - ------------------------------------------------------------------------------------------ ProFund VP--Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.70 439,054 1/1/2003 to 12/31/2003 $7.70 $9.69 1,009,867 1/1/2004 to 12/31/2004 $9.69 $10.58 2,220,901 1/1/2005 to 12/31/2005 $10.58 $11.58 5,059,311 1/1/2006 to 12/31/2006 $11.58 $11.84 1,594,539 1/1/2007 to 12/31/2007 $11.84 $13.01 2,101,505 - ------------------------------------------------------------------------------------------ ProFund VP--UltraMid-Cap 1/1/2002 to 12/31/2002 $5.71 477,953 1/1/2003 to 12/31/2003 $5.71 $9.55 1,112,311 1/1/2004 to 12/31/2004 $9.55 $11.99 3,106,849 1/1/2005 to 12/31/2005 $11.99 $13.91 1,935,487 1/1/2006 to 12/31/2006 $13.91 $15.14 1,588,771 1/1/2007 to 12/31/2007 $15.14 $15.77 1,072,846 - ------------------------------------------------------------------------------------------ ProFund VP--Small-Cap Value 1/1/2002 to 12/31/2002 $7.09 994,778 1/1/2003 to 12/31/2003 $7.09 $9.39 5,144,632 1/1/2004 to 12/31/2004 $9.39 $11.10 4,088,760 1/1/2005 to 12/31/2005 $11.10 $11.35 1,398,442 1/1/2006 to 12/31/2006 $11.35 $13.11 2,446,357 1/1/2007 to 12/31/2007 $13.11 $11.96 714,107 - ------------------------------------------------------------------------------------------ ProFund VP--Small-Cap Growth 1/1/2002 to 12/31/2002 $7.69 772,260 1/1/2003 to 12/31/2003 $7.69 $10.16 3,868,951 1/1/2004 to 12/31/2004 $10.16 $11.98 4,677,820 1/1/2005 to 12/31/2005 $11.98 $12.67 4,579,887 1/1/2006 to 12/31/2006 $12.67 $13.54 1,643,633 1/1/2007 to 12/31/2007 $13.54 $13.85 676,467
A-84
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2002 to 12/31/2002 $6.14 212,085 1/1/2003 to 12/31/2003 $6.14 $12.04 1,702,558 1/1/2004 to 12/31/2004 $12.04 $15.52 5,098,565 1/1/2005 to 12/31/2005 $15.52 $15.23 816,755 1/1/2006 to 12/31/2006 $15.23 $18.87 1,580,595 1/1/2007 to 12/31/2007 $18.87 $16.11 527,856 - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2002 to 12/31/2002 $11.56 2,486,854 1/1/2003 to 12/31/2003 $11.56 $11.08 731,470 1/1/2004 to 12/31/2004 $11.08 $11.79 1,051,158 1/1/2005 to 12/31/2005 $11.79 $12.64 2,312,868 1/1/2006 to 12/31/2006 $12.64 $11.86 821,668 1/1/2007 to 12/31/2007 $11.86 $12.85 2,443,725 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2002 to 12/31/2002 $8.02 165,792 1/1/2003 to 12/31/2003 $8.02 $7.56 1,817,924 1/1/2004 to 12/31/2004 $7.56 $6.63 5,314,528 1/1/2005 to 12/31/2005 $6.63 $6.00 3,415,324 1/1/2006 to 12/31/2006 $6.00 $6.50 4,567,551 1/1/2007 to 12/31/2007 $6.50 $6.06 1,806,294 - --------------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.56 899,141 1/1/2006 to 12/31/2006 $10.56 $11.38 1,207,864 1/1/2007 to 12/31/2007 $11.38 $11.78 898,024 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2002 to 12/31/2002 $6.80 19,826 1/1/2003 to 12/31/2003 $6.80 $9.16 66,435 1/1/2004 to 12/31/2004 $9.16 $10.03 91,924 1/1/2005 to 12/31/2005 $10.03 $9.92 87,726 1/1/2006 to 12/31/2006 $9.92 $10.15 100,227 1/1/2007 to 12/31/2007 $10.15 $10.55 106,856 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $11.85 311,233 1/1/2005 to 12/31/2005 $11.85 $12.84 590,605 1/1/2006 to 12/31/2006 $12.84 $17.48 1,507,757 1/1/2007 to 12/31/2007 $17.48 $19.49 2,078,809 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $11.32 1,777,316 1/1/2005 to 12/31/2005 $11.32 $11.94 2,420,873 1/1/2006 to 12/31/2006 $11.94 $13.10 2,772,210 1/1/2007 to 12/31/2007 $13.10 $14.10 2,203,754
A-85
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.66 82,809 1/1/2005 to 12/31/2005 $10.66 $10.83 134,177 1/1/2006 to 12/31/2006 $10.83 $11.60 199,508 1/1/2007 to 12/31/2007 $11.60 $13.88 403,709 - --------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.75 173,851 1/1/2005 to 12/31/2005 $10.75 $11.01 304,840 1/1/2006 to 12/31/2006 $11.01 $11.14 290,152 1/1/2007 to 12/31/2007 $11.14 $11.42 274,858 - --------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.48 155,695 1/1/2005 to 12/31/2005 $10.48 $9.98 194,864 1/1/2006 to 12/31/2006 $9.98 $12.32 481,064 1/1/2007 to 12/31/2007 $12.32 $12.20 235,030 - --------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.76 1,240,527 1/1/2006 to 12/31/2006 $9.76 $11.34 2,310,768 1/1/2007 to 12/31/2007 $11.34 $11.28 2,000,024 - --------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $12.59 389,792 1/1/2005 to 12/31/2005 $12.59 $14.82 1,068,339 1/1/2006 to 12/31/2006 $14.82 $15.00 1,119,827 1/1/2007 to 12/31/2007 $15.00 $17.43 1,173,103 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 72,725 1/1/2005 to 12/31/2005 $10.37 $10.30 2,620,751 1/1/2006 to 12/31/2006 $10.30 $11.05 2,181,106 1/1/2007 to 12/31/2007 $11.05 $11.62 2,009,820 - --------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.37 159,605 1/1/2005 to 12/31/2005 $10.37 $10.51 2,141,308 1/1/2006 to 12/31/2006 $10.51 $12.26 4,023,312 1/1/2007 to 12/31/2007 $12.26 $12.08 1,984,257
A-86
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ---------------------------------------------------------------------------------------------------- Profund VP Short Mid Cap 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.70 39,360 1/1/2005 to 12/31/2005 $9.70 $8.64 364,782 1/1/2006 to 12/31/2006 $8.64 $8.18 254,207 1/1/2007 to 12/31/2007 $8.18 $7.82 131,223 - ---------------------------------------------------------------------------------------------------- Profund VP Short Small-Cap 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $9.54 136,809 1/1/2005 to 12/31/2005 $9.54 $9.11 220,843 1/1/2006 to 12/31/2006 $9.11 $7.90 560,897 1/1/2007 to 12/31/2007 $7.90 $8.12 1,000,449 - ---------------------------------------------------------------------------------------------------- SP International Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- $10.53 269,671 1/1/2005 to 12/31/2005 $10.53 $12.05 672,243 1/1/2006 to 12/31/2006 $12.05 $14.35 742,865 1/1/2007 to 12/31/2007 $14.35 $16.87 828,104 - ---------------------------------------------------------------------------------------------------- AST Aggressive Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.00 649,829 1/1/2006 to 12/31/2006 $10.00 $11.38 5,212,589 1/1/2007 to 12/31/2007 $11.38 $12.26 8,022,912 - ---------------------------------------------------------------------------------------------------- AST Capital Growth Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.01 2,586,012 1/1/2006 to 12/31/2006 $10.01 $11.19 23,048,850 1/1/2007 to 12/31/2007 $11.19 $12.07 31,465,957 - ---------------------------------------------------------------------------------------------------- AST Balanced Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.02 2,726,484 1/1/2006 to 12/31/2006 $10.02 $11.01 21,829,919 1/1/2007 to 12/31/2007 $11.01 $11.83 30,616,578 - ---------------------------------------------------------------------------------------------------- AST Conservative Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.03 685,724 1/1/2006 to 12/31/2006 $10.03 $10.90 7,315,279 1/1/2007 to 12/31/2007 $10.90 $11.70 12,873,620
A-87
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ AST Preservation Asset Allocation Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.04 115,215 1/1/2006 to 12/31/2006 $10.04 $10.66 3,303,256 1/1/2007 to 12/31/2007 $10.66 $11.40 7,359,596 - ------------------------------------------------------------------------------------------------------------ AST Advanced Strategies Portfolio 3/20/2006 to 12/31/2006* $10.00 $10.66 5,258,473.80 1/1/2007 to 12/31/2007 $10.66 $11.48 8,525,849 - ------------------------------------------------------------------------------------------------------------ AST First Trust Balanced Target Portfolio 3/20/2006 to 12/31/2006* $10.00 $10.58 3,781,525.04 1/1/2007 to 12/31/2007 $10.58 $11.30 7,801,920 - ------------------------------------------------------------------------------------------------------------ AST First Trust Capital Appreciation Portfolio 3/20/2006 to 12/31/2006* $10.00 $10.48 3,795,562 1/1/2007 to 12/31/2007 $10.48 $11.49 7,899,326 - ------------------------------------------------------------------------------------------------------------ AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.51 120,901 - ------------------------------------------------------------------------------------------------------------ AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.04 74,936 - ------------------------------------------------------------------------------------------------------------ AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.19 157,014 - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 39,143 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.00 50,892 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 213,630
* Denotes the start date of these sub-accounts. ASL II Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV, and EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $13.32 0 - --------------------------------------------------------------------------------------------------- AST International Growth 3/14/2005* to 12/31/2005 $11.16 $11.16 0 1/1/2006 to 12/31/2006 $11.16 $13.10 0 1/1/2007 to 12/31/2007 $13.10 $15.12 0 - --------------------------------------------------------------------------------------------------- AST International Value 3/14/2005* to 12/31/2005 $10.59 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.95 0
A-88
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST MFS Global Equity 1/1/2005 to 12/31/2005 $10.36 0 1/1/2006 to 12/31/2006 $10.36 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $13.25 0 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2005 to 12/31/2005 $10.31 0 1/1/2006 to 12/31/2006 $10.31 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $11.71 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.66 0 1/1/2007 to 12/31/2007 $10.66 $12.27 0 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2005 to 12/31/2005 $10.84 0 1/1/2006 to 12/31/2006 $10.84 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $12.80 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Small-Cap Value 1/1/2005 to 12/31/2005 $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $10.92 0 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $11.22 0 - -------------------------------------------------------------------------------------------- AST DeAM Small-Cap Value 1/1/2005 to 12/31/2005 $9.90 0 1/1/2006 to 12/31/2006 $9.90 $11.53 0 1/1/2007 to 12/31/2007 $11.53 $9.19 0 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2005 to 12/31/2005 $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.78 0 1/1/2007 to 12/31/2007 $10.78 $12.48 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Growth 1/1/2005 to 12/31/2005 $11.21 0 1/1/2006 to 12/31/2006 $11.21 $12.40 0 1/1/2007 to 12/31/2007 $12.40 $14.70 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2005 to 12/31/2005 $10.76 0 1/1/2006 to 12/31/2006 $10.76 $11.56 0 1/1/2007 to 12/31/2007 $11.56 $11.57 0 - -------------------------------------------------------------------------------------------- AST Alger All-Cap Growth 1/1/2005 to 12/2/2005 $11.59 0 - -------------------------------------------------------------------------------------------- AST Mid-Cap Value 1/1/2005 to 12/31/2005 $10.24 0 1/1/2006 to 12/31/2006 $10.24 $11.34 0 1/1/2007 to 12/31/2007 $11.34 $11.31 0 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Natural Resources 1/1/2005 to 12/31/2005 $11.61 0 1/1/2006 to 12/31/2006 $11.61 $13.05 0 1/1/2007 to 12/31/2007 $13.05 $17.78 0
A-89
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2005 to 12/31/2005 $11.98 0 1/1/2006 to 12/31/2006 $11.98 $12.28 0 1/1/2007 to 12/31/2007 $12.28 $12.89 0 - ----------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2005 to 12/31/2005 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $12.63 0 - ----------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2005 to 12/31/2005 $10.78 0 1/1/2006 to 12/31/2006 $10.78 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $12.50 0 - ----------------------------------------------------------------------------------------------- AST Goldman Sachs Concentrated Growth 1/1/2005 to 12/31/2005 $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $12.55 0 - ----------------------------------------------------------------------------------------------- AST DeAm Large-Cap Value 1/1/2005 to 12/31/2005 $10.59 0 1/1/2006 to 12/31/2006 $10.59 $12.51 0 1/1/2007 to 12/31/2007 $12.51 $12.28 0 - ----------------------------------------------------------------------------------------------- AST AllianceBernstein Growth + Value 1/1/2005 to 12/2/2005 $11.21 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $11.22 0 - ----------------------------------------------------------------------------------------------- AST Cohen & Steers Real Estate 1/1/2005 to 12/31/2005 $11.88 0 1/1/2006 to 12/31/2006 $11.88 $15.76 0 1/1/2007 to 12/31/2007 $15.76 $12.24 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Managed Index 500 1/1/2005 to 12/31/2005 $10.28 0 1/1/2006 to 12/31/2006 $10.28 $11.23 0 1/1/2007 to 12/31/2007 $11.23 $11.12 0 - ----------------------------------------------------------------------------------------------- AST American Century Income & Growth 1/1/2005 to 12/31/2005 $10.22 0 1/1/2006 to 12/31/2006 $10.22 $11.58 0 1/1/2007 to 12/31/2007 $11.58 $11.22 0 - ----------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2005 to 12/31/2005 $10.15 0 1/1/2006 to 12/31/2006 $10.15 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.77 0 - ----------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2005 to 12/31/2005 $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.99 0 1/1/2007 to 12/31/2007 $11.99 $11.29 0 - ----------------------------------------------------------------------------------------------- AST UBS Dynamic Alpha formerly, AST Global Allocation 1/1/2005 to 12/31/2005 $10.50 0 1/1/2006 to 12/31/2006 $10.50 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $11.20 0
A-90
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------------- AST American Century Strategic Allocation formerly, AST American Century Strategic Balanced 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.85 0 1/1/2007 to 12/31/2007 $10.85 $11.46 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Asset Allocation 1/1/2005 to 12/31/2005 $10.24 0 1/1/2006 to 12/31/2006 $10.24 $11.17 0 1/1/2007 to 12/31/2007 $11.17 $11.52 0 - --------------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2005 to 12/31/2005 $9.34 0 1/1/2006 to 12/31/2006 $9.34 $9.63 0 1/1/2007 to 12/31/2007 $9.63 $10.24 0 - --------------------------------------------------------------------------------------------------------- AST High Yield 1/1/2005 to 12/31/2005 $9.75 0 1/1/2006 to 12/31/2006 $9.75 $10.43 0 1/1/2007 to 12/31/2007 $10.43 $10.37 0 - --------------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2005 to 12/31/2005 $9.84 0 1/1/2006 to 12/31/2006 $9.84 $10.48 0 1/1/2007 to 12/31/2007 $10.48 $10.78 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2005 to 12/31/2005 $10.04 0 1/1/2006 to 12/31/2006 $10.04 $10.10 0 1/1/2007 to 12/31/2007 $10.10 $10.61 0 - --------------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2005 to 12/31/2005 $9.94 0 1/1/2006 to 12/31/2006 $9.94 $10.01 0 1/1/2007 to 12/31/2007 $10.01 $10.37 0 - --------------------------------------------------------------------------------------------------------- AST Money Market 1/1/2005 to 12/31/2005 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $10.13 0 1/1/2007 to 12/31/2007 $10.13 $10.31 0 - --------------------------------------------------------------------------------------------------------- Gartmore NVIT Developing Markets Fund formerly, Gartmore GVIT Developing Markets Fund 1/1/2005 to 12/31/2005 $11.93 0 1/1/2006 to 12/31/2006 $11.93 $15.57 0 1/1/2007 to 12/31/2007 $15.57 $21.67 0 - --------------------------------------------------------------------------------------------------------- WFVT Advantage Equity Income 1/1/2005 to 12/31/2005 $10.08 0 1/1/2006 to 12/31/2006 $10.08 $11.60 0 1/1/2007 to 12/31/2007 $11.60 $11.57 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Dynamics 1/1/2005 to 12/31/2005 $10.80 0 1/1/2006 to 12/31/2006 $10.80 $12.16 0 1/1/2007 to 12/31/2007 $12.16 $13.23 0 - --------------------------------------------------------------------------------------------------------- AIM V.I.--Technology 1/1/2005 to 12/31/2005 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $11.36 0 1/1/2007 to 12/31/2007 $11.36 $11.87 0
A-91
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AIM V.I.--Health Sciences 1/1/2005 to 12/31/2005 $11.04 0 1/1/2006 to 12/31/2006 $11.04 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $12.23 0 - ----------------------------------------------------------------------------------------- AIM V.I.--Financial Services 1/1/2005 to 12/31/2005 $10.62 0 1/1/2006 to 12/31/2006 $10.62 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $9.05 0 - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2005 to 12/31/2005 $10.88 0 1/1/2006 to 12/31/2006 $10.88 $13.00 0 1/1/2007 to 12/31/2007 $13.00 $14.50 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Special Equity 1/1/2005 to 4/15/2005 $9.26 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2005 to 12/31/2005 $10.50 0 1/1/2006 to 12/31/2006 $10.50 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $11.72 0 - ----------------------------------------------------------------------------------------- Evergreen VA Growth Fund 1/1/2005 to 12/31/2005 $11.33 0 1/1/2006 to 12/31/2006 $11.33 $12.20 0 1/1/2007 to 12/31/2007 $12.20 $13.14 0 - ----------------------------------------------------------------------------------------- ProFund VP--Europe 30 1/1/2005 to 12/31/2005 $10.41 0 1/1/2006 to 12/31/2006 $10.41 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $13.19 0 - ----------------------------------------------------------------------------------------- ProFund VP--Asia 30 1/1/2005 to 12/31/2005 $11.10 0 1/1/2006 to 12/31/2006 $11.10 $14.99 0 1/1/2007 to 12/31/2007 $14.99 $21.48 0 - ----------------------------------------------------------------------------------------- ProFund VP--Japan 1/1/2005 to 12/31/2005 $13.38 0 1/1/2006 to 12/31/2006 $13.38 $14.38 0 1/1/2007 to 12/31/2007 $14.38 $12.56 0 - ----------------------------------------------------------------------------------------- ProFund VP--Banks 1/1/2005 to 12/31/2005 $10.10 0 1/1/2006 to 12/31/2006 $10.10 $11.31 0 1/1/2007 to 12/31/2007 $11.31 $7.98 0 - ----------------------------------------------------------------------------------------- ProFund VP--Basic Materials 1/1/2005 to 12/31/2005 $9.48 0 1/1/2006 to 12/31/2006 $9.48 $10.62 0 1/1/2007 to 12/31/2007 $10.62 $13.46 0 - ----------------------------------------------------------------------------------------- ProFund VP--Biotechnology 1/1/2005 to 12/31/2005 $13.48 0 1/1/2006 to 12/31/2006 $13.48 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $12.03 0 - ----------------------------------------------------------------------------------------- ProFund VP--Consumer Services 1/1/2005 to 12/31/2005 $9.66 0 1/1/2006 to 12/31/2006 $9.66 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $9.34 0
A-92
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------- ProFund VP--Consumer Goods 1/1/2005 to 12/31/2005 $9.73 0 1/1/2006 to 12/31/2006 $9.73 $10.63 0 1/1/2007 to 12/31/2007 $10.63 $11.09 0 - ------------------------------------------------------------------------------------- ProFund VP--Oil & Gas 1/1/2005 to 12/31/2005 $10.92 0 1/1/2006 to 12/31/2006 $10.92 $12.78 0 1/1/2007 to 12/31/2007 $12.78 $16.42 0 - ------------------------------------------------------------------------------------- ProFund VP--Financial 1/1/2005 to 12/31/2005 $10.53 0 1/1/2006 to 12/31/2006 $10.53 $11.98 0 1/1/2007 to 12/31/2007 $11.98 $9.40 0 - ------------------------------------------------------------------------------------- ProFund VP--Healthcare 1/1/2005 to 12/31/2005 $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.68 0 1/1/2007 to 12/31/2007 $10.68 $11.04 0 - ------------------------------------------------------------------------------------- ProFund VP--Industrial 1/1/2005 to 12/31/2005 $10.06 0 1/1/2006 to 12/31/2006 $10.06 $10.90 0 1/1/2007 to 12/31/2007 $10.90 $11.81 0 - ------------------------------------------------------------------------------------- ProFund VP--Internet 1/1/2005 to 12/31/2005 $12.71 0 1/1/2006 to 12/31/2006 $12.71 $12.50 0 1/1/2007 to 12/31/2007 $12.50 $13.36 0 - ------------------------------------------------------------------------------------- ProFund VP--Pharmaceuticals 1/1/2005 to 12/31/2005 $9.44 0 1/1/2006 to 12/31/2006 $9.44 $10.27 0 1/1/2007 to 12/31/2007 $10.27 $10.19 0 - ------------------------------------------------------------------------------------- ProFund VP--Precious Metals 1/1/2005 to 12/31/2005 $12.00 0 1/1/2006 to 12/31/2006 $12.00 $12.49 0 1/1/2007 to 12/31/2007 $12.49 $14.84 0 - ------------------------------------------------------------------------------------- ProFund VP--Real Estate 1/1/2005 to 12/31/2005 $11.17 0 1/1/2006 to 12/31/2006 $11.17 $14.36 0 1/1/2007 to 12/31/2007 $14.36 $11.20 0 - ------------------------------------------------------------------------------------- ProFund VP--Semiconductor 1/1/2005 to 12/31/2005 $10.65 0 1/1/2006 to 12/31/2006 $10.65 $9.60 0 1/1/2007 to 12/31/2007 $9.60 $9.97 0 - ------------------------------------------------------------------------------------- ProFund VP--Technology 1/1/2005 to 12/31/2005 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $11.05 0 1/1/2007 to 12/31/2007 $11.05 $12.26 0 - ------------------------------------------------------------------------------------- ProFund VP--Telecommunications 1/1/2005 to 12/31/2005 $9.74 0 1/1/2006 to 12/31/2006 $9.74 $12.68 0 1/1/2007 to 12/31/2007 $12.68 $13.33 0 - ------------------------------------------------------------------------------------- ProFund VP--Utilities 1/1/2005 to 12/31/2005 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $13.77 0
A-93
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------- ProFund VP--Bull 1/1/2005 to 12/31/2005 $10.12 0 1/1/2006 to 12/31/2006 $10.12 $11.16 0 1/1/2007 to 12/31/2007 $11.16 $11.21 0 - --------------------------------------------------------------------------------------- ProFund VP--Bear 1/1/2005 to 12/31/2005 $9.54 0 1/1/2006 to 12/31/2006 $9.54 $8.56 0 1/1/2007 to 12/31/2007 $8.56 $8.35 0 - --------------------------------------------------------------------------------------- ProFund VP--Ultra Bull 1/1/2005 to 12/31/2005 $10.25 0 1/1/2006 to 12/31/2006 $10.25 $12.23 0 1/1/2007 to 12/31/2007 $12.23 $11.96 0 - --------------------------------------------------------------------------------------- ProFund VP NASDAQ-100 formerly, ProFund VP--OTC 1/1/2005 to 12/31/2005 $10.55 0 1/1/2006 to 12/31/2006 $10.55 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $12.31 0 - --------------------------------------------------------------------------------------- ProFund VP Short NASDAQ-100 formerly, ProFund VP--Short OTC 1/1/2005 to 12/31/2005 $9.14 0 1/1/2006 to 12/31/2006 $9.14 $8.75 0 1/1/2007 to 12/31/2007 $8.75 $7.50 0 - --------------------------------------------------------------------------------------- ProFund VP UltraNASDAQ-100 formerly, ProFund VP--UltraOTC 1/1/2005 to 12/31/2005 $11.04 0 1/1/2006 to 12/31/2006 $11.04 $11.23 0 1/1/2007 to 12/31/2007 $11.23 $14.00 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Value 1/1/2005 to 12/31/2005 $10.60 0 1/1/2006 to 12/31/2006 $10.60 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.31 0 - --------------------------------------------------------------------------------------- ProFund VP--Mid-Cap Growth 1/1/2005 to 12/31/2005 $10.76 0 1/1/2006 to 12/31/2006 $10.76 $10.85 0 1/1/2007 to 12/31/2007 $10.85 $11.76 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraMid-Cap 1/1/2005 to 12/31/2005 $11.38 0 1/1/2006 to 12/31/2006 $11.38 $12.22 0 1/1/2007 to 12/31/2007 $12.22 $12.55 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Value 1/1/2005 to 12/31/2005 $10.30 0 1/1/2006 to 12/31/2006 $10.30 $11.73 0 1/1/2007 to 12/31/2007 $11.73 $10.55 0 - --------------------------------------------------------------------------------------- ProFund VP--Small-Cap Growth 1/1/2005 to 12/31/2005 $10.48 0 1/1/2006 to 12/31/2006 $10.48 $11.05 0 1/1/2007 to 12/31/2007 $11.05 $11.15 0 - --------------------------------------------------------------------------------------- ProFund VP--UltraSmall-Cap 1/1/2005 to 12/31/2005 $10.66 0 1/1/2006 to 12/31/2006 $10.66 $13.03 0 1/1/2007 to 12/31/2007 $13.03 $10.97 0
A-94
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- ProFund VP--U.S. Government Plus 1/1/2005 to 12/31/2005 $10.54 0 1/1/2006 to 12/31/2006 $10.54 $9.76 0 1/1/2007 to 12/31/2007 $9.76 $10.43 0 - --------------------------------------------------------------------------------------------------- ProFund VP--Rising Rates Opportunity 1/1/2005 to 12/31/2005 $9.08 0 1/1/2006 to 12/31/2006 $9.08 $9.71 0 1/1/2007 to 12/31/2007 $9.71 $8.92 0 - --------------------------------------------------------------------------------------------------- Access VP High Yield 1/1/2005 to 12/31/2005 $10.47 0 1/1/2006 to 12/31/2006 $10.47 $11.12 0 1/1/2007 to 12/31/2007 $11.12 $11.35 0 - --------------------------------------------------------------------------------------------------- First Trust Target Focus Four Portfolio formerly, First Trust(R) 10 Uncommon Values 1/1/2005 to 12/31/2005 $9.74 0 1/1/2006 to 12/31/2006 $9.74 $9.83 0 1/1/2007 to 12/31/2007 $9.83 $10.07 0 - --------------------------------------------------------------------------------------------------- First Trust Global Dividend Target 15 1/1/2005 to 12/31/2005 $10.83 0 1/1/2006 to 12/31/2006 $10.83 $14.54 0 1/1/2007 to 12/31/2007 $14.54 $15.99 0 - --------------------------------------------------------------------------------------------------- First Trust Managed VIP 1/1/2005 to 12/31/2005 $10.43 0 1/1/2006 to 12/31/2006 $10.43 $11.29 0 1/1/2007 to 12/31/2007 $11.29 $11.98 0 - --------------------------------------------------------------------------------------------------- First Trust NASDAQ Target 15 1/1/2005 to 12/31/2005 $10.75 0 1/1/2006 to 12/31/2006 $10.75 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $13.40 0 - --------------------------------------------------------------------------------------------------- First Trust S&P Target 24 1/1/2005 to 12/31/2005 $10.48 0 1/1/2006 to 12/31/2006 $10.48 $10.46 0 1/1/2007 to 12/31/2007 $10.46 $10.57 0 - --------------------------------------------------------------------------------------------------- First Trust The Dow Target 10 1/1/2005 to 12/31/2005 $9.53 0 1/1/2006 to 12/31/2006 $9.53 $11.61 0 1/1/2007 to 12/31/2007 $11.61 $11.33 0 - --------------------------------------------------------------------------------------------------- First Trust Dow Target Dividend 1/1/2005 to 12/31/2005 $9.67 0 1/1/2006 to 12/31/2006 $9.67 $11.08 0 1/1/2007 to 12/31/2007 $11.08 $10.87 0 - --------------------------------------------------------------------------------------------------- First Trust Value Line Target 25 1/1/2005 to 12/31/2005 $11.11 0 1/1/2006 to 12/31/2006 $11.11 $11.08 0 1/1/2007 to 12/31/2007 $11.08 $12.71 0 - --------------------------------------------------------------------------------------------------- Profund VP Large-Cap Growth 1/1/2005 to 12/31/2005 $9.98 0 1/1/2006 to 12/31/2006 $9.98 $10.56 0 1/1/2007 to 12/31/2007 $10.56 $10.96 0 - --------------------------------------------------------------------------------------------------- Profund VP Large-Cap Value 1/1/2005 to 12/31/2005 $10.20 0 1/1/2006 to 12/31/2006 $10.20 $11.74 0 1/1/2007 to 12/31/2007 $11.74 $11.40 0
A-95
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------------------ Profund VP Short Mid Cap 1/1/2005 to 12/31/2005 $8.94 0 1/1/2006 to 12/31/2006 $8.94 $8.36 0 1/1/2007 to 12/31/2007 $8.36 $7.87 0 - ------------------------------------------------------------------------------------------------------------ Profund VP Short Small-Cap 1/1/2005 to 12/31/2005 $9.17 0 1/1/2006 to 12/31/2006 $9.17 $7.84 0 1/1/2007 to 12/31/2007 $7.84 $7.95 0 - ------------------------------------------------------------------------------------------------------------ SP International Growth 1/1/2005 to 12/31/2005 $11.18 0 1/1/2006 to 12/31/2006 $11.18 $13.12 0 1/1/2007 to 12/31/2007 $13.12 $15.22 0 - ------------------------------------------------------------------------------------------------------------ AST Aggressive Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $9.99 0 1/1/2006 to 12/31/2006 $9.99 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $11.91 0 - ------------------------------------------------------------------------------------------------------------ AST Capital Growth Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.00 0 1/1/2006 to 12/31/2006 $10.00 $11.02 2,672 1/1/2007 to 12/31/2007 $11.02 $11.73 10,225 - ------------------------------------------------------------------------------------------------------------ AST Balanced Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.01 0 1/1/2006 to 12/31/2006 $10.01 $10.85 18,249 1/1/2007 to 12/31/2007 $10.85 $11.49 19,931 - ------------------------------------------------------------------------------------------------------------ AST Conservative Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.74 0 1/1/2007 to 12/31/2007 $10.74 $11.36 4,610 - ------------------------------------------------------------------------------------------------------------ AST Preservation Asset Allocation Portfolio 1/1/2005 to 12/31/2005 $10.03 0 1/1/2006 to 12/31/2006 $10.03 $10.50 0 1/1/2007 to 12/31/2007 $10.50 $11.07 0 - ------------------------------------------------------------------------------------------------------------ AST Advanced Strategies Portfolio 3/20/2006 to 12/31/2006* $10.00 $10.54 0 1/1/2007 to 12/31/2007 $10.54 $11.20 7,920 - ------------------------------------------------------------------------------------------------------------ AST First Trust Balanced Target Portfolio 3/20/2006 to 12/31/2006* $10.00 $10.47 0 1/1/2007 to 12/31/2007 $10.47 $11.02 5,264 - ------------------------------------------------------------------------------------------------------------ AST First Trust Capital Appreciation Portfolio 3/20/2006 to 12/31/2006* $10.00 $10.37 0 1/1/2007 to 12/31/2007 $10.37 $11.20 5,929 - ------------------------------------------------------------------------------------------------------------ AST CLS Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $11.49 0 - ------------------------------------------------------------------------------------------------------------ AST CLS Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.02 0 - ------------------------------------------------------------------------------------------------------------ AST Horizon Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.17 0 - ------------------------------------------------------------------------------------------------------------ AST Horizon Moderate Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $10.15 0 - ------------------------------------------------------------------------------------------------------------ AST Niemann Capital Growth Asset Allocation Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 0 - ------------------------------------------------------------------------------------------------------------ AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.96 0
* Denotes the start date of these sub-accounts. A-96 APPENDIX B - CALCULATION OF OPTIONAL DEATH BENEFITS Examples of Enhanced Beneficiary Protection Optional Death Benefit Calculation The following are examples of how the Enhanced Beneficiary Protection Optional Death Benefit is calculated. Each example assumes that a $50,000 initial Purchase Payment is made. Each example assumes that there is one Owner who is age 50 on the Issue Date and that all Account Value is maintained in the variable investment options. The formula for determining the Enhanced Beneficiary Protection Optional Death Benefit is as follows: Growth = Account Value of variable minus Purchase Payments - investment options plus Interim proportional withdrawals Value of Fixed Allocations (no MVA applies)
Example with market increase Assume that the Owner has made no withdrawals and that the Account Value has been increasing due to positive market performance. On the date we receive due proof of death, the Account Value is $75,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value, which ever is greater. Therefore, the basic Death Benefit is equal to $75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the "Growth" under the Annuity. Growth = $75,000 - [$50,000 - $0] = $25,000 Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit = 40% of Growth = $25,000 * 0.40 = $10,000 Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection Optional Death Benefit = $85,000
Examples with market decline Assume that the Owner has made no withdrawals and that the Account Value has been decreasing due to declines in market performance. On the date we receive due proof of death, the Account Value is $45,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value, which ever is greater. Therefore, the basic Death Benefit is equal to $50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth" under the Annuity. Growth = $45,000 - [$50,000 - $0] = $-5,000 Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit = 40% of Growth NO BENEFIT IS PAYABLE Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection Optional Death Benefit = $50,000
In this example you would receive no additional benefit from purchasing the Enhanced Beneficiary Protection Optional Death Benefit. B-1 Example with market increase and withdrawals Assume that the Account Value has been increasing due to positive market performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when the Account Value was $75,000. On the date we receive due proof of death, the Account Value is $90,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value, which ever is greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the Annuity. Growth = $90,000 - [$50,000 - ($50,000 * $15,000/$75,000)] = $90,000 - [$50,000 - $10,000] = $90,000 - $40,000 = $50,000 Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit = 40% of Growth = $50,000 * 0.40 = $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection Optional Death Benefit
= $110,000
Examples of Highest Anniversary Value Death Benefit Calculation The following are examples of how the Highest Anniversary Value Death Benefit is calculated. Each example assumes an initial Purchase Payment of $50,000. Each example assumes that there is one Owner who is age 70 on the Issue Date and that all Account Value is maintained in the variable investment options. Example with market increase and death before Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals have been made. On the date we receive due proof of death, the Account Value is $75,000; however, the Anniversary Value on the 5/th/ anniversary of the Issue Date was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Anniversary Value or the basic Death Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000) because it is greater than the amount that would have been payable under the basic Death Benefit ($75,000). Example with withdrawals Assume that the Account Value has been increasing due to positive market performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when the Account Value was $75,000. On the date we receive due proof of death, the Account Value is $80,000; however, the Anniversary Value on the 5/th/ anniversary of the Issue Date was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Anniversary Value or the basic Death Benefit. Highest Anniversary Value = $90,000 - [$90,000 * $15,000/$75,000] = $90,000 - $18,000 = $72,000 Basic Death Benefit = max [$80,000, $50,000 - ($50,000 * $15,000/$75,000)] = max [$80,000, $40,000] = $80,000 The Death Benefit therefore is $80,000.
B-2 Example with death after Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals had been made prior to the Death Benefit Target Date. Further assume that the Owner dies after the Death Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary Value on the Death Benefit Target Date was $80,000; however, following the Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account Value was $70,000. The Death Benefit is equal to the greater of the Highest Anniversary Value plus Purchase Payments minus proportional withdrawals after the Death Benefit Target Date or the basic Death Benefit. Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) * $5,000/$70,000] = $80,000 + $15,000 - $6,786 = $88,214 Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) * $5,000/$70,000}] = max [$75,000, $60,357] = $75,000 The Death Benefit therefore is $88,214.
Examples of Combination 5% Roll-Up and Highest Anniversary Value Death Benefit Calculation The following are examples of how the Combination 5% Roll-Up and Highest Anniversary Value Death Benefit are calculated. Each example assumes an initial Purchase Payment of $50,000. Each example assumes that there is one Owner who is age 70 on the Issue Date and that all Account Value is maintained in the variable investment options. Example with market increase and death before Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals have been made. On the 7/th/ anniversary of the Issue Date we receive due proof of death, at which time the Account Value is $75,000; however, the Anniversary Value on the 5/th/ anniversary of the Issue Date was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000) because it is greater than both the Roll-Up Value ($67,005) and the amount that would have been payable under the basic Death Benefit ($75,000). Example with withdrawals Assume that the Owner made a withdrawal of $5,000 on the 6/th/ anniversary of the Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6/th/ anniversary of the Issue Date is equal to initial Purchase Payment accumulated at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the 7/th/ annuity year is equal to 5% of the Roll-Up Value as of the 6/th/ anniversary of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal results in a proportional reduction to the Roll-Up Value. On the 7/th/ anniversary of the Issue Date we receive due proof of death, at which time the Account Value is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue Date was $70,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death Benefit. Roll-Up Value = {(67,005 - $3,350) - [($67,005 - $3,350) * $1,650/($45,000 - $3,350)]} * 1.05 = ($63,655 - $2,522) * 1.05 = $64,190 Highest Anniversary Value = $70,000 - [$70,000 * $5,000/$45,000] = $70,000 - $7,778 = $62,222 Basic Death Benefit = max [$43,000, $50,000 - ($50,000 * $5,000/$45,000)] = max [$43,000, $44,444] = $44,444 The Death Benefit therefore is $64,190.
B-3 Example with death after Death Benefit Target Date Assume that the Owner has not made any withdrawals prior to the Death Benefit Target Date. Further assume that the Owner dies after the Death Benefit Target Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit Target Date (the contract anniversary on or following the Owner's 80/th/ birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was $85,000; however, following the Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the Death Benefit Target Date; each increased by subsequent Purchase Payments and reduced proportionally for subsequent withdrawals. Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) * $5,000/$70,000] = $81,445 + $15,000 - $6,889 = $89,556 Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) * $5,000/$70,000] = $85,000 + $15,000 - $7,143 = $92,857 Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000 + $15,000) * $5,000/$70,000}] = max [$75,000, $60,357] = $75,000 The Death Benefit therefore is $92,857.
Examples of Highest Daily Value Death Benefit Calculation The following are examples of how the HDV Death Benefit is calculated. Each example assumes an initial Purchase Payment of $50,000. Each example assumes that there is one Owner who is age 70 on the Issue Date. Example with market increase and death before Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals have been made. On the date we receive due proof of death, the Account Value is $75,000; however, the Highest Daily Value was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Daily Value or the basic Death Benefit. The Death Benefit would be the HDV ($90,000) because it is greater than the amount that would have been payable under the basic Death Benefit ($75,000). Example with withdrawals Assume that the Account Value has been increasing due to positive market performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when the Account Value was $75,000. On the date we receive due proof of death, the Account Value is $80,000; however, the Highest Daily Value ($90,000) was attained during the fifth Annuity Year. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Daily Value (proportionally reduced by the subsequent withdrawal) or the basic Death Benefit. Highest Daily Value = $90,000 - [$90,000 * $15,000/$75,000] = $90,000 - $18,000 = $72,000 Basic Death Benefit = max [$80,000, $50,000 - ($50,000 * $15,000/$75,000)] = max [$80,000, $40,000] = $80,000 The Death Benefit therefore is $80,000.
B-4 Example with death after Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals had been made prior to the Death Benefit Target Date. Further assume that the Owner dies after the Death Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value on the Death Benefit Target Date was $80,000; however, following the Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account Value was $70,000. The Death Benefit is equal to the greater of the Highest Daily Value on the Death Benefit Target Date plus Purchase Payments minus proportional withdrawals after the Death Benefit Target Date or the basic Death Benefit. Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) * $5,000/$70,000] = $80,000 + $15,000 - $6,786 = $88,214 Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) * $5,000/$70,000}] = max [$75,000, $60,357] = $75,000 The Death Benefit therefore is $88,214.
B-5 APPENDIX C - PLUS40(TM) OPTIONAL LIFE INSURANCE RIDER Prudential Annuities' Plus40(TM) Optional Life Insurance Rider was offered, in those states where approved, between November 18, 2002 for ASAP III, January 17, 2002 for ASL II and APEX II, and January 23, 2002 for XT6 and May 1, 2003. The description below of the Plus40(TM) benefit applies to those Contract Owners who purchased an Annuity during that time period and elected the Plus40(TM) benefit. The life insurance coverage provided under the Plus40(TM) Optional Life Insurance Rider ("Plus40(TM) rider" or the "Rider") is supported by Prudential Annuities' general account and is not subject to, or registered as a security under, either the Securities Act of 1933 or the Investment Company Act of 1940. Information about the Plus40(TM) rider is included as an Appendix to this Prospectus to help you understand the Rider and the relationship between the Rider and the value of your Annuity. It is also included because you can elect to pay for the Rider with taxable withdrawals from your Annuity. The staff of the Securities and Exchange Commission has not reviewed this information. However, the information may be subject to certain generally applicable provisions of the Federal securities laws regarding accuracy and completeness. The income tax-free life insurance payable to your Beneficiary(ies) under the Plus40(TM) rider is equal to 40% of the Account Value of your Annuity as of the date we receive due proof of death, subject to certain adjustments, restrictions and limitations described below. ELIGIBILITY The Plus40(TM) rider may be purchased as a rider on your Annuity. The Rider must cover those persons upon whose death the Annuity's death benefit becomes payable - the Annuity's owner or owners, or the Annuitant (in the case of an entity owned Annuity). If the Annuity has two Owners, the Rider's death benefit is payable upon the first death of such persons. If the Annuity is owned by an entity, the Rider's death benefit is payable upon the death of the Annuitant, even if a Contingent Annuitant is named. The minimum allowable age to purchase the Plus40(TM) rider is 40; the maximum allowable age is 75. If the Rider is purchased on two lives, both persons must meet the age eligibility requirements. The Plus40(TM) rider is not available to purchasers who use their Annuity as a funding vehicle for a Tax Sheltered Annuity (or 403(b)) or as a funding vehicle for a qualified plan under Section 401 of the Internal Revenue Code ("Code"). ADJUSTMENTS, RESTRICTIONS & LIMITATIONS . If you die during the first 24 months following the effective date of the Plus40(TM) rider (generally, the Issue Date of your Annuity), the death benefit will be limited to the amount of any charges paid for the Rider while it was in effect. While we will return the charges you have paid during the applicable period as the death benefit, your Beneficiary(ies) will receive no additional life insurance benefit from the Plus40(TM) rider if you die within 24 months of its effective date. . If you make a Purchase Payment within 24 months prior to the date of death, the Account Value used to determine the amount of the death benefit will be reduced by the amount of such Purchase Payment(s). If we reduce the death benefit payable under the Plus40(TM) rider based on this provision, we will return 50% of any charges paid for the Rider based on those Purchase Payments as an additional amount included in the death benefit under the Rider. . If we apply Credits to your Annuity based on Purchase Payments, such Credits are treated as Account Value for purposes of determining the death benefit payable under the Plus40(TM) rider. However, if Credits were applied to Purchase Payments made within 24 months prior to the date of death, the Account Value used to determine the amount of the death benefit will be reduced by the amount of such Credits. If we reduce the death benefit payable under the Plus40(TM) rider based on this provision, we will return 50% of any charges paid for the Rider based on such Credits as an additional amount included in the death benefit under the Rider. . If you become terminally ill (as defined in the Rider) and elect to receive a portion of the Plus40(TM) rider's death benefit under the Accelerated Death Benefit provision, the amount that will be payable under the Rider upon your death will be reduced. Please refer to the Accelerated Death Benefit provision described below. . If charges for the Plus40(TM) rider are due and are unpaid as of the date the death benefit is being determined, such charges will be deducted from the amount paid to your Beneficiary(ies). . If the age of any person covered under the Plus40(TM) rider is misstated, we will adjust any coverage under the Rider to conform to the facts. For example, if, due to the misstatement, we overcharged you for coverage under the Rider, we will add any additional charges paid to the amount payable to your Beneficiary(ies). If, due to the misstatement, we undercharged you for coverage under the Rider, we will reduce the death benefit in proportion to the charges not paid as compared to the charges that would have been paid had there been no misstatement. C-1 . On or after an Owner reaches the expiry date of the Rider (the anniversary of the Annuity's Issue Date on or immediately after the 95/th/ birthday), coverage will terminate. No charge will be made for an Owner following the expiry date. If there are two Owners, the expiry date applies separately to each Owner; therefore, coverage may continue for one Owner and terminate as to the other Owner. MAXIMUM BENEFIT The Plus40(TM) rider is subject to a Maximum Death Benefit Amount based on the Purchase Payments applied to your Annuity. The Plus40(TM) rider may also be subject to a Per Life Maximum Benefit that is based on all amounts paid under any annuity contract we issue to you under which you have elected the Plus40(TM) rider or similar life insurance coverage. . The Maximum Death Benefit Amount is 100% of the Purchase Payments increasing at 5% per year following the date each Purchase Payment is applied to the Annuity until the date of death. If Purchase Payments are applied to the Annuity within 24 months prior to the date of death, the Maximum Death Benefit Amount is decreased by the amount of such Purchase Payments. . The Per Life Maximum Benefit applies to Purchase Payments applied to any such annuity contracts more than 24 months from the date of death that exceed $1,000,000. If you make Purchase Payments in excess of $1,000,000, we will reduce the aggregate death benefit payable under all Plus40(TM) riders, or similar riders issued by us, based on the combined amount of Purchase Payments in excess of $1,000,000 multiplied by 40%. If the Per Life Maximum Benefit applies, we will reduce the amount payable under each applicable Plus40(TM) rider on a pro-rata basis. If the Per Life Maximum Benefit applies upon your death, we will return any excess charges that you paid on the portion of your Account Value on which no benefit is payable. The Per Life Maximum Benefit does not limit the amount of Purchase Payments that you may apply to your Annuity. ACCELERATED DEATH BENEFIT PROVISION If you become terminally ill, you may request that a portion of the death benefit payable under the Plus40(TM) rider be prepaid instead of being paid to your Beneficiary(ies) upon your death. Subject to our requirements and where allowed by law, we will make a one time, lump sum payment. Our requirements include proof satisfactory to us, in writing, of terminal illness after the Rider's Effective Date. The maximum we will pay, before any reduction, is the lesser of 50% of the Rider's death benefit or $100,000. If you elect to accelerate payment of a portion of the death benefit under the Plus40(TM) rider, the amount of the remaining death benefit is reduced by the prepaid amount accumulating at an annualized interest rate of 6.0%. Eligibility for an accelerated payout of a portion of your Plus40(TM) rider death benefit may be more restrictive than any medically-related surrender provision that may be applicable to you under the Annuity. CHARGES FOR THE PLUS40(TM) RIDER The Plus40(TM) rider has a current charge and a guaranteed maximum charge. The current charge for the Plus40(TM) rider is based on a percentage of your Account Value as of the anniversary of the Issue Date of your Annuity. The applicable percentages differ based on the attained age, last birthday of the Owner(s) or Annuitant (in the case of an entity owned Annuity) as of the date the charge is due. We reserve the right to change the current charge, at any time, subject to regulatory approval where required. If there are two Owners, we calculate the current charge that applies to each Owner individually and deduct the combined amount as the charge for the Rider. There is no charge based on a person's life after coverage expires as to that person. However, a charge will still apply to the second of two Owners (and coverage will continue for such Owner) if such Owner has not reached the expiry date.
Percentage of Attained Age Account Value -------------------------- Age 40-75 .80% -------------------------- Age 76-80 1.60% -------------------------- Age 81-85 3.20% -------------------------- Age 86-90 4.80% -------------------------- Age 91 6.50% -------------------------- Age 92 7.50% -------------------------- Age 93 8.50% -------------------------- Age 94 9.50% -------------------------- Age 95 10.50% --------------------------
C-2 The charge for the Plus40(TM) rider may also be subject to a guaranteed maximum charge that will apply if the current charge, when applied to the Account Value, exceeds the guaranteed maximum charge. The guaranteed maximum charge is based on a charge per $1,000 of insurance. We determine the charge for the Rider annually, in arrears. We deduct the charge: (1) upon your death; (2) on each anniversary of the Issue Date; (3) on the date that you begin receiving annuity payments; (4) if you surrender your Annuity other than a medically-related surrender; or (5) if you choose to terminate the Rider. If the Rider terminates for any of the preceding reasons on a date other than the anniversary of the Annuity's Issue Date, the charge will be prorated. During the first year after the Annuity's Issue Date, the charge will be prorated from the Issue Date. In all subsequent years, the charge will be prorated from the last anniversary of the Issue Date. You can elect to pay the annual charge through a redemption from your Annuity's Account Value or through funds other than those within the Annuity. If you do not elect a method of payment, we will automatically deduct the annual charge from your Annuity's Account Value. The manner in which you elect to pay for the Rider may have tax implications. . If you elect to pay the charge through a redemption of your Annuity's Account Value, the withdrawal will be treated as a taxable distribution, and will generally be subject to ordinary income tax on the amount of any investment gain withdrawn. If you are under age 59 1/2, the distribution may also be subject to a 10% penalty on any gain withdrawn, in addition to ordinary income taxes. We first deduct the amount of the charge pro-rata from the Account Value in the variable investment options. We only deduct the charge pro-rata from the Fixed Allocations to the extent there is insufficient Account Value in the variable investment options to pay the charge. . If you elect to pay the charge through funds other than those from your Annuity, we require that payment be made electronically in U.S. currency through a U.S. financial institution. If you elect to pay the charge through electronic transfer of funds and payment has not been received within 31 days from the due date, we will deduct the charge as a redemption from your Annuity, as described above. TERMINATION You can terminate the Plus40(TM) rider at any time. Upon termination, you will be required to pay a pro-rata portion of the annual charge for the Rider. The Plus40(TM) rider will terminate automatically on the date your Account Value is applied to begin receiving annuity payments, on the date you surrender the Annuity or, on the expiry date with respect to such person who reaches the expiry date. We may also terminate the Plus40(TM) rider, if necessary, to comply with our interpretation of the Code and applicable regulations. Once terminated, you may not reinstate your coverage under the Plus40(TM) rider. CHANGES IN ANNUITY DESIGNATIONS Changes in ownership and annuitant designations under the Annuity may result in changes in eligibility and charges under the Plus40(TM) rider. These changes may include termination of the Rider. Please refer to the Rider for specific details. SPOUSAL ASSUMPTION A spousal beneficiary may elect to assume ownership of the Annuity instead of taking the Annuity's Death Benefit. However, regardless of whether a spousal beneficiary assumes ownership of the Annuity, the death benefit under the Plus40(TM) rider will be paid despite the fact that the Annuity will continue. The spousal beneficiary can apply the death benefit proceeds under the Plus40(TM) rider to the Annuity as a new Purchase Payment, can purchase a new annuity contract or use the death benefit proceeds for any other purpose. Certain restrictions may apply to an Annuity that is used as a qualified investment. Spousal beneficiaries may also be eligible to purchase the Plus40(TM) rider, in which case the Annuity's Account Value, as of the date the assumption is effective, will be treated as the initial Purchase Payment under applicable provisions of the Rider. TAX CONSIDERATION The Plus40(TM) rider was designed to qualify as a life insurance contract under the Code. As life insurance, under most circumstances, the Beneficiary(ies) does not pay any Federal income tax on the death benefit payable under the Rider. If your Annuity is being used as an Individual Retirement Annuity (IRA), we consider the Plus40(TM) rider to be outside of your IRA, since premium for the Rider is paid for either with funds outside of your Annuity or with withdrawals previously subject to tax and any applicable tax penalty. We believe payments under the accelerated payout provision of the Rider will meet the requirements of the Code and the regulations in order to qualify as tax-free payments. To the extent permitted by law, we will change our procedures in relation to the Rider, or the definition of terminally ill, or any other applicable term in order to maintain the tax-free status of any amounts paid out under the accelerated payout provision. C-3 APPENDIX D - ADDITIONAL INFORMATION ON ASSET ALLOCATION PROGRAMS PROGRAM RULES . Prior to December 5, 2005, you could elect an asset allocation program where the Sub-accounts for each asset class in each model portfolio were designated based on an evaluation of available Sub-accounts. Effective December 5, 2005, you can no longer enroll in an asset allocation program, but you will be permitted to remain in the program if you enrolled prior to the date. These Program Rules reflect how the asset allocation program will be administered as of December 5, 2005 for those Owners who have chosen to remain in their program. Asset allocation is a sophisticated method of diversification that allocates assets among asset classes in order to manage investment risk and potentially enhance returns over the long term. However, asset allocation does not guarantee a profit or protect against a loss. HOW THE ASSET ALLOCATION PROGRAM WORKS . Amounts will automatically be allocated in accordance with the percentages and to Sub-accounts indicated for the model portfolio that you previously chose. If you allocate your Account Value or transfer your Account Value among any Sub-accounts that are outside of your model portfolio, we will allocate these amounts according to the allocation percentages of the applicable model portfolio upon the next rebalancing. You will not be permitted to change from one model portfolio to another. Upon each rebalance, 100% of your Account Value allocated to the variable Sub-accounts will be allocated to the asset allocation program. Any Account Value not invested in the Sub-accounts will not be part of the program. . Additional Purchase Payments: Unless otherwise requested, any additional Purchase Payments applied to the variable Sub-accounts in the Annuity will be allocated to the Sub-accounts according to the allocation percentages for the model portfolio you chose. Allocation of additional Purchase Payments outside of your model portfolio but into a Sub-account, will be reallocated according to the allocation percentages of the applicable model portfolio upon the next rebalancing. . Rebalancing Your Model Portfolio: Changes in the value of the Sub-account will cause your Account Value allocated to the Sub-accounts to vary from the percentage allocations of the model portfolio you select. By selecting the asset allocation program, you have directed us to periodically (e.g., quarterly) rebalance your Account Value allocated to the Sub-accounts in accordance with the percentage allocations assigned to each Sub-account within your model portfolio at the time you elected the program or had later been modified with your consent. Some asset allocation programs will only require that a rebalancing occur when the percent of your Account Value allocated to the Sub-accounts are outside of the acceptable range permitted under such asset allocation program. Note - Any Account Value not invested in the Sub-accounts will not be affected by any rebalance. . Sub-account Changes Within the Model Portfolios: From time to time there may be a change in a Sub-account within your model portfolio. Unless directed by you or your Financial Professional to reallocate to the new Sub-account, rebalancing will continue in accordance with your unchanged model portfolio, unless the Sub-account is no longer available under your Annuity. If the Sub-account is no longer available we will notify you. If you do not consent to the new Sub-account, your lack of consent will be deemed a request to terminate the asset allocation program and the provisions under "Termination or Modification of the Asset Allocation Program" will apply. . Owner Changes in Choice of Model Portfolio: You may not change from the model portfolio that you have elected to any other model portfolio. TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM: . You may request to terminate your asset allocation program at any time. Once you terminate your asset allocation program, you will not be permitted to re-enroll in the program. Any termination will be effective on the date that Prudential Annuities receives your termination request in good order. If you are enrolled in certain optional benefits, termination of your asset allocation program must coincide with (i) the enrollment in a then currently available and approved asset allocation program or other approved option, or (ii) the allocation of your entire account value to the then required investment option(s) available with these benefits. However, if you are enrolled in certain optional benefits, you may terminate the benefit in order to then terminate your asset allocation program. Prudential Annuities reserves the right to terminate or modify the asset allocation program at any time with respect to any programs. RESTRICTIONS ON ELECTING THE ASSET ALLOCATION: . You cannot participate in auto-rebalancing or a DCA program while enrolled in an asset allocation program and Systematic Withdrawals can only be made as flat dollar amounts. D-1 APPENDIX E - DESCRIPTION AND CALCULATION OF PREVIOUSLY OFFERED OPTIONAL DEATH BENEFITS (THIS APPLIES SOLELY TO APEX II, ASL II, AND XT6) If you purchased your Annuity before November 18, 2002 and were not a resident of the State of New York, the following optional death benefits were offered: ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT The Enhanced Beneficiary Protection Optional Death Benefit can provide additional amounts to your Beneficiary that may be used to offset federal and state taxes payable on any taxable gains in your Annuity at the time of your death. Whether this benefit is appropriate for you may depend on your particular circumstances, including other financial resources that may be available to your Beneficiary to pay taxes on your Annuity should you die during the accumulation period. No benefit is payable if death occurs on or after the Annuity Date. The Enhanced Beneficiary Protection Optional Death Benefit provides a benefit that is payable in addition to the basic Death Benefit. If the Annuity has one Owner, the Owner must be age 75 or less at the time the benefit is purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or less. If the Annuity is owned by an entity, the Annuitant must be age 75 or less. Calculation of Enhanced Beneficiary Protection Optional Death Benefit If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the Death Benefit is calculated as follows: 1. the basic Death Benefit described above PLUS 2. 50% of the "Death Benefit Amount" less Purchase Payments reduced by proportional withdrawals. "Death Benefit Amount" includes your Account Value and any amounts added to your Account Value under the Annuity's basic Death Benefit when the Death Benefit is calculated. Under the basic Death Benefit, amounts are added to your Account Value when the Account Value is less than Purchase Payments minus proportional withdrawals. "Proportional withdrawals" are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. The amount calculated in Items 1 & 2 above may be reduced by any Credits under certain circumstances. The Enhanced Beneficiary Protection Optional Death Benefit is subject to a maximum of 50% of all Purchase Payments applied to the Annuity at least 12 months prior to the death of the decedent that triggers the payment of the Death Benefit. Please refer to the section entitled "Tax Considerations" for a discussion of special tax considerations for purchasers of this benefit. NOTE: You may not elect the Enhanced Beneficiary Protection Optional Death Benefit if you have elected any other Optional Death Benefit. Guaranteed Minimum Death Benefit If the Annuity has one Owner, the Owner must be age 80 or less at the time the optional Death Benefit is purchased. If the Annuity has joint Owners, the oldest Owner must be age 80 or less. If the Annuity is owned by an entity, the Annuitant must be age 80 or less. Key Terms Used with the Guaranteed Minimum Death Benefit . The Death Benefit Target Date is the contract anniversary on or after the 80/th/ birthday of the current Owner, the oldest of either joint Owner or the Annuitant, if entity owned. . The Highest Anniversary Value equals the highest of all previous "Anniversary Values" on or before the earlier of the Owner's date of death and the "Death Benefit Target Date". . The Anniversary Value is the Account Value as of each anniversary of the Issue Date plus the sum of all Purchase Payments on or after such anniversary less the sum of all "Proportional Reductions" since such anniversary. . A Proportional Reduction is a reduction to the value being measured caused by a withdrawal, equaling the percentage of the withdrawal as compared to the Account Value as of the date of the withdrawal. For example, if your Account Value is $10,000 and you withdraw $2,000 (a 20% reduction), we will reduce both your Anniversary Value and the amount determined by Purchase Payments increasing at the appropriate interest rate by 20%. E-1 Calculation of Guaranteed Minimum Death Benefit The Guaranteed Minimum Death Benefit depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date, the Death Benefit equals the greatest of: 1. the Account Value in the Sub-accounts plus the Interim Value of any Fixed Allocations (no MVA) as of the date we receive in writing "due proof of death"; and 2. the sum of all Purchase Payments minus the sum of all Proportional Reductions, each increasing daily until the Owner's date of death at a rate of 5.0%, subject to a limit of 200% of the difference between the sum of all Purchase Payments and the sum of all withdrawals as of the Owner's date of death; and 3. the "Highest Anniversary Value" on or immediately preceding the Owner's date of death. The amount determined by this calculation is increased by any Purchase Payments received after the Owner's date of death and decreased by any Proportional Reductions since such date. The amount calculated in Items 1 & 3 above may be reduced by any Credits under certain circumstances. If the Owner dies on or after the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the Account Value as of the date we receive in writing "due proof of death" (an MVA may be applicable to amounts in any Fixed Allocations); and 2. the greater of Item 2 & 3 above on the Death Benefit Target Date plus the sum of all Purchase Payments less the sum of all Proportional Reductions since the Death Benefit Target Date. The amount calculated in Item 1 above may be reduced by any Credits under certain circumstances. Annuities with joint Owners For Annuities with Joint Owners, the Death Benefit is calculated as shown above except that the age of the oldest of the Joint Owners is used to determine the Death Benefit Target Date. NOTE: If you and your spouse own the Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary Beneficiary is the surviving spouse, then the surviving spouse can elect to assume ownership of the Annuity and continue the contract instead of receiving the Death Benefit. Annuities owned by entities For Annuities owned by an entity, the Death Benefit is calculated as shown above except that the age of the Annuitant is used to determine the Death Benefit Target Date. Payment of the Death Benefit is based on the death of the Annuitant (or Contingent Annuitant, if applicable). Can I terminate the optional Death Benefits? Do the optional Death Benefits terminate under other circumstances? You can terminate the Enhanced Beneficiary Protection Optional Death Benefit and the Guaranteed Minimum Death Benefit at any time. Upon termination, you will be required to pay a pro-rata portion of the annual charge for the benefit. Both optional Death Benefits will terminate automatically on the Annuity Date. We may also terminate any optional Death Benefit if necessary to comply with our interpretation of the Code and applicable regulations. What Are The Charges For The Optional Death Benefits? We deduct a charge from your Account Value if you elect to purchase either optional Death Benefit. The Enhanced Beneficiary Protection Death Benefit costs 0.25% of Account Value. The Guaranteed Minimum Death Benefit costs 0.30% of the current Death Benefit. The charges for these death benefits are deducted in arrears each Annuity Year. No charge applies after the Annuity Date. We deduct the charge: 1. on each anniversary of the Issue Date; 2. when Account Value is transferred to our general account prior to the Annuity Date; 3. if you surrender your Annuity; and 4. if you choose to terminate the benefit (Enhanced Beneficiary Protection Optional Death Benefit only) If you surrender the Annuity, elect to begin receiving annuity payments or terminate the benefit on a date other than an anniversary of the Issue Date, the charge will be prorated. During the first year after the Issue Date, the charge will be prorated from the Issue Date. In all subsequent years, it would be prorated from the last anniversary of the Issue Date. E-2 We first deduct the amount of the charge pro-rata from the Account Value in the variable investment options. We only deduct the charge pro-rata from the Fixed Allocations to the extent there is insufficient Account Value in the variable investment options to pay the charge. If your Annuity's Account Value is insufficient to pay the charge, we may deduct your remaining Account Value and terminate your Annuity. We will notify you if your Account Value is insufficient to pay the charge and allow you to submit an additional Purchase Payment to continue your Annuity. Please refer to the section entitled "Tax Considerations" for additional considerations in relation to the optional Death Benefit. ADDITIONAL CALCULATIONS Examples of Enhanced Beneficiary Protection Optional Death Benefit Calculation The following are examples of how the Enhanced Beneficiary Protection Optional Death Benefit is calculated. Each example assumes that a $50,000 initial Purchase Payment is made and that no withdrawals are made prior to the Owner's death. Each example assumes that there is one Owner who is age 50 on the Issue Date and that all Account Value is maintained in the variable investment options. NOTE: The examples below do not include Credits which may be recovered by Prudential Annuities under certain circumstances. Example with market increase Assume that the Owner's Account Value has been increasing due to positive market performance. On the date we receive due proof of death, the Account Value is $75,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value less the amount of any Credits applied within 12-months prior to the date of death, whichever is greater. Therefore, the basic Death Benefit is equal to $75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($75,000) PLUS 50% of the "Death Benefit Amount" less Purchase Payments reduced by proportional withdrawals. Purchase Payments = $50,000 Account Value = $75,000 Basic Death Benefit = $75,000 Death Benefit Amount = $75,000 - $50,000 = $25,000 Amount Payable Under Enhanced Beneficiary Protection Optional Death Benefit = $75,000 + $12,500 = $87,500
Examples with market decline Assume that the Owner's Account Value has been decreasing due to declines in market performance. On the date we receive due proof of death, the Account Value is $45,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value less the amount of any Credits applied within 12-months prior to the date of death, whichever is greater. Therefore, the basic Death Benefit is equal to $50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($50,000) PLUS 50% of the "Death Benefit Amount" less Purchase Payments reduced by proportional withdrawals. Purchase Payments = $50,000 Account Value = $40,000 Basic Death Benefit = $50,000 Death Benefit Amount = $50,000 - $50,000 = $0 Amount Payable Under Enhanced Beneficiary Protection Optional Death Benefit = $50,000 + $0 = $50,000
In this example you would receive no additional benefit from purchasing the Enhanced Beneficiary Protection Optional Death Benefit. Examples of Guaranteed Minimum Death Benefit Calculation The following are examples of how the Guaranteed Minimum Death Benefit is calculated. Each example assumes that a $50,000 initial Purchase Payment is made and that no withdrawals are made prior to the Owner's death. Each example assumes that there is one Owner who is age 50 on the Issue Date and that all Account Value is maintained in the variable investment options. NOTE: The examples below do not include Credits which may be recovered by Prudential Annuities under certain circumstances. E-3 Example of market increase Assume that the Owner's Account Value has generally been increasing due to positive market performance. On the date we receive due proof of death, the Account Value is $90,000. The Highest Anniversary Value at the end of any previous period is $72,000. The Death Benefit would be the Account Value ($90,000) because it is greater than the Highest Anniversary Value ($72,000) or the sum of prior Purchase Payments increased by 5.0% annually ($73,872.77). Example of market decrease Assume that the Owner's Account Value generally increased until the fifth anniversary but generally has been decreasing since the fifth contract anniversary. On the date we receive due proof of death, the Account Value is $48,000. The Highest Anniversary Value at the end of any previous period is $54,000. The Death Benefit would be the sum of prior Purchase Payments increased by 5.0% annually ($73,872.77) because it is greater than the Highest Anniversary Value ($54,000) or the Account Value ($48,000). Example of market increase followed by decrease Assume that the Owner's Account Value increased significantly during the first six years following the Issue Date. On the sixth anniversary date the Account Value is $90,000. During the seventh Annuity Year, the Account Value increases to as high as $100,000 but then subsequently falls to $80,000 on the date we receive due proof of death. The Death Benefit would be the Highest Anniversary Value at the end of any previous period ($90,000), which occurred on the sixth anniversary, although the Account Value was higher during the subsequent period. The Account Value on the date we receive due proof of death ($80,000) is lower, as is the sum of all prior Purchase Payments increased by 5.0% annually ($73,872.77). E-4 APPENDIX F - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU Prudential Annuities Life Assurance Corporation offers several deferred variable annuity products. Each annuity has different features and benefits that may be appropriate for you based on your individual financial situation and how you intend to use the annuity. Not all of these annuities may be available to you, depending on your state of residence and/or the broker-dealer through which your annuity was sold. You can verify which of these annuities is available to you by speaking to your Financial Professional or calling 1-800-752-6342. The different features and benefits may include variations on your ability to access funds in your annuity without the imposition of a withdrawal charge as well as different ongoing fees and charges you pay to stay in the contract. Additionally, differences may exist on various optional benefits such as guaranteed living benefits or death benefit protection. Among the factors you should consider when choosing which annuity product may be most appropriate for your individual needs are the following: .. Your age; .. The amount of your investment and any planned future deposits into the annuity; .. How long you intend to hold the annuity (also referred to as investment time horizon); .. Your desire to make withdrawals from the annuity, and the timing thereof; .. Your investment return objectives; .. The effect of optional benefits that may be elected, .. The value of being able to "lock-in" growth in your annuity after the initial withdrawal charge period for purposes of calculating the death benefit payable from the annuity; and .. Your desire to minimize costs and/or maximize return associated with the annuity. The following chart outlines some of the different features for each Annuity sold through this prospectus. The availability of optional features, such as those noted in the chart, may increase the cost of the annuity. Therefore you should carefully consider which features you plan to use when selecting your annuity. You should also consider the investment objectives, risks, charges and expenses of an investment carefully before investing. In addition, the hypothetical illustrations below reflect the account value and surrender value of each variable annuity over a variety of holding periods. These charts are meant to reflect how your annuities can grow or decrease depending on market conditions and the comparable value of each of the annuities (which reflects the charges associated with the annuities) under the assumptions noted. You can compare the costs of each Annuity by examining the section in this prospectus entitled "Summary of Contract Fees and Charges." For example, XT6 has the highest contingent deferred sales charge ("CDSC") and has an Insurance charge/Distribution charge that is as high as the Insurance charge of APEX II and ASL II (in Annuity Years 1-10). However, XT6 offers purchase credits that the other Annuities do not. ASAP III has the lowest Insurance Charge in Annuity Years 1-10, but does not offer purchase credits. APEX II has the same Insurance charge as ASL II and as the Insurance charge/Distribution charge of XT6 (in Annuity Years 1-10), and offers the shortest CDSC period among the three Annuities that have a CDSC. APEX II also offers greater access to Profund VP portfolios than the other Annuities. ASL II does not have any CDSC, but offers neither a purchase credit (like XT6) nor a loyalty credit (like ASAP III and APEX II). As you can see, there are trade-offs associated with the costs and benefits provided by each of the Annuities. In choosing the Annuity to purchase, you should consider which features are most important to you, and whether the associated costs offer the greatest value to you. Prudential Annuities' Annuity Product Comparison. Below is a summary of Prudential Annuities' annuity products sold through this prospectus. You should consider the investment objectives, risks, charges and expenses of an investment in any Annuity carefully before investing. The prospectus for the Annuities as well as the underlying portfolio prospectuses contain this and other information about the variable annuities and underlying investment options. Your registered Financial Professional can provide you with prospectuses for the Annuities and the underlying portfolios and can guide you through Selecting the Variable Annuity That's Right for you, and help you decide upon the Annuity that would be most advantageous for you given your individual needs. Please read the prospectuses carefully before investing. F-1
ASL II APEX II ASAP III - --------------------------------------------------------------------------------------------------------------------------------- Minimum Investment $15,000 $10,000 $1,000 - --------------------------------------------------------------------------------------------------------------------------------- Maximum Issue Age No Maximum Age 85 80 - --------------------------------------------------------------------------------------------------------------------------------- Contingent Deferred Sales None 4 Years (8.5%, 8%, 7%, 8 Years (7.5%, 7%, 6.5%, Charge Schedule 6%) 6%, 5%, 4%, 3%, 2%) - --------------------------------------------------------------------------------------------------------------------------------- Insurance and Distribution 1.65% 1.65% 1.25% years 1-8; 0.65% Charge years 9+ - --------------------------------------------------------------------------------------------------------------------------------- Annual Maintenance Fee Lesser of $35 or 2% of Lesser of $35 or 2% of Lesser of $35 or 2% of Account Value* Account Value* Account Value* - --------------------------------------------------------------------------------------------------------------------------------- Contract Credit No Yes. Generally, we apply a Yes. Generally, we apply a Loyalty Credit to your Loyalty Credit to your Annuity's Account Value Annuity's Account Value at the end of your fifth at the end of your fifth contract year (i.e., on your contract year (i.e., on your fifth Contract fifth Contract Anniversary). The Loyalty Anniversary). The Loyalty Credit is equal to 2.75% of Credit is equal to 0.50% of total Purchase Payments total Purchase Payments made during the first four made during the first four contract years less the contract years less the cumulative amount of cumulative amount of withdrawals made withdrawals made (including the deduction of (including the deduction of any CDSC amounts) any CDSC amounts) through the fifth Contract through the fifth Contract Anniversary Anniversary - --------------------------------------------------------------------------------------------------------------------------------- Fixed Allocation (early Fixed Allocation Available Fixed Allocation Available Fixed Allocation Available withdrawals are subject (currently offering (currently offering (currently offering to a Market Value durations of: 1,2,3,5,7,10 durations of: 1,2,3,5,7,10 durations of: 1,2,3,5,7,10 Adjustment) years) years) years) - --------------------------------------------------------------------------------------------------------------------------------- Variable Investment See "Investment Options" See "Investment Options" See "Investment Options" Options section of Prospectus. Not section of Prospectus. Not section of Prospectus. Not all options available with all options available with all options available with certain optional benefits. certain optional benefits. certain optional benefits. - --------------------------------------------------------------------------------------------------------------------------------- Basic Death Benefit Prior to age 85: The greater The greater of: Purchase The greater of: Purchase of: Purchase Payments less Payments less proportional Payments less proportional proportional withdrawals withdrawals or account withdrawals or account or account value (no MVA value (no MVA Applied). value (no MVA Applied). Applied). On or after age 85: account value - --------------------------------------------------------------------------------------------------------------------------------- Optional Death Benefits Enhanced Beneficiary EBP II, HDV, HAV, EBP II, HDV, HAV, (for an additional cost) Protection (EBPII), Combo 5% Roll-up /HAV Combo 5% Roll-up/HAV Highest Daily Value (HDV), Highest Anniversary Value (HAV), Combo 5% Roll Up/HAV - --------------------------------------------------------------------------------------------------------------------------------- Living Benefits (for an GRO/GRO Plus, HD GRO, GRO/GRO Plus, HD GRO, GRO/GRO Plus, HD GRO, additional cost) Guaranteed Minimum GMWB, GMIB, Lifetime GMWB, GMIB, Lifetime Withdrawal Benefit Five, Spousal Lifetime Five, Spousal Lifetime (GMWB), Guaranteed Five, Highest Daily Five, Highest Daily Minimum Income Benefit Lifetime Five, Highest Lifetime Five, Highest (GMIB), Lifetime Five, Daily Lifetime Seven, Daily Lifetime Seven, Spousal Lifetime Five, Spousal Highest Daily Spousal Highest Daily Highest Daily Lifetime Lifetime Seven Lifetime Seven Five, Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Seven - --------------------------------------------------------------------------------------------------------------------------------- Annuity Rewards Not Available Available after initial Available after initial withdrawal period withdrawal period - ---------------------------------------------------------------------------------------------------------------------------------
XTra Credit SIX - --------------------------------------------------------------------- Minimum Investment $10,000 - --------------------------------------------------------------------- Maximum Issue Age 75 - --------------------------------------------------------------------- Contingent Deferred Sales 10 Years (9%, 9%, 8%, Charge Schedule 7%, 6%, 5%, 4%, 3%, 2%, 1%) - --------------------------------------------------------------------- Insurance and Distribution 1.65% years 1-10; 0.65% Charge years 11+ - --------------------------------------------------------------------- Annual Maintenance Fee Lesser of $35 or 2% of Account Value - --------------------------------------------------------------------- Contract Credit Yes. The amount of the credit applied to a Purchase Payment is based on the year the Purchase Payment is received, for the first 6 years of the contract as follows: the credit percentages for each year, starting with the first, are 6.50%, 5.00%, 4.00%, 3.00%, 2.00%, and 1.00%. Recaptured in certain circumstances - --------------------------------------------------------------------- Fixed Allocation (early Fixed Allocation Available withdrawals are subject (currently offering to a Market Value durations of: 1,2,3,5,7,10 Adjustment) years) - --------------------------------------------------------------------- Variable Investment See "Investment Options" Options section of Prospectus. Not all options available with certain optional benefits. - --------------------------------------------------------------------- Basic Death Benefit The greater of: Purchase Payments less proportional withdrawals or account value (no MVA Applied) less an amount equal to the credits applied within the 12 months prior to date of death. - --------------------------------------------------------------------- Optional Death Benefits EBP II, HDV, HAV, (for an additional cost) Combo 5% Roll-up /HAV - --------------------------------------------------------------------- Living Benefits (for an GRO/GRO Plus, HD GRO, additional cost) GMWB, GMIB, Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Seven - --------------------------------------------------------------------- Annuity Rewards Available after initial withdrawal period - ---------------------------------------------------------------------
F-2 HYPOTHETICAL ILLUSTRATION The following examples outline the value of each annuity as well as the amount that would be available to an investor as a result of full surrender at the end of each of the Annuity years specified. The values shown below are based on the following assumptions: An initial investment of $100,000 is made into each Annuity earning a gross rate of return of 0%, 6% and 10% respectively. .. No subsequent deposits or withdrawals are made from the Annuity. .. The hypothetical gross rates of return are reduced by the arithmetic average of the fees and expenses of the underlying portfolios and the charges that are deducted from the Annuity at the Separate Account level as follows: .. 1.14% (for ASL II, ASAP III, and XT6) and 1.36% for APEX II. based on the fees and expenses of the underlying portfolios as of December 31, 2007. The arithmetic average of all fund expenses is computed by adding portfolio management fees, 12b-1 fees and other expenses of all of the underlying portfolios and then dividing by the number of portfolios. For purposes of the illustrations, we do not reflect any expense reimbursements or expense waivers that might apply and are described in the prospectus fee table. .. The Separate Account level charges include the Insurance Charge and Distribution Charge (as applicable). .. The Account Value and Surrender Value are further reduced by the annual maintenance fee. For XTra Credit SIX, APEX II, and ASAP III, the Account Value and Surrender Value also reflect the addition of any applicable credits. F-3 The Account Value assumes no surrender, while the Surrender Value assumes a 100% surrender two days prior to the anniversary of the Issue Date of the Annuity ("Annuity Anniversary"), therefore reflecting the withdrawal charge applicable to that Annuity year. Note that a withdrawal on the Annuity Anniversary would be subject to the withdrawal charge applicable to the next Annuity year, which usually is lower. The values that you actually experience under an Annuity will be different than what is depicted here if any of the assumptions we make here differ from your circumstances, however the relative values for each Annuity reflected below will remain the same. (We will provide you with a personalized illustration upon request).
------------------------------------------------------------------------ 0% Gross Rate of Return 6% Gross Rate of Return 10% Gross Rate of Return APEX II APEX II APEX II ------------------------------------------------------------------------ Net rate of return Net rate of return Net rate of return All years -2.99% All years 2.83% All years 6.71% ----------------------------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Year Value Value Value Value Value Value ----------------------------------------------------------------------------- 1 97,021 88,521 102,825 94,325 106,695 98,195 ----------------------------------------------------------------------------- 2 94,088 86,088 105,739 97,739 113,858 105,858 ----------------------------------------------------------------------------- 3 91,243 84,243 108,734 101,734 121,502 114,502 ----------------------------------------------------------------------------- 4 88,483 82,483 111,815 105,815 129,659 123,659 ----------------------------------------------------------------------------- 5 85,806 85,806 114,983 114,983 138,364 138,364 ----------------------------------------------------------------------------- 6 85,876 85,876 121,068 121,068 150,587 150,587 ----------------------------------------------------------------------------- 7 83,277 83,277 124,498 124,498 160,697 160,697 ----------------------------------------------------------------------------- 8 80,755 80,755 128,026 128,026 171,486 171,486 ----------------------------------------------------------------------------- 9 78,308 78,308 131,653 131,653 182,999 182,999 ----------------------------------------------------------------------------- 10 75,935 75,935 135,383 135,383 195,285 195,285 ----------------------------------------------------------------------------- 11 73,632 73,632 139,218 139,218 208,396 208,396 ----------------------------------------------------------------------------- 12 71,399 71,399 143,163 143,163 222,387 222,387 ----------------------------------------------------------------------------- 13 69,232 69,232 147,219 147,219 237,317 237,317 ----------------------------------------------------------------------------- 14 67,129 67,129 151,390 151,390 253,250 253,250 ----------------------------------------------------------------------------- 15 65,090 65,090 155,679 155,679 270,253 270,253 ----------------------------------------------------------------------------- 16 63,111 63,111 160,090 160,090 288,396 288,396 ----------------------------------------------------------------------------- 17 61,192 61,192 164,625 164,625 307,759 307,759 ----------------------------------------------------------------------------- 18 59,330 59,330 169,289 169,289 328,420 328,420 ----------------------------------------------------------------------------- 19 57,523 57,523 174,086 174,086 350,470 350,470 ----------------------------------------------------------------------------- 20 55,771 55,771 179,018 179,018 373,999 373,999 ----------------------------------------------------------------------------- 21 54,071 54,071 184,090 184,090 399,108 399,108 ----------------------------------------------------------------------------- 22 52,421 52,421 189,305 189,305 425,903 425,903 ----------------------------------------------------------------------------- 23 50,821 50,821 194,669 194,669 454,497 454,497 ----------------------------------------------------------------------------- 24 49,269 49,269 200,184 200,184 485,010 485,010 ----------------------------------------------------------------------------- 25 47,763 47,763 205,856 205,856 517,572 517,572 -----------------------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses = 1.36% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary F-4
------------------------------------------------------------------------ 0% Gross Rate of Return 6% Gross Rate of Return 10% Gross Rate of Return ASAP III ASAP III ASAP III ------------------------------------------------------------------------ Net rate of return Net rate of return Net rate of return Yrs 1-8 -2.38% Yrs 1-8 3.48% Yrs 1-8 7.39% Yrs 9+ -1.78% Yrs 9+ 4.11% Yrs 9+ 8.04% ----------------------------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Year Value Value Value Value Value Value ----------------------------------------------------------------------------- 1 97,631 89,131 103,472 94,972 107,366 98,866 ----------------------------------------------------------------------------- 2 95,277 88,277 107,075 100,075 115,296 108,296 ----------------------------------------------------------------------------- 3 92,979 86,479 110,803 104,303 123,813 117,313 ----------------------------------------------------------------------------- 4 90,736 84,736 114,660 108,660 132,959 126,959 ----------------------------------------------------------------------------- 5 88,546 83,546 118,653 113,653 142,780 137,780 ----------------------------------------------------------------------------- 6 86,897 82,897 123,301 119,301 153,863 149,863 ----------------------------------------------------------------------------- 7 84,798 81,798 127,594 124,594 165,229 162,229 ----------------------------------------------------------------------------- 8 82,749 80,749 132,036 130,036 177,434 175,434 ----------------------------------------------------------------------------- 9 81,239 81,239 137,462 137,462 191,695 191,695 ----------------------------------------------------------------------------- 10 79,756 79,756 143,112 143,112 207,105 207,105 ----------------------------------------------------------------------------- 11 78,300 78,300 148,994 148,994 223,755 223,755 ----------------------------------------------------------------------------- 12 76,870 76,870 155,119 155,119 241,743 241,743 ----------------------------------------------------------------------------- 13 75,465 75,465 161,495 161,495 261,177 261,177 ----------------------------------------------------------------------------- 14 74,085 74,085 168,133 168,133 282,173 282,173 ----------------------------------------------------------------------------- 15 72,730 72,730 175,044 175,044 304,858 304,858 ----------------------------------------------------------------------------- 16 71,400 71,400 182,239 182,239 329,366 329,366 ----------------------------------------------------------------------------- 17 70,092 70,092 189,730 189,730 355,844 355,844 ----------------------------------------------------------------------------- 18 68,809 68,809 197,529 197,529 384,451 384,451 ----------------------------------------------------------------------------- 19 67,548 67,548 205,648 205,648 415,357 415,357 ----------------------------------------------------------------------------- 20 66,309 66,309 214,101 214,101 448,749 448,749 ----------------------------------------------------------------------------- 21 65,093 65,093 222,902 222,902 484,824 484,824 ----------------------------------------------------------------------------- 22 63,898 63,898 232,064 232,064 523,800 523,800 ----------------------------------------------------------------------------- 23 62,725 62,725 241,603 241,603 565,909 565,909 ----------------------------------------------------------------------------- 24 61,572 61,572 251,534 251,534 611,403 611,403 ----------------------------------------------------------------------------- 25 60,440 60,440 261,873 261,873 660,555 660,555 -----------------------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses = 1.14% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary F-5
------------------------------------------------------------------------ 0% Gross Rate of Return 6% Gross Rate of Return 10% Gross Rate of Return Xtra Credit Xtra Credit Xtra Credit ------------------------------------------------------------------------ Net rate of return Net rate of return Net rate of return Yrs 1-10 -2.77% Yrs 1-10 3.06% Yrs 1-10 6.95% Yrs 11+ -1.78% Yrs 11+ 4.11% Yrs 11+ 8.04% ----------------------------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Year Value Value Value Value Value Value ----------------------------------------------------------------------------- 1 103,557 94,557 109,753 100,753 113,883 104,883 ----------------------------------------------------------------------------- 2 100,653 91,653 113,078 104,078 121,762 112,762 ----------------------------------------------------------------------------- 3 97,830 89,830 116,505 108,505 130,189 122,189 ----------------------------------------------------------------------------- 4 95,084 88,084 120,037 113,037 139,202 132,202 ----------------------------------------------------------------------------- 5 92,415 86,415 123,677 117,677 148,841 142,841 ----------------------------------------------------------------------------- 6 89,820 84,820 127,428 122,428 159,151 154,151 ----------------------------------------------------------------------------- 7 87,297 83,297 131,295 127,295 170,177 166,177 ----------------------------------------------------------------------------- 8 84,844 81,844 135,280 132,280 181,970 178,970 ----------------------------------------------------------------------------- 9 82,459 80,459 139,387 137,387 194,583 192,583 ----------------------------------------------------------------------------- 10 80,140 79,140 143,619 142,619 208,072 207,072 ----------------------------------------------------------------------------- 11 78,675 78,675 149,482 149,482 224,755 224,755 ----------------------------------------------------------------------------- 12 77,238 77,238 155,590 155,590 242,786 242,786 ----------------------------------------------------------------------------- 13 75,827 75,827 161,949 161,949 262,266 262,266 ----------------------------------------------------------------------------- 14 74,441 74,441 168,569 168,569 283,312 283,312 ----------------------------------------------------------------------------- 15 73,079 73,079 175,462 175,462 306,050 306,050 ----------------------------------------------------------------------------- 16 71,742 71,742 182,638 182,638 330,616 330,616 ----------------------------------------------------------------------------- 17 70,429 70,429 190,109 190,109 357,157 357,157 ----------------------------------------------------------------------------- 18 69,139 69,139 197,887 197,887 385,831 385,831 ----------------------------------------------------------------------------- 19 67,872 67,872 205,984 205,984 416,811 416,811 ----------------------------------------------------------------------------- 20 66,628 66,628 214,415 214,415 450,281 450,281 ----------------------------------------------------------------------------- 21 65,406 65,406 223,192 223,192 486,442 486,442 ----------------------------------------------------------------------------- 22 64,206 64,206 232,329 232,329 525,511 525,511 ----------------------------------------------------------------------------- 23 63,027 63,027 241,843 241,843 567,719 567,719 ----------------------------------------------------------------------------- 24 61,869 61,869 251,747 251,747 613,321 613,321 ----------------------------------------------------------------------------- 25 60,732 60,732 262,059 262,059 662,589 662,589 -----------------------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses = 1.14% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary F-6
------------------------------------------------------------------------ 0% Gross Rate of Return 6% Gross Rate of Return 10% Gross Rate of Return ASL ASL ASL ------------------------------------------------------------------------ Net rate of return Net rate of return Net rate of return All years -2.77% All years 3.06% All years 6.95% ----------------------------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Year Value Value Value Value Value Value ----------------------------------------------------------------------------- 1 97,236 97,236 103,054 103,054 106,932 106,932 ----------------------------------------------------------------------------- 2 94,508 94,508 106,210 106,210 114,366 114,366 ----------------------------------------------------------------------------- 3 91,855 91,855 109,463 109,463 122,316 122,316 ----------------------------------------------------------------------------- 4 89,275 89,275 112,815 112,815 130,819 130,819 ----------------------------------------------------------------------------- 5 86,767 86,767 116,270 116,270 139,913 139,913 ----------------------------------------------------------------------------- 6 84,329 84,329 119,831 119,831 149,639 149,639 ----------------------------------------------------------------------------- 7 81,958 81,958 123,501 123,501 160,042 160,042 ----------------------------------------------------------------------------- 8 79,652 79,652 127,283 127,283 171,167 171,167 ----------------------------------------------------------------------------- 9 77,411 77,411 131,181 131,181 183,067 183,067 ----------------------------------------------------------------------------- 10 75,232 75,232 135,199 135,199 195,793 195,793 ----------------------------------------------------------------------------- 11 73,113 73,113 139,339 139,339 209,404 209,404 ----------------------------------------------------------------------------- 12 71,053 71,053 143,607 143,607 223,961 223,961 ----------------------------------------------------------------------------- 13 69,050 69,050 148,005 148,005 239,530 239,530 ----------------------------------------------------------------------------- 14 67,102 67,102 152,537 152,537 256,181 256,181 ----------------------------------------------------------------------------- 15 65,209 65,209 157,209 157,209 273,990 273,990 ----------------------------------------------------------------------------- 16 63,368 63,368 162,023 162,023 293,037 293,037 ----------------------------------------------------------------------------- 17 61,578 61,578 166,985 166,985 313,408 313,408 ----------------------------------------------------------------------------- 18 59,837 59,837 172,099 172,099 335,195 335,195 ----------------------------------------------------------------------------- 19 58,145 58,145 177,370 177,370 358,497 358,497 ----------------------------------------------------------------------------- 20 56,500 56,500 182,802 182,802 383,419 383,419 ----------------------------------------------------------------------------- 21 54,900 54,900 188,400 188,400 410,073 410,073 ----------------------------------------------------------------------------- 22 53,344 53,344 194,170 194,170 438,580 438,580 ----------------------------------------------------------------------------- 23 51,832 51,832 200,117 200,117 469,068 469,068 ----------------------------------------------------------------------------- 24 50,362 50,362 206,245 206,245 501,677 501,677 ----------------------------------------------------------------------------- 25 48,932 48,932 212,562 212,562 536,552 536,552 -----------------------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses = 1.14% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary F-7 APPENDIX G - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME FIVE INCOME BENEFIT We set out below the current formula under which we may transfer amounts between the variable investment options and the Benefit Fixed Rate Account. Upon your election of Highest Daily Lifetime Five, we will not alter the asset transfer formula that applies to your Annuity. However, as discussed in the "Living Benefits" section, we reserve the right to modify this formula with respect to those who elect Highest Daily Lifetime Five in the future. TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULA: . C\\u\\ - the upper target is established on the effective date of the Highest Daily Lifetime Five benefit (the "Effective Date") and is not changed for the life of the guarantee. Currently, it is 83%. . C\\t\\ - the target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 80%. . C\\l\\ - the lower target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 77%. . L - the target value as of the current Valuation Day. . r - the target ratio. . a - the factors used in calculating the target value. These factors are established on the Effective Date and are not changed for the life of the guarantee. The factors that we use currently are derived from the a2000 Individual Annuity Mortality Table with an assumed interest rate of 3%. Each number in the table "a" factors (which appears below) represents a factor, which when multiplied by the Highest Daily Annual Income Amount, projects our total liability for the purpose of asset transfers under the guarantee. . Q - age based factors used in calculating the target value. These factors are established on the Effective Date and are not changed for the life of the guarantee. The factor is currently set equal to 1. . V - the total value of all Permitted Sub-accounts in the Annuity. . F - the total value of all Benefit Fixed Rate Account allocations. . I - the income value prior to the first withdrawal. The income value is equal to what the Highest Daily Annual Income Amount would be if the first withdrawal were taken on the date of calculation. After the first withdrawal the income value equals the greater of the Highest Daily Annual Income Amount, the quarterly step-up amount times the annual income percentage, and the Account Value times the annual income percentage. . T - the amount of a transfer into or out of the Benefit Fixed Rate Account. . I% - annual income amount percentage. This factor is established on the Effective Date and is not changed for the life of the guarantee. Currently, this percentage is equal to 5% TARGET VALUE CALCULATION: On each Valuation Day, a target value (L) is calculated, according to the following formula. If the variable Account Value (V) is equal to zero, no calculation is necessary. L = I * Q * a
Transfer Calculation: The following formula, which is set on the Effective Date and is not changed for the life of the guarantee, determines when a transfer is required: Target Ratio r = (L - F) / V.
. If r ((greater than)) C\\u\\, assets in the Permitted Sub-accounts are transferred to Benefit Fixed Rate Account. . If r ((less than)) C\\l\\, and there are currently assets in the Benefit Fixed Rate Account (F ((greater than)) 0), assets in the Benefit Fixed Rate Account are transferred to the Permitted Sub-accounts. The following formula, which is set on the Effective Date and is not changed for the life of the guarantee, determines the transfer amount: T = {Min(V, [L - F - V * C\\t\\] / (1 - C\\t\\))} T(greater than)0, Money moving from the Permitted Sub-accounts to the Benefit Fixed Rate Account T = {Min(F, [L - F - V * C\\t\\] / (1 - C\\t\\))} T(less than)0, Money moving from the Benefit Fixed Rate Account to the Permitted Sub-accounts]
G-1 Example: Male age 65 contributes $100,000 into the Permitted Sub accounts and the value drops to $92,300 during year one, end of day one. A table of values for "a" appears below. Target Value Calculation: L = I * Q * a = 5000.67 * 1 * 15.34 = 76,710.28
Target Ratio: r = (L - F) / V = (76,710.28 - 0) / 92,300.00 = 83.11%
Since r (greater than) Cu ( because 83.11% (greater than) 83%) a transfer into the Benefit Fixed rate Account occurs. T = { Min ( V, [ L - F - V * Ct] / ( 1 - Ct))} = { Min ( 92,300.00, [ 76,710.28 - 0 - 92,300.00 * 0.80] / ( 1 - 0.80))} = { Min ( 92,300.00, 14,351.40 )} = 14,351.40
G-2 Age 65 "a" Factors for Liability Calculations (in Years and Months since Benefit Effective Date)*
Months Years 1 2 3 4 5 6 7 8 9 10 11 12 ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- 1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95 2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51 3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07 4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63 5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19 6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75 7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30 8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86 9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42 10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98 11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54 12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11 13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68 14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26 15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84 16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44 17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04 18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65 19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27 20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91 21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55 22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22 23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89 24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58 25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29 26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01 27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75 28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51 29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28 30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06 31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84 32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64 33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44 34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24 35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03 36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83 37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62 38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42 39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22 40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02 41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
* The values set forth in this table are applied to all ages. G-3 APPENDIX H - ANNUITIES APPROVED FOR SALE BY THE NEW YORK STATE INSURANCE DEPARTMENT
ASL II NY APEX II NY - --------------------------------------------------------------------------------------------------- Minimum Investment $15,000 $10,000 - --------------------------------------------------------------------------------------------------- Maximum Issue Age Annuitant 85; Annuitant 85 Owner None Oldest Owner 85 - --------------------------------------------------------------------------------------------------- Contingent Deferred Sales None 4 Years Charge Schedule (7%, 6%, 5%, 4%) (Applied to Purchase Payments based on the inception date of the Annuity) - --------------------------------------------------------------------------------------------------- Insurance Charge 1.65% 1.65% - --------------------------------------------------------------------------------------------------- Distribution Charge N/A N/A - --------------------------------------------------------------------------------------------------- Annual Maintenance Fee Lesser of $30 or 2% of Lesser of $30 or 2% of Account Value Waived for Account Value Waived for Account Values exceeding Account Values exceeding $100,000 $100,000 - --------------------------------------------------------------------------------------------------- Transfer Fee $10 after twenty in any $10 after twenty in any annuity year. May be annuity year. increased to $15 after eight in any annuity year - --------------------------------------------------------------------------------------------------- Contract Credit No Yes. Effective for Contracts issued on or after June 20, 2005. Generally we apply a Loyalty Credit to your Annuity's Account Value at the end of your fifth contract year (i.e. on your fifth Contract Anniversary). Currently the Loyalty Credit is equal to 2.75% of total Purchase Payments made during the first four contract years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Contract Anniversary - --------------------------------------------------------------------------------------------------- Fixed Allocation (If Fixed Allocations Fixed Allocations available, early Available (Currently Available (Currently withdrawals are subject offering durations of: offering durations of: to a Market Value 5, 7, and 10 years) The 5, 7, and 10 years) The Adjustment) ("MVA") MVA formula for NY is MVA formula for NY is [(1+I)/ (1+J)] N/365 The [(1+I)/ (1+J)] N/365 The MVA formula does not MVA formula does not apply during the 30 day apply during the 30 day period immediately before period immediately before the end of the Guarantee the end of the Guarantee Period. Period. - --------------------------------------------------------------------------------------------------- Variable Investment All options generally All options generally Options available except where available except where restrictions apply when restrictions apply when certain riders are certain riders are purchased. ProFund purchased. ProFund Portfolios are restricted for Portfolios are restricted for ASL II, ASAP III, and ASL II, ASAP III, and XTra Credit SIX. XTra Credit SIX. - ---------------------------------------------------------------------------------------------------
ASAP III NY XTra Credit SIX NY - ------------------------------------------------------------------------------------------------------------ Minimum Investment $1,000 $10,000 - ------------------------------------------------------------------------------------------------------------ Maximum Issue Age Annuitant 85 Annuitant 85 Oldest Owner 80 Oldest Owner 75 - ------------------------------------------------------------------------------------------------------------ Contingent Deferred Sales 7 Years 10 Years Charge Schedule (7%, 6%, 5%, 4%, 3%, (9%, 9%, 8%, 7%, 6%, 2%, 1%) (Applied to 5%, 4%, 3%, 2%, 1%) Purchase Payments based (Applied to Purchase on the inception date of the Payments based on the Annuity) inception date of the Annuity) - ------------------------------------------------------------------------------------------------------------ Insurance Charge 0.65% 0.65% - ------------------------------------------------------------------------------------------------------------ Distribution Charge 0.60% annuity years 1-7 1.00% annuity years 1-10 0.0% annuity years 8+ 0.00% annuity years 11+ - ------------------------------------------------------------------------------------------------------------ Annual Maintenance Fee Lesser of $30 or 2% of Lesser of $30 or 2% of Account Value Waived for Account Value Account Values exceeding $100,000 - ------------------------------------------------------------------------------------------------------------ Transfer Fee $10 after twenty in any $10 after twenty in any annuity year. May be annuity year increased to $15 after eight in any annuity year - ------------------------------------------------------------------------------------------------------------ Contract Credit Yes. Effective for Yes The amount of the Contracts issued on or after credit applied to a Purchase July 24, 2006. Generally Payment is based on the we apply a Loyalty Credit year the Purchase Payment to your Annuity's Account is received, for the first 6 Value at the end of your years of the contract. fifth contract year (i.e. on Currently the credit your fifth Contract percentages for each year Anniversary). Currently starting with the first year the Loyalty Credit is equal are: 6.50%, 5.00%, 4.00%, to 0.50% of total Purchase 3.00%, 2.00%, and 1.00%. Payments made during the first four contract years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Contract Anniversary. - ------------------------------------------------------------------------------------------------------------ Fixed Allocation (If Fixed Allocations No available, early Available (Currently withdrawals are subject offering durations of: to a Market Value 2, 3, 5, 7, and 10 years) Adjustment) ("MVA") The MVA formula for NY is [(1+I)/(1+J)] N/365 The MVA formula does not apply during the 30 day period immediately before the end of the Guarantee Period. - ------------------------------------------------------------------------------------------------------------ Variable Investment All options generally All options generally Options available except where available except where restrictions apply when restrictions apply when certain riders are certain riders are purchased. ProFund purchased. ProFund Portfolios are restricted for Portfolios are restricted for ASL II, ASAP III, and ASL II, ASAP III, and XTra Credit SIX. XTra Credit SIX. - ------------------------------------------------------------------------------------------------------------
H-1
ASL II NY APEX II NY - -------------------------------------------------------------------------------------------------------- Basic Death Benefit Prior to age 85: The greater The greater of: Purchase of: Purchase Payments less Payments less proportional proportional withdrawals withdrawals or Account or Account Value Value (variable) plus (variable) plus Interim Interim Value (fixed). (No Value (fixed). (No MVA MVA applied) applied) On or after age 85: Account Value (variable) plus Interim Value (fixed) (No MVA applied) - -------------------------------------------------------------------------------------------------------- Optional Death Benefits Highest Anniversary Value HAV (for an additional cost)/1/ (HAV) - -------------------------------------------------------------------------------------------------------- Optional Living Benefits GRO/GRO Plus, Highest GRO/GRO Plus, Highest (for an additional cost)/2/ Daily GRO, Guaranteed Daily GRO, GMWB, Minimum Withdrawal GMIB, Lifetime Five, Benefit, (GMWB), Spousal Lifetime Five, Guaranteed Minimum Highest Daily Lifetime Income Benefit (GMIB), Five, Highest Daily Lifetime Five, Spousal Lifetime Seven, Spousal Lifetime Five, Highest Highest Daily Lifetime Daily Lifetime Five, Seven (Highest Daily Highest Daily Lifetime GRO, Highest Daily Seven, Spousal Highest Lifetime Seven and Daily Lifetime Seven Spousal Highest Daily (Highest Daily GRO, Lifetime Seven pending Highest Daily Lifetime New York Department of Seven and Spousal Highest Insurance approval) Daily Lifetime Seven pending New York Department of Insurance approval) - -------------------------------------------------------------------------------------------------------- Annuity Rewards/3/ No Available after initial CDSC period - -------------------------------------------------------------------------------------------------------- Annuitization Options Fixed option only Annuity Fixed option only Annuity date cannot exceed the first date cannot exceed the first day of the calendar month day of the calendar month following Annuitant's 90/th/ following Annuitant's 90/th/ birthday. The maximum birthday. The maximum Annuity Date is based on Annuity Date is based on the first Owner or the first Owner or Annuitant to reach the Annuitant to reach the maximum age, as indicated maximum age, as indicated in your Annuity. in your Annuity. - --------------------------------------------------------------------------------------------------------
ASAP III NY XTra Credit SIX NY - -------------------------------------------------------------------------------------------------------------- Basic Death Benefit The greater of: Purchase The greater of: Purchase Payments less proportional Payments less proportional withdrawals or Account withdrawals or Account Value (variable) plus Value (variable) (No MVA Interim Value (fixed). (No applied) (No recapture of MVA applied) credits applied within 12 months prior to date of death) - -------------------------------------------------------------------------------------------------------------- Optional Death Benefits HAV HAV (for an additional cost)/1/ - -------------------------------------------------------------------------------------------------------------- Optional Living Benefits GRO/GRO Plus, Highest Highest Daily GRO, (for an additional cost)/2/ Daily GRO, GMWB, GMWB, GMIB, Lifetime GMIB, Lifetime Five, Five, Spousal Lifetime Spousal Lifetime Five, Five, Highest Daily Highest Daily Lifetime Lifetime Five, Highest Five, Highest Daily Daily Lifetime Seven, Lifetime Seven, Spousal Spousal Highest Daily Highest Daily Lifetime Lifetime Seven (Highest Seven (Highest Daily Daily GRO, Highest Daily GRO, Highest Daily Lifetime Seven and Lifetime Seven and Spousal Highest Daily Spousal Highest Daily Lifetime Seven pending Lifetime Seven pending New York Department of New York Department of Insurance approval) Insurance approval) - -------------------------------------------------------------------------------------------------------------- Annuity Rewards/3/ Available after initial Available after initial CDSC period CDSC period - -------------------------------------------------------------------------------------------------------------- Annuitization Options Fixed option only Annuity Fixed option only Annuity date cannot exceed the first date cannot exceed the first day of the calendar month day of the calendar month following Annuitant's 90/th/ following Annuitant's 90/th/ birthday. The maximum birthday. The maximum Annuity Date is based on Annuity Date is based on the first Owner or the first Owner or Annuitant to reach the Annuitant to reach the maximum age, as indicated maximum age, as indicated in your Annuity. in your Annuity. - --------------------------------------------------------------------------------------------------------------
(1)For more information on these benefits, refer to the "Death Benefit" section in the Prospectus. (2)For more information on these benefits, refer to the "Living Benefit Programs" section in the Prospectus. (3)The Annuity rewards benefit offers Owners an ability to increase the guaranteed death benefit so that the death benefit will at least equal the Annuity's Account Value on the effective date of the Annuity Rewards benefits, if the terms of the Annuity Rewards benefit are met. For more information about variations applicable to annuities approved for sale by the New York State Insurance Department, please refer to your annuity contract. H-2 APPENDIX I - ASSET TRANSER FORMULA UNDER GRO PLUS 2008 AND HIGHEST DAILY GRO THE FOLLOWING ARE THE TERMS AND DEFINITIONS REFERENCED IN THE TRANSFER CALCULATION FORMULA: . AV is the current Account Value of the Annuity . V is the current Account Value of the elected Sub-accounts of the Annuity . B is the total current value of the AST bond portfolio Sub-account . C\\l\\ is the lower target value. Currently, it is 79%. . C\\t\\ is the middle target value. Currently, it is 82%. . C\\u\\ is the upper target value. Currently, it is 85%. For each guarantee provided under the program, . G\\i\\ is the guarantee amount . N\\i\\ is the number of days until the maturity date . d\\i\\ is the discount rate applicable to the number of days until the maturity date. It is determined with reference to a benchmark index, reduced by the Discount Rate Adjustment. Once selected, we will not change the applicable benchmark index. However, if the benchmark index is discontinued, we will substitute a successor benchmark index, if there is one. Otherwise we will substitute a comparable benchmark index. We will obtain any required regulatory approvals prior to substitution of the benchmark index. The formula, which is set on the Effective Date and is not changed while the Rider is in effect, determines, on each Valuation Day, when a transfer is required. The formula begins by determining the value on that Valuation Day that, if appreciated at the applicable discount rate, would equal the guarantee amount at the end of the Base Guarantee Period or Step-Up Guarantee Period. We call the greatest of these values the "current liability (L)." L = MAX (L\\i\\), where L\\i\\ = G\\i\\ / (1 + d\\i\\)/(Ni/365)/.
Next the formula calculates the following formula ratio: r = (L - B) / V.
If the formula ratio exceeds an upper target value, then all or a portion of the Account Value will be transferred to the bond fund Sub-account associated with the current liability. If at the time we make a transfer to the bond fund Sub-account associated with the current liability there is Account Value allocated to a bond fund Sub-account not associated with the current liability, we will transfer all assets from that bond fund Sub-account to the bond fund Sub-account associated with the current liability. The formula will transfer assets into the Transfer Account if r (greater than) C\\u\\. The transfer amount is calculated by the following formula: T = {Min(V, [L - B - V*C\\t\\] / (1 - C\\t\\))}
If the formula ratio is less than a lower target value and there are assets in the Transfer Account, then the formula will transfer assets out of the Transfer Account into the elected Sub-accounts. The transfer amount is calculated by the following formula: T = {Min(B, - [L - B - V*C\\t\\] / (1 - C\\t\\))}
If following a transfer to the elected Sub-accounts, there are assets remaining in a bond fund Sub-account not associated with the current liability, we will transfer all assets from that bond fund Sub-account to the bond fund Sub-account associated with the current liability. I-1 APPENDIX J - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME SEVEN INCOME BENEFIT AND SPOUSAL HIGHEST DAILY LIFETIME SEVEN INCOME BENEFIT TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULA: . C\\u\\ - the upper target is established on the effective date of the Highest Daily Lifetime Seven benefit (the "Effective Date") and is not changed for the life of the guarantee. Currently, it is 83%. . C\\t\\ - the target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 80%. . C\\l\\ - the lower target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 77%. . L - the target value as of the current business day. . r - the target ratio. . a - factors used in calculating the target value. These factors are established on the Effective Date and are not changed for the life of the guarantee. . V - the total value of all Permitted Sub-accounts in the annuity. . B - the total value of the AST Investment Grade Bond Portfolio Sub-account. . P - Income Basis. Prior to the first withdrawal, the Income Basis is the Protected Withdrawal Value calculated as if the first withdrawal were taken on the date of calculation. After the first withdrawal, the Income Basis is equal to the greater of (1) the Protected Withdrawal Value at the time of the first withdrawal, adjusted for additional purchase payments including the amount of any associated Credits, and adjusted proportionally for excess withdrawals*, (2) any highest quarterly value increased for additional purchase payments including the amount of any associated Credits, and adjusted for withdrawals, and (3) the Account Value. . T - the amount of a transfer into or out of the AST Investment Grade Bond Portfolio Sub-account * Note: withdrawals of less than the Annual Income Amount do not reduce the Income Basis. TARGET VALUE CALCULATION: On each business day, a target value (L) is calculated, according to the following formula. If the variable account value (V) is equal to zero, no calculation is necessary. L = 0.05 * P * a
Transfer Calculation: The following formula, which is set on the Benefit Effective Date and is not changed for the life of the guarantee, determines when a transfer is required: Target Ratio r = (L - B) / V.
. If r (greater than) C\\u\\, assets in the Permitted Sub-accounts are transferred to the AST Investment Grade Bond Portfolio Sub-account. . If r (less than) C\\l\\, and there are currently assets in the AST Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets in the AST Investment Grade Bond Portfolio Sub-account are transferred to the Permitted Sub-accounts according to most recent allocation instructions. The following formula, which is set on the Benefit Effective Date and is not changed for the life of the guarantee, determines the transfer amount: T = {Min(V, [L - B - V * Ct] / (1-Ct))}, Money moving from the Permitted Sub-accounts to the AST Investment Grade Bond Portfolio Sub-account T = {Min(B,- [L - B - V * Ct] / (1-Ct))}, Money moving from the AST Investment Grade Bond Portfolio Sub-account to the Permitted Sub- accounts]
J-1 "a" Factors for Liability Calculations (in Years and Months since Benefit Effective Date)*
Months Years 1 2 3 4 5 6 7 8 9 10 11 12 ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- 1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95 2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51 3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07 4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63 5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19 6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75 7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30 8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86 9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42 10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98 11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54 12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11 13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68 14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26 15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84 16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44 17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04 18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65 19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27 20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91 21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55 22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22 23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89 24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58 25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29 26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01 27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75 28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51 29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28 30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06 31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84 32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64 33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44 34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24 35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03 36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83 37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62 38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42 39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22 40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02 41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
* The values set forth in this table are applied to all ages. J-2 PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER DETAILS ABOUT THE PRUDENTIAL ANNUITIES ANNUITY DESCRIBED IN PROSPECTUS (PLEASE CHECK ONE) ASAPIIIPROS (05/2008) ____, APEX2PROS (05/2008) ____, ASL2PROS (05/2008) ____, XT6PROS (05/2008) ____. --------------------------------------- (print your name) --------------------------------------- (address) --------------------------------------- (city/state/zip code)
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Variable Annuity Issued by: Variable Annuity Distributed by: PRUDENTIAL ANNUITIES LIFE PRUDENTIAL ANNUITIES DISTRIBUTORS, ASSURANCE CORPORATION INC. A Prudential Financial Company A Prudential Financial Company One Corporate Drive One Corporate Drive Shelton, Connecticut 06484 Shelton, Connecticut 06484 Telephone: 1-800-752-6342 Telephone: 203-926-1888 http:// www.prudentialannuities.com http:// www.prudentialannuities.com MAILING ADDRESSES: PRUDENTIAL ANNUITIES - VARIABLE ANNUITIES P.O. Box 7960 Philadelphia, PA 19176 EXPRESS MAIL: PRUDENTIAL ANNUITIES - VARIABLE ANNUITIES 2101 Welsh Road Dresher, PA 19025 PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION A Prudential Financial Company One Corporate Drive, Shelton, Connecticut 06484 OPTIMUM/SM/ OPTIMUM FOUR/SM/ OPTIMUM PLUS/SM/ Flexible Premium Deferred Annuities PROSPECTUS: MAY 1, 2008 This prospectus describes three different flexible premium deferred annuities (the "Annuities" or the "Annuity") offered by Prudential Annuities Life Assurance Corporation ("Prudential Annuities", "we", "our", or "us") exclusively through Linsco/Private Ledger, Corp. Each Annuity may be offered as an individual annuity contract or as an interest in a group annuity. Each Annuity has different features and benefits that may be appropriate for you based on your financial situation, your age and how you intend to use the Annuity. This Prospectus describes the important features of the Annuities and what you should consider before purchasing one of the Annuities. The Prospectus also describes differences among the Annuities which include differences in the fees and charges you pay and variations in some product features such as the availability of certain bonus amounts and basic death benefit protection. These differences among the products are discussed more fully in the Prospectus and summarized in Appendix D entitled "Selecting the Variable Annuity That's Right for You". There may also be differences in the compensation paid to your Financial Professional for each Annuity. Differences in compensation among different annuity products could influence a Financial Professional's decision as to which annuity to recommend for you. In addition, selling broker-dealer firms through which each Annuity is sold may decline to make available to their customers certain of the optional features and investment options offered generally under the Annuity. Alternatively, such firms may restrict the optional benefits that they do make available to their customers (e.g., by imposing a lower maximum issue age for certain optional benefits than what is prescribed generally under the Annuity). Please speak to your Financial Professional for further details. Each Annuity or certain of its investment options and/or features may not be available in all states. Various rights, benefits and certain fees may differ among states to meet applicable laws and/or regulations. For more information about variations applicable to your state, please refer to your Annuity or consult your Financial Professional. For some of the variations specific to Annuities approved for sale by the New York State Insurance Department, see Appendix F. Certain terms are capitalized in this Prospectus. Those terms are either defined in the Glossary of Terms or in the context of the particular section. THE SUB-ACCOUNTS Each Sub-account of Prudential Annuities Life Assurance Corporation Variable Account B invests in an underlying mutual fund portfolio. Currently, portfolios of the following underlying mutual funds are being offered: Advanced Series Trust and Evergreen Variable Annuity Trust. See the following page for a complete list of Sub-accounts. PLEASE READ THIS PROSPECTUS Please read this Prospectus and the current prospectus for the underlying mutual funds. Keep them for future reference. If you are purchasing one of the Annuities as a replacement for an existing variable annuity or variable life coverage or a fixed insurance policy, you should consider any surrender or penalty charges you may incur when replacing your existing coverage and that this Annuity may be subject to a contingent deferred sales charge if you elect to surrender the Annuity or take a partial withdrawal. You should consider your need to access the Annuity's Account Value and whether the Annuity's liquidity features will satisfy that need. AVAILABLE INFORMATION We have also filed a Statement of Additional Information that is available from us, without charge, upon your request. The contents of the Statement of Additional Information are described below - see Table of Contents. The Statement of Additional Information is incorporated by reference into this prospectus. This Prospectus is part of the registration statement we filed with the SEC regarding this offering. Additional information on us and this offering is available in the registration statement and the exhibits thereto. You may review and obtain copies of these materials at no cost to you, by contacting us. These documents, as well as documents incorporated by reference, may also be obtained through the SEC's Internet Website (http://www.sec.gov) for this registration statement as well as for other registrants that file electronically with the SEC. These annuities are NOT deposits or obligations of, or issued, guaranteed or endorsed by, any bank, are NOT insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any other agency. An investment in an annuity involves investment risks, including possible loss of value, even with respect to amounts allocated to the AST Money Market Sub-account. - -------------------------------------------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. OPTIMUM/SM/, OPTIMUM FOUR/SM/, OPTIMUM PLUS/SM/, ARE SERVICE MARKS OR REGISTERED TRADEMARKS OF LINSCO/PRIVATE LEDGER, CORP. - -------------------------------------------------------------------------------- FOR FURTHER INFORMATION CALL: 1-800-752-6342 Prospectus Dated: Statement of Additional May 1, 2008 Information Dated: May 1, 2008 OA074PROS-0508 LPLOASAI PLEASE SEE OUR PRIVACY POLICY AND OUR IRA, ROTH IRA AND FINANCIAL DISCLOSURE STATEMENTS ATTACHED TO THE BACK COVER OF THIS PROSPECTUS. INVESTMENT OPTIONS Advanced Series Trust: AST AllianceBernstein Core Value AST AllianceBernstein Growth & Income AST Balanced Asset Allocation AST Bond Portfolio 2015 AST Bond Portfolio 2018 AST Bond Portfolio 2019 AST Capital Growth Asset Allocation AST Cohen & Steers Realty AST Conservative Asset Allocation AST Federated Aggressive Growth AST Goldman Sachs Mid-Cap Growth AST International Growth AST International Value AST Investment Grade Bond AST JPMorgan International Equity AST Large-Cap Value AST Lord Abbett Bond Debenture AST Marsico Capital Growth AST Mid-Cap Value AST MFS Growth AST Money Market AST Neuberger Berman Mid-Cap Growth AST Neuberger Berman Mid-Cap Value AST Neuberger Berman Small-Cap Growth AST PIMCO Limited Maturity Bond AST PIMCO Total Return Bond AST Preservation Asset Allocation AST Small-Cap Growth AST Small-Cap Value AST T. Rowe Price Global Bond AST T. Rowe Price Large-Cap Growth AST Western Asset Core Plus Bond Evergreen Variable Annuity Trust: International Equity Omega CONTENTS INTRODUCTION......................................................................... 1 WHY WOULD I CHOOSE TO PURCHASE ONE OF THE ANNUITIES?................................ 1 WHAT ARE SOME OF THE KEY FEATURES OF THE ANNUITIES?................................. 1 HOW DO I PURCHASE ONE OF THE ANNUITIES?............................................. 2 GLOSSARY OF TERMS.................................................................... 3 SUMMARY OF CONTRACT FEES AND CHARGES................................................. 6 EXPENSE EXAMPLES..................................................................... 12 INVESTMENT OPTIONS................................................................... 14 WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?.................. 14 WHAT ARE THE FIXED ALLOCATIONS?..................................................... 19 FEES AND CHARGES..................................................................... 20 WHAT ARE THE CONTRACT FEES AND CHARGES?............................................. 20 WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?........................................ 22 WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?........................... 22 EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES........................................... 22 PURCHASING YOUR ANNUITY.............................................................. 23 WHAT ARE OUR REQUIREMENTS FOR PURCHASING ONE OF THE ANNUITIES?...................... 23 MANAGING YOUR ANNUITY................................................................ 24 MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?..................... 24 MAY I RETURN MY ANNUITY IF I CHANGE MY MIND?........................................ 24 MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?............................................ 25 MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?........................ 25 MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?.................... 25 MANAGING YOUR ACCOUNT VALUE.......................................................... 26 HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?........................................ 26 HOW DO I RECEIVE A LOYALTY CREDIT UNDER THE OPTIMUM AND OPTIMUM FOUR ANNUITIES?..... 26 HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE UNDER THE OPTIMUM AND OPTIMUM FOUR ANNUITIES?................................................................... 26 HOW DO I RECEIVE CREDITS UNDER THE OPTIMUM PLUS ANNUITY?............................ 27 HOW ARE CREDITS APPLIED TO ACCOUNT VALUE UNDER THE OPTIMUM PLUS ANNUITY?............ 27 ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?.......... 28 DO YOU OFFER DOLLAR COST AVERAGING?................................................. 29 DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?.................................... 30 ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?........................................ 30 WHAT IS THE BALANCED INVESTMENT PROGRAM?............................................ 31 MAY I GIVE MY FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS? 31 MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?............. 31 HOW DO THE FIXED ALLOCATIONS WORK?.................................................. 32 HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?................................... 32 HOW DOES THE MARKET VALUE ADJUSTMENT WORK?.......................................... 33 WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?...................................... 34 ACCESS TO ACCOUNT VALUE.............................................................. 35 WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?.................................... 35 ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?....................................... 35 CAN I WITHDRAW A PORTION OF MY ANNUITY?............................................. 35 HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?....................................... 35 CAN I MAKE PERIODIC WITHDRAWALS FROM MY ANNUITY DURING THE ACCUMULATION PERIOD?..... 36 DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL REVENUE CODE?............................................................................. 36 WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?.................. 36 CAN I SURRENDER MY ANNUITY FOR ITS VALUE?........................................... 36 WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?......................... 37
(i) WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?.......................................... 37 HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?.................................. 38 HOW ARE ANNUITY PAYMENTS CALCULATED?.................................................. 38 LIVING BENEFIT PROGRAMS................................................................ 40 DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE THEY ARE ALIVE........................................................................... 40 GUARANTEED RETURN OPTION PLUS/SM/ (GRO PLUS/SM/)...................................... 41 GUARANTEED RETURN OPTION (GRO)........................................................ 44 GUARANTEED RETURN OPTION PLUS 2008.................................................... 47 HIGHEST DAILY GUARANTEED RETURN OPTION (HD GRO)....................................... 50 GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB).......................................... 53 GUARANTEED MINIMUM INCOME BENEFIT (GMIB).............................................. 56 LIFETIME FIVE/SM/ INCOME BENEFIT (LIFETIME FIVE)...................................... 60 SPOUSAL LIFETIME FIVE/SM/ INCOME BENEFIT (SPOUSAL LIFETIME FIVE)...................... 65 HIGHEST DAILY LIFETIME FIVE/SM/ INCOME BENEFIT (HIGHEST DAILY LIFETIME FIVE).......... 69 HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (HIGHEST DAILY LIFETIME SEVEN)........ 75 SPOUSAL HIGHEST DAILY LIFETIME SEVEN/SM/INCOME BENEFIT (SPOUSAL HIGHEST DAILY LIFETIME SEVEN).............................................................................. 82 DEATH BENEFIT.......................................................................... 90 WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?......................................... 90 BASIC DEATH BENEFIT................................................................... 90 OPTIONAL DEATH BENEFITS............................................................... 90 PRUDENTIAL ANNUITIES' ANNUITY REWARDS................................................. 94 PAYMENT OF DEATH BENEFITS............................................................. 95 VALUING YOUR INVESTMENT................................................................ 98 HOW IS MY ACCOUNT VALUE DETERMINED?................................................... 98 WHAT IS THE SURRENDER VALUE OF MY ANNUITY?............................................ 98 HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?........................................... 98 HOW DO YOU VALUE FIXED ALLOCATIONS?................................................... 98 WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?........................................... 98 WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?......... 99 TAX CONSIDERATIONS..................................................................... 100 GENERAL INFORMATION.................................................................... 108 HOW WILL I RECEIVE STATEMENTS AND REPORTS?............................................ 108 WHO IS PRUDENTIAL ANNUITIES?.......................................................... 108 WHAT ARE SEPARATE ACCOUNTS?........................................................... 109 WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?.................................. 110 WHO DISTRIBUTES ANNUITIES OFFERED BY PRUDENTIAL ANNUITIES?............................ 111 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 113 FINANCIAL STATEMENTS.................................................................. 114 HOW TO CONTACT US..................................................................... 114 INDEMNIFICATION....................................................................... 114 LEGAL PROCEEDINGS..................................................................... 114 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION................................... 116 APPENDIX A - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B.................. A-1 APPENDIX B - CALCULATION OF OPTIONAL DEATH BENEFITS.................................... B-1 APPENDIX C - ADDITIONAL INFORMATION ON ASSET ALLOCATION PROGRAMS....................... C-1 APPENDIX D - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU....................... D-1 APPENDIX E - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME FIVE INCOME BENEFIT... E-1 APPENDIX F - ANNUITIES APPROVED FOR SALE BY THE NEW YORK STATE INSURANCE DEPARTMENT.... F-1 APPENDIX G - ASSET TRANSFER FORMULA UNDER GRO PLUS 2008 AND HIGHEST DAILY GRO.......... G-1 APPENDIX H - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME SEVEN AND SPOUSAL..... HIGHEST DAILY LIFETIME SEVEN........................................................... H-1
(ii) INTRODUCTION WHY WOULD I CHOOSE TO PURCHASE ONE OF THE ANNUITIES? The Annuities are frequently used for retirement planning because they allow you to accumulate retirement savings and also offer annuity payment options when you are ready to begin receiving income. Each Annuity also offers a choice of different optional benefits, for an additional charge, that can provide principal protection or guaranteed minimum income protection for Owners while they are alive and one or more Death Benefits that can protect your retirement savings if you die during a period of declining markets. Each Annuity may be used as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth IRA, Section 401(a) plans (defined benefit plans and defined contribution plans such as 401(k), profit sharing and money purchase plans) or Tax Sheltered annuities (or 403(b)). Each Annuity may also be used as an investment vehicle for "non-qualified" investments. Each Annuity allows you to invest your money in a number of Sub-accounts as well as in one or more Fixed Allocations. This Prospectus describes four different Annuities including features that these Annuities have in common as well as differences. For a summary of each Annuity's features, please refer to Appendix D entitled, "Selecting the Variable Annuity That's Right for You." When an Annuity is purchased as a "non-qualified" investment, you generally are not taxed on any investment gains the Annuity earns until you make a withdrawal or begin to receive annuity payments. This feature, referred to as "tax-deferral", can be beneficial to the growth of your Account Value because money that would otherwise be needed to pay taxes on investment gains each year remains invested and can earn additional money. However, because the Annuity is designed for long-term retirement savings, a 10% penalty tax may be applied on withdrawals you make before you reach age 59 1/2. Annuities purchased as a non-qualified investment are not subject to the maximum contribution limits that may apply to a qualified investment, and are not subject to required minimum distributions after age 70 1/2. When an Annuity is purchased as a "qualified" investment, you should consider that the Annuity does not provide any tax advantages in addition to the preferential treatment already available through your retirement plan under the Internal Revenue Code. In other words, you need not invest in an Annuity to gain the preferential tax treatment provided by your retirement plan. An Annuity, however, may offer features and benefits in addition to providing tax deferral that other investment vehicles may not offer, including Death Benefit protection for your beneficiaries, lifetime income options and the ability to make transfers between numerous variable investment options offered under the Annuity. You should consult with your Financial Professional as to whether the overall benefits and costs of the Annuity are appropriate considering your overall financial plan. WHAT ARE SOME OF THE KEY FEATURES OF THE ANNUITIES? .. Each Annuity is a "flexible premium deferred annuity." It is called "flexible premium" because you have considerable flexibility in the timing and amount of Purchase Payments. Generally, investors "defer" receiving annuity payments until after an accumulation period. .. Each Annuity offers both Sub-accounts and Fixed Allocations. If you allocate your Account Value to Sub-accounts, the value of your Annuity will vary daily to reflect the investment performance of the underlying investment options. Fixed Allocations of different durations are offered that are guaranteed by us, but may have a Market Value Adjustment if you withdraw or transfer your Account Value before the Maturity Date. .. Each Annuity features two distinct periods - the accumulation period and the payout period. During the accumulation period your Account Value is allocated to one or more investment options. .. During the payout period, commonly called "annuitization," you can elect to receive annuity payments (1) for life; (2) for life with a guaranteed minimum number of payments; (3) based on joint lives; or (4) for a guaranteed number of payments. We currently make annuity payments available on a fixed basis only. .. Each Annuity offers optional income benefits, for an additional charge, that can provide principal protection or guaranteed minimum income or withdrawal protection for Owners while they are alive. .. Each Annuity offers a basic Death Benefit. It also offers optional Death Benefits that provide an enhanced level of protection for your beneficiary(ies) for an additional charge. .. You are allowed to withdraw a limited amount of money from each Annuity on an annual basis without any charges, although any optional guaranteed benefit you elect may be reduced. Other product features allow you to access your Account Value as necessary, although a charge may apply. You will be subject to taxes on most withdrawals. .. Transfers between investment options are tax-free. Currently, you may make twenty transfers each year free of charge. We also offer several programs that enable you to manage your Account Value as your financial needs and investment performance change. 1 With respect to Optimum Plus only: . If you purchase this Annuity, we apply an additional amount (referred to as an Optimum Plus/SM/ amount, Purchase Credit or Credit) to your Account Value with each Purchase Payment you make, including your initial Purchase Payment and any additional Purchase Payments during the first six Annuity Years. . Please note that during the first 10 years, the total asset-based charges on the Optimum Plus Annuity are higher than many of our other annuities. In addition, the Contingent Deferred Sales Charge (CDSC) on the Optimum Plus Annuity is higher and is deducted for a longer period of time as compared to our other annuities. The Credit is included in your Account Value. However, Prudential Annuities may take back all Credits if you return your Annuity under the "free look" provision. In addition, Prudential Annuities may take back a Credit associated with any Purchase Payment if (a) the Credit was applied within twelve (12) months prior to the death of the Owner (or Annuitant if entity owned) or (b) the Credit was applied within 12 months prior to a request to surrender the Annuity under the medically-related surrender provision. . In these situations, your Account Value could be substantially reduced. The amount we take back will equal the Credit, without adjustment up or down for investment performance. Therefore, any gain on the Credit will not be taken back. But if there was a loss on the Credit, the amount we take back will still equal that of the Credit. Additional conditions and restrictions apply. We do not deduct a CDSC in any situation where we take back the Credit. . If replacing an annuity, please consider all charges associated with that annuity. Purchase Credits applicable to bonus products should not be viewed as an offset of any surrender charge that applies to any Annuity you currently own. For more information on all available annuities, please see Appendix D of this prospectus. With respect to Optimum Four only: . This Annuity offers a Loyalty Credit which we add to your Account Value with respect to Purchase Payments that have been made during the first four Annuity Years less withdrawals through the fifth Annuity Anniversary, subject to our rules and state availability. With respect to Optimum only: . For annuities issued on or after February 13, 2006, this Annuity offers a Loyalty Credit which we add to your Account Value with respect to Purchase Payments that have been made during the first four Annuity Years less withdrawals through the fifth Annuity Anniversary, subject to our rules and state availability. HOW DO I PURCHASE ONE OF THE ANNUITIES? We sell each Annuity through licensed, registered Financial Professionals. Unless we agree otherwise and subject to our rules, each Annuity has minimum initial Purchase Payments as follows: $1,000 for Optimum, $10,000 for Optimum Plus and Optimum Four. We may allow you to make a lower initial Purchase Payment provided you establish an electronic funds transfer under which Purchase Payments received in the first Annuity Year total at least the minimum initial Purchase Payment for the Annuity purchased. Unless we agree otherwise and subject to our rules, if the Annuity is owned by an individual or individuals, the oldest of those Owners must not be older than a maximum issue age as of the Issue Date of the Annuity as follows: age 80 for Optimum, age 75 for Optimum Plus and age 85 for Optimum Four. If the Annuity is owned by an entity, the Annuitant must not be older than the maximum issue age, as of the Issue Date of the Annuity unless we agree otherwise. The availability and level of protection of certain optional benefits may vary based on the age of the Owner or Annuitant on the Issue Date of the Annuity, on the date the benefit is elected or the date of the Owner's death. 2 GLOSSARY OF TERMS Many terms used within this Prospectus are described within the text where they appear. The description of those terms are not repeated in this Glossary of Terms. Account Value: The value of each allocation to a Sub-account (also referred to as a "variable investment option") or a Fixed Allocation prior to the Annuity Date, plus any earnings, and/or less any losses, distributions and charges. The Account Value is calculated before we assess any applicable Contingent Deferred Sales Charge ("CDSC" or "surrender charge") and/or, other than on an annuity anniversary, any fee that is deducted from the Annuity annually in arrears. The Account Value is determined separately for each Sub-account and for each Fixed Allocation, and then totaled to determine the Account Value for your entire Annuity. The Account Value of each Fixed Allocation on other than its Maturity Date may be calculated using a market value adjustment. With respect to Optimum Plus, the Account Value includes any Credits we applied to your Purchase Payments that we are entitled to take back under certain circumstances. With respect to Optimum and Optimum Four, the Account Value includes any Loyalty Credit we apply. With respect to Annuities with a Highest Daily Lifetime Five Income Benefit election, Account Value includes the value of any allocation to the Benefit Fixed Rate Account. Adjusted Purchase Payments As used in the discussion of certain optional benefits in this prospectus and elsewhere, Adjusted Purchase Payments are Purchase Payments, increased by any Credits applied to your Account Value in relation to such Purchase Payments, and decreased by any charges deducted from such Purchase Payments. Annuitization: The application of Account Value to one of the available annuity options for the Owner to begin receiving periodic payments for life (or joint lives), for a guaranteed minimum number of payments or for life with a guaranteed minimum number of payments. Annuity Date: The date you choose for annuity payments to commence. Unless we agree otherwise, for Annuities issued on or after November 20, 2006, the Annuity Date must be no later than the first day of the calendar month coinciding with or next following the later of: (a) the oldest Owner's or Annuitant's 95/th/ birthday, whichever occurs first, and (b) the fifth anniversary of the Issue Date. Annuity Year: A 12-month period commencing on the Issue Date of the Annuity and each successive 12-month period thereafter. Benefit Fixed Rate Account: An investment option offered as part of this Annuity that is used only if you have elected the optional Highest Daily Lifetime Five Benefit. Amounts allocated to the Benefit Fixed Rate Account earn a fixed rate of interest, and are held within our general account. You may not allocate Purchase Payments to the Benefit Fixed Rate Account. Rather, Account Value is transferred to the Benefit Fixed Rate Account only under the asset transfer feature of the Highest Daily Lifetime Five Income Benefit. Code: The Internal Revenue Code of 1986, as amended from time to time. Combination 5% Roll-up And HAV Death Benefit: We offer an optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing the greater of the Highest Anniversary Value Death Benefit and a 5% annual increase on Purchase Payments adjusted for withdrawals. Contingent Deferred Sales Charge (CDSC): This is a sales charge that may be deducted when you make a full or partial withdrawal under your Annuity. We refer to this as a "contingent" charge because it is imposed only if you make a withdrawal. The charge is a percentage of each applicable Purchase Payment that is being withdrawn. The period during which a particular percentage applies is measured from the Issue Date of the Annuity. The amount and duration of the CDSC varies among the Optimum, Optimum Four and Optimum Plus. See "Summary of Contract Fees and Charges" for details on the CDSC for each Annuity. Enhanced Beneficiary Protection Death Benefit: We offer an optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing amounts in addition to the basic Death Benefit that can be used to offset federal and state taxes payable on any taxable gains in your Annuity at the time of your death. Fixed Allocation: An investment option that offers a fixed rate of interest for a specified Guarantee Period during the accumulation period. Free Look: Under state insurance laws, you have the right, during a limited period of time, to examine your Annuity and decide if you want to keep it or cancel it. This right is referred to as your "free look" right. The length of this time period depends on the law of your state, and may vary depending on whether your purchase is a replacement or not. Check your Annuity for more details about your free look right. 3 Guaranteed Minimum Income Benefit (GMIB): We offer an optional benefit that, for an additional cost, after a seven-year waiting period, guarantees your ability to begin receiving income from your Annuity in the form of annuity payments based on your total Purchase Payments and an annual increase of 5% on such Purchase Payments adjusted for withdrawals (called the "Protected Income Value"), regardless of the impact of market performance on your Account Value. Guaranteed Minimum Withdrawal Benefit (GMWB): We offer an optional benefit that, for an additional cost, guarantees your ability to withdraw amounts over time equal to an initial principal value, regardless of the impact of market performance on your Account Value. Guarantee Period: A period of time during the accumulation period where we credit a fixed rate of interest on a Fixed Allocation. Guaranteed Return Option Plus/SM/ (GRO Plus/SM/)/Guaranteed Return Option (GRO(R))/Highest Daily Guaranteed Return Option/SM/ (Highest Daily GRO/SM/): Each of GRO Plus, GRO, and Highest Daily GRO is a separate optional benefit that, for an additional cost, guarantees a minimum Account Value at one or more future dates and that requires your participation in an asset transfer program. Beginning in 2008, we introduced a new version of GRO Plus, called GRO Plus 2008 that we offer for new elections. Highest Anniversary Value Death Benefit ("HAV"): We offer an optional Death Benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing a death benefit equal to the greater of the basic Death Benefit and the Highest Anniversary Value, less proportional withdrawals. Highest Daily Lifetime Five/SM/ Income Benefit: We offer an optional benefit that, for an additional cost, guarantees your ability to withdraw an annual amount equal to a percentage of a principal value called the Total Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. Highest Daily Lifetime Seven/SM/ Income Benefit: An optional feature available for an additional charge that guarantees your ability to withdraw amounts equal to a percentage of a principal value called the Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. Highest Daily Lifetime Seven is the same class of optional benefit as our Highest Daily Lifetime Five Income Benefit, but differs (among other things) with respect to how the Protected Withdrawal Value is calculated and to how the lifetime withdrawals are calculated. Highest Daily Value Death Benefit ("HDV"): We offer an optional benefit that, for an additional cost, provides an enhanced level of protection for your beneficiary(ies) by providing a death benefit equal to the greater of the basic Death Benefit and the Highest Daily Value, less proportional withdrawals. Interim Value: The value of a Fixed Allocation on any date other than the Maturity Date. The Interim Value is equal to the initial value allocated to the Fixed Allocation plus all interest credited to the Fixed Allocation as of the date calculated, less any transfers or withdrawals from the Fixed Allocation. Issue Date: The effective date of your Annuity. Lifetime Five/SM/ Income Benefit: We offer an optional benefit that, for an additional cost, guarantees your ability to withdraw an annual amount equal to a percentage of an initial principal value called the Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. MVA: A market value adjustment used in the determination of Account Value of each Fixed Allocation on any day more than 30 days prior to the Maturity Date of such Fixed Allocation. Owner: With an Annuity issued as an individual annuity contract, the Owner is either an eligible entity or person named as having ownership rights in relation to the Annuity. With an Annuity issued as a certificate under a group annuity contract, the "Owner" refers to the person or entity who has the rights and benefits designated as to the "Participant" in the certificate. Spousal Highest Daily Lifetime Seven/SM/ Income Benefit: The spousal version of the Highest Daily Lifetime Seven Income Benefit. Spousal Highest Daily Lifetime Seven is the same class of optional benefit as our Spousal Lifetime Five Income Benefit, but differs (among other things) with respect to how the Protected Withdrawal Value is calculated and to how the lifetime withdrawals are calculated. Spousal Lifetime Five/SM/ Income Benefit: We offer an optional benefit that, for an additional cost, guarantees until the later death of two Designated Lives (as defined in this Prospectus) the ability to withdraw an annual amount equal to a percentage of an initial 4 principal value called the Protected Withdrawal Value. Subject to our rules regarding the timing and amount of withdrawals, we guarantee these withdrawal amounts, regardless of the impact of market performance on your Account Value. Sub-account: We issue your Annuity through our separate account. See "What is the Separate Account?" under the General Information section. The separate account invests in underlying mutual fund portfolios. From an accounting perspective, we divide the separate account into a number of sections, each of which corresponds to a particular underlying mutual fund portfolio. We refer to each such section of our separate account as a "Sub-account". Surrender Value: The value of your Annuity available upon surrender prior to the Annuity Date. It equals the Account Value as of the date we price the surrender minus any applicable CDSC, Annual Maintenance Fee, any Tax Charge and the charge for any optional benefits and any additional amounts we applied to your Purchase Payments that we may be entitled to recover under certain circumstances. The surrender value may be calculated using a MVA with respect to amounts in any Fixed Allocation. Unit: A measure used to calculate your Account Value in a Sub-account during the accumulation period. Valuation Day: Every day the New York Stock Exchange is open for trading or any other day the Securities and Exchange Commission requires mutual funds or unit investment trusts to be valued. 5 SUMMARY OF CONTRACT FEES AND CHARGES Below is a summary of the fees and charges for the Annuities. Some fees and charges are assessed against each Annuity while others are assessed against assets allocated to the Sub-accounts. The fees and charges that are assessed against an Annuity include any applicable Contingent Deferred Sales Charge, Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are assessed against the Sub-accounts are the Mortality and Expense Risk charge, the charge for Administration of the Annuity, any applicable Distribution Charge and the charge for certain optional benefits you elect. Certain optional benefits deduct a charge from each Annuity based on a percentage of a "protected value." Each underlying mutual fund portfolio assesses a fee for investment management, other expenses and, with some mutual funds, a 12b-1 fee. The prospectus for each underlying mutual fund provides more detailed information about the expenses for the underlying mutual funds. The following tables provide a summary of the fees and charges you will pay if you surrender your Annuity or transfer Account Value among investment options. These fees and charges are described in more detail within this Prospectus. CONTINGENT DEFERRED SALES CHARGES FOR EACH ANNUITY /1/ OPTIMUM Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9+ ------------------------------------------------------ 7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0% ------------------------------------------------------ OPTIMUM FOUR Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5+ ------------------------------ 8.5% 8.0% 7.0% 6.0% 0.0% ------------------------------ OPTIMUM PLUS For Annuities issued prior to November 20, 2006, the following schedule applies: Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+ -------------------------------------------------------------------- 9.0% 9.0% 8.5% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0% -------------------------------------------------------------------- For Annuities issued on or after November 20, 2006 (subject to state availability), the following schedule applies /2/: Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+ -------------------------------------------------------------------- 9.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -------------------------------------------------------------------- 1 The Contingent Deferred Sales Charges are assessed upon surrender or withdrawal. The charge is a percentage of each applicable Purchase Payment deducted upon surrender or withdrawal. The period during which a particular percentage applies is measured from the Issue Date of the Annuity. 2 In jurisdictions that have not yet approved this schedule, the schedule for Annuities issued prior to November 20, 2006 will apply.
---------------------------------------------------------------------- OTHER TRANSACTION FEES AND CHARGES (assessed against each Annuity) ---------------------------------------------------------------------- FEE/CHARGE OPTIMUM OPTIMUM FOUR OPTIMUM PLUS ---------------------------------------------------------------------- Transfer Fee /1/ $15.00 maximum $15.00 maximum $15.00 maximum currently, $10.00 currently, $10.00 currently, $10.00 ---------------------------------------------------------------------- Tax Charge /2/ 0% to 3.5% 0% to 3.5% 0% to 3.5% ----------------------------------------------------------------------
1 Currently, we deduct the fee after the 20/th/ transfer each Annuity Year. We guarantee that the number of charge free transfers per Annuity Year will never be less than 8. 2 We reserve the right to deduct the charge either at the time the tax is imposed, upon a full surrender of the Annuity, or upon annuitization. 6 The following table provides a summary of the periodic fees and charges you will pay while you own your Annuity, excluding the underlying mutual fund Portfolio annual expenses. These fees and charges are described in more detail within this Prospectus.
- -------------------------------------------------------------------------------------------------- PERIODIC FEES AND CHARGES (assessed against each Annuity) - -------------------------------------------------------------------------------------------------- FEE/CHARGE OPTIMUM OPTIMUM FOUR OPTIMUM PLUS Annual Maintenance Fee /1/ Lesser of $35 or 2% of Lesser of $35 or 2% of Lesser of $35 or 2% of Account Value /2/ Account Value /2/ Account Value -------------------------------------------------------------------- Beneficiary Continuation Lesser of $30 or 2% of Lesser of $30 or 2% of Lesser of $30 or 2% of Option Only Account Value Account Value Account Value - -------------------------------------------------------------------------------------------------- ANNUAL FEES CHARGES/OF THE SUB-ACCOUNTS /3/ (assessed as a percentage of the daily net assets of the Sub-accounts) - -------------------------------------------------------------------------------------------------- FEE/CHARGE Mortality & Expense 0.50% 1.50% 0.50% Risk Charge /4/ - -------------------------------------------------------------------------------------------------- Administration Charge /4/ 0.15% 0.15% 0.15% - -------------------------------------------------------------------------------------------------- Distribution Charge /5/ 0.60% In Annuity N/A 1.00% in Annuity Years 1-8 Years 1-10 - -------------------------------------------------------------------------------------------------- Settlement Service Charge /6/ 1.40% (qualified); 1.40% (qualified); 1 40% (qualified); 1.00% (non-qualified) 1.00% (non-qualified) 1.00% (non-qualified) - -------------------------------------------------------------------------------------------------- Total Annual Charges of 1.25% In Annuity 1.65% 1.65% in Annuity The Sub-accounts Years 1-8; Years 1-10; (excluding settlement 0.65% In Annuity 0.65% in Annuity service charge) Years 9 and later Years 11 and later - --------------------------------------------------------------------------------------------------
1 Assessed annually on the Annuity's anniversary date or upon surrender. For beneficiaries who elect the non-qualified Beneficiary Continuation Option, the fee is only applicable if Account Value is less than $25,000. 2 Only applicable if Account Value is less than $100,000. Fee may differ in certain States. 3 These charges are deducted daily and apply to the Sub-accounts only. 4 The combination of the Mortality and Expense Risk Charge and Administration Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus. 5 The Distribution Charge is 0.00% in Annuity Years 9+ for Optimum and in Annuity Years 11+ for Optimum Plus. 6 The Mortality & Expense Risk Charge, the Administration Charge and the Distribution Charge (if applicable) do not apply if you are a beneficiary under the Beneficiary Continuation Option. The Settlement Service Charge applies only if your beneficiary elects the Beneficiary Continuation Option. The 1.00% and 1.40% charges set forth above are annual charges that are assessed against the Account Value in the Sub-accounts. 7 The following table sets forth the charge for each optional benefit under the Annuity. These fees would be in addition to the periodic fees and transaction fees set forth in the tables above.
- ----------------------------------------------------------------------------------------- YOUR OPTIONAL BENEFIT FEES AND CHARGES /1/ - ----------------------------------------------------------------------------------------- OPTIONAL BENEFIT OPTIONAL TOTAL TOTAL TOTAL BENEFIT FEE/ ANNUAL ANNUAL ANNUAL CHARGE CHARGE /2/ CHARGE /2/ CHARGE /2/ for for for OPTIMUM OPTIMUM OPTIMUM FOUR PLUS - ----------------------------------------------------------------------------------------- GUARANTEED RETURN OPTION & GRO PLUS 0.75% maximum /3/ 1.50% 1.90% 1.90% 0.25% current charge - ----------------------------------------------------------------------------------------- GUARANTEED RETURN OPTION PLUS 2008 0.75% maximum /3/ 1.60% 2.00% 2.00% 0.35% current charge - ----------------------------------------------------------------------------------------- HIGHEST DAILY GUARANTEED RETURN 0.75% maximum /3/ 1.60% 2.00% 2.00% OPTION (HD GRO) 0.35% current charge - ----------------------------------------------------------------------------------------- GUARANTEED MINIMUM WITHDRAWAL BENEFIT 1.00% maximum /3/ 1.60% 2.00% 2.00% (GMWB) 0.35% current charge - ----------------------------------------------------------------------------------------- GUARANTEED MINIMUM INCOME BENEFIT 1.00% maximum /3/ 1.25% 1.65% 1.65% (GMIB) 0.50% current +0.50% of +0.50% of +0.50% of charge PIV PIV PIV - ----------------------------------------------------------------------------------------- LIFETIME FIVE/SM/ INCOME BENEFIT 1.50% maximum /3/ 1.85% 2.25% 2.25% 0.60% current charge - ----------------------------------------------------------------------------------------- SPOUSAL LIFETIME FIVE INCOME BENEFIT 1.50% maximum /3/ 2.00% 2.40% 2.40% 0.75% current charge - ----------------------------------------------------------------------------------------- HIGHEST DAILY LIFETIME FIVE INCOME 1.50% maximum /3/ 1.85% 2.25% 2.25% BENEFIT 0.60% current charge - ----------------------------------------------------------------------------------------- HIGHEST DAILY LIFETIME SEVEN INCOME 1.50% maximum /3/ 1.25% 1.65% 1.65% BENEFIT 0.60% current +0.60% of +0.60% of +0.60% of charge PWV PWV PWV - ----------------------------------------------------------------------------------------- SPOUSAL HIGHEST DAILY LIFETIME SEVEN 1.50% maximum /3/ 1.25% 1.65% 1.65% INCOME BENEFIT 0.75% current +0.75% of +0.75% of +0.75% of charge PWV PWV PWV - ----------------------------------------------------------------------------------------- ENHANCED BENEFICIARY PROTECTION DEATH 0.25% 1.50% 1.90% 1.90% BENEFIT - ----------------------------------------------------------------------------------------- HIGHEST ANNIVERSARY VALUE DEATH 0.25% 1.50% 1.90% 1.90% BENEFIT ("HAV") - ----------------------------------------------------------------------------------------- COMBINATION 5% ROLL-UP AND HAV DEATH 0.50% 1.75% 2.15% 2.15% BENEFIT - ----------------------------------------------------------------------------------------- HIGHEST DAILY VALUE DEATH BENEFIT 0.50% 1.75% 2.15% 2.15% ("HDV") - ----------------------------------------------------------------------------------------- Please refer to the section of this Prospectus that describes each optional benefit for a complete description of the benefit, including any restrictions or limitations that may apply. - -----------------------------------------------------------------------------------------
HOW CHARGE IS DETERMINED 1 Guaranteed Return Option and GRO Plus: Charge for each benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.50% total annual charge applies in Annuity years 1-8 and is 0.90% thereafter. For Optimum Four, 1.90% total annual charge applies in all Annuity years, and for Optimum Plus, 1.90% total annual charge applies in Annuity Years 1-10 and is 0.90% thereafter. GRO PLUS 2008: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.60% total annual charge applies in Annuity years 1-8 and is 1.00% thereafter. For Optimum Four, 2.00% total annual charge applies in all Annuity years, and for Optimum Plus, 2.00% total annual charge applies in Annuity Years 1-10 and is 1.00% thereafter. 8 Highest Daily GRO: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.60% total annual charge applies in Annuity years 1-8 and is 1.00% thereafter. For Optimum Four, 2.00% total annual charge applies in all Annuity years, and for Optimum Plus, 2.00% total annual charge applies in Annuity Years 1-10 and is 1.00% thereafter. Guaranteed Minimum Withdrawal Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.60% total annual charge applies in Annuity years 1-8 and is 1.00% thereafter. For Optimum Four, 2.00% total annual charge applies in all Annuity years, and for Optimum Plus, 2.00% total annual charge applies in Annuity Years 1-10 and is 1.00% thereafter. Guaranteed Minimum Income Benefit: Charge for this benefit is assessed against the GMIB Protected Income Value ("PIV"). As discussed in the description of the benefit, the charge is taken out of the Sub-accounts and the Fixed Allocations. For Optimum, 0.50% of PIV is in addition to 1.25% annual charge in Annuity Years 1-8 and 0.65% thereafter. For Optimum Four, 0.50% of PIV is in addition to 1.65% annual charge. For Optimum Plus, 0.50% of PIV is in addition to 1.65% annual charge in Annuity Years 1-10 and 0.65% thereafter. Lifetime Five Income Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.85% total annual charge applies in Annuity years 1-8 and is 1.25% thereafter. For Optimum Four, 2.25% total annual charge applies in all Annuity years, and for Optimum Plus, 2.25% total annual charge applies in Annuity Years 1-10 and is 1.25% thereafter. Spousal Lifetime Five Income Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 2.00% total annual charge applies in Annuity years 1-8 and is 1.40% thereafter. For Optimum Four, 2.40% total annual charge applies in all Annuity years, and for Optimum Plus, 2.40% total annual charge applies in Annuity Years 1-10 and is 1.40% thereafter. Highest Daily Lifetime Five Income Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.85% total annual charge applies in Annuity years 1-8 and is 1.25% thereafter. For Optimum Four, 2.25% total annual charge applies in all Annuity years, and for Optimum Plus, 2.25% total annual charge applies in Annuity Years 1-10 and is 1.25% thereafter. Highest Daily Lifetime Seven Income Benefit: Charge for this benefit is assessed against the Protected Withdrawal Value ("PWV"). As discussed in the description of the benefit, the charge is taken out of the Sub-accounts. For Optimum, 0.60% of PWV is in addition to 1.25% annual charge in Annuity Years 1-8 and 0.65% thereafter. For Optimum Four, 0.60% of PWV is in addition to 1.65% annual charge. For Optimum Plus, 0.60% of PWV is in addition to 1.65 % annual charge in Annuity Years 1-10 and 0.65% thereafter. Spousal Highest Daily Lifetime Seven Income Benefit: Charge for this benefit is assessed against the Protected Withdrawal Value ("PWV"). As discussed in the description of the benefit, the charge is taken out of the Sub-accounts. For Optimum, 0.75% of PWV is in addition to 1.25% annual charge in Annuity Years 1-8 and 0.65% thereafter. For Optimum Four, 0.75% of PWV is in addition to 1.65% annual charge. For Optimum Plus, 0.75% of PWV is in addition to 1.65% annual charge in Annuity Years 1-10 and 0.65% thereafter. Enhanced Beneficiary Protection Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.50% total annual charge applies in Annuity years 1-8 and is 0.90% thereafter. For Optimum Four, 1.90% total annual charge applies in all Annuity years, and for Optimum Plus, 1.90% total annual charge applies in Annuity Years 1-10 and is 0.90% thereafter. Highest Anniversary Value Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.50% total annual charge applies in Annuity years 1-8 and is 0.90% thereafter. For Optimum Four, 1.90% total annual charge applies in all Annuity years, and for Optimum Plus, 1.90% total annual charge applies in Annuity Years 1-10 and is 0.90% thereafter. Combination 5% roll-up and HAV Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.75% total annual charge applies in Annuity years 1-8 and is 1.15% thereafter. For Optimum Four, 2.15% total annual charge applies in all Annuity years, and for Optimum Plus, 2.15% total annual charge applies in Annuity Years 1-10 and is 1.15% thereafter. Highest Daily Value Death Benefit: Charge for this benefit is assessed against the average daily net assets of the Sub-accounts. For Optimum, 1.75% total annual charge applies in Annuity years 1-8 and is 1.15% thereafter. For Optimum Four, 2.15% total annual charge applies in all Annuity years, and for Optimum Plus, 2.15% total annual charge applies in Annuity Years 1-10 and is 1.15% thereafter. 2 The Total Annual Charge includes the Insurance Charge and Distribution Charge (if applicable) assessed against the average daily net assets allocated to the Sub-accounts. If you elect more than one optional benefit, the Total Annual Charge would be increased to include the charge for each optional benefit. With respect to GMIB, the 0.50% charge is assessed against the GMIB Protected Income Value. With respect to Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven, the 0.60% charge and 0.75% charge, respectively, is assessed against the Protected Withdrawal Value. With respect to each of Highest Daily Lifetime Seven and Spousal Highest Daily Lifetime Seven, one-fourth of the annual charge is deducted at the end of each quarter, where the quarters are part of years that have as their anniversary the date that the benefit was elected. These optional benefits are not available under the Beneficiary Continuation Option. 3 We reserve the right to increase the charge to the maximum charge indicated, upon any step-up or reset under the benefit, or new election of the benefit. However, we have no present intention of doing so. The following table provides the range (minimum and maximum) of the total annual expenses for the underlying mutual funds ("Portfolios") as of December 31, 2007. Each figure is stated as a percentage of the underlying Portfolio's average daily net assets.
------------------------------------------------- TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES ------------------------------------------------- MINIMUM MAXIMUM ------------------------------------------------- Total Portfolio Operating Expense 0.59% 1.64% -------------------------------------------------
9 The following are the total annual expenses for each underlying mutual fund ("Portfolio") as of December 31, 2007, except as noted. The "Total Annual Portfolio Operating Expenses" reflect the combination of the underlying Portfolio's investment management fee, other expenses and any 12b-1 fees. Each figure is stated as a percentage of the underlying Portfolio's average daily net assets. There is no guarantee that actual expenses will be the same as those shown in the table. For certain of the underlying Portfolios, a portion of the management fee has been waived and/or other expenses have been partially reimbursed. The existence of any such fee waivers and/or reimbursements have been reflected in the footnotes. The following expenses are deducted by the underlying Portfolio before it provides Prudential Annuities with the daily net asset value. The underlying Portfolio information was provided by the underlying mutual funds and has not been independently verified by us. See the prospectuses or statements of additional information of the underlying Portfolios for further details. The current prospectus and statement of additional information for the underlying Portfolios can be obtained by calling 1-800-752-6342.
- --------------------------------------------------------------------------------------------- UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES (as a percentage of the average net assets of the underlying Portfolios) - --------------------------------------------------------------------------------------------- For the year ended December 31, 2007 --------------------------------------------------- UNDERLYING PORTFOLIO Acquired Total Portfolio Annual Management Other Fees & Portfolio Fee /4/ Expenses 12b-1 Fee Expenses /6/ Expenses - --------------------------------------------------------------------------------------------- Advanced Series Trust /1,3/ AST AllianceBernstein Core Value 0.75% 0.11% 0.00% 0.00% 0.86% AST AllianceBernstein Growth & Income 0.75% 0.08% 0.00% 0.00% 0.83% AST Balanced Asset Allocation /2/ 0.15% 0.01% 0.00% 0.90% 1.06% AST Bond Portfolio 2015 /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST Bond Portfolio 2018 /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST Bond Portfolio 2019 /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST Capital Growth Asset Allocation /2/ 0.15% 0.01% 0.00% 0.93% 1.09% AST Cohen & Steers Realty Portfolio 1.00% 0.12% 0.00% 0.00% 1.12% AST Conservative Asset Allocation /2/ 0.15% 0.02% 0.00% 0.87% 1.04% AST Federated Aggressive Growth 0.95% 0.11% 0.00% 0.00% 1.06% AST Goldman Sachs Mid-Cap Growth 1.00% 0.12% 0.00% 0.00% 1.12% AST International Growth 1.00% 0.11% 0.00% 0.00% 1.11% AST International Value 1.00% 0.12% 0.00% 0.00% 1.12% AST Investment Grade Bond /5/ 0.65% 0.99% 0.00% 0.00% 1.64% AST JPMorgan International Equity 0.87% 0.13% 0.00% 0.00% 1.00% AST Large-Cap Value 0.75% 0.08% 0.00% 0.00% 0.83% AST Lord Abbett Bond-Debenture 0.80% 0.11% 0.00% 0.00% 0.91% AST Marsico Capital Growth 0.90% 0.08% 0.00% 0.00% 0.98% AST MFS Growth 0.90% 0.12% 0.00% 0.00% 1.02% AST Mid-Cap Value 0.95% 0.14% 0.00% 0.00% 1.09% AST Money Market 0.50% 0.09% 0.00% 0.00% 0.59% AST Neuberger Berman Mid-Cap Growth 0.90% 0.10% 0.00% 0.00% 1.00% AST Neuberger Berman Mid-Cap Value 0.89% 0.10% 0.00% 0.00% 0.99% AST Neuberger Berman Small-Cap Growth 0.95% 0.12% 0.00% 0.00% 1.07% AST PIMCO Limited Maturity Bond 0.65% 0.11% 0.00% 0.00% 0.76% AST PIMCO Total Return Bond 0.65% 0.09% 0.00% 0.00% 0.74% AST Preservation Asset Allocation/ 2/ 0.15% 0.03% 0.00% 0.82% 1.00% AST Small-Cap Growth 0.90% 0.15% 0.00% 0.00% 1.05% AST Small-Cap Value 0.90% 0.10% 0.00% 0.00% 1.00% AST T. Rowe Price Global Bond 0.80% 0.13% 0.00% 0.00% 0.93% AST T. Rowe Price Large-Cap Growth 0.88% 0.08% 0.00% 0.00% 0.96% AST Western Asset Core Plus Bond /5/ 0.70% 0.10% 0.00% 0.02% 0.82% - --------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------- Evergreen Variable Annuity Trust /7/ International Equity 0.39% 0.24% 0.00% 0.00% 0.63% Omega 0.52% 0.19% 0.00% 0.00% 0.71%
1 The Fund has entered into arrangements with the issuers of the variable insurance products offering the Portfolios under which the Fund compensates the issuers 0.10% for providing ongoing services to Portfolio shareholders in lieu of the Fund providing such services directly to shareholders. Amounts paid under these arrangements are included in "Other Expenses." Subject to the expense limitations set forth below, for each Portfolio of the Fund other than the Dynamic Asset Allocation Portfolios, 0.03% of the 0.10% administrative services fee is voluntarily waived. The Dynamic Asset Allocation Portfolios do not directly pay any portion of the 0.10% administrative service fee. The Acquired Portfolios in which the Dynamic Asset Allocation Portfolios invest, 10 however, are subject to the administrative services fee. Our reference above to the Dynamic Asset Allocation Portfolios refers to these portfolios: AST Balanced Asset Allocation, AST Capital Growth Asset Allocation, AST Conservative Asset Allocation, and AST Preservation Asset Allocation. 2 Some of the Portfolios invest in other investment companies (the Acquired Portfolios). For example, each Dynamic Asset Allocation Portfolio invests primarily in shares of other Portfolios of Advanced Series Trust. Investors in a Portfolio indirectly bear the fees and expenses of the Acquired Portfolios. The expenses shown under "Acquired Portfolio Fees and Expenses" represent a weighted average of the expense ratios of the Acquired Portfolios in which each Portfolio invested during the year ended December 31, 2007. The Dynamic Asset Allocation Portfolios do not pay any transaction fees when purchasing or redeeming shares of the Acquired Portfolios. Our reference above to the Dynamic Asset Allocation Portfolios refers to these portfolios: AST Balanced Asset Allocation, AST Capital Growth Asset Allocation, AST Conservative Asset Allocation, and AST Preservation Asset Allocation. 3 Prudential Investments LLC and AST Investment Services, Inc. have voluntarily agreed to waive a portion of their management fee and/or limit total expenses (expressed as an annual percentage of average daily net assets) for certain Portfolios of the Fund. These arrangements, which are set forth as follows, may be discontinued or otherwise modified at any time. AST Cohen & Steers Realty: 1.45%; AST Goldman Sachs Mid-Cap Growth: 1.12%; AST JPMorgan International Equity: 1.01%; AST International Value: 1.50%; AST Large-Cap Value: 1.20%; AST Lord Abbett Bond-Debenture: 0.88%; AST MFS Growth: 1.35%; AST Marsico Capital Growth: 1.35%; AST Mid-Cap Value: 1.45%; AST Money Market: 0.56%; AST Neuberger Berman Mid-Cap Growth: 1.25%; AST Neuberger Berman Mid-Cap Value: 1.25%; AST PIMCO Total Return Bond: contractual Portfolio expense limit 1.05%, which can be discontinued or modified only by amending the contract; AST PIMCO Limited Maturity Bond: 1.05%; AST International Growth: 1.75%. 4 The management fee rate shown in the "management fees" column represents the actual fee rate paid by the indicated Portfolio for the fiscal year ended December 31, 2007, except that the fee rate shown does not reflect the impact of any voluntary management fee waivers that may be applicable and which would result in a reduction in the fee rate paid by the Portfolio. The management fee rate for certain Portfolios may include "breakpoints" which are reduced fee rates that are applicable at specified levels of Portfolio assets; the effective fee rates shown in the table reflect and incorporate any fee "breakpoints" which may be applicable. 5 The Western Asset Core Plus Bond Portfolio expenses are based on estimated expenses for 2008 and current period average daily net assets. The AST Bond Portfolio 2015, AST Bond Portfolio 2018, AST Bond Portfolio 2019 and the AST Investment Grade Bond Portfolio are based on estimated expenses for 2008 at an estimated asset level. 6 Acquired Fund Fees and Expenses are not fees or expenses incurred by the fund directly but are expenses of the investment companies in which the fund invests. You incur these fees and expenses indirectly through the valuation of the fund's investment in those investment companies. As a result, the Total Annual Portfolio Operating Expenses listed above may exceed the expense limit numbers. The impact of the acquired fund fees and expenses are included in the total returns of the Fund. 7 The Total Annual Portfolio Operating Expenses excludes expense reductions. 11 EXPENSE EXAMPLES These examples are intended to help you compare the cost of investing in one Prudential Annuity with the cost of investing in other Prudential Annuities and/or other variable annuities. Below are examples for each Annuity showing what you would pay in expenses at the end of the stated time periods had you invested $10,000 in the Annuity and your investment has a 5% return each year. The examples reflect the following fees and charges for each Annuity as described in "Summary of Contract Fees and Charges": . Insurance Charge . Distribution Charge (if applicable) . Contingent Deferred Sales Charge (when and if applicable) . Annual Maintenance Fee . The maximum combination of optional benefit charges The examples also assume the following for the period shown: . You allocate all of your Account Value to the Sub-account with the maximum total annual operating expenses, and those expenses remain the same each year* . For each charge, we deduct the maximum charge rather than the current charge . You make no withdrawals of Account Value . You make no transfers, or other transactions for which we charge a fee . No tax charge applies . You elect the Lifetime Five Income Benefit, the Highest Daily Value Death Benefit and the Enhanced Beneficiary Protection Death Benefit (which are the maximum combination of optional benefit charges) . For the Optimum Plus example, the Credit applicable to the Annuity is 6.5% of the Purchase Payment** . For the Optimum Four example, the Loyalty Credit applies to the Annuity and is equal to 2.75% of total Purchase Payments made during the first four Annuity years . For the Optimum example, the Loyalty Credit applies to the Annuity and is equal to 0.50% of total Purchase Payment made during the first four Annuity years. Amounts shown in the examples are rounded to the nearest dollar. * Note: Not all portfolios offered as Sub-accounts may be available depending on optional benefit selection, the applicable jurisdiction and selling firm. ** The Credit that is applied to Purchase Payments received after the first Annuity Year is less than 6.5% (see "How do I Receive Credits?") THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUNDS OR THEIR PORTFOLIOS - ACTUAL EXPENSES WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR IF YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS. Expense Examples are provided as follows: 1) if you surrender the Annuity at the end of the stated time period; 2) if you annuitize at the end of the stated time period; and 3) if you do not surrender your Annuity. A table of accumulation values appears in Appendix A to this Prospectus. If you surrender your annuity at the end of the applicable time period:
1 yr 3 yrs 5 yrs 10 yrs -------------------------------------------- OPTIMUM $1,225 $2,228 $3,175 $5,274 -------------------------------------------- OPTIMUM FOUR $1,368 $2,421 $2,959 $5,789 -------------------------------------------- OPTIMUM PLUS/ 2/ $1,488 $2,625 $3,643 $6,097 --------------------------------------------
If you annuitize your annuity at the end of the applicable time period:/1/
1 yr 3 yrs 5 yrs 10 yrs ------------------------------------------ OPTIMUM NA $1,643 $2,725 $5,274 ------------------------------------------ OPTIMUM FOUR NA $1,791 $2,959 $5,789 ------------------------------------------ OPTIMUM PLUS/ 2/ NA NA $3,067 $6,001 ------------------------------------------
12 If you do not surrender your annuity at the end of the applicable time period:
1 yr 3 yrs 5 yrs 10 yrs ------------------------------------------ OPTIMUM $550 $1,643 $2,725 $5,274 ------------------------------------------ OPTIMUM FOUR $603 $1,791 $2,959 $5,789 ------------------------------------------ OPTIMUM PLUS/ 2/ $624 $1,857 $3,067 $6,001 ------------------------------------------
1. If you own Optimum Plus, you may not annuitize in the first Three (3) Annuity Years; if you own Optimum or Optimum Four, you may not annuitize in the first Annuity Year. 2. Optimum Plus Annuities purchased prior to November 20, 2006 are subject to a different CDSC schedule. 13 INVESTMENT OPTIONS WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS? Each variable investment option is a Sub-account of Prudential Annuities Life Assurance Corporation Variable Account B (see "What are Separate Accounts" for more detailed information). Each Sub-account invests exclusively in one Portfolio. You should carefully read the prospectus for any Portfolio in which you are interested. The following chart classifies each of the Portfolios based on our assessment of their investment style (as of the date of this Prospectus). The chart also provides a description of each Portfolio's investment objective (in italics) and a short, summary description of their key policies to assist you in determining which Portfolios may be of interest to you. There is no guarantee that any underlying Portfolio will meet its investment objective. Not all portfolios offered as Sub-accounts may be available depending on optional benefit selection, the applicable jurisdiction and selling firm. The Portfolios that you select are your choice - we do not provide investment advice, and we do not recommend or endorse any particular Portfolio. Please see the General Information section of this prospectus, under the heading concerning "service fees" for a discussion of fees that we may receive from underlying mutual funds and/or their families. When you purchase one of the Annuities, you will be required to participate in LPL's asset allocation program which does not utilize all of the investment options available under the Annuities. Unless you have elected an optional benefit that requires you to stay in the asset allocation program, you will be permitted to transfer Account Value out of the asset allocation program subsequent to the Issue Date. Currently, the following optional benefits require that you maintain your Account Value in one or more of the asset allocation programs: Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Seven, GRO Plus 2008, Highest Daily GRO, and the Highest Daily Value death benefit. The asset allocation program is offered by LPL. We have not designed the models or the program, and we are not responsible for them. Our role is limited to administering the model you select. For additional information, are Appendix C - "Additional Information on Asset Allocation Programs." If your Annuity is no longer held through LPL, we will not require you to continue to participate in LPL's asset allocation program. In that event, you will be permitted to allocate your Account Value to any permitted Portfolio (unless you are obligated to invest in specified Portfolios to participate in an optional benefit). The name of the advisor/sub-advisor for each Portfolio appears next to the description. Those Portfolios whose name includes the prefix "AST" are Portfolios of Advanced Series Trust. The investment managers for AST are AST Investment Services, Inc., a Prudential Financial Company, and Prudential Investments LLC, both of which are affiliated companies of Prudential Annuities. However, a sub-advisor, as noted below, is engaged to conduct day-to-day management. The Portfolios are not publicly traded mutual funds. They are only available as investment options in variable annuity contracts and variable life insurance policies issued by insurance companies, or in some cases, to participants in certain qualified retirement plans. However, some of the Portfolios available as Sub-accounts under the Annuities are managed by the same portfolio advisor or sub-advisor as a retail mutual fund of the same or similar name that the Portfolio may have been modeled after at its inception. Certain retail mutual funds may also have been modeled after a Portfolio. While the investment objective and policies of the retail mutual funds and the Portfolios may be substantially similar, the actual investments will differ to varying degrees. Differences in the performance of the funds can be expected, and in some cases could be substantial. You should not compare the performance of a publicly traded mutual fund with the performance of any similarly named Portfolio offered as a Sub-account. Details about the investment objectives, policies, risks, costs and management of the Portfolios are found in the prospectuses for the underlying mutual funds. The current prospectus and statement of additional information for the underlying Portfolios can be obtained by calling 1-800-752-6342. ------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ------------------------------------------------------------------- ADVANCED SERIES TRUST ------------------------------------------------------------------- LARGE AST AllianceBernstein Core Value AllianceBernstein CAP Portfolio: seeks long-term capital L.P. VALUE growth by investing primarily in common stocks. The subadviser expects that the majority of the Portfolio's assets will be invested in the common stocks of large companies that appear to be undervalued. Among other things, the Portfolio seeks to identify compelling buying opportunities created when companies are undervalued on the basis of investor reactions to near-term problems or circumstances even though their long-term prospects remain sound. The subadviser seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large. ------------------------------------------------------------------- LARGE AST AllianceBernstein Growth & AllianceBernstein CAP Income Portfolio: seeks long-term L.P. VALUE growth of capital and income while attempting to avoid excessive fluctuations in market value. The Portfolio normally will invest in common stocks (and securities convertible into common stocks). The subadviser will take a value-oriented approach, in that it will try to keep the Portfolio's assets invested in securities that are selling at reasonable valuations in relation to their fundamental business prospects. ------------------------------------------------------------------- 14 ---------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ---------------------------------------------------------------------- ---------------------------------------------------------------------- ASSET AST Balanced Asset Allocation AST ALLOCA- Portfolio: seeks the highest INVESTMENT TION/ potential total return consistent SERVICES, INC. BALANCED with its specified level of risk & PRUDENTIAL tolerance. The Portfolio will invest INVESTMENTS its assets in several other Advanced LLC/ Series Trust Portfolios. Under PRUDENTIAL normal market conditions, the INVESTMENTS Portfolio will devote approximately LLC 75% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 67.5% to 80%), and 25% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 20.0% to 32.5%). ---------------------------------------------------------------------- FIXED AST Bond Portfolio 2015: seeks the Prudential INCOME highest potential total return Investment consistent with its specified level Management, Inc. of risk tolerance to meet the parameters established to support the GRO benefits and maintain liquidity to support changes in market conditions for a fixed maturity of 2015. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. ---------------------------------------------------------------------- FIXED AST Bond Portfolio 2018: seeks the Prudential INCOME highest potential total return Investment consistent with its specified level Management, Inc. of risk tolerance to meet the parameters established to support the GRO benefits and maintain liquidity to support changes in market conditions for a fixed maturity of 2018. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. ---------------------------------------------------------------------- FIXED AST Bond Portfolio 2019: seeks the Prudential INCOME highest potential total return Investment consistent with its specified level Management, Inc. of risk tolerance to meet the parameters established to support the GRO benefits and maintain liquidity to support changes in market conditions for a fixed maturity of 2019. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. ---------------------------------------------------------------------- ASSET AST Capital Growth Asset Allocation AST ALLOCA- Portfolio: seeks the highest INVESTMENT TION/ potential total return consistent SERVICES, INC. BALANCED with its specified level of risk & PRUDENTIAL tolerance. The Portfolio will invest INVESTMENTS its assets in several other Advanced LLC/ Series Trust Portfolios. Under PRUDENTIAL normal market conditions, the INVESTMENTS Portfolio will devote approximately LLC 65% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 57.5% to 72.5%, and 35% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 27.5% to 42.5%). ---------------------------------------------------------------------- SPECIALTY AST Cohen & Steers Realty Portfolio: Cohen & Steers seeks to maximize total return Capital through investment in real estate Management, Inc. securities. The Portfolio pursues its investment objective by investing, under normal circumstances, at least 80% of its net assets in common stocks and other equity securities issued by real estate companies, such as real estate investment trusts (REITs). Under normal circumstances, the Portfolio will invest substantially all of its assets in the equity securities of real estate companies, i.e., a company that derives at least 50% of its revenues from the ownership, construction, financing, management or sale of real estate or that has at least 50% of its assets in real estate. Real estate companies may include real estate investment trusts (REITs). ---------------------------------------------------------------------- ASSET AST Conservative Asset Allocation AST ALLOCA- Portfolio: seeks the highest INVESTMENT TION/ potential total return consistent SERVICES, INC. BALANCED with its specified level of risk & PRUDENTIAL tolerance. The Portfolio will invest INVESTMENTS its assets in several other Advanced LLC/ Series Trust Portfolios. Under PRUDENTIAL normal market conditions, the INVESTMENTS Portfolio will devote approximately LLC 55% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 47.5% to 62.5%), and 45% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 37.5% to 52.5%. ---------------------------------------------------------------------- SMALL AST Federated Aggressive Growth Federated Equity CAP Portfolio: seeks capital growth. The Management GROWTH Portfolio pursues its investment Company of objective by investing primarily in Pennsylvania/ the stocks of small companies that Federated Global are traded on national security Investment exchanges, NASDAQ stock exchange and Management Corp.; the over-the-counter-market. Small Federated MDTA companies will be defined as LLC companies with market capitalizations similar to companies in the Russell 2000 Growth Index. ---------------------------------------------------------------------- 15 ---------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ---------------------------------------------------------------------- MID AST Goldman Sachs Mid-Cap Growth Goldman Sachs CAP Portfolio: seeks long-term capital Asset Management, GROWTH growth. The Portfolio pursues its L.P. investment objective, by investing primarily in equity securities selected for their growth potential, and normally invests at least 80% of the value of its assets in medium-sized companies. Medium-sized companies are those whose market capitalizations (measured at the time of investment) fall within the range of companies in the Russell Mid-cap Growth Index. The subadviser seeks to identify individual companies with earnings growth potential that may not be recognized by the market at large. ---------------------------------------------------------------------- INTER- AST International Growth Portfolio: Marsico Capital NATIONAL seeks long-term capital growth. Management, LLC; EQUITY Under normal circumstances, the William Blair & Portfolio invests at least 80% of Company, LLC the value of its assets in securities of issuers that are economically tied to countries other than the United States. Although the Portfolio intends to invest at least 80% of its assets in the securities of issuers located outside the United States, it may at times invest in U.S. issuers and it may invest all of its assets in fewer than five countries or even a single country. The Portfolio looks primarily for stocks of companies whose earnings are growing at a faster rate than other companies or which offer attractive growth. ---------------------------------------------------------------------- INTER- AST International Value Portfolio: LSV Asset NATIONAL seeks long-term capital Management; EQUITY appreciation. The Portfolio normally Thornburg invests at least 80% of the Investment Portfolio's assets in equity Management, Inc. securities. The Portfolio will invest at least 65% of its net assets in the equity securities of companies in at least three different countries, without limit as to the amount of assets that may be invested in a single country. ---------------------------------------------------------------------- FIXED AST Investment Grade Bond Portfolio: Prudential INCOME seeks the highest potential total Investment return consistent with its specified Management, Inc. level of risk tolerance to meet the parameters established to support the Highest Daily Lifetime Seven benefits and maintain liquidity to support changes in market conditions for a fixed duration (weighted average maturity) of about 6 years. Please note that you may not make purchase payments to this Portfolio, and that this Portfolio is available only with certain living benefits. ---------------------------------------------------------------------- INTER- AST JPMorgan International Equity J.P. Morgan NATIONAL Portfolio: seeks long-term capital Investment EQUITY growth by investing in a diversified Management, Inc. portfolio of international equity securities. The Portfolio seeks to meet its objective by investing, under normal market conditions, at least 80% of its assets in a diversified portfolio of equity securities of companies located or operating in developed non-U.S. countries and emerging markets of the world. The equity securities will ordinarily be traded on a recognized foreign securities exchange or traded in a foreign over-the-counter market in the country where the issuer is principally based, but may also be traded in other countries including the United States. ---------------------------------------------------------------------- LARGE AST Large-Cap Value Portfolio: seeks Dreman Value CAP current income and long-term growth Management LLC; VALUE of income, as well as capital Hotchkis and Wiley appreciation. The Portfolio invests, Capital under normal circumstances, at least Management LLC; 80% of its net assets in common J.P. Morgan stocks of large capitalization Investment companies. Large capitalization Management, Inc. companies are those companies with market capitalizations within the market capitalization range of the Russell 1000 Value Index. ---------------------------------------------------------------------- FIXED AST Lord Abbett Bond-Debenture Lord, Abbett & Co. INCOME Portfolio: seeks high current income LLC and the opportunity for capital appreciation to produce a high total return. The Portfolio invests, under normal circumstances, at least 80% of the value of its assets in fixed income securities. The Portfolio allocates its assets principally among fixed income securities in four market sectors: U.S. investment grade securities, U.S. high yield securities, foreign securities (including emerging market securities) and convertible securities. Under normal circumstances, the Portfolio invests in each of the four sectors described above. However, the Portfolio may invest substantially all of its assets in any one sector at any time, subject to the limitation that at least 20% of the Portfolio's net assets must be invested in any combination of investment grade debt securities, U.S. Government securities and cash equivalents. The Portfolio may also make significant investments in mortgage-backed securities. Although the Portfolio expects to maintain a weighted average maturity in the range of five to twelve years, there are no restrictions on the overall Portfolio or on individual securities. The Portfolio may invest up to 20% of its net assets in equity securities. ---------------------------------------------------------------------- 16 -------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR -------------------------------------------------------------------- LARGE AST Marsico Capital Growth Marsico Capital CAP Portfolio: seeks capital growth. Management, LLC GROWTH Income realization is not an investment objective and any income realized on the Portfolio's investments, therefore, will be incidental to the Portfolio's objective. The Portfolio will pursue its objective by investing primarily in common stocks of large companies that are selected for their growth potential. Large capitalization companies are companies with market capitalizations within the market capitalization range of the Russell 1000 Growth Index. In selecting investments for the Portfolio, the subadviser uses an approach that combines "top down" macroeconomic analysis with "bottom up" stock selection. The "top down" approach identifies sectors, industries and companies that may benefit from the trends the subadviser has observed. The subadviser then looks for individual companies with earnings growth potential that may not be recognized by the market at large, utilizing a "bottom up" stock selection process. The Portfolio will normally hold a core position of between 35 and 50 common stocks. The Portfolio may hold a limited number of additional common stocks at times when the Portfolio manager is accumulating new positions, phasing out existing or responding to exceptional market conditions. -------------------------------------------------------------------- LARGE AST MFS Growth Portfolio: seeks Massachusetts CAP long-term capital growth and future, Financial Services GROWTH rather than current income. Under Company normal market conditions, the Portfolio invests at least 80% of its net assets in common stocks and related securities, such as preferred stocks, convertible securities and depositary receipts, of companies that the subadviser believes offer better than average prospects for long-term growth. The subadviser uses a "bottom up" as opposed to a "top down" investment style in managing the Portfolio. -------------------------------------------------------------------- MID AST Mid Cap Value Portfolio: seeks EARNEST Partners CAP to provide capital growth by LLC; WEDGE VALUE investing primarily in Capital mid-capitalization stocks that Management, LLP appear to be undervalued. The Portfolio generally invests, under normal circumstances, at least 80% of the value of its net assets in mid- capitalization companies. Mid-capitalization companies are generally those that have market capitalizations, at the time of purchase, within the market capitalization range of companies included in the Russell Midcap Value Index during the previous 12-months based on month-end data. -------------------------------------------------------------------- FIXED AST Money Market Portfolio: seeks Prudential INCOME high current income while Investment maintaining high levels of Management, Inc. liquidity. The Portfolio invests in high-quality, short-term, U.S. dollar denominated corporate, bank and government obligations. The Portfolio will invest in securities which have effective maturities of not more than 397 days. -------------------------------------------------------------------- MID AST Neuberger Berman Mid-Cap Growth Neuberger Berman CAP Portfolio: seeks capital growth. Management Inc. GROWTH Under normal market conditions, the Portfolio invests at least 80% of its net assets in the common stocks of mid-capitalization companies. Mid-capitalization companies are those companies whose market capitalization is within the range of market capitalizations of companies in the Russell Midcap(R) Growth Index. Using fundamental research and quantitative analysis, the subadviser looks for fast-growing companies that are in new or rapidly evolving industries. -------------------------------------------------------------------- MID AST Neuberger Berman Mid-Cap Value Neuberger Berman CAP Portfolio: seeks capital growth. Management Inc. VALUE Under normal market conditions, the Portfolio invests at least 80% of its net assets in the common stocks of medium capitalization companies. For purposes of the Portfolio, companies with market capitalizations that fall within the range of the Russell Midcap(R) Index at the time of investment are considered medium capitalization companies. Some of the Portfolio's assets may be invested in the securities of large-cap companies as well as in small-cap companies. Under the Portfolio's value-oriented investment approach, the subadviser looks for well-managed companies whose stock prices are undervalued and that may rise in price before other investors realize their worth. -------------------------------------------------------------------- 17 ----------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR ----------------------------------------------------------------------- SMALL AST Neuberger Berman Small-Cap Neuberger Berman CAP Growth Portfolio: seeks maximum Management Inc. GROWTH growth of investors' capital from a portfolio of growth stocks of smaller companies. The Portfolio pursues its objective, under normal circumstances, by primarily investing at least 80% of its total assets in the equity securities of small-sized companies included in the Russell 2000 Growth(R) Index. ----------------------------------------------------------------------- FIXED AST PIMCO Limited Maturity Bond Pacific Investment INCOME Portfolio: seeks to maximize total Management return consistent with preservation Company LLC of capital and prudent investment (PIMCO) management. The Portfolio will invest in a portfolio of fixed-income investment instruments of varying maturities. The average portfolio duration of the Portfolio generally will vary within a one- to three- year time frame based on the subadviser's forecast for interest rates. ----------------------------------------------------------------------- FIXED AST PIMCO Total Return Bond Pacific Investment INCOME Portfolio: seeks to maximize total Management return consistent with preservation Company LLC of capital and prudent investment (PIMCO) management. The Portfolio will invest in a portfolio of fixed-income investment instruments of varying maturities. ----------------------------------------------------------------------- ASSET AST Preservation Asset Allocation AST ALLOCA- Portfolio: seeks the highest INVESTMENT TION/ potential total return consistent SERVICES, INC. BALANCED with its specified level of risk & PRUDENTIAL tolerance. The Portfolio will invest INVESTMENTS its assets in several other Advanced LLC / Series Trust Portfolios. Under PRUDENTIAL normal market conditions, the INVESTMENTS Portfolio will devote approximately LLC 35% of its net assets to underlying portfolios investing primarily in equity securities (with a range of 27.5% to 42.5%), and 65% of its net assets to underlying portfolios investing primarily in debt securities and money market instruments (with a range of 57.5% to 72.5%. ----------------------------------------------------------------------- SMALL AST Small-Cap Growth Portfolio: Eagle Asset CAP seeks long-term capital growth. The Management; GROWTH Portfolio pursues its objective by Neuberger Berman investing, under normal Management Inc. circumstances, at least 80% of the value of its assets in small-capitalization companies. Small-capitalization companies are those companies with a market capitalization, at the time of purchase, no larger than the largest capitalized company included in the Russell 2000(R) Index at the time of the Portfolio's investment. ----------------------------------------------------------------------- SMALL AST Small-Cap Value Portfolio: seeks ClearBridge CAP to provide long-term capital growth Advisors, LLC; VALUE by investing primarily in Dreman Value small-capitalization stocks that Management LLC; appear to be undervalued. The J.P. Morgan Portfolio invests, under normal Investment circumstances, at least 80% of the Management, Inc.; value of its net assets in small Lee Munder capitalization stocks. Small Investments, Ltd capitalization stocks are the stocks of companies with market capitalization that are within the market capitalization range of the Russell 2000(R) Value Index. ----------------------------------------------------------------------- FIXED AST T. Rowe Price Global Bond T. Rowe Price INCOME Portfolio: seeks to provide high International, Inc. current income and capital growth by investing in high-quality foreign and U.S. dollar-denominated bonds. The Portfolio will invest at least 80% of its total assets in fixed income securities. The Portfolio invests in all types of bonds, including those issued or guaranteed by U.S. or foreign governments or their agencies and by foreign authorities, provinces and municipalities as well as investment grade corporate bonds, mortgage and asset-backed securities, and high-yield bonds of U.S. and foreign issuers. The Portfolio generally invests in countries where the combination of fixed-income returns and currency exchange rates appears attractive, or, if the currency trend is unfavorable, where the subadviser believes that the currency risk can be minimized through hedging. The Portfolio may also invest up to 20% of its assets in the aggregate in below investment-grade, high-risk bonds ("junk bonds"). In addition, the Portfolio may invest up to 30% of its assets in mortgage- related (including mortgage dollar rolls and derivatives, such as collateralized mortgage obligations and stripped mortgage securities) and asset-backed securities. ----------------------------------------------------------------------- 18 --------------------------------------------------------------------- STYLE/ INVESTMENT OBJECTIVES/POLICIES PORTFOLIO TYPE ADVISOR/ SUB-ADVISOR --------------------------------------------------------------------- LARGE AST T. Rowe Price Large-Cap Growth T. Rowe Price CAP Portfolio: seeks long-term growth of Associates, Inc. GROWTH capital by investing predominantly in the equity securities of a limited number of large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. The Portfolio takes a growth approach to investment selection and normally invests at least 80% of its net assets in the common stocks of large companies. Large companies are defined as those whose market cap is larger than the median market cap of companies in the Russell 1000 Growth Index as of the time of purchase. --------------------------------------------------------------------- FIXED AST Western Asset Core Plus Bond Western Asset INCOME Portfolio: seeks to maximize total Management return, consistent with prudent Company investment management and liquidity needs, by investing to obtain its average specified duration. The Portfolio's current target average duration is generally 2.5 to 7 years. The Portfolio pursues this objective by investing in all major fixed income sectors with a bias towards non-Treasuries. --------------------------------------------------------------------- Evergreen Variable Annuity Trust --------------------------------------------------------------------- INTER- Evergreen VA International Equity: Evergreen NATIONAL seeks long-term capital growth and Investment EQUITY secondarily, modest income. The Management Portfolio will normally invest at Company, LLC least 80% of its assets in equity securities issued by , in the manager's opinion, established and quality non-U.S. companies located in countries with developed markets. The Portfolio may purchase securities across all market capitalizations. The Portfolio normally invests at least 65% of its assets in securities of companies in at least three countries (other than the U.S.). The Portfolio may also invest in emerging markets. The Portfolio's managers seek both growth and value opportunities For growth investments, the Portfolio's manager seeks, among other things, good business models, good management and growth in cash flows. For value investments, the Portfolio's manager seeks, among other things, companies that are undervalued in the marketplace compared to their assets. The Portfolio normally intends to seek modest income from dividends paid by its equity holdings. Other than cash and cash equivalents, the Portfolio intends to invest substantially all of its assets in the securities of non-U.S. issuers. --------------------------------------------------------------------- SPECIALTY Evergreen VA Omega: seeks long-term Evergreen capital growth. The Portfolio Investment invests primarily, and under normal Management conditions substantially all of its Company, LLC assets, in common stocks of U.S. companies across any market capitalizations. The Portfolio's manager employs a growth style of equity management that seeks to emphasizes companies with cash flow growth, sustainable competitive advantages, returns on invested capital above their cost of capital and the ability to manage for profitable growth that can create long-term value for shareholders. --------------------------------------------------------------------- WHAT ARE THE FIXED ALLOCATIONS? We offer Fixed Allocations of different durations during the accumulation period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a specified period of time, called the "Guarantee Period." In most states, we offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also offer special purpose Fixed Allocations for use with certain optional investment programs. We guarantee the fixed rate for the entire Guarantee Period. However, if you withdraw or transfer Account Value before the end of the Guarantee Period, we will adjust the value of your withdrawal or transfer based on a formula, called a "Market Value Adjustment." The Market Value Adjustment can either be positive or negative, depending on the movement of applicable interest rates payable on Strips of the appropriate duration. Please refer to the section entitled "How does the Market Value Adjustment Work?" for a description of the formula along with examples of how it is calculated. You may allocate Account Value to more than one Fixed Allocation at a time. We may restrict your ability to allocate Account Value to Fixed Allocations if you elect certain optional benefits. The interest rate that we credit to the Fixed Allocations may be reduced by an amount that corresponds to the asset-based charges assessed against the Sub-accounts. Fixed Allocations may not be available in all states. Availability of Fixed Allocations is subject to change and may differ by state and by the annuity product you purchase. Please call Prudential Annuities at 1-800-752-6342 to determine availability of Fixed Allocations in your state and for your annuity product. 19 FEES AND CHARGES The charges under each Annuity are designed to cover, in the aggregate, our direct and indirect costs of selling, administering and providing benefits under each Annuity. They are also designed, in the aggregate, to compensate us for the risks of loss we assume. If, as we expect, the charges that we collect from the Annuities exceed our total costs in connection with the Annuities, we will earn a profit. Otherwise we will incur a loss. For example, Prudential Annuities may make a profit on the Insurance Charge if, over time, the actual costs of providing the guaranteed insurance obligations under an Annuity are less than the amount we deduct for the Insurance Charge. To the extent we make a profit on the Insurance Charge, such profit may be used for any other corporate purpose, including payment of other expenses that Prudential Annuities incurs in promoting, distributing, issuing and administering an Annuity and to offset a portion of the costs associated with offering any Credits which are funded through Prudential Annuities' general account. The rates of certain of our charges have been set with reference to estimates of the amount of specific types of expenses or risks that we will incur. In most cases, this prospectus identifies such expenses or risks in the name of the charge; however, the fact that any charge bears the name of, or is designed primarily to defray a particular expense or risk does not mean that the amount we collect from that charge will never be more than the amount of such expense or risk, nor does it mean that we may not also be compensated for such expense or risk out of any other charges we are permitted to deduct by the terms of the Annuity. A portion of the proceeds that Prudential Annuities receives from charges that apply to the Sub-accounts may include amounts based on market appreciation of the Sub-account values including appreciation on amounts that represent any Credits. WHAT ARE THE CONTRACT FEES AND CHARGES? Contingent Deferred Sales Charge: We do not deduct a sales charge from Purchase Payments you make to your Annuity. However, we may deduct a CDSC if you surrender your Annuity or when you make a partial withdrawal. The CDSC reimburses us for expenses related to sales and distribution of the Annuity, including commissions, marketing materials and other promotional expenses. The CDSC is calculated as a percentage of your Purchase Payment being surrendered or withdrawn during the applicable Annuity Year. For purposes of calculating the CDSC, we consider the year following the Issue Date of your Annuity as Year 1. The amount of the CDSC decreases over time, measured from the Issue Date of the Annuity. The CDSC percentages for each Annuity are shown under "Summary of Contract Fees and Charges". If you purchase Optimum Plus and make a withdrawal that is subject to a CDSC, we may use part of that CDSC to recoup our costs of providing the Credit. However, we do not impose any CDSC on your withdrawal of a Credit amount. With respect to a partial withdrawal, we calculate the CDSC by assuming that any available free withdrawal amount is taken out first (see How Much Can I Withdraw as a Free Withdrawal?). If the free withdrawal amount is not sufficient, we then assume that withdrawals are taken from Purchase Payments that have not been previously withdrawn, on a first-in, first-out basis, and subsequently from any other Account Value in the Annuity. For purposes of calculating any applicable CDSC on a surrender, the Purchase Payments being withdrawn may be greater than your remaining Account Value or the amount of your withdrawal request. This is most likely to occur if you have made prior partial withdrawals or if your Account Value has declined in value due to negative market performance. In that scenario, we would determine the CDSC amount as the applicable percentage of the Purchase Payments being withdrawn, rather than as a percentage of the remaining Account Value or withdrawal request. Thus, the CDSC would be greater than if it were calculated as a percentage of remaining Account Value or withdrawal amount. We may waive any applicable CDSC under certain circumstances including, certain medically-related circumstances or when taking a Minimum Distribution from an Annuity purchased as a "qualified" investment. Free Withdrawals, Medically-Related Surrenders and Minimum Distributions are each explained more fully in the section entitled "Access to Your Account Value". Transfer Fee: Currently, you may make twenty (20) free transfers between investment options each Annuity Year. We will charge $10.00 for each transfer after the twentieth in each Annuity Year. We do not consider transfers made as part of a Dollar Cost Averaging, Automatic Rebalancing or asset allocation program when we count the twenty free transfers. All transfers made on the same day will be treated as one (1) transfer. Renewals or transfers of Account Value from a Fixed Allocation at the end of its Guarantee Period are not subject to the Transfer Fee and are not counted toward the twenty free transfers. We may reduce the number of free transfers allowable each Annuity Year (subject to a minimum of eight) without charging a Transfer Fee unless you make use of electronic means to transmit your transfer requests. We may eliminate the Transfer Fee for transfer requests transmitted electronically or through other means that reduce our processing costs. If you are enrolled in any program that does not permit transfer requests to be transmitted electronically, the Transfer Fee will not be waived. Annual Maintenance Fee: During the accumulation period we deduct an Annual Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account Value invested in the Sub-accounts, whichever is less. This fee will be deducted annually on the anniversary of the Issue Date of your Annuity or, if you surrender your Annuity during the Annuity Year, the fee is deducted at the time of surrender. With respect to Optimum and Optimum Four, currently, the Annual Maintenance Fee is only deducted if your 20 Account Value is less than $100,000 on the anniversary of the Issue Date or at the time of surrender. With respect to Optimum Plus, we deduct the Annual Maintenance Fee regardless of Account Value. We do not impose the Annual Maintenance Fee upon annuitization, the payment of a Death Benefit, or a medically-rated full surrender. We may increase the Annual Maintenance Fee. However, any increase will only apply to Annuities issued after the date of the increase. For beneficiaries that elect the Beneficiary Continuation Option, the Annual Maintenance Fee is the lesser of $30 or 2% of Account Value. For a non-qualified Beneficiary Continuation Option, the fee is only applicable if the Account Value is less than $25,000 at the time the fee is assessed. Tax Charge: Several states and some municipalities charge premium taxes or similar taxes on annuities that we are required to pay. The amount of tax will vary from jurisdiction to jurisdiction and is subject to change. The tax charge currently ranges up to 3 1/2% of your Purchase Payment and is designed to approximate the taxes that we are required to pay. We reserve the right to deduct the charge either at the time the tax is imposed, upon a full surrender of the Annuity, or upon annuitization. We may assess a charge against the Sub-accounts and the Fixed Allocations equal to any taxes which may be imposed upon the separate accounts. We will pay company income taxes on the taxable corporate earnings created by this separate account product. While we may consider company income taxes when pricing our products, we do not currently include such income taxes in the tax charges you pay under the Annuity. We will periodically review the issue of charging for these taxes and may impose a charge in the future. In calculating our corporate income tax liability, we derive certain corporate income tax benefits associated with the investment of company assets, including separate account assets, which are treated as company assets under applicable income tax law. These benefits reduce our overall corporate income tax liability. Under current law, such benefits may include foreign tax credits and corporate dividends received deductions. We do not pass these tax benefits through to holders of the separate account annuity contracts because (i) the contract owners are not the owners of the assets generating these benefits under applicable income tax law and (ii) we do not currently include company income taxes in the tax charges you pay under the contract. Insurance Charge: We deduct an Insurance Charge daily. The charge is assessed against the daily assets allocated to the Sub-accounts and is equal to the amount indicated under "Summary of Contract Fees and Charges". The Insurance Charge is the combination of the Mortality & Expense Risk Charge and the Administration Charge. The Insurance Charge is intended to compensate Prudential Annuities for providing the insurance benefits under each Annuity, including each Annuity's basic Death Benefit that provides guaranteed benefits to your beneficiaries even if the market declines and the risk that persons we guarantee annuity payments to will live longer than our assumptions. The charge also covers administrative costs associated with providing the Annuity benefits, including preparation of the contract and prospectus, confirmation statements, annual account statements and annual reports, legal and accounting fees as well as various related expenses. Finally, the charge covers the risk that our assumptions about the mortality risks and expenses under each Annuity are incorrect and that we have agreed not to increase these charges over time despite our actual costs. We may increase the portion of the total Insurance Charge that is deducted for administrative costs; however, any increase will only apply to Annuities issued after the date of the increase. The Insurance Charge is not deducted against assets allocated to a Fixed Allocation. However, the amount we credit to Fixed Allocations may also reflect similar assumptions about the insurance guarantees provided under each Annuity and the administrative costs associated with providing the Annuity benefits. Distribution Charge: For Optimum and Optimum Plus, we deduct a Distribution Charge daily. The charge is assessed against the average assets allocated to the Sub-accounts and is equal to the amount indicated under "Summary of Contract Fees and Charges" on an annual basis. The Distribution Charge is intended to compensate us for a portion of our acquisition expenses under the Annuity, including promotion and distribution of the Annuity and, with respect to Optimum Plus, the costs associated with offering Credits which are funded through Prudential Annuities' general account. The Distribution Charge is deducted against your Annuity's Account Value and any increases or decreases in your Account Value based on market fluctuations of the Sub-accounts will affect the charge. Optional Benefits for which we assess a charge: Generally, if you elect to purchase certain optional benefits, we will deduct an additional charge on a daily basis from your Account Value allocated to the Sub-accounts. The additional charge is included in the daily calculation of the Unit Price for each Sub-account. We may assess charges for other optional benefits on a different basis. Please refer to the sections entitled "Summary of Contract Fees and Charges" for the list of charges for each Optional Benefit. Settlement Service Charge: If your beneficiary takes the death benefit under a Beneficiary Continuation Option, we deduct a Settlement Service Charge. The charge is assessed daily against the average assets allocated to the Sub-accounts and is equal to an annual charge of 1.00% for non-qualified Annuities and 1.40% for qualified Annuities. Fees and expenses incurred by the Portfolios: Each Portfolio incurs total annual operating expenses comprised of an investment management fee, other expenses and any distribution and service (12b-1) fees that may apply. These fees and expenses are reflected daily by each Portfolio before it provides Prudential Annuities with the net asset value as of the close of business each day. More detailed information about fees and expenses can be found in the prospectuses for the Portfolios. 21 WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS? No specific fees or expenses are deducted when determining the rate we credit to a Fixed Allocation. However, for some of the same reasons that we deduct the Insurance Charge against Account Value allocated to the Sub-accounts, we also take into consideration mortality, expense, administration, profit and other factors in determining the interest rates we credit to Fixed Allocations. Any CDSC or Tax Charge applies to amounts that are taken from the Sub-accounts or the Fixed Allocations. A Market Value Adjustment may also apply to transfers, certain withdrawals, surrender or annuitization from a Fixed Allocation. WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION? If you select a fixed payment option, the amount of each fixed payment will depend on the Account Value of your Annuity when you elected to annuitize. There is no specific charge deducted from these payments; however, the amount of each annuity payment reflects assumptions about our insurance expenses. If you select a variable payment option that we may offer, then the amount of your benefits will reflect changes in the value of your Annuity and will be subject to charges that apply under the variable immediate annuity option. Also, a tax charge may apply (see "Tax Charge" above). Currently, we only offer fixed payment options. EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES We may reduce or eliminate certain fees and charges or alter the manner in which the particular fee or charge is deducted. For example, we may reduce the amount of any CDSC or the length of time it applies, reduce or eliminate the amount of the Annual Maintenance Fee or reduce the portion of the total Insurance Charge that is deducted as an Administration Charge. Generally, these types of changes will be based on a reduction to our sales, maintenance or administrative expenses due to the nature of the individual or group purchasing the Annuity. Some of the factors we might consider in making such a decision are: (a) the size and type of group; (b) the number of Annuities purchased by an Owner; (c) the amount of Purchase Payments or likelihood of additional Purchase Payments; (d) whether an annuity is reinstated pursuant to our rules; and/or (e) other transactions where sales, maintenance or administrative expenses are likely to be reduced. We will not discriminate unfairly between Annuity purchasers if and when we reduce any fees and charges. 22 PURCHASING YOUR ANNUITY WHAT ARE OUR REQUIREMENTS FOR PURCHASING ONE OF THE ANNUITIES? Initial Purchase Payment: Unless we agree otherwise and subject to our rules, you must make a minimum initial Purchase Payment as follows: $1,000 for Optimum and $10,000 for Optimum Plus and Optimum Four. However, if you decide to make payments under a systematic investment or an electronic funds transfer program, we may accept a lower initial Purchase Payment provided that, within the first Annuity Year, your subsequent Purchase Payments plus your initial Purchase Payment total the minimum initial Purchase Payment amount required for the Annuity purchased. Where allowed by law, we must approve any initial and additional Purchase Payments of $1,000,000 or more. We may apply certain limitations and/or restrictions on an Annuity as a condition of our acceptance, including limiting the liquidity features or the Death Benefit protection provided under an Annuity, limiting the right to make additional Purchase Payments, changing the number of transfers allowable under an Annuity or restricting the Sub-accounts or Fixed Allocations that are available. Other limitations and/or restrictions may apply. Applicable laws designed to counter terrorists and prevent money laundering might, in certain circumstances, require us to block a contract owner's ability to make certain transactions, and thereby refuse to accept Purchase Payments or requests for transfers, partial withdrawals, total withdrawals, death benefits, or income payments until instructions are received from the appropriate regulator. We also may be required to provide additional information about you and your Annuity to government regulators. Except as noted below, Purchase Payments must be submitted by check drawn on a U.S. bank, in U.S. dollars, and made payable to Prudential Annuities. Purchase Payments may also be submitted via 1035 exchange or direct transfer of funds. Under certain circumstances, Purchase Payments may be transmitted to Prudential Annuities via wiring funds through your Financial Professional's broker-dealer firm. Additional Purchase Payments may also be applied to your Annuity under an electronic funds transfer arrangement where you authorize us to deduct money directly from your bank account. We may reject any payment if it is received in an unacceptable form. Our acceptance of a check is subject to our ability to collect funds. Age Restrictions: Unless we agree otherwise and subject to our rules, the Owner (or Annuitant if entity owned) must not be older than a maximum issue age as of the Issue Date of the Annuity as follows: age 80 for Optimum, age 75 for Optimum Plus and age 85 for Optimum Four. If an Annuity is owned jointly, the oldest of the Owners must not be older than the maximum issue age on the Issue Date. You should consider your need to access your Account Value and whether the Annuity's liquidity features will satisfy that need. If you take a distribution prior to age 59 1/2, you may be subject to a 10% penalty in addition to ordinary income taxes on any gain. The availability and level of protection of certain optional benefits may vary based on the age of the Owner on the Issue Date of the Annuity or the date of the Owner's death. Owner, Annuitant and Beneficiary Designations: We will ask you to name the Owner(s), Annuitant and one or more Beneficiaries for your Annuity. . Owner: The Owner(s) holds all rights under the Annuity. You may name up to two Owners in which case all ownership rights are held jointly. Generally, joint owners are required to act jointly; however, if each owner provides us with an instruction that we find acceptable, we will permit each owner to act separately. All information and documents that we are required to send you will be sent to the first named owner. This Annuity does not provide a right of survivorship. Refer to the Glossary of Terms for a complete description of the term "Owner." . Annuitant: The Annuitant is the person upon whose life we continue to make annuity payments. You must name an Annuitant who is a natural person. We do not accept a designation of joint Annuitants during the accumulation period. In limited circumstances and where allowed by law, you may name one or more Contingent Annuitants. Generally, a Contingent Annuitant will become the Annuitant if the Annuitant dies before the Annuity Date. Please refer to the discussion of "Considerations for Contingent Annuitants" in the Tax Considerations section of the Prospectus. . Beneficiary: The Beneficiary is the person(s) or entity you name to receive the Death Benefit. Your Beneficiary Designation should be the exact name of your beneficiary, not only a reference to the beneficiary's relationship to you. If you use a designation of "surviving spouse," we will pay the Death Benefit to the individual that is your spouse at the time of your death (as defined under the federal tax laws and regulations). If no beneficiary is named the Death Benefit will be paid to you or your estate. Your right to make certain designations may be limited if your Annuity is to be used as an IRA or other "qualified" investment that is given beneficial tax treatment under the Code. You should seek competent tax advice on the income, estate and gift tax implications of your designations. 23 MANAGING YOUR ANNUITY MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS? You may change the Owner, Annuitant and Beneficiary designations by sending us a request in writing in a form acceptable to us. Upon an ownership change, any automated investment or withdrawal programs will be canceled. The new owner must submit the applicable program enrollment if they wish to participate in such a program. Where allowed by law, such changes will be subject to our acceptance. Some of the changes we will not accept include, but are not limited to: . a new Owner subsequent to the death of the Owner or the first of any joint Owners to die, except where a spouse Beneficiary has become the Owner as a result of an Owner's death; . a new Annuitant subsequent to the Annuity Date; . for "non-qualified" investments, a new Annuitant prior to the Annuity Date if the Annuity is owned by an entity; and . a change in Beneficiary if the Owner had previously made the designation irrevocable. There are also restrictions on designation changes when you have elected certain optional benefits. See the "Living Benefit Programs" and "Death Benefits" sections of this Prospectus for any such restrictions. Spousal Designations If an Annuity is co-owned by spouses, we will assume that the sole primary Beneficiary is the surviving spouse that was named as the co-owner unless you elect an alternative Beneficiary Designation. Unless you elect an alternative Beneficiary Designation, upon the death of either spousal Owner, the surviving spouse may elect to assume ownership of the Annuity instead of taking the Death Benefit payment. The Death Benefit that would have been payable will be the new Account Value of the Annuity as of the date of due proof of death and any required proof of a spousal relationship. As of the date the assumption is effective, the surviving spouse will have all the rights and benefits that would be available under the Annuity to a new purchaser of the same attained age. For purposes of determining any future Death Benefit for the beneficiary of the surviving spouse, the new Account Value will be considered as the initial Purchase Payment. No CDSC will apply to the new Account Value. However, any additional Purchase Payments applied after the date the assumption is effective will be subject to all provisions of the Annuity, including the CDSC when applicable. Spousal assumption is also permitted, subject to our rules and regulatory approval, if the Annuity is held by a custodial account established to hold retirement assets for the benefit of the natural person Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code ("Code") (or any successor Code section thereto) ("Custodial Account") and, on the date of the Annuitant's death, the spouse of the Annuitant is (1) the Contingent Annuitant under the Annuity and (2) the beneficiary of the Custodial Account. The ability to continue the Annuity in this manner will result in the Annuity no longer qualifying for tax deferral under the Code. However, such tax deferral should result from the ownership of the Annuity by the Custodial Account. Please consult your tax or legal adviser. We define a spouse the same as under federal tax laws and regulations. Contingent Annuitant Generally, if an Annuity is owned by an entity and the entity has named a Contingent Annuitant, the Contingent Annuitant will become the Annuitant upon the death of the Annuitant, and no Death Benefit is payable. Unless we agree otherwise, the Annuity is only eligible to have a Contingent Annuitant designation if the entity which owns the Annuity is (1) a plan described in Internal Revenue Code Section 72(s)(5)(A)(i) (or any successor Code section thereto); (2) an entity described in Code Section 72(u)(1) (or any successor Code section thereto); or (3) a Custodial Account, as described in the above section. Where the Annuity is held by a Custodial Account, the Contingent Annuitant will not automatically become the Annuitant upon the death of the Annuitant. Upon the death of the Annuitant, the Custodial Account will have the choice, subject to our rules, to either elect to receive the Death Benefit or elect to continue the Annuity. If the Custodial Account elects to receive the Death Benefit, the Account Value of the Annuity as of the date of due proof of death of the Annuitant will reflect the amount that would have been payable had a Death Benefit been paid. See the section above entitled "Spousal Designations" for more information about how the Annuity can be continued by a Custodial Account. MAY I RETURN MY ANNUITY IF I CHANGE MY MIND? If after purchasing your Annuity you change your mind and decide that you do not want it, you may return it to us within a certain period of time known as a right to cancel period. This is often referred to as a "free look." Depending on the state in which you purchased your Annuity and, in some states, if you purchased the Annuity as a replacement for a prior contract, the right to cancel period may be ten (10) days, or longer, measured from the time that you received your Annuity. If you return your Annuity during the applicable period, we will refund your current Account Value plus any tax charge deducted, less any applicable federal and state income tax withholding and depending on your state's requirements, any applicable insurance charges deducted. The amount returned to you may be higher or lower than the Purchase Payment(s) applied during the right to cancel period. Where required by law, we will return your Purchase Payment(s), or the greater of your current Account Value and the amount of your Purchase 24 Payment(s) applied during the right to cancel period less any applicable federal and state income tax withholding. With respect to Optimum Plus, if you return your Annuity, we will not return any Credits we applied to your Annuity based on your Purchase Payments. MAY I MAKE ADDITIONAL PURCHASE PAYMENTS? Unless we agree otherwise and subject to our rules, the minimum amount that we accept as an additional Purchase Payment is $100 unless you participate in our Systematic Investment Plan or a periodic Purchase Payment program. Purchase Payments made while you participate in an asset allocation program will be allocated in accordance with such program. Additional Purchase Payments may be made at any time before the Annuity Date. Additional Purchase Payments are not permitted in certain states. MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT? You can make additional Purchase Payments to your Annuity by authorizing us to deduct money directly from your bank account and applying it to your Annuity. We call our electronic funds transfer program "The Systematic Investment Plan." Purchase Payments made through electronic funds transfer may only be allocated to the Sub-accounts when applied. Different allocation requirements may apply in connection with certain optional benefits. We may allow you to invest in your Annuity with a lower initial Purchase Payment, as long as you authorize payments through an electronic funds transfer that will equal at least the minimum Purchase Payment set forth above during the first 12 months of your Annuity. We may suspend or cancel electronic funds transfer privileges if sufficient funds are not available from the applicable financial institution on any date that a transaction is scheduled to occur. MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM? These types of programs are only available with certain types of qualified investments. If your employer sponsors such a program, we may agree to accept periodic Purchase Payments through a salary reduction program as long as the allocations are made only to Sub-accounts and the periodic Purchase Payments received in the first year total at least the minimum Purchase Payment set forth above. 25 MANAGING YOUR ACCOUNT VALUE HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED? (See "Valuing Your Investment" for a description of our procedure for pricing initial and subsequent Purchase Payments.) Initial Purchase Payment: Once we accept your application, we invest your Purchase Payment in your Annuity according to your instructions for allocating your Account Value. The Purchase Payment is your initial Purchase Payment minus any tax charges that may apply. You can allocate Account Value to one or more Sub-accounts or Fixed Allocations. Investment restrictions will apply if you elect certain optional benefits. Subsequent Purchase Payments: Unless you participate in an asset allocation program, or unless you have provided us with other specific allocation instructions for one, more than one, or all subsequent Purchase Payments, we will allocate any additional Purchase Payments you make according to your initial Purchase Payment allocation instructions. If you so instruct us, we will allocate subsequent Purchase Payments according to any new allocation instructions. Unless you tell us otherwise, Purchase Payments made while you participate in an asset allocation program will be allocated in accordance with such program. HOW DO I RECEIVE A LOYALTY CREDIT UNDER THE OPTIMUM AND OPTIMUM FOUR ANNUITIES? We apply a Loyalty Credit to your Annuity's Account Value at the end of your fifth Annuity Year ("fifth Annuity Anniversary"). With respect to Optimum, for annuities issued on or after February 13, 2006, the Loyalty Credit is equal to 0.50% of total Purchase Payments made during the first four Annuity Years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Annuity Anniversary. With respect to Optimum Four, for annuities issued between June 20, 2005 and February 13, 2006, the Loyalty Credit is equal to 2.25% of total Purchase Payments made during the first four Annuity Years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Annuity Anniversary. For Optimum Four Annuities issued on or after February 13, 2006, the Loyalty Credit is equal to 2.75% of total Purchase Payments made during the first four Annuity Years less the cumulative amount of withdrawals made (including the deduction of any CDSC amounts) through the fifth Annuity Anniversary. If the total Purchase Payments made during the first four Annuity Years is less than the cumulative amount of withdrawals made on or before the fifth Annuity Anniversary, no Loyalty Credit will be applied to your Annuity. Also, no Loyalty Credit will be applied to your Annuity if your Account Value is zero on the fifth Annuity Anniversary. This would include any situation where the Annuity is still in force due to the fact that payments are being made under an optional benefit such as Highest Daily Lifetime Five, Lifetime Five, Spousal Lifetime Five or the Guaranteed Minimum Withdrawal Benefit. In addition, no Loyalty Credit will be applied to your Annuity if before the fifth Annuity Anniversary: (i) you have surrendered your Annuity; (ii) you have annuitized your Annuity; (iii) your Beneficiary has elected our Beneficiary Continuation Option; or (iv) we have received due proof of your death (and there has been no spousal continuation election made). If your spouse continues the Annuity under our spousal continuation option, we will apply the Loyalty Credit to your Annuity only on the fifth Annuity Anniversary measured from the date that we originally issued you the Annuity. Since the Loyalty Credit is applied to the Account Value only, any guarantees that are not based on Account Value will not reflect the Loyalty Credit. Similarly, guarantees that are made against a loss in Account Value will not be triggered in certain very limited circumstances where they otherwise would have been, had no Loyalty Credit been applied to the Account Value. HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE UNDER THE OPTIMUM AND OPTIMUM FOUR ANNUITIES? Any Loyalty Credit that is allocated to your Account Value on the fifth Annuity Anniversary will be allocated to the Fixed Allocations and Sub-accounts in the same percentages as Purchase Payments are then being allocated to your Annuity. Example of Applying the Loyalty Credit with respect to Optimum Assume you make an initial Purchase Payment of $10,000 and your Annuity is issued on or after February 13, 2006. During Annuity Year four (i.e., prior to the fourth Annuity Anniversary) you make an additional $10,000 Purchase Payment. During the early part of Annuity Year five (i.e., prior to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and later in the year make a withdrawal of $5,000. The Loyalty Credit that we will apply to your Annuity on the fifth Annuity Anniversary is, subject to state availability, equal to 0.50% of $15,000 (this represents the $20,000 of Purchase Payments made during the first four Annuity Years minus the $5,000 withdrawal made in the fifth Annuity Year. The computation disregards the additional $10,000 Purchase Payment made in the fifth Annuity Year.) Therefore, the Loyalty Credit amount would be equal to $75.00. Example of Applying the Loyalty Credit with respect to Optimum Four Assume you make an initial Purchase Payment of $10,000 and your Annuity is issued on or after February 13, 2006. During Annuity Year four (i.e., prior to the fourth Annuity Anniversary) you make an additional $10,000 Purchase Payment. During the early part of Annuity Year five (i.e., prior to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and later in the year make a withdrawal of $5,000. The Loyalty Credit that we will apply to your Annuity on the fifth Annuity Anniversary is, subject to state availability, equal to 2.75% of $15,000 (this represents the $20,000 of Purchase Payments made during the first four 26 Annuity Years minus the $5,000 withdrawal made in the fifth Annuity Year. The computation disregards the additional $10,000 Purchase Payment made in the fifth Annuity Year.) Therefore, the Loyalty Credit amount would be equal to $412.50. HOW DO I RECEIVE CREDITS UNDER THE OPTIMUM PLUS ANNUITY? We apply a "Credit" to your Annuity's Account Value each time you make a Purchase Payment during the first six (6) Annuity Years. The amount of the Credit is payable from our general account. The amount of the Credit depends on the Annuity Year in which the Purchase Payment(s) is made, according to the table below: For annuities issued prior to February 13, 2006:
ANNUITY YEAR CREDIT ------------------- 1 6.00% 2 5.00% 3 4.00% 4 3.00% 5 2.00% 6 1.00% 7+ 0.00% -------------------
For annuities issued on or after February 13, 2006 (subject to state availability):
ANNUITY YEAR CREDIT ------------------- 1 6.50% 2 5.00% 3 4.00% 4 3.00% 5 2.00% 6 1.00% 7+ 0.00% -------------------
HOW ARE CREDITS APPLIED TO ACCOUNT VALUE UNDER THE OPTIMUM PLUS ANNUITY? Each Credit is allocated to your Account Value at the time the Purchase Payment is applied to your Account Value. The amount of the Credit is allocated to the investment options in the same ratio as the applicable Purchase Payment is applied. Examples of Applying Credits Initial Purchase Payment Assume you make an initial Purchase Payment of $10,000 and your Annuity is issued on or after February 13, 2006. We would apply a 6.5% Credit to your Purchase Payment and allocate the amount of the Credit ($650 = $10,000 X .065) to your Account Value in the proportion that your Purchase Payment is allocated. Additional Purchase Payment in Annuity Year 2 Assume that you make an additional Purchase Payment of $5,000. We would apply a 5.0% Credit to your Purchase Payment and allocate the amount of the Credit ($250 = $5,000 X .05) to your Account Value. Additional Purchase Payment in Annuity Year 6 Assume that you make an additional Purchase Payment of $15,000. We would apply a 1.0% Credit to your Purchase Payment and allocate the amount of the Credit ($150 = $15,000 X .01) to your Account Value. The amount of any Optimum Plus Credits applied to your Optimum Plus Annuity Account Value can be taken back by Prudential Annuities under certain circumstances: . any Optimum Plus Credits applied to your Account Value on Purchase Payments made within the 12 months before the Owner's (or Annuitant's if entity owned) date of death will be taken back; . the amount available under the medically-related surrender portion of the Annuity will not include the amount of any Optimum Plus Credits payable on Purchase Payments made within 12 months prior to the date of a request under the medically-related surrender provision; and . if you elect to "free look" your Annuity, the amount returned to you will not include the amount of any Optimum Plus Credits. The Account Value may be substantially reduced if Prudential Annuities takes back the Optimum Plus Credit amount under these circumstances. The amount we take back will equal the Optimum Plus Credit amount, without adjustment up or down for investment performance. Therefore, any gain on the Optimum Plus Credit amount will not be taken back. But if there was a loss on the Optimum Plus Credit amount, the amount we take back will still equal the amount of the Optimum Plus Credit amount. We do 27 not deduct a CDSC in any situation where we take back the Optimum Plus Credit amount. During the first 10 Annuity Years, the total asset-based charges on this Annuity (including the Insurance Charge and the Distribution Charge) are higher than many of our other annuities, including other annuities we offer that apply credits to Purchase Payments. General Information about Credits . We do not consider Credits to be "investment in the contract" for income tax purposes. . You may not withdraw the amount of any Credits under the Free Withdrawal provision. The Free Withdrawal provision only applies to withdrawals of Purchase Payments. ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS? During the accumulation period you may transfer Account Value between investment options subject to the restrictions outlined below. Transfers are not subject to taxation on any gain. We may require a minimum of $500 in each Sub-account you allocate Account Value to at the time of any allocation or transfer. If you request a transfer and, as a result of the transfer, there would be less than $500 in the Sub-account, we may transfer the remaining Account Value in the Sub-account pro-rata to the other investment options to which you transferred. Currently, we charge $10.00 for each transfer after the twentieth (20/th/) transfer in each Annuity Year. Transfers made as part of a Dollar Cost Averaging, Automatic Rebalancing or asset allocation program do not count toward the twenty free transfer limit. Renewals or transfers of Account Value from a Fixed Allocation at the end of its Guarantee Period are not subject to the transfer charge. We may reduce the number of free transfers allowable each Annuity Year (subject to a minimum of eight) without charging a Transfer Fee. We may also increase the Transfer Fee that we charge to $20.00 for each transfer after the number of free transfers has been used up. We may eliminate the Transfer Fee for transfer requests transmitted electronically or through other means that reduce our processing costs. If enrolled in any program that does not permit transfer requests to be transmitted electronically, the Transfer Fee will not be waived. Once you have made 20 transfers among the Sub-accounts during an Annuity Year, we will accept any additional transfer request during that year only if the request is submitted to us in writing with an original signature and otherwise is in good order. For purposes of this 20 transfer limit, we (i) do not view a facsimile transmission as a "writing", (ii) will treat multiple transfer requests submitted on the same Valuation Day as a single transfer, and (iii) do not count any transfer that solely involves Sub-accounts corresponding to the AST Money Market Portfolio, or any transfer that involves one of our systematic programs, such as asset allocation and automated withdrawals. Frequent transfers among Sub-accounts in response to short-term fluctuations in markets, sometimes called "market timing," can make it very difficult for a Portfolio manager to manage a Portfolio's investments. Frequent transfers may cause the Portfolio to hold more cash than otherwise necessary, disrupt management strategies, increase transaction costs, or affect performance. Each Annuity offers Sub-accounts designed for Owners who wish to engage in frequent transfers (i.e., one or more of the Sub-accounts corresponding to the AST Money Market Portfolio), and we encourage Owners seeking frequent transfers to utilize those Sub-accounts. In light of the risks posed to Owners and other investors by frequent transfers, we reserve the right to limit the number of transfers in any Annuity Year for all existing or new Owners and to take the other actions discussed below. We also reserve the right to limit the number of transfers in any Annuity Year or to refuse any transfer request for an Owner or certain Owners if: (a) we believe that excessive transfer activity (as we define it) or a specific transfer request or group of transfer requests may have a detrimental effect on Unit Values or the share prices of the Portfolios; or (b) we are informed by a Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or redemption of shares in the Portfolio must be restricted because the Portfolio believes the transfer activity to which such purchase and redemption relates would have a detrimental effect on the share prices of the affected Portfolio. Without limiting the above, the most likely scenario where either of the above could occur would be if the aggregate amount of a trade or trades represented a relatively large proportion of the total assets of a particular Portfolio. In furtherance of our general authority to restrict transfers as described above, and without limiting other actions we may take in the future, we have adopted the following specific restrictions: .. With respect to each Sub-account (other than the AST Money Market Sub-account), we track amounts exceeding a certain dollar threshold that were transferred into the Sub-account. If you transfer such amount into a particular Sub-account, and within 30 calendar days thereafter transfer (the "Transfer Out") all or a portion of that amount into another Sub-account, then upon the Transfer Out, the former Sub-account becomes restricted (the "Restricted Sub-account"). Specifically, we will not permit subsequent transfers into the Restricted Sub-account for 90 calendar days after the Transfer Out if the Restricted Sub-account invests in a non-international Portfolio, or 180 calendar days after the Transfer Out if the Restricted Sub-account invests in an international Portfolio. For purposes of this rule, we (i) do not count transfers made in connection with one of our systematic programs, such as asset allocation and automated withdrawals; (ii) do not count any transfer that solely involves Sub-accounts corresponding to the AST Money Market Portfolio; and (iii) do not categorize as a transfer the first transfer that you make after the Issue Date, if you make that transfer within 30 calendar days after the Issue Date. Even if an amount becomes restricted under the foregoing rules, you are still free to redeem the amount from your Annuity at any time. 28 .. We reserve the right to effect exchanges on a delayed basis for all contracts. That is, we may price an exchange involving the Sub-accounts on the Valuation Day subsequent to the Valuation Day on which the exchange request was received. Before implementing such a practice, we would issue a separate written notice to Owners that explains the practice in detail. If we deny one or more transfer requests under the foregoing rules, we will inform you or your Financial Professional promptly of the circumstances concerning the denial. There are contract owners of different variable annuity contracts that are funded through the same Separate Account that are not subject to the above-referenced transfer restrictions and, therefore, might make more numerous and frequent transfers than contract owners who are subject to such limitations. Finally, there are contract owners of other variable annuity contracts or variable life contracts that are issued by Prudential Annuities as well as other insurance companies that have the same underlying mutual fund portfolios available to them. Since some contract owners are not subject to the same transfer restrictions, unfavorable consequences associated with such frequent trading within the underlying mutual fund (e.g., greater portfolio turnover, higher transaction costs, or performance or tax issues) may affect all contract owners. Similarly, while contracts managed by a Financial Professional or third party investment advisor are subject to the restrictions on transfers between investment options that are discussed above, if the advisor manages a number of contracts in the same fashion unfavorable consequences may be associated with management activity since it may involve the movement of a substantial portion of an underlying mutual fund's assets which may affect all contract owners invested in the affected options. Apart from jurisdiction- specific and contract differences in transfer restrictions, we will apply these rules uniformly (including contracts managed by a Financial Professional or third party investment advisor), and will not waive a transfer restriction for any contract owner. Although our transfer restrictions are designed to prevent excessive transfers, they are not capable of preventing every potential occurrence of excessive transfer activity. The Portfolios may have adopted their own policies and procedures with respect to excessive trading of their respective shares, and we reserve the right to enforce any such current or future policies and procedures. The prospectuses for the Portfolios describe any such policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. Under SEC rules, we are required to: (1) enter into a written agreement with each Portfolio or its principal underwriter or its transfer agent that obligates us to provide to the Portfolio promptly upon request certain information about the trading activity of individual contract owners, and (2) execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific contract owners who violate the excessive trading policies established by the Portfolio. In addition, you should be aware that some Portfolios may receive "omnibus" purchase and redemption orders from other insurance companies or intermediaries such as retirement plans. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance contracts and/or individual retirement plan participants. The omnibus nature of these orders may limit the Portfolios in their ability to apply their excessive trading policies and procedures. In addition, the other insurance companies and/or retirement plans may have different policies and procedures or may not have any such policies and procedures because of contractual limitations. For these reasons, we cannot guarantee that the Portfolios (and thus contract owners) will not be harmed by transfer activity relating to other insurance companies and/or retirement plans that may invest in the Portfolios. A Portfolio also may assess a short term trading fee in connection with a transfer out of the Sub-account investing in that Portfolio that occurs within a certain number of days following the date of allocation to the Sub-account. Each Portfolio determines the amount of the short term trading fee and when the fee is imposed. The fee is retained by or paid to the Portfolio and is not retained by us. The fee will be deducted from your Account Value, to the extent allowed by law. At present, no Portfolio has adopted a short-term trading fee. DO YOU OFFER DOLLAR COST AVERAGING? Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost Averaging allows you to systematically transfer an amount periodically from one investment option to one or more other investment options. You can choose to transfer earnings only, principal plus earnings or a flat dollar amount. You may elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly, semi-annually, or annually from Sub-accounts, or a program that transfers amounts monthly from Fixed Allocations. By investing amounts on a regular basis instead of investing the total amount at one time, Dollar Cost Averaging may decrease the effect of market fluctuation on the investment of your Purchase Payment. This may result in a lower average cost of units over time. However, there is no guarantee that Dollar Cost Averaging will result in a profit or protect against a loss in a declining market. There is no minimum Account Value required to enroll in a Dollar Cost Averaging program and we do not deduct a charge for participating in a Dollar Cost Averaging program. You can Dollar Cost Average from Sub-accounts or Fixed Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number of rules that include, but are not limited to the following: .. You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3 years. .. You may only Dollar Cost Average earnings or principal plus earnings. If transferring principal plus earnings, the program must be designed to last the entire Guarantee Period for the Fixed Allocation. .. Dollar Cost Averaging transfers from Fixed Allocations are not subject to a Market Value Adjustment. 29 NOTE: When a Dollar Cost Averaging program is established from a Fixed Allocation, the fixed rate of interest we credit to your Account Value is applied to a declining balance due to the transfers of Account Value to the Sub-accounts during the Guarantee Period. This will reduce the effective rate of return on the Fixed Allocation over the Guarantee Period. The Dollar Cost Averaging program is not available if you have elected an automatic rebalancing program or an asset allocation program. Dollar Cost Averaging from Fixed Allocations also is not available if you elect certain optional benefits. Prudential Annuities may offer Fixed Allocations with Guarantee Periods of 6 months or 12 months exclusively for use with a Dollar Cost Averaging program ("DCA Fixed Allocations"). DCA Fixed Allocations are designed to automatically transfer Account Value in either 6 or 12 payments under a Dollar Cost Averaging program. Dollar Cost Averaging transfers will be effected on the date the DCA Fixed Dollar Allocation is established and each month following until the entire principal amount plus earnings is transferred. DCA Fixed Allocations may only be established with your initial Purchase Payment or additional Purchase Payments. You may not transfer existing Account Value to a DCA Fixed Allocation. We reserve the right to terminate offering these special purpose Fixed Allocations at any time. Account Value allocated to the DCA Fixed Allocation will be transferred to the Sub-accounts you choose under the Dollar Cost Averaging program. If you terminate the Dollar Cost Averaging program before the entire principal amount plus earnings has been transferred to the Sub-account(s), you must transfer all remaining Account Value to any other investment option. Unless you provide alternate instructions at the time you terminate the Dollar Cost Averaging program, Account Value will be transferred to the AST Money Market Sub-account. Transfers from Fixed Allocations as part of a Dollar Cost Averaging program are not subject to a Market Value Adjustment. However, a Market Value Adjustment will apply if you terminate the Dollar Cost Averaging program before the entire principal amount plus earnings has been transferred to the Sub-account(s). DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS? Yes. During the accumulation period, we offer Automatic Rebalancing among the Sub-accounts you choose. You can choose to have your Account Value rebalanced monthly, quarterly, semi-annually, or annually. On the appropriate date, the Sub-accounts you chose are rebalanced to the allocation percentages you requested. With Automatic Rebalancing, we transfer the appropriate amount from the "overweighted" Sub-accounts to the "underweighted" Sub-accounts to return your allocations to the percentages you request. For example, over time the performance of the Sub-accounts will differ, causing your percentage allocations to shift. Any transfer to or from any Sub-account that is not part of your Automatic Rebalancing program, will be made; however, that Sub-account will not become part of your rebalancing program unless we receive instructions from you indicating that you would like such option to become part of the program. There is no minimum Account Value required to enroll in Automatic Rebalancing. All rebalancing transfers as part of an Automatic Rebalancing program are not included when counting the number of transfers each year toward the maximum number of free transfers. We do not deduct a charge for participating in an Automatic Rebalancing program. Participation in the Automatic Rebalancing program may be restricted if you are enrolled in certain other optional programs. Sub-accounts that are part of a Systematic Withdrawal program or Dollar Cost Averaging program will be excluded from an Automatic Rebalancing program. ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE? Yes. Certain "static asset allocation programs" are provided by Linsco/Private Ledger, Corp, ("LPL"), the firm selling the Annuity. Initially, you may be required to enroll in an available asset allocation program if you purchase one of the Annuities. Additionally, certain optional benefits require your Account Value be maintained in a model in the asset allocation program. These programs are considered static because once you have selected a model portfolio, the Sub-accounts and the percentage of contract value allocated to each Sub-account cannot be changed without your consent and direction. The programs are available at no additional charge. Under these programs, the Sub-account for each asset class in each model portfolio is designated for you. Under the programs, the values in the Sub-accounts will be rebalanced periodically back to the indicated percentages for the applicable asset class within the model portfolio that you have selected. The programs are offered by LPL. We have not designed the models or the program, and we are not responsible for them. Our role is limited to administering the model you select. For more information on the asset allocation programs see the Appendix entitled "Additional Information on the Asset Allocation Programs." Asset allocation is a sophisticated method of diversification, which allocates assets among asset classes in order to manage investment risk and enhance returns over the long term. However, asset allocation does not guarantee a profit or protect against a loss. No personalized investment advice is provided in connection with the asset allocation programs and you should not rely on these programs as providing individualized investment recommendations to you. The asset allocation programs do not guarantee better investment results. LPL reserves the right to terminate or change the programs at any time. We reserve the right to change the way in which we administer the program you have selected with your LPL Financial Professional, and we reserve the right to terminate our administration of the programs. You should consult with your LPL Financial Professional before electing any asset allocation program. 30 WHAT IS THE BALANCED INVESTMENT PROGRAM? We offer a balanced investment program where a portion of your Account Value is allocated to a Fixed Allocation and the remaining Account Value is allocated to the Sub-accounts that you select. When you enroll in the Balanced Investment Program, you choose the duration that you wish the program to last. This determines the duration of the Guarantee Period for the Fixed Allocation. Based on the fixed rate for the Guarantee Period chosen, we calculate the portion of your Account Value that must be allocated to the Fixed Allocation to grow to a specific "principal amount" (such as your initial Purchase Payment). We determine the amount based on the rates then in effect for the Guarantee Period you choose. If you continue the program until the end of the Guarantee Period and make no withdrawals or transfers, at the end of the Guarantee Period, the Fixed Allocation will have grown to equal the "principal amount". Withdrawals or transfers from the Fixed Allocation before the end of the Guarantee Period will terminate the program and may be subject to a Market Value Adjustment. You can transfer the Account Value that is not allocated to the Fixed Allocation between any of the Sub-accounts available under your Annuity. Account Value you allocate to the Sub-accounts is subject to market fluctuations and may increase or decrease in value. We do not deduct a charge for participating in the Balanced Investment Program. Example Assume you invest $100,000. You choose a 10-year program and allocate a portion of your Account Value to a Fixed Allocation with a 10-year Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*. Based on the fixed interest rate for the Guarantee Period chosen, the factor is 0.781198 for determining how much of your Account Value will be allocated to the Fixed Allocation. That means that $78,120 will be allocated to the Fixed Allocation and the remaining Account Value ($21,880) will be allocated to the Sub-accounts. Assuming that you do not make any withdrawals or transfers from the Fixed Allocation, it will grow to $100,000 at the end of the Guarantee Period. Of course we cannot predict the value of the remaining Account Value that was allocated to the Sub-accounts. * The rate in this example is hypothetical and may not reflect the current rate for Guarantee Periods of this duration. MAY I GIVE MY FINANCIAL PROFESSIONAL PERMISSION TO FORWARD TRANSACTION INSTRUCTIONS? Yes. Subject to our rules, your Financial Professional may forward instructions regarding the allocation of your Account Value, and request financial transactions involving investment options. If your Financial Professional has this authority, we deem that all transactions that are directed by your Financial Professional with respect to your Annuity have been authorized by you. You must contact us immediately if and when you revoke such authority. We will not be responsible for acting on instructions from your Financial Professional until we receive notification of the revocation of such person's authority. We may also suspend, cancel or limit these privileges at any time. We will notify you if we do. MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT? Yes. You may engage your own investment advisor to manage your account. These investment advisors may be firms or persons who also are appointed by us, or whose affiliated broker-dealers are appointed by us, as authorized sellers of the Annuities. Even if this is the case, however, please note that the investment advisor you engage to provide advice and/or make transfers for you, is not acting on our behalf, but rather is acting on your behalf. We do not offer advice about how to allocate your Account Value under any circumstance. As such, we are not responsible for any recommendations such investment advisors make, any investment models or asset allocation programs they choose to follow or any specific transfers they make on your behalf. Please note that if you have engaged a third-party investment advisor to provide asset allocation services with respect to your Annuity, we do not allow you to elect an optional benefit that requires investment in an asset allocation Portfolio and/or that involves mandatory Account Value transfers (e.g. Highest Daily GRO). It is your responsibility to arrange for the payment of the advisory fee charged by your investment advisor. Similarly, it is your responsibility to understand the advisory services provided by your investment advisor and the advisory fees charged for the services. We or an affiliate of ours may provide administrative support to licensed, registered Financial Professionals or Investment advisors who you authorize to make financial transactions on your behalf. We may require Financial Professionals or investment advisors, who are authorized by multiple contract owners to make financial transactions, to enter into an administrative agreement with Prudential Annuities as a condition of our accepting transactions on your behalf. The administrative agreement may impose limitations on the Financial Professional's or investment advisor's ability to request financial transactions on your behalf. These limitations are intended to minimize the detrimental impact of a Financial Professional who is in a position to transfer large amounts of money for multiple clients in a particular Portfolio or type of portfolio or to comply with specific restrictions or limitations imposed by a Portfolio(s) of Prudential Annuities. Please Note: Annuities where your Financial Professional or investment advisor has the authority to forward instruction on financial transactions are also subject to the restrictions on transfers between investment options that are discussed in the section entitled "ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?" Since transfer activity directed by a Financial Professional or third party investment adviser may result in unfavorable consequences to all contract owners invested in the affected options, we reserve the right to limit the investment options available to a particular Owner 31 where such authority as described above has been given to a Financial Professional or investment advisor or impose other transfer restrictions we deem necessary. The administrative agreement may limit the available investment options, require advance notice of large transactions, or impose other trading limitations on your Financial Professional. Your Financial Professional will be informed of all such restrictions on an ongoing basis. We may also require that your Financial Professional transmit all financial transactions using the electronic trading functionality available through our Internet website (www.prudentialannuities.com). Limitations that we may impose on your Financial Professional or investment advisor under the terms of the administrative agreement do not apply to financial transactions requested by an Owner on their own behalf, except as otherwise described in this Prospectus. HOW DO THE FIXED ALLOCATIONS WORK? We credit a fixed interest rate to the Fixed Allocation throughout a set period of time called a "Guarantee Period." Fixed Allocations currently are offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations of different durations available in the future, including Fixed Allocations offered exclusively for use with certain optional investment programs. Fixed Allocations may not be available in all states and may not always be available for all Guarantee Periods depending on market factors and other considerations. The interest rate credited to a Fixed Allocation is the rate in effect when the Guarantee Period begins and does not change during the Guarantee Period. The rates are an effective annual rate of interest. We determine the interest rates for the various Guarantee Periods. At the time that we confirm your Fixed Allocation, we will advise you of the interest rate in effect and the date your Fixed Allocation matures. We may change the rates we credit new Fixed Allocations at any time. Any change in interest rate does not affect Fixed Allocations that were in effect before the date of the change. To inquire as to the current rates for Fixed Allocations, please call 1-800-752-6342. A Guarantee Period for a Fixed Allocation begins: . when all or part of a net Purchase Payment is allocated to that particular Guarantee Period; . upon transfer of any of your Account Value to a Fixed Allocation for that particular Guarantee Period; or . when you "renew" a Fixed Allocation by electing a new Guarantee Period. To the extent permitted by law, we may establish different interest rates for Fixed Allocations offered to a class of Owners who choose to participate in various optional investment programs we make available. This may include, but is not limited to, Owners who elect to use Fixed Allocations under a dollar cost averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced investment program (see "Do you offer programs designed to guarantee a "Return of Premium" at a future date?"). The interest rate credited to Fixed Allocations offered to this class of purchasers may be different than those offered to other purchasers who choose the same Guarantee Period but who do not participate in an optional investment program. Any such program is at our sole discretion. Prudential Annuities may offer Fixed Allocations with Guarantee Periods of 3 months or 6 months exclusively for use as a short-term Fixed Allocation ("Short-term Fixed Allocations"). Short-term Fixed Allocations may only be established with your initial Purchase Payment or additional Purchase Payments. You may not transfer existing Account Value to a Short-term Fixed Allocation. We reserve the right to terminate offering these special purpose Fixed Allocations at any time. On the Maturity Date of the Short-term Fixed Allocation, the Account Value will be transferred to the Sub-account(s) you choose at the inception of the program. If no instructions are provided, such Account Value will be transferred to the AST Money Market Sub-account. Short-term Fixed Allocations may not be renewed on the Maturity Date. If you surrender the Annuity or transfer any Account Value from the Short-term Fixed Allocation to any other investment option before the end of the Guarantee Period, a Market Value Adjustment will apply. HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS? We do not have a specific formula for determining the fixed interest rates for Fixed Allocations. Generally the interest rates we offer for Fixed Allocations will reflect the investment returns available on the types of investments we make to support our fixed rate guarantees. These investment types may include cash, debt securities guaranteed by the United States government and its agencies and instrumentalities, money market instruments, corporate debt obligations of different durations, private placements, asset-backed obligations and municipal bonds. In determining rates we also consider factors such as the length of the Guarantee Period for the Fixed Allocation, regulatory and tax requirements, liquidity of the markets for the type of investments we make, commissions, administrative and investment expenses, our insurance risks in relation to the Fixed Allocations, general economic trends and competition. Some of these considerations are similar to those we consider in determining the Insurance Charge that we deduct from Account Value allocated to the Sub-accounts. The interest rate that we credit to the Fixed Allocations may be reduced by an amount that corresponds to the asset-based charges assessed against the Sub-accounts. 32 We will credit interest on a new Fixed Allocation in an existing Annuity at a rate not less than the rate we are then crediting to Fixed Allocations for the same Guarantee Period selected by new Annuity purchasers in the same class. The interest rate we credit for a Fixed Allocation is subject to a minimum. Please refer to the Statement of Additional Information. In certain states the interest rate may be subject to a minimum under state law or regulation. HOW DOES THE MARKET VALUE ADJUSTMENT WORK? If you transfer or withdraw Account Value from a Fixed Allocation more than 30 days before the end of its Guarantee Period, we will adjust the value of your investment based on a formula, called a "Market Value Adjustment" or "MVA". The amount of any Market Value Adjustment can be either positive or negative, depending on the movement of a combination of Strip Yields on Strips and an Option-adjusted Spread (each as defined below) between the time that you purchase the Fixed Allocation and the time you make a transfer or withdrawal. The Market Value Adjustment formula compares the combination of Strip Yields for Strips and the Option-adjusted Spreads as of the date the Guarantee Period began with the combination of Strip Yields for Strips and the Option-adjusted Spreads as of the date the MVA is being calculated. In certain states the amount of any Market Value Adjustment may be limited under state law or regulation. If your Annuity is governed by the laws of that state, any Market Value Adjustment that applies will be subject to our rules for complying with such law or regulation. .. "Strips" are a form of security where ownership of the interest portion of United States Treasury securities are separated from ownership of the underlying principal amount or corpus. .. "Strip Yields" are the yields payable on coupon Strips of United States Treasury securities. .. "Option-adjusted Spread" is the difference between the yields on corporate debt securities (adjusted to disregard options on such securities) and government debt securities of comparable duration. We currently use the Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of Option-adjusted Spreads. MVA Formula The MVA formula is applied separately to each Fixed Allocation to determine the Account Value of the Fixed Allocation on a particular date. The formula is as follows: [(1+I) / (1+J+0.0010)]/N365/ where: I is the Strip Yield as of the start date of the Guarantee Period for coupon Strips maturing at the end of the applicable Guarantee Period plus the Option-adjusted Spread. If there are no Strips maturing at that time, we will use the Strip Yield for the Strips maturing as soon as possible after the Guarantee Period ends. J is the Strip Yield as of the date the MVA formula is being applied for coupon Strips maturing at the end of the applicable Guarantee Period plus the Option-adjusted Spread. If there are no Strips maturing at that time, we will use the Strip Yield for the Strips maturing as soon as possible after the Guarantee Period ends. N is the number of days remaining in the original Guarantee Period. If you surrender your Annuity under the right to cancel provision, the MVA formula is: [(1 + I)/(1 + J)]/N365/ MVA Examples The following hypothetical examples show the effect of the MVA in determining Account Value. Assume the following: . You allocate $50,000 into a Fixed Allocation (we refer to this as the "Allocation Date" in these examples) with a Guarantee Period of 5 years (we refer to this as the "Maturity Date" in these examples). . The Strip Yields for coupon Strips beginning on Allocation Date and maturing on Maturity Date plus the Option-adjusted Spread is 5.50% (I = 5.50%). . You make no withdrawals or transfers until you decide to withdraw the entire Fixed Allocation after exactly three (3) years, at which point 730 days remain before the Maturity Date (N = 730). 33 Example Of Positive MVA Assume that at the time you request the withdrawal, the Strip Yields for Strips maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J = 4.00%). Based on these assumptions, the MVA would be calculated as follows: MVA Factor = [(1+I)/(1+J+0.0010)]/N365/ = [1.055/1.041]/2/ /= 1.027078 Interim Value = $57,881.25 Account Value after MVA = Interim Value X MVA Factor = $59,448.56 Example Of Negative MVA Assume that at the time you request the withdrawal, the Strip Yields for Strips maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J = 7.00%). Based on these assumptions, the MVA would be calculated as follows: MVA Factor = [(1+I)/(1+J+0.0010)]/N365 /= [1.055/1.071]/2/ = 0.970345 Interim Value = $57,881.25 Account Value after MVA = Interim Value X MVA Factor = $56,164.78 WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES? The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee Period. Before the Maturity Date, you may choose to renew the Fixed Allocation for a new Guarantee Period of the same or different length or you may transfer all or part of that Fixed Allocation's Account Value to another Fixed Allocation or to one or more Sub-accounts. We will not charge a MVA if you choose to renew a Fixed Allocation on its Maturity Date or transfer the Account Value to one or more Sub-accounts. We will notify you before the end of the Guarantee Period about the fixed interest rates that we are currently crediting to all Fixed Allocations that are being offered. The rates being credited to Fixed Allocations may change before the Maturity Date. If you do not specify how you want a Fixed Allocation to be allocated on its Maturity Date, we will then transfer the Account Value of the Fixed Allocation to the AST Money Market Sub-account. You can then elect to allocate the Account Value to any of the Sub-accounts or to a new Fixed Allocation. 34 ACCESS TO ACCOUNT VALUE WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME? During the accumulation period you can access your Account Value through partial withdrawals, Systematic Withdrawals, and where required for tax purposes, Minimum Distributions. You can also surrender your Annuity at any time. We may deduct a portion of the Account Value being withdrawn or surrendered as a CDSC, if applicable. If you surrender your Annuity, in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax Charge that applies and the charge for any optional benefits. We may also apply a Market Value Adjustment to any Fixed Allocations being withdrawn or surrendered. Certain amounts may be available to you each Annuity Year that are not subject to a CDSC. These are called "Free Withdrawals." Unless you notify us differently, withdrawals are taken pro-rata based on the Account Value in the investment options at the time we receive your withdrawal request. Each of these types of distributions is described more fully below. ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS? (For more information, see "Tax Considerations.") During The Accumulation Period A distribution during the accumulation period is deemed to come first from any "gain" in your Annuity and second as a return of your "tax basis", if any. Distributions from your Annuity are generally subject to ordinary income taxation on the amount of any investment gain unless the distribution qualifies as a non-taxable exchange or transfer. If you take a distribution prior to the taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to ordinary income taxes on any gain. You may wish to consult a professional tax advisor for advice before requesting a distribution. During The Annuitization Period During the annuitization period, a portion of each annuity payment is taxed as ordinary income at the tax rate you are subject to at the time of the payment. The Code and regulations have "exclusionary rules" that we use to determine what portion of each annuity payment should be treated as a return of any tax basis you have in your Annuity. Once the tax basis in your Annuity has been distributed, the remaining annuity payments are taxable as ordinary income. The tax basis in your Annuity may be based on the tax-basis from a prior contract in the case of a 1035 exchange or other qualifying transfer. CAN I WITHDRAW A PORTION OF MY ANNUITY? Yes, you can make a withdrawal during the accumulation period. . To meet liquidity needs, you can withdraw a limited amount from your Annuity during each Annuity Year without application of any CDSC. We call this the "Free Withdrawal" amount. The Free Withdrawal amount is not available if you choose to surrender your Annuity. Amounts withdrawn as a Free Withdrawal do not reduce the amount of CDSC that may apply upon a subsequent withdrawal or surrender of your Annuity. After any partial withdrawal, your Annuity must have a Surrender Value of at least $1,000, or we may treat the partial withdrawal request as a request to fully surrender your annuity. The minimum Free Withdrawal you may request is $100. . You can also make withdrawals in excess of the Free Withdrawal amount. The minimum partial withdrawal you may request is $100. To determine if a CDSC applies to partial withdrawals, we: 1. First determine what, if any, amounts qualify as a Free Withdrawal. These amounts are not subject to the CDSC. 2. Next determine what, if any, remaining amounts are withdrawals of Purchase Payments. Amounts in excess of the Free Withdrawal amount will be treated as withdrawals of Purchase Payments unless all Purchase Payments have been previously withdrawn. These amounts are subject to the CDSC. Purchase Payments are withdrawn on a first in, first out basis. 3. Withdraw any remaining amounts from any other Account Value. These amounts are not subject to the CDSC. You may request a withdrawal for an exact dollar amount after deduction of any CDSC that applies (called a "net withdrawal") or request a gross withdrawal from which we will deduct any CDSC that applies, resulting in less money being payable to you than the amount you requested. If you request a net withdrawal, the amount deducted from your Account Value to pay the CDSC may also be subject to a CDSC. Partial withdrawals may also be available following annuitization but only if you choose certain annuity payment options. (Note, however, that we do not permit commutation once annuity payments have commenced). To request the forms necessary to make a withdrawal from your Annuity, call 1-800-752-6342 or visit our Internet Website at www.prudentialannuities.com. HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL? The maximum Free Withdrawal amount during each Annuity Year is equal to 10% of all Purchase Payments that are subject to a CDSC. Withdrawals made within an Annuity Year reduce the Free Withdrawal amount available for the remainder of the Annuity 35 Year. If you do not make a withdrawal during an Annuity Year, you are not allowed to carry over the Free Withdrawal amount to the next Annuity Year. CAN I MAKE PERIODIC WITHDRAWALS FROM MY ANNUITY DURING THE ACCUMULATION PERIOD? Yes. We call these "Systematic Withdrawals." You can receive Systematic Withdrawals of earnings only or a flat dollar amount. Systematic Withdrawals may be subject to a CDSC. We will determine whether a CDSC applies and the amount in the same way as we would for a partial withdrawal. Systematic Withdrawals can be made from Account Value allocated to the Sub-accounts or Fixed Allocations. Generally, Systematic Withdrawals from Fixed Allocations are limited to earnings accrued after the program of Systematic Withdrawals begins, or payments of fixed dollar amounts that do not exceed such earnings. Systematic Withdrawals are available on a monthly, quarterly, semi-annual or annual basis. The minimum amount for each Systematic Withdrawal is $100. If any scheduled Systematic Withdrawal is for less than $100 (which may occur under a program that provides payment of an amount equal to the earnings in your Annuity for the period requested), we may postpone the withdrawal and add the expected amount to the amount that is to be withdrawn on the next scheduled Systematic Withdrawal. DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL REVENUE CODE? Yes. If your Annuity is used as a funding vehicle for certain retirement plans that receive special tax treatment under Sections 401, 403(b), 408 or 408A of the Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax on distributions made prior to age 59 1/2 if you elect to receive distributions as a series of "substantially equal periodic payments." Distributions received under these provisions in any Annuity Year that exceed the maximum amount available as a free withdrawal will be subject to any applicable CDSC. We may apply a Market Value Adjustment to any Fixed Allocations. To request a program that complies with Sections 72(t), you must provide us with certain required information in writing on a form acceptable to us. We may require advance notice to allow us to calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity must be at least $20,000 before we will allow you to begin a program for withdrawals under Sections 72(t). The minimum amount for any such withdrawal is $100 and payments may be made monthly, quarterly, semi-annually or annually. You may also annuitize your contract and begin receiving payments for the remainder of your life (or life expectancy) as a means of receiving income payments before age 59 1/2 that are not subject to the 10% penalty. WHAT ARE REQUIRED MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM? (See "Tax Considerations" for a further discussion of Required Minimum Distributions.) Required Minimum Distributions are a type of Systematic Withdrawal we allow to meet distribution requirements under Sections 401, 403(b) or 408 of the Code. Required Minimum Distribution rules do not apply to Roth IRAs during the Owner's lifetime. Under the Code, you may be required to begin receiving periodic amounts from your Annuity. In such case, we will allow you to make Systematic Withdrawals in amounts that satisfy the Required Minimum Distribution rules under the Code. We do not assess a CDSC on Required Minimum Distributions from your Annuity if you are required by law to take such Required Minimum Distributions from your Annuity at the time it is taken. However, a CDSC (if applicable) may be assessed on that portion of a Systematic Withdrawal that is taken to satisfy the Required Minimum Distribution provisions in relation to other savings or investment plans under other qualified retirement plans not maintained with Prudential Annuities. The amount of the Required Minimum Distribution for your particular situation may depend on other annuities, savings or investments. We will only calculate the amount of your Required Minimum Distribution based on the value of your Annuity. We require three (3) days advance written notice to calculate and process the amount of your payments. You may elect to have Required Minimum Distributions paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount that applies to Systematic Withdrawals applies to monthly Required Minimum Distributions but does not apply to Required Minimum Distributions taken out on a quarterly, semi-annual or annual basis. You may also annuitize your contract and begin receiving payments for the remainder of your life (or life expectancy) as a continued means of receiving income payments and satisfying the Required Minimum Distribution provisions under the Code. CAN I SURRENDER MY ANNUITY FOR ITS VALUE? Yes. During the accumulation period you can surrender your Annuity at any time. Upon surrender, you will receive the Surrender Value. Upon surrender of your Annuity, you will no longer have any rights under the surrendered Annuity. For purposes of calculating any applicable CDSC on surrender, the Purchase Payments being withdrawn may be greater than your remaining Account Value or the amount of your withdrawal request. This is most likely to occur if you have made prior 36 withdrawals under the Free Withdrawal provision or if your Account Value has declined in value due to negative market performance. In that scenario, we would determine the CDSC amount as the applicable percentage of the Purchase Payments being withdrawn, rather than as a percentage of the remaining Account Value or withdrawal request. Thus, the CDSC would be greater than if it were calculated as a percentage of remaining Account Value or withdrawal amount. We may apply a Market Value Adjustment to any Fixed Allocations. Under certain annuity payment options, you may be allowed to surrender your Annuity for its then current value. To request the forms necessary to surrender your Annuity, call 1-800-752-6342 or visit our Internet Website at www.prudentialannuities.com. WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY? Where permitted by law, you may request to surrender all or part of your Annuity prior to the Annuity Date without application of any otherwise applicable CDSC upon occurrence of a medically-related "Contingency Event" as described below. We may apply a Market Value Adjustment to any Fixed Allocations. If you request a full surrender, the amount payable will be your Account Value minus, with respect to Optimum Plus, (a) the amount of any Credits applied within 12 months prior to your request to surrender your Annuity under this provision; and (b) the amount of any Credits added in conjunction with any Purchase Payments received after our receipt of your request for a medically-related surrender (e.g. Purchase Payments received at such time pursuant to a salary reduction program). With respect to partial surrenders, we similarly reserve the right to take back Credits as described above. This waiver of any applicable CDSC is subject to our rules in place at the time of your request, which currently include but are not limited to the following: . The Annuitant must have been named or any change of Annuitant must have been accepted by us, prior to the "Contingency Event" described below in order to qualify for a medically-related surrender; . the Annuitant must be alive as of the date we pay the proceeds of such surrender request; . if the Owner is one or more natural persons, all such Owners must also be alive at such time; . we must receive satisfactory proof of the Annuitant's confinement in a Medical Care Facility or Fatal Illness in writing on a form satisfactory to us; and . no additional Purchase Payments can be made to the Annuity A "Contingency Event" occurs if the Annuitant is: . first confined in a "Medical Care Facility" while your Annuity is in force and remains confined for at least 90 days in a row; or . first diagnosed as having a "Fatal Illness" while your Annuity is in force. The definitions of "Medical Care Facility" and "Fatal Illness," as well as additional terms and conditions, are provided in your Annuity. Specific details and definitions in relation to this benefit may differ in certain jurisdictions. WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE? We currently make available annuity options that provide fixed annuity payments, or adjustable annuity payments. Your Annuity provides certain fixed annuity payment options. We do not guarantee to continue to make available or any other option other than the fixed annuity payment options set forth in your Annuity. Fixed options provide the same amount with each payment. Adjustable options provide a fixed payment that is periodically adjusted based on current interest rates. Please refer to the "Living Benefits" section below for a description of annuity options that are available when you elect one of the living benefits. For additional information on annuity payment options you may request a Statement of Additional Information. You may choose an Annuity Date, an annuity option and the frequency of annuity payments. You may change your choices before the Annuity Date under the terms of your contract. A maximum Annuity Date may be required by law or under the terms of your Annuity. The Annuity Date may depend on the annuity option you choose. Certain annuity options may not be available depending on the age of the Annuitant. See section below entitled "How and When Do I Choose the Annuity Payment Option?" Certain of these annuity options may be available to Beneficiaries who choose to receive the Death Benefit proceeds as a series of payments instead of a lump sum payment. Please note, with respect to Optimum Plus, you may not annuitize within the first three Annuity Years and with respect to Optimum and Optimum Four, you may not annuitize within the first Annuity Year. Option 1 Payments for Life: Under this option, income is payable periodically until the death of the "key life". The "key life" (as used in this section) is the person or persons upon whose life annuity payments are based. No additional annuity payments are made after the death of the key life. Since no minimum number of payments is guaranteed, this option offers the largest amount of periodic payments of the life contingent annuity options. It is possible that only one payment will be payable if the death of the key life 37 occurs before the date the second payment was due, and no other payments nor death benefits would be payable. Under this option, you cannot make a partial or full surrender of the annuity. Option 2 Payments Based on Joint Lives: Under this option, income is payable periodically during the joint lifetime of two key lives, and thereafter during the remaining lifetime of the survivor, ceasing with the last payment prior to the survivor's death. No minimum number of payments is guaranteed under this option. It is possible that only one payment will be payable if the death of all the key lives occurs before the date the second payment was due, and no other payments or death benefits would be payable. Under this option, you cannot make a partial or full surrender of the annuity. Option 3 Payments for Life with a Certain Period: Under this option, income is payable until the death of the key life. However, if the key life dies before the end of the period selected (5, 10 or 15 years), the remaining payments are paid to the Beneficiary until the end of such period. Under this option, you cannot make a partial or full surrender of the annuity. Option 4 Fixed Payments for a Certain Period: Under this option, income is payable periodically for a specified number of years. If the payee dies before the end of the specified number of years, the remaining payments are paid to the Beneficiary until the end of such period. Note that under this option, payments are not based on any assumptions of life expectancy. Therefore, that portion of the Insurance Charge assessed to cover the risk that key lives outlive our expectations provides no benefit to an Owner selecting this option. Under this option, you cannot make a partial or full surrender of the annuity. We may make different annuity payment options available in the future. We do not guarantee to continue to make available any other option other than the fixed annuity payment options set forth in your contract. HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION? Unless prohibited by law, we require that you elect either a life annuity or an annuity with a certain period of at least 5 years if any CDSC would apply were you to surrender your Annuity on the Annuity Date. Certain annuity payment options may not be available if your Annuity Date occurs during the period that a CDSC would apply. You have a right to choose your Annuity Date provided it is no later than the maximum Annuity Date that may be required by law or under the terms of your Annuity. For Annuities issued prior to November 20, 2006: . if you do not provide us with your Annuity Date, a default date for the Annuity Date will be the first day of the calendar month following the later of the Annuitant's 85/th/ birthday or the fifth anniversary of our receipt of your request to purchase an Annuity; and . unless you instruct us otherwise, the annuity payments, where allowed by law, will be calculated on a fixed basis under Option 3, Payments for Life with 10 years certain. If you choose to defer the Annuity Date beyond the default date, the IRS may not consider your contract to be an annuity under the tax law. If that should occur, all gain in your Annuity at that time will become immediately taxable to you. Further, each subsequent year's increase in Account Value would be taxable in that year. By choosing to continue to defer after the default date, you will assume the risk that your Annuity will not be considered an annuity for federal income tax purposes. For Annuities issued on or after November 20, 2006: . Unless we agree otherwise, the Annuity Date you choose must be no later than the first day of the calendar month coinciding with or next following the later of: (a) the oldest Owner's or Annuitant's 95/th/ birthday, whichever occurs first, and (b) the fifth anniversary of the Issue Date. Certain states may have different requirements based on applicable laws. . If you do not provide us with your Annuity Date, the maximum date as described above will be the default date; and, unless you instruct us otherwise, we will pay you the annuity payments and the annuity payments, where allowed by law, will be calculated on a fixed basis under Option 3, Payments for Life with 10 years certain Please note that annuitization essentially involves converting your Account Value to an annuity payment stream, the length of which depends on the terms of the applicable annuity option. Thus, once annuity payments begin, your death benefit is determined solely under the terms of the applicable annuity payment option, and you no longer participate in any optional living benefit (unless you have annuitized under that benefit). HOW ARE ANNUITY PAYMENTS CALCULATED? Fixed Annuity Payments If you choose to receive fixed annuity payments, you will receive equal fixed-dollar payments throughout the period you select. The amount of the fixed payment will vary depending on the annuity payment option and payment frequency you select. Generally, 38 the first annuity payment is determined by multiplying the Account Value, minus any state premium taxes that may apply, by the factor determined from our table of annuity rates. The table of annuity rates differs based on the type of annuity chosen and the frequency of payment selected. Our rates will not be less than our guaranteed minimum rates. These guaranteed minimum rates are derived from the a2000 Individual Annuity Mortality Table with an assumed interest rate of 3% per annum. Where required by law or regulation, such annuity table will have rates that do not differ according to the gender of the key life. Otherwise, the rates will differ according to the gender of the key life. Adjustable Annuity Payments We may make an adjustable annuity payment option available. Adjustable annuity payments are calculated similarly to fixed annuity payments except that on every fifth (5/th/) anniversary of receiving annuity payments, the annuity payment amount is adjusted upward or downward depending on the rate we are currently crediting to annuity payments. The adjustment in the annuity payment amount does not affect the duration of remaining annuity payments, only the amount of each payment. 39 LIVING BENEFIT PROGRAMS DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE THEY ARE ALIVE? Prudential Annuities offers different optional benefits, for an additional charge, that can provide investment protection for Owners while they are alive. Notwithstanding the additional protection provided under the optional Living Benefit Programs, the additional cost has the impact of reducing net performance of the investment options. Each optional benefit offers a distinct type of guarantee, regardless of the performance of the Sub-accounts, that may be appropriate for you depending on the manner in which you intend to make use of your Annuity while you are alive. Depending on which optional benefit you choose, you can have flexibility to invest in the Sub-accounts while: .. protecting a principal amount from decreases in value as of specified future dates due to investment performance; .. taking withdrawals with a guarantee that you will be able to withdraw not less than a principal amount over time; .. guaranteeing a minimum amount of growth will be applied to your principal, if it is to be used as the basis for certain types of lifetime income payments or lifetime withdrawals; or .. providing spousal continuation of certain benefits. The "living benefits" that Prudential Annuities offers are the Guaranteed Return Option (GRO), the Guaranteed Return Option Plus (GRO Plus), Guaranteed Return Option Plus 2008 (GRO Plus 2008), the Highest Daily Guaranteed Return Option (Highest Daily GRO), the Guaranteed Minimum Withdrawal Benefit (GMWB), the Guaranteed Minimum Income Benefit (GMIB), the Lifetime Five Income Benefit, the Spousal Lifetime Five Income Benefit, the Highest Daily Lifetime Five Income Benefit, the Highest Daily Lifetime Seven Income Benefit, and the Spousal Highest Daily Lifetime Seven Income Benefit. Please refer to the benefit descriptions that follow for a complete description of the terms, conditions and limitations of each optional benefit. Investment restrictions apply if you elect certain optional living benefits. You should consult with your Financial Professional to determine if any of these optional benefits may be appropriate for you based on your financial needs. There are many factors to consider, but we note that among them you may want to evaluate the tax implications of these different approaches to meeting your needs, both between these benefits and in comparison to other potential solutions to your needs (e.g., comparing the tax implications of the withdrawal benefit and annuity payments). Here is a general description of each kind of living benefit that we offer under this Annuity: .. Guaranteed Minimum Accumulation Benefits. The common characteristic of these benefits is that a specified amount of your annuity value is guaranteed at some point in the future. For example, under our Highest Daily GRO benefit, we make an initial guarantee that your annuity value on the day you start the benefit will not be any less ten years later. If your annuity value is less on that date, we use our own funds to give you the difference. Because the guarantee inherent in the guaranteed minimum accumulation benefit does not take effect until a specified number of years into the future, you should elect such a benefit only if your investment time horizon is of at least that duration. .. Guaranteed Minimum Income Benefit or ("GMIB"). As discussed elsewhere in this prospectus, you have the right under your annuity to ask us to convert your accumulated annuity value into a series of annuity payments. Generally, the smaller the amount of your annuity value, the smaller the amount of your annuity payments. GMIB addresses this risk, by guaranteeing a certain amount of appreciation in the amount used to produce annuity payments. Thus, even if your annuity value goes down in value, GMIB guarantees that the amount we use to determine the amount of the annuity payments will go up in value by the prescribed amount. You should select GMIB only if you are prepared to delay your annuity payments for the required waiting period and if you anticipate needing annuity payments. .. Guaranteed Minimum Withdrawal Benefit. This benefit is designed for someone who wants to access the annuity's value through withdrawals over time, rather than by annuitizing. This benefit guarantees that a specified amount will be available for withdrawal over time, even if the value of the annuity itself has declined. .. Lifetime Guaranteed Minimum Withdrawal Benefits. These benefits also are designed for someone who wants to access the annuity's value through withdrawals over time, rather than by annuitizing. These benefits differ, however, in that the withdrawal amounts are guaranteed for life (or until the second to die of spouses). The way that we establish the guaranteed amount that, in turn, determines the amount of the annual lifetime payments varies among these benefits. Under our Highest Daily Lifetime Seven benefit, for example, the guaranteed amount generally is equal to your annuity value, appreciated at seven percent annually. Please refer to the benefit descriptions that follow for a complete description of the terms, conditions and limitations of each optional benefit. Investment restrictions apply if you elect certain optional living benefits. You should consult with your Financial Professional to determine if any of these optional benefits may be appropriate for you based on your financial needs. There are many factors to consider, but we note that among them you may want to evaluate the tax implications of these different approaches to meeting your needs, both between these benefits and in comparison to other potential solutions to your needs (e.g., comparing the tax implications of the withdrawal benefit and annuity payments). 40 GUARANTEED RETURN OPTION Plus/SM/ (GRO Plus/SM/) The Guaranteed Return Option Plus described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. The program can be elected by new purchasers on the Issue Date of their Annuity, and can be elected by existing Annuity Owners on either the anniversary of the Issue Date of their Annuity or on a date other than that anniversary, as described below under "Election of the Program". The Guaranteed Return Option Plus is not available if you elect any other optional living benefit, the Highest Daily Value Death Benefit, or the Dollar Cost Averaging program if it involves transfers out of the Fixed Allocations. We offer a program that, after a seven-year period following commencement of the program (we refer to the end of that period and any applicable subsequent period as the "maturity date") and on each anniversary of the maturity date thereafter while the program remains in effect, guarantees your Account Value will not be less than your Account Value on the effective date of your program (called the "Protected Principal Value"). The program also offers you the opportunity to elect a second, enhanced guaranteed amount at a later date if your Account Value has increased, while preserving the guaranteed amount established on the effective date of your program. The enhanced guaranteed amount (called the "Enhanced Protected Principal Value") guarantees that, after a separate period following election of the enhanced guarantee and on each anniversary thereafter while this enhanced guarantee amount remains in effect, your Account Value will not be less than your Account Value on the effective date of your election of the enhanced guarantee. The program monitors your Account Value daily and, if necessary, systematically transfers amounts between the Sub-accounts you choose and Fixed Allocations used to support the Protected Principal Value(s). The program may be appropriate if you wish to protect a principal amount against market downturns as of a specific date in the future, but also wish to invest in the Sub-accounts to participate in market performance. There is an additional charge if you elect the Guaranteed Return Option Plus program. The guarantees provided by the program exist only on the applicable maturity date(s) and on each anniversary of the maturity date(s) thereafter. However, due to the ongoing monitoring of your Account Value and the transfer of Account Value between the Sub-accounts and the Fixed Allocations to support our future guarantees, the program may provide some protection from significant market losses if you choose to surrender your Annuity or begin receiving annuity payments prior to a maturity date. For this same reason, the program may limit your ability to benefit from market increases while it is in effect. Key Feature - Protected Principal Value/Enhanced Protected Principal Value The Guaranteed Return Option Plus offers a base guarantee as well as the option of electing an enhanced guarantee at a later date. . Base Guarantee: Under the base guarantee, Prudential Annuities guarantees that on the maturity date and on each anniversary of the maturity date thereafter that the program remains in effect, your Account Value will be no less than the Protected Principal Value. On the maturity date and on each anniversary after the maturity date that the program remains in effect, if your Account Value is below the Protected Principal Value, Prudential Annuities will apply additional amounts to your Annuity from its general account to increase your Account Value to be equal to the Protected Principal Value. . Enhanced Guarantee: On any anniversary following commencement of the program, you can establish an enhanced guaranteed amount based on your current Account Value. Under the enhanced guarantee, Prudential Annuities guarantees that at the end of a specified period following the election of the enhanced guarantee (also referred to as its "maturity date"), and on each anniversary of the maturity date thereafter that the enhanced guaranteed amount remains in effect, your Account Value will be no less than the Enhanced Protected Principal Value. You can elect an enhanced guarantee more than once; however, a subsequent election supersedes the prior election of an enhanced guarantee. Election of an enhanced guarantee does not impact the base guarantee. In addition, you may elect an "auto step-up" feature that will automatically create an enhanced guarantee (or increase your enhanced guarantee, if previously elected) on each anniversary of the program (and create a new maturity period for the new enhanced guarantee) if the Account Value as of that anniversary exceeds the Protected Principal Value or Enhanced Protected Principal Value by 7% or more. You may also elect to terminate an enhanced guarantee. If you elect to terminate the enhanced guarantee, the base guarantee will remain in effect. If you have elected the enhanced guarantee, on the guarantee's maturity date and on each anniversary of the maturity date thereafter that the enhanced guarantee amount remains in effect, if your Account Value is below the Enhanced Protected Principal Value, Prudential Annuities will apply additional amounts to your Annuity from its general account to increase your Account Value to be equal to the Enhanced Protected Principal Value. 41 Any amounts added to your Annuity to support our guarantee under the program will be applied on a pro rata basis to the Sub-accounts (after first transferring any amounts held in the Fixed Allocations pro rata to the Sub-accounts and then, if necessary, reallocating those assets according to our asset allocation mechanism). If our assumptions are correct and the operations relating to the administration of the program work properly, we do not expect that we will need to add additional amounts to your Annuity. The Protected Principal Value is referred to as the "Base Guarantee" and the Enhanced Protected Principal Value is referred to as the "Step-up Guarantee" in the rider we issue for this benefit. Withdrawals under your Annuity Withdrawals from your Annuity, while the program is in effect, will reduce the base guarantee under the program as well as any enhanced guarantee. Cumulative annual withdrawals up to 5% of the Protected Principal Value as of the effective date of the program (adjusted for any subsequent Purchase Payments and, with respect to Optimum Plus, any Credits applied to such Purchase Payments) will reduce the applicable guaranteed amount by the actual amount of the withdrawal (referred to as the "dollar-for-dollar limit"). If the amount withdrawn is greater than the dollar-for-dollar limit, the portion of the withdrawal equal to the dollar-for-dollar limit will be treated as described above, and the portion of the withdrawal in excess of the dollar-for-dollar limit will reduce the base guarantee and the enhanced guarantee proportionally, according to the formula as described in the rider for this benefit (see the examples of this calculation below). Withdrawals other than Systematic Withdrawals will be taken pro-rata from the Sub-accounts and any Fixed Allocations. Systematic Withdrawals will be taken pro-rata from the Sub-accounts and any Fixed Allocations up to growth attributable to the Fixed Allocations and thereafter pro-rata solely from the Sub-accounts. Withdrawals will be subject to all other provisions of your Annuity, including any Contingent Deferred Sales Charge and Market Value Adjustment that would apply. Charges for other optional benefits under your Annuity that are deducted as an annual charge in arrears will not reduce the applicable guaranteed amount under the Guaranteed Return Option Plus program and any third party investment advisory service will be treated as withdrawals and will reduce the applicable guaranteed amount. The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the GRO Plus/SM/ program are October 13, 2004; 2.) an initial Purchase Payment of $250,000 (includes any Credits under Optimum Plus); 3.) a base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GRO Plus or other fees and charges. Example 1. Dollar-For-Dollar Reduction A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Dollar-for-dollar Limit: .. The base guarantee amount is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-For-Dollar and Proportional Reductions A second $10,000 withdrawal is taken on December 18, 2004 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. The base guarantee amount is first reduced by the Remaining Limit (from $240,000 to $237,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or $177,500). The resulting base guarantee amount is: $237,500 X (1 - $7,500 / $177,500), or $227,464.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. Example 3. Reset of the Dollar-For-Dollar Limit A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As the amount withdrawn is less than the dollar-for-dollar limit: .. The base guarantee amount is reduced by the amount withdrawn (i.e., reduced by $10,000, from $227,464.79 to $217,464.79). .. The Remaining Limit for the balance of the second Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Key Feature - Allocation of Account Value Account Value is transferred to and maintained in Fixed Allocations to the extent we, in our sole discretion, deem it is necessary to support our guarantee(s) under the program. We monitor fluctuations in your Account Value each Valuation Day, as well as the prevailing interest rates on Fixed Allocations, the remaining duration(s) until the applicable maturity date(s) and the amount of Account Value allocated to Fixed Allocation(s) relative to a "reallocation trigger", which determines whether Account Value must be 42 transferred to or from Fixed Allocation(s). While you are not notified when your Account Value reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from Fixed Allocation(s). . If your Account Value is greater than or equal to the reallocation trigger, your Account Value in the Sub-accounts will remain allocated according to your most recent instructions. If a portion of Account Value was previously allocated to a Fixed Allocation to support the applicable guaranteed amount, all or a portion of those amounts may be transferred from the Fixed Allocation and re-allocated to the Sub-accounts pro-rata according to your most recent allocation instructions (including the model allocations under any asset allocation program you may have elected). A Market Value Adjustment will apply when we reallocate Account Value from a Fixed Allocation to the Sub-accounts, which may result in a decrease or increase in your Account Value. . If your Account Value is less than the reallocation trigger, a portion of your Account Value in the Sub-accounts will be transferred from the Sub-accounts pro-rata according to your allocations to a new Fixed Allocation(s) to support the applicable guaranteed amount. The new Fixed Allocation(s) will have a Guarantee Period equal to the time remaining until the applicable maturity date(s). The Account Value allocated to the new Fixed Allocation(s) will be credited with the fixed interest rate(s) then being credited to a new Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded to the next highest yearly duration). The Account Value will remain invested in each applicable Fixed Allocation until the applicable maturity date unless, at an earlier date, your Account Value is greater than or equal to the reallocation trigger and, therefore, amounts can be transferred to the Sub-accounts while maintaining the guaranteed protection under the program (as described above). If a significant amount of your Account Value is systematically transferred to Fixed Allocations to support the Protected Principal Value and/or the Enhanced Protected Principal Value during periods of market declines, low interest rates, and/or as the program nears its maturity date, less of your Account Value may be available to participate in the investment experience of the Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the base guarantee or any enhanced guarantee, or any anniversary of such maturity date(s), a significant portion of your Account Value may be allocated to Fixed Allocations to support any applicable guaranteed amount(s). If your Account Value is less than the reallocation trigger and new Fixed Allocations must be established during periods where the interest rate(s) being credited to such Fixed Allocations is low, a larger portion of your Account Value may need to be transferred to Fixed Allocations to support the applicable guaranteed amount(s), causing less of your Account Value to be available to participate in the investment experience of the Sub-accounts. Separate Fixed Allocations may be established in support of the Protected Principal Value and the Enhanced Protected Principal Value (if elected). There may also be circumstances when a Fixed Allocation will be established only in support of the Protected Principal Value or the Enhanced Protected Principal Value. If you elect an enhanced guarantee, it is more likely that a portion of your Account Value may be allocated to Fixed Allocations and will remain allocated for a longer period of time to support the Enhanced Protected Principal Value, even during a period of positive market performance and/or under circumstances where Fixed Allocations would not be necessary to support the Protected Principal Value. Further, there may be circumstances where Fixed Allocations in support of the Protected Principal Value or Enhanced Protected Principal Value are transferred to the Sub-accounts differently than each other because of the different guarantees they support. Prudential Annuities uses an allocation mechanism based on assumptions of expected and maximum market volatility, interest rates and time left to the maturity of the program to determine the reallocation trigger. The allocation mechanism is used to determine the allocation of Account Value between Fixed Allocations and the Sub-accounts you choose. Prudential Annuities reserves the right to change the allocation mechanism and the reallocation trigger at its discretion, subject to regulatory approval where required. Changes to the allocation mechanism and/or the reallocation trigger may be applied to existing programs where allowed by law. Election of the Program The Guaranteed Return Option Plus program can be elected at the time that you purchase your Annuity, or on any Valuation Day thereafter (prior to annuitization). If you elect the program after the Issue Date of your Annuity, the program will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the guaranteed amount will be based on your Account Value as of that date. If you previously elected the Guaranteed Return Option program and wish to elect the Guaranteed Return Option Plus program, your prior Guaranteed Return Option program will be terminated. Termination of the Guaranteed Return Option for the purpose of electing the Guaranteed Return Option Plus will be treated as any other termination of the Guaranteed Return Option (see below), including the termination of any guaranteed amount, and application of any applicable Market Value Adjustment when amounts are transferred to the Sub-accounts as a result of the termination. The Guaranteed Return Option Plus program will then be added to your Annuity based on the current Account Value. Termination of the Program You can elect to terminate the enhanced guarantee but maintain the protection provided by the base guarantee. You also can terminate the Guaranteed Return Option Plus program entirely. If you terminate the program entirely, you can subsequently elect to participate in the program again (based on the Account Value on that date) by furnishing the documentation we require. In a rising market, you could, for example, terminate the program on a given Valuation Day and two weeks later reinstate the program with a 43 higher base guarantee (and a new maturity date). However, your ability to reinstate the program is limited by the following: (A) in any Annuity Year, we do not permit more than two program elections (including any election made effective on the Annuity issue date and any election made by a surviving spouse) and (B) a program reinstatement cannot be effected on the same Valuation Day on which a program termination was effected. Upon termination, any Account Value in the Fixed Allocations will be transferred to the Sub-accounts pro-rata based on the Account Values in such Sub-accounts, or in accordance with any effective asset allocation program. A Market Value Adjustment will apply. The program will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract); (b) as of the date Account Value is applied to begin annuity payments; or (c) upon full surrender of the Annuity. If you elect to terminate the program, the Guaranteed Return Option Plus will no longer provide any guarantees. The surviving spouse may elect the benefit at any time, subject to the limitations described above, after the death of the Annuity Owner. The surviving spouse's election will be effective on the Valuation Day that we receive the required documentation in good order at our home office, and the Account Value on that Valuation Day will be the Protected Principal Value. Special Considerations under the Guaranteed Return Option Plus This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the Sub-accounts. No Fixed Allocations may be in effect as of the date that you elect to participate in the program. However, the reallocation trigger may transfer Account Value to Fixed Allocations as of the effective date of the program under some circumstances. . You cannot allocate any portion of Purchase Payments (including any Credits applied to such Purchase Payments under Optimum Plus) or transfer Account Value to or from a Fixed Allocation while participating in the program; however, all or a portion of any Purchase Payments (including any Credits applied to such Purchase Payments under Optimum Plus) may be allocated by us to Fixed Allocations to support the amount guaranteed. You cannot participate in any dollar cost averaging program that transfers Account Value from a Fixed Allocation to a Sub-account. . Transfers from Fixed Allocations made as a result of the allocation mechanism under the program will be subject to the Market Value Adjustment formula under an Annuity; however, the 0.10% liquidity factor in the formula will not apply. A Market Value Adjustment may be either positive or negative. Transfer amounts will be taken from the most recently established Fixed Allocation. . Transfers from the Sub-accounts to Fixed Allocations or from Fixed Allocations to the Sub-accounts under the program will not count toward the maximum number of free transfers allowable under an Annuity. . Any amounts applied to your Account Value by Prudential Annuities on the maturity date or any anniversary of the maturity date will not be treated as "investment in the contract" for income tax purposes. . Low interest rates may require allocation to Fixed Allocations even when the current Account Value exceeds the guarantee. . As the time remaining until the applicable maturity date gradually decreases the program will become increasingly sensitive to moves to Fixed Allocations. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We currently deduct a charge equal to 0.25% of the average daily net assets of the Sub-accounts for participation in the Guaranteed Return Option Plus program. The annual charge is deducted daily. The charge is deducted to compensate Prudential Annuities for: (a) the risk that your Account Value on the maturity date is less than the amount guaranteed; and (b) administration of the program. If you elect the Enhanced Guarantee under the program, and on the date you elect to step-up, the charges under the program have changed for new purchases, your program may be subject to the new charge level. GUARANTEED RETURN OPTION (GRO)(R) The Guaranteed Return Option described below is offered only in those jurisdictions where we have not yet received regulatory approval for the Guaranteed Return Option Plus as of the date the election of the option is made. Certain terms and conditions may differ between jurisdictions. The program can be elected by new purchasers on the Issue Date of their Annuity, and can be elected by existing Annuity Owners on either the anniversary of the Issue Date of their Annuity or on a date other than that anniversary, as described below under "Election of the Program". The Guaranteed Return Option is not available if you elect any other optional living benefit, the Highest Daily Value Death Benefit, or the Dollar Cost Averaging program if it involves transfers out of the Fixed Allocations. 44 We offer a program that, after a seven-year period following commencement of the program (we refer to the end of that period as the "maturity date") guarantees your Account Value will not be less than your Account Value on the effective date of your program (called the "Protected Principal Value"). The program monitors your Account Value daily and, if necessary, systematically transfers amounts between the Sub-accounts you choose and the Fixed Allocation used to support the Protected Principal Value. The program may be appropriate if you wish to protect a principal amount against market downturns as of a specific date in the future, but also wish to invest in the Sub-accounts to participate in market performance. There is an additional charge if you elect the Guaranteed Return Option program. The guarantee provided by the program exists only on the applicable maturity date. However, due to the ongoing monitoring of your Account Value and the transfer of Account Value between the Sub-accounts and the Fixed Allocation to support our future guarantee, the program may provide some protection from significant market losses if you choose to surrender your Annuity or begin receiving annuity payments prior to a maturity date. For this same reason, the program may limit your ability to benefit from market increases while it is in effect. Key Feature - Protected Principal Value Under the GRO option, Prudential Annuities guarantees that on the maturity date, your Account Value will be no less than the Protected Principal Value. On the maturity date if your Account Value is below the Protected Principal Value, Prudential Annuities will apply additional amounts to your Annuity from its general account to increase your Account Value to be equal to the Protected Principal Value. Any amounts added to your Annuity to support our guarantee under the program will be applied to the Fixed Allocation first and then to the Sub-accounts pro rata, based on your most recent allocation instructions in accordance with the allocation mechanism we use under the program. We will notify you of any amounts added to your Annuity under the program. However, if when we add such an amount to your Annuity, all of your Account Value is allocated to the Fixed Allocations, then we will add the amount to the AST Money Market Portfolio Sub-account. If our assumptions are correct and the operations relating to the administration of the program work properly, we do not expect that we will need to add additional amounts to an Annuity. The Protected Principal Value is generally referred to as the "Guaranteed Amount" in the rider we issue for this benefit. Withdrawals from your Annuity, while the program is in effect, will reduce the Protected Principal Value proportionally. The proportion will be equal to the proportionate reduction in the Account Value due to the withdrawal as of that date. Withdrawals will be taken pro rata from the Sub-accounts and any Fixed Allocations. Systemic withdrawals will be taken pro rata from the Sub-accounts and any Fixed Allocations up to growth attributable to the Fixed Allocations and thereafter pro rata solely from the Sub-accounts. Withdrawals will be subject to all other provisions of your Annuity, including any Market Value Adjustment that would apply. Key Feature - Allocation of Account Value Account Value is transferred to and maintained in a Fixed Allocation to the extent we, in our sole discretion, deem it is necessary to support our guarantee under the program. We monitor fluctuations in your Account Value each Valuation Day, as well as the prevailing interest rate on the Fixed Allocation, the remaining duration until the applicable maturity date and the amount of Account Value allocated to the Fixed Allocation relative to a "reallocation trigger", which determines whether Account Value must be transferred to or from the Fixed Allocation while you are not notified when your Account Value reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the Fixed Allocation. . If your Account Value is greater than or equal to the reallocation trigger, your Account Value in the Sub-accounts will remain allocated according to your most recent instructions. If a portion of Account Value was previously allocated to the Fixed Allocation to support the guaranteed amount, all or a portion of those amounts may be transferred from the Fixed Allocation and re-allocated to the Sub-accounts pro-rata according to your most recent allocation instructions (including the model allocations under any asset allocation program you may have elected). A Market Value Adjustment will apply when we reallocate Account Value from the Fixed Allocation to the Sub-accounts, which may result in a decrease or increase in your Account Value. . If your Account Value is less than the reallocation trigger, a portion of your Account Value in the Sub-accounts will be transferred from your Sub-accounts pro-rata according to your allocations to a new Fixed Allocation to support the guaranteed amount. The new Fixed Allocation will have a Guarantee Period equal to the time remaining until the applicable maturity date. The Account Value allocated to the new Fixed Allocation will be credited with the fixed interest rate then being credited to a new Fixed Allocation maturing on the applicable maturity date (rounded to the next highest yearly duration). The Account Value will remain invested in the Fixed Allocation until the maturity date unless, at an earlier date, your Account Value is greater than or equal to the reallocation trigger and, therefore, amounts can be transferred to the Sub-accounts while maintaining the guaranteed protection under the program (as described above). If a significant amount of your Account Value is systematically transferred to the Fixed Allocation to support the Protected Principal Value during periods of market declines, low interest rates, and/or as the program nears its maturity date, less of 45 your Account Value may be available to participate in the investment experience of the Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the guarantee a significant portion of your Account Value may be allocated to the Fixed Allocation to support any applicable guaranteed amount. If your Account Value is less than the reallocation trigger and a new Fixed Allocation must be established during periods where the interest rate being credited to such Fixed Allocation is low, a larger portion of your Account Value may need to be transferred to the Fixed Allocation to support the guaranteed amount, causing less of your Account Value to be available to participate in the investment experience of the Sub-accounts. Prudential Annuities uses an allocation mechanism based on assumptions of expected and maximum market volatility, interest rates and time left to the maturity of the program to determine the reallocation trigger. The allocation mechanism is used to determine the allocation of Account Value between the Fixed Allocation and the Sub-accounts you choose. Prudential Annuities reserves the right to change the allocation mechanism and the reallocation trigger at its discretion, subject to regulatory approval where required. Changes to the allocation mechanism and/or the reallocation trigger may be applied to existing programs where allowed by law. Election of the Program The Guaranteed Return Option can be elected at the time that you purchase your Annuity, or on any Valuation Day thereafter (prior to annuitization). If you elect the program after the Issue Date of your Annuity, the program will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the Protected Principal Value will be based on your Account Value as of that date. Restart of the Program Once each Annuity Year you may request to restart the Program. Such a request is an election by you to terminate the existing Program and start a new one. Restarts only take effect on anniversaries of the Issue Date. To make such a request for a restart, you must notify us. If we accept your request, we then terminate the existing Program as of that valuation period, if it is an anniversary of the Issue Date, or, if not, as of the next following anniversary of the Issue Date. The new Program starts at that time. The initial Protected Principal Value for the new Program is the Account Value as of the effective date of the new Program. Unless you tell us otherwise, the duration of the new Program will be the same as that for the existing Program. However, if we do not then make that duration available, you must elect from those we make available at that time. As part of terminating the existing Program, we transfer any amounts in Fixed Allocations, subject to a Market Value Adjustment, to the Sub-accounts on a pro-rata basis. If your entire Account Value was then in Fixed Allocations, you must first provide us instructions as to how to allocate the transferred Account Value among the Sub-accounts. Termination of the Program The Annuity Owner also can terminate the Guaranteed Return Option program. Upon termination, any Account Value in the Fixed Allocation will be transferred to the Sub-accounts pro-rata based on the Account Values in such Sub-accounts, or in accordance with any effective asset allocation program. A Market Value Adjustment will apply. The program will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract); (b) as of the date Account Value is applied to begin annuity payments; or (c) upon full surrender of your Annuity. If you elect to terminate the program, the Guaranteed Return Option will no longer provide any guarantees. If the surviving spouse assumes your Annuity, he/ she may re-elect the benefit on any anniversary of the Issue Date of the Annuity or, if the deceased Owner had not previously elected the benefit, may elect the benefit at any time. The surviving spouse's election will be effective on the Valuation Day that we receive the required documentation in good order at our home office, and the Account Value on that Valuation Day will be the Protected Principal Value. The charge for the Guaranteed Return Option program will no longer be deducted from your Account Value upon termination of the program. Special Considerations under the Guaranteed Return Option This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the Sub-accounts. The Fixed Allocation may not be in effect as of the date that you elect to participate in the program. However, the reallocation trigger may transfer Account Value to the Fixed Allocation as of the effective date of the program under some circumstances. . Annuity Owners cannot allocate any portion of Purchase Payments (including any Credits applied to such Purchase Payments under Optimum Plus) or transfer Account Value to or from the Fixed Allocation while participating in the program; however, all or a portion of any Purchase Payments (including any Credits applied to such Purchase Payments under Optimum Plus) may be allocated by us to the Fixed Allocation to support the amount guaranteed. You cannot participate in any dollar cost averaging program that transfers Account Value from a Fixed Allocation to a Sub-account. . Transfers from the Fixed Allocation made as a result of the allocation mechanism under the program will be subject to the Market Value Adjustment formula under an Annuity; however, the 0.10% liquidity factor in the formula will not apply. A Market Value Adjustment may be either positive or negative. Transfer amounts will be taken from the most recently established Fixed Allocation. 46 . Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed Allocation to the Sub-accounts under the program will not count toward the maximum number of free transfers allowable under an Annuity. . Any amounts applied to your Account Value by Prudential Annuities on the maturity date or any anniversary of the maturity date will not be treated as "investment in the contract" for income tax purposes. . Low interest rates may require allocation to the Fixed Allocation even when the current Account Value exceeds the guarantee. . As the time remaining until the applicable maturity date gradually decreases the program will become increasingly sensitive to moves to the Fixed Allocation. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We deduct a charge equal to 0.25% of the average daily net assets of the Sub-accounts for participation in the Guaranteed Return Option program. The annual charge is deducted daily. The charge is deducted to compensate Prudential Annuities for: (a) the risk that your Account Value on the maturity date is less than the amount guaranteed; and (b) administration of the program. GUARANTEED RETURN OPTION Plus 2008/SM/ (GRO Plus 2008/SM/) The GRO Plus 2008 benefit described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Upon our receipt of approval in a given State, we will offer only GRO Plus 2008 for new elections, rather than the existing versions of GRO. Certain terms and conditions may differ between jurisdictions once approved. You can elect this benefit on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in either this benefit or Highest Daily GRO, in which case your election must be on an Annuity Anniversary). GRO Plus 2008 is not available if you participate in any other optional living benefit. However, GRO Plus 2008 may be elected together with any optional death benefit, other than the Highest Daily Value Death Benefit . Under GRO Plus 2008, we guarantee that the Account Value on the date that the benefit is added to your Annuity (adjusted for subsequent Purchase Payments and withdrawals as detailed below) will not be any less than that original value on the seventh anniversary of benefit election and each anniversary thereafter. We refer to this initial guarantee as the "base guarantee." In addition to the base guarantee, GRO Plus 2008 offers the possibility of an enhanced guarantee. You may lock in an enhanced guarantee once per "benefit year" (i.e., a year beginning on the date you acquired the benefit and each anniversary thereafter) if your Account Value on the Valuation Day exceeds the amount of any outstanding base guarantee or enhanced guarantee. We guarantee that the Account Value locked-in by that enhanced guarantee will not be any less seven years later, and each anniversary of that date thereafter. In addition, you may elect an automatic enhanced guarantee feature under which, if Account Value on a benefit anniversary exceeds the highest existing guarantee by 7% or more, we guarantee that such Account Value will not be any less seven benefit anniversaries later and each benefit anniversary thereafter. You may maintain only one enhanced guarantee in addition to your base guarantee. Thus, when a new enhanced guarantee is created, it cancels any existing enhanced guarantee. However, the fact that an enhanced guarantee was effected automatically on a benefit anniversary does not prevent you from "manually" locking-in an enhanced guarantee during the ensuing benefit year. Please note that whenever an enhanced guarantee is created, we reserve the right to increase your charge for GRO Plus 2008 if we have increased the charge for new elections of the benefit generally. You may not lock in an enhanced guarantee, either manually or through our optional automatic program, within seven years of the date by which annuity payments must commence under the terms of your Annuity (please see "How and When Do I Choose The Annuity Payment Option?" for further information on your maximum Annuity Date). In general, we refer to a date on which the Account Value is guaranteed to be present as the "maturity date". If the Account Value on the maturity date is less than the guaranteed amount, we will contribute funds from our general account to bring your Account Value up to the guaranteed amount. If the maturity date is not a Valuation Day, then we would contribute such an amount on the next Valuation Day. We will allocate any such amount to each Sub-account (other than the "Current AST bond portfolio Sub-account" described below) in accordance with your current allocations instructions. Regardless of whether we need to contribute funds at the end of a guarantee period, we will at that time transfer all amounts held within the Current AST bond portfolio Sub-account associated with the maturing guarantee to your other Sub-accounts, on a pro rata basis. If the entire Account Value is invested in an AST bond portfolio Sub-account, we will allocate according to your current allocation instructions. We increase both the base guarantee and any enhanced guarantee by the amount of each Purchase Payment (and associated credits) made subsequent to the date that the guarantee was established. For example, if the effective date of the benefit was January 1, 2009 and the Account Value was $100,000 on that date, then a $30,000 Purchase Payment made on March 30, 2010 would increase the base guarantee amount to $130,000. As illustrated in the examples below, additional Purchase Payments also increase an amount we refer to as the "dollar-for-dollar corridor." 47 The dollar-for-dollar corridor is equal to 5% of the base guarantee amount (i.e., 5% of the Account Value at benefit election). Thereafter, the dollar-for-dollar corridor is adjusted only for subsequent Purchase Payments (i.e., 5% of the Purchase Payment is added to the corridor amount) and "excess withdrawals" (as described below). Thus, the creation of any enhanced guarantee has no impact on the dollar-for-dollar corridor. Each "benefit year", withdrawals that you make that are equal to or less than the dollar-for-dollar corridor reduce both the amount of the dollar-for-dollar corridor for that benefit year plus the base guarantee amount and the amount of any enhanced guarantee by the exact amount of the withdrawal. However, if you withdraw more than the dollar-for-dollar corridor in a given benefit year, we use the portion of the withdrawal that exceeded the dollar-for-dollar corridor to effect a proportional reduction to both the dollar-for-dollar corridor itself and each guarantee amount. We calculate a proportional reduction by (i) identifying the amount of the withdrawal that exceeded the dollar-for-dollar corridor (the "excess withdrawal") (ii) subtracting the dollar-for-dollar amount from the Account Value prior to the withdrawal (iii) dividing the excess withdrawal by the amount in (ii), and (iv) reducing each guarantee amount, and the dollar-for-dollar corridor itself, by the percentage derived in (iii). See examples of this calculation below. Any partial withdrawals in payment of any third party investment advisory service will be treated as withdrawals, and will reduce each guarantee amount and the dollar-for-dollar corridor in the manner indicated above. EXAMPLES The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the GRO Plus/SM/ 2008 program are October 13, 2008; 2.) an initial Purchase Payment of $250,000 (includes any Credits); 3.) a base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GRO Plus 2008 or other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 29, 2008 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Dollar-for-dollar Limit: .. The base guarantee amount is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 18, 2008 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. the base guarantee amount is first reduced by the Remaining Limit (from $240,000 to $237,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or $177,500). The resulting base guarantee amount is: $237,500 X (1 - $7,500 / $177,500), or $227,464.79. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. Key Feature - Allocation of Account Value To allow us to make these guarantees, we monitor your Account Value according to the formula that is set forth in the schedule supplement to the rider. Because the formula is made part of your schedule supplement, the formula applicable to you may not be altered once you elect the benefit. However, we do reserve the right to amend the formula for newly-issued Annuities that elect GRO Plus 2008 and for existing Annuities that elect the benefit in the future. This required allocation mechanism helps us manage our financial exposure under GRO Plus 2008, by moving assets out of certain Sub-accounts in the event of securities market declines. In essence, we seek to preserve the value of these assets, by transferring them to a more stable option (i.e., one or more specified bond portfolios of Advanced Series Trust). We refer to these bond portfolios collectively as the "AST bond portfolios." The formula also contemplates the transfer of assets from an AST bond portfolio to the other Sub-accounts in certain other scenarios. The formula itself is the same as that used for our Highest Daily GRO benefit, and is set forth in Appendix G to this prospectus. A summary description of each AST Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies Of The Portfolios? Upon the initial transfer of your Account Value into an AST Bond Portfolio, we will send a prospectus for that Portfolio to you along with your confirmation. In addition, you can find a copy of the AST Bond Portfolio prospectus by going to www.prudentialannuities.com. Each AST bond portfolio is unique, in that its underlying investments generally mature at different times. For example, there would be an AST bond portfolio whose underlying investments generally mature in 2015, an AST bond portfolio whose underlying investments generally mature in 2016, and so forth. We will introduce new AST bond portfolios in subsequent years, to correspond generally to the length of new guarantee periods that are created under this benefit (and the Highest Daily GRO benefit). If you 48 have elected GRO Plus 2008, you may invest in an AST bond portfolio only by operation of the asset transfer formula, and thus you may not allocate Purchase Payments to such a Portfolio. Please see this prospectus and the prospectus for the Advanced Series Trust for more information about each AST bond portfolio used with this benefit. Although we employ several AST bond portfolios for purposes of the benefit, the formula described in the next paragraph operates so that your Account Value may be allocated to only one AST bond portfolio Sub-account at one time. In the description of the formula in the next paragraph, we refer to the AST bond portfolio Sub-account in which you are invested immediately prior to any potential asset transfer as the "Current AST bond portfolio Sub-account." The formula may dictate that a transfer out of the Current AST Bond Portfolio Sub-account be made, or alternatively may mandate a transfer into another AST bond portfolio Sub-account. Any transfer into an AST bond portfolio Sub-account will be directed to the AST bond portfolio Sub-account associated with the "current liability" (we refer to that Sub-account as the "Transfer AST bond portfolio Sub-account"). Note that if the Current AST bond portfolio Sub-account is associated with the current liability, then that Sub-account would be the Transfer AST bond portfolio Sub-account, and we would simply transfer additional assets into the Sub-account if such a transfer is dictated by the formula. As indicated, the AST bond portfolios are employed with this benefit to help us mitigate the financial risks under our guarantee. Thus, in accordance with the formula, applicable to you under the benefit, we determine which AST bond portfolio your Account Value is transferred to, and under what circumstances a transfer is made. In general, the asset transfer formula works as follows (please see Appendix G). On each Valuation Day, the formula automatically performs an analysis with respect to each guarantee amount that is outstanding. For each outstanding guarantee, the formula begins by determining the present value on that Valuation Day that, if appreciated at the applicable "discount rate", would equal the applicable guarantee amount on the maturity date. As detailed in the formula, the discount rate is an interest rate determined by taking a benchmark index used within the financial services industry and then reducing the rate determined by that index by a prescribed adjustment. Once selected, we do not change the applicable benchmark index (although we do reserve the right to use a new benchmark index if the original benchmark is discontinued). The greatest of each such present value is referred to as the "current liability" in the formula. The formula compares the current liability to the amount of your Account Value held within the Current AST bond portfolio Sub-account and to your Account Value held within the other Sub-accounts. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount held within your other Sub-accounts, exceeds an upper target value (currently, 0.85), then the formula will make a transfer into the Transfer AST bond portfolio Sub-account, in the amount dictated by the formula. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount within your other Sub-accounts, is less than a lower target value (currently, 0.79), then the formula will transfer Account Value within the Current AST bond portfolio Sub-account into the other Sub-accounts (other than the Transfer AST bond portfolio Sub-account), in the amount dictated by the formula. If a significant amount of your Account Value is systematically transferred to an AST bond portfolio Sub-account to support the guarantee amounts during periods of market declines, low interest rates, and/or as the guarantee nears its maturity date, less of your Account Value may be available to participate in the investment experience of the other Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the guarantee, a significant portion of your Account Value may be allocated to an AST bond portfolio Sub-account to support any applicable guaranteed amount(s). Election/Cancellation of the Program GRO Plus 2008 can be elected on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in either this benefit or Highest Daily GRO, in which case your election must be on an Annuity Anniversary). If you elect the benefit after the Issue Date of your Annuity, the benefit will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the base guarantee amount will equal the Account Value on that day. You may elect GRO Plus 2008 only if the oldest of the Owner and Annuitant is 84 or younger on the date of election (80 or younger, in New York). If you currently participate in one of the original versions of GRO, you may terminate that benefit at any time and elect GRO Plus 2008. You may cancel the GRO Plus 2008 benefit at any time. Upon cancellation, we will transfer any Account Value that is held in an AST bond portfolio Sub-account to the other Sub-accounts, according to your current allocation instructions. GRO Plus 2008 will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract), unless the Annuity is continued by the surviving spouse; (b) as of the date Account Value is applied to begin annuity payments; (c) as of the anniversary of benefit election that immediately precedes the contractually-mandated latest annuity date, or (d) upon full surrender of the Annuity. If you elect to terminate the program, GRO Plus 2008 will no longer provide any guarantees. The charge for the GRO Plus 2008 program will no longer be deducted from your Account Value upon termination of the program. Special Considerations under GRO Plus 2008 This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the permitted Sub-accounts. No fixed interest rate allocations may be in effect as of the date that you elect to participate in the program. 49 . You cannot participate in any dollar cost averaging program that transfers Account Value from a fixed interest rate option to a Sub-account. . Transfers between an AST bond portfolio Sub-account and your other Sub-accounts under the program will not count toward the maximum number of free transfers allowable under the Annuity. . Any amounts applied to your Account Value by us on a maturity date will not be treated as "investment in the contract" for income tax purposes. . As the time remaining until the applicable maturity date gradually decreases, the program may become increasingly sensitive to moves to an AST bond portfolio Sub-account. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. Moreover, if you are invested in prohibited investment options and seek to acquire the benefit, we will ask you to reallocate to permitted investment options as a prerequisite to acquiring the benefit. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We deduct a charge equal to 0.35% of the average daily net assets of the Sub-accounts for participation in the GRO Plus 2008 program. The annual charge is deducted daily. The charge is deducted to compensate us for: (a) the risk that your Account Value on a maturity date is less than the amount guaranteed and (b) administration of the program. We reserve the right to increase this fee for newly-issued contracts or new elections of the benefit. HIGHEST DAILY GUARANTEED RETURN OPTION/SM/ (HD GRO/SM/) The Highest Daily Guaranteed Return Option described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. You can elect this benefit on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in this benefit or a prior version of GRO, in which case your election must be on an Annuity Anniversary). Highest Daily GRO is not available if you participate in any other living benefit. However, Highest Daily GRO may be elected together with any optional death benefit, other than the Highest Daily Value Death Benefit . Highest Daily GRO creates a series of separate guarantees, each of which is based on the highest Account Value attained on a day during the applicable time period. As each year of your participation in the benefit passes, we create a new guarantee. Each guarantee then remains in existence until the date on which it matures (unless the benefit terminates sooner). We refer to each date on which the specified Account Value is guaranteed as the "maturity date" for that guarantee. The guarantees provided by the program exist only on the applicable maturity date(s). However, due to the ongoing monitoring of your Account Value, and the transfer of Account Value to support our future guarantees, the program may provide some protection from significant market losses if you choose to surrender your Annuity or begin receiving annuity payments prior to a maturity date. For this same reason, the program may limit your ability to benefit from market increases while it is in effect. The initial guarantee is created on the day that the Highest Daily GRO benefit is added to your Annuity. We guarantee that your Account Value on the tenth anniversary of that day (we refer to each such anniversary as a "benefit anniversary") will not be less than your Account Value on the day that the Highest Daily GRO benefit was added to your Annuity. Each benefit anniversary thereafter, we create a new guarantee. With respect to each such subsequent guarantee, we identify the highest Account Value that occurred between the date of that benefit anniversary and the date on which Highest Daily GRO was added to your Annuity. We guarantee that your Account Value ten years after that benefit anniversary will be no less than the highest daily Account Value that occurred during that time period. The following example illustrates the time period over which we identify the highest daily Account Value for purposes of each subsequent guarantee under the benefit. If the date of benefit election were January 1, 2009, we would create a guarantee on January 1, 2012 based on the highest Account Value achieved between January 1, 2009 and January 1, 2012, and that guarantee would mature on January 1, 2022. As described below, we adjust each of the guarantee amounts for purchase payments and withdrawals. In general, we refer to a date on which the Account Value is guaranteed to be present as the "maturity date". If the Account Value on the maturity date is less than the guaranteed amount, we will contribute funds from our general account to bring your Account Value up to the guaranteed amount. If the maturity date is not a Valuation Day, then we would contribute such an amount on the next Valuation Day. We will allocate any such amount to each Sub-account (other than the "Current AST bond portfolio Sub-account" described below) in accordance with your current allocations instructions. Regardless of whether we need to contribute funds at the end of a guarantee period, we will at that time transfer all amounts held within the AST bond portfolio Sub-account associated with the maturing guarantee to your other Sub-accounts, on a pro rata basis. If the entire account value is invested in the AST bond portfolio Sub-account, we will allocate according to your current allocation instructions. 50 We increase the amount of each guarantee that has not yet reached its maturity date, as well as the highest daily Account Value that we calculate to establish a guarantee, by the amount of each Purchase Payment (and associated Credits) made prior to the applicable maturity date. For example, if the effective date of the benefit was January 1, 2009, and there was an initial guaranteed amount that was set at $100,000 maturing January 1, 2019, and a second guaranteed amount that was set at $120,000 maturing January 1, 2020, then a $30,000 Purchase Payment made on March 30, 2010 would increase the guaranteed amounts to $130,000 and $150,000, respectively. As illustrated in the examples below, additional Purchase Payments also increase an amount we refer to as the "dollar-for-dollar corridor." We reflect the effect of withdrawals by reference to an amount called the "dollar-for-dollar corridor." The dollar-for-dollar corridor is set initially to equal 5% of the initial guaranteed amount (i.e., 5% of the Account Value at benefit election). Each "benefit year" (i.e., a year that begins on the date of election of Highest Daily GRO and each anniversary thereafter), withdrawals that you make that are equal to or less than the dollar-for-dollar corridor reduce (i) the amount of the dollar-for-dollar corridor for that benefit year (ii) the amount of each outstanding guarantee amount, and (iii) the highest daily Account Value that we calculate to establish a guarantee, by the exact amount of the withdrawal. However, if you withdraw more than the dollar-for-dollar corridor in a given benefit year, we use the portion of the withdrawal that exceeded the dollar-for-dollar corridor to effect a proportional reduction to both the dollar-for-dollar corridor itself and each outstanding guaranteed amount, as well as the highest daily Account Value that we calculate to establish a guarantee. We calculate a proportional reduction by (i) identifying the amount of the withdrawal that exceeded the dollar-for-dollar corridor (the "excess withdrawal") (ii) subtracting the dollar-for-dollar amount from the Account Value prior to the withdrawal (iii) dividing the excess withdrawal by the amount in (ii), and (iv) reducing each guaranteed amount, as well as the highest daily Account Value that we calculate to establish a guarantee and the dollar for dollar corridor itself, by the percentage derived in (iii). See examples of this calculation below. Any partial withdrawals in payment of any third party investment advisory service will be treated as withdrawals, and will reduce each applicable guaranteed amount and the dollar-for-dollar corridor in the manner indicated above. EXAMPLES The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the Highest Daily GRO program are October 13, 2008; 2.) an initial Purchase Payment of $250,000 (includes any Credits); 3.) an initial guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for Highest Daily GRO or other fees and charges. Example 1. Dollar-for-dollar reduction A $10,000 withdrawal is taken on November 29, 2008 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Dollar-for-dollar Limit: .. The initial guarantee amount is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-for-dollar and proportional reductions A second $10,000 withdrawal is taken on December 18, 2008 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. the initial guarantee amount is first reduced by the Remaining Limit (from $240,000 to $237,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or $177,500). The resulting initial guarantee amount is: $237,500 X (1 - $7,500 / $177,500), or $227,464.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. The resulting dollar-for-dollar corridor for the next year is $11,373.24 (i.e., 5% of $227,464.79). The resulting dollar-for-dollar corridor for the next Annuity Year is calculated by multiplying the prior dollar-for-dollar corridor by the same ratio by which we reduce the Guarantee Amount above: $12,500 X (1 - $7,500 / $177,500), or $11,971.83. Key Feature - Allocation of Account Value To allow us to make these guarantees, we monitor your Account Value according to the formula that is set forth in the schedule supplement to the rider. Because the formula is made part of your schedule supplement, the formula may not be altered. However, we do reserve the right to amend the formula for newly-issued annuity contracts that elect Highest Daily GRO and for existing contracts that elect the benefit post-issue. This required allocation mechanism helps us manage our financial exposure under Highest Daily GRO, by moving assets out of certain Sub-accounts in certain scenarios. In essence, we seek to preserve the value of these assets, by transferring them to a more stable option (i.e., one of a specified group of bond portfolios within Advanced Series Trust) (collectively, the "AST Bond Portfolios"). The formula also contemplates the transfer of assets from the AST Bond Portfolios to the other Sub-accounts in other scenarios. 51 For purposes of operating the Highest Daily GRO formula, we have included as investment options within this Annuity several AST bond portfolios. Each AST bond portfolio is unique, in that its underlying investments generally mature at the same time as each outstanding maturity date that exists under the benefit. For example, there would be an AST bond portfolio whose underlying investments generally mature in 2018 (corresponding to all guarantees that mature in 2018), an AST Bond Portfolio whose underlying investments generally mature in 2019 (corresponding to all guarantees that mature in 2019), and so forth. We will introduce new AST bond portfolios in subsequent years, to correspond generally to the length of new guarantee periods that are created under this benefit. If you have elected Highest Daily GRO, you may invest in an AST bond portfolio only by operation of the asset transfer formula, and thus you may not allocate Purchase Payments to such a Portfolio. Please see this prospectus and the prospectus for the Advanced Series Trust for more information about each AST bond portfolio used with this benefit. A summary description of each AST Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies Of The Portfolios?" Upon the initial transfer of your Account Value into an AST Bond Portfolio, we will send a prospectus for that Portfolio to you along with your confirmation. In addition, you can find a copy of the AST Bond Portfolio prospectus by going to www.prudentialannuities.com Although we employ several AST bond portfolios for purposes of the benefit, the formula described in the next paragraph operates so that your Account Value may be allocated to only one AST bond portfolio Sub-account at one time. In the description of the formula in the next paragraph, we refer to the AST bond portfolio Sub-account in which you are invested immediately prior to any potential asset transfer as the "Current AST bond portfolio Sub-account." The formula may dictate that a transfer out of the Current AST bond portfolio Sub-account be made, or alternatively may mandate a transfer into an AST bond portfolio Sub-account. Any transfer into an AST bond portfolio Sub-account will be directed to the AST bond portfolio Sub-account associated with the "current liability" (we refer to that Sub-account as the "Transfer AST bond portfolio Sub-account"). Note that if the Current AST bond portfolio Sub-account is associated with the current liability, then that Sub-account would be the Transfer AST bond portfolio Sub-account, and we would simply transfer additional assets into the Sub-account if dictated by the formula. In general, the asset transfer formula works as follows. On each Valuation Day, the formula automatically performs an analysis with respect to each guarantee that is outstanding. For each outstanding guarantee, the formula begins by determining the present value on that Valuation Day that, if appreciated at the applicable "discount rate", would equal the applicable guarantee amount on the maturity date. As detailed in the formula, the discount rate is an interest rate determined by taking a benchmark index used within the financial services industry and then reducing that interest rate by a prescribed adjustment. Once selected, we do not change the applicable benchmark index (although we do reserve the right to use a new benchmark index if the original benchmark is discontinued). The greatest of each such present value is referred to as the "current liability" in the formula. The formula compares the current liability to the amount of your Account Value held within the Current AST bond portfolio Sub-account and to your Account Value held within the other Sub-accounts. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount held within your other Sub-accounts, exceeds an upper target value (currently, 0.85), then the formula will make a transfer into the Transfer AST bond portfolio Sub-account, in the amount dictated by the formula. If the current liability, reduced by the amount held within the Current AST bond portfolio Sub-account, and divided by the amount within your other Sub-accounts, is less than a lower target value (currently, 0.79), then the formula will transfer Account Value within the Current AST bond portfolio Sub-account into the other Sub-accounts (other than the Transfer AST bond portfolio Sub-account), in the amount dictated by the formula. If a significant amount of your Account Value is systematically transferred to an AST bond portfolio Sub-account to support the guarantee amounts during periods of market declines, low interest rates, and/or as the guarantee nears its maturity date, less of your Account Value may be available to participate in the investment experience of the other Sub-accounts if there is a subsequent market recovery. During periods closer to the maturity date of the guarantee, a significant portion of your Account Value may be allocated to an AST bond portfolio Sub-account to support any applicable guaranteed amount(s). Election/Cancellation of the Program Highest Daily GRO can be elected on the Issue Date of your Annuity, or at any time thereafter (unless you previously participated in either this benefit or GRO Plus 2008, in which case your election must be on an Annuity Anniversary). If you elect the benefit after the Issue Date of your Annuity, the benefit will be effective as of the Valuation Day that we receive the required documentation in good order at our home office, and the initial guaranteed amount will equal the Account Value on that day. You may elect Highest Daily GRO only if the oldest of the Owner and Annuitant is 84 or younger on the date of election (80 or younger, in New York). If you currently participate in one of the original versions of GRO, you may terminate that benefit at any time and elect Highest Daily GRO. You may cancel Highest Daily GRO at any time. Upon cancellation, we will transfer any Account Value that is held in an AST bond portfolio Sub-account to the other Sub-accounts, according to your current allocation instructions. Highest Daily GRO will terminate automatically upon: (a) the death of the Owner or the Annuitant (in an entity owned contract), unless the Annuity is continued by the surviving spouse; (b) as of the date Account Value is applied to begin annuity payments; (c) as of the anniversary of benefit election that immediately precedes the contractually-mandated latest annuity date, or (d) upon full surrender of the Annuity. If you elect to terminate the program, Highest Daily GRO will no longer provide any guarantees. The charge for the Highest Daily GRO program will no longer be deducted from your Account Value upon termination of the program. 52 Special Considerations under Highest Daily GRO This program is subject to certain rules and restrictions, including, but not limited to the following: . Upon inception of the program, 100% of your Account Value must be allocated to the permitted Sub-accounts. No fixed interest rate allocations may be in effect as of the date that you elect to participate in the program. . You cannot participate in any dollar cost averaging program that transfers Account Value from a fixed interest rate option to a Sub-account. . Transfers from the other Sub-accounts to an AST bond portfolio Sub-account or from an AST bond portfolio Sub-account to the other Sub-accounts under the program will not count toward the maximum number of free transfers allowable under the Annuity. . Any amounts applied to your Account Value by us on a maturity date will not be treated as "investment in the contract" for income tax purposes. . As the time remaining until the applicable maturity date gradually decreases, the program may become increasingly sensitive to moves to an AST bond portfolio Sub-account. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. Moreover, if you are invested in prohibited investment options and seek to acquire the benefit, we will ask you to reallocate to permitted investment options as a prerequisite to acquiring the benefit. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. Charges under the Program We deduct an annual charge equal to 0.35% of the average daily net assets of the Sub-accounts (including each AST bond portfolio Sub-account) for participation in the Highest Daily GRO program. The charge is deducted daily. The charge is deducted to compensate us for: (a) the risk that your Account Value on the maturity date is less than the amount guaranteed and (b) administration of the program. We reserve the right to increase this fee for newly-issued contracts or new elections of the benefit. GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) The Guaranteed Minimum Withdrawal Benefit program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Currently, the program can only be elected by new purchasers on the Issue Date of their Annuity. We may offer the program to existing Annuity Owners in the future, subject to our eligibility rules and restrictions. The Guaranteed Minimum Withdrawal Benefit program is not available if you elect any other optional living benefit. We offer a program that guarantees your ability to withdraw amounts equal to an initial principal value (called the "Protected Value"), regardless of the impact of market performance on your Account Value, subject to our program rules regarding the timing and amount of withdrawals. The program may be appropriate if you intend to make periodic withdrawals from your Annuity and wish to ensure that market performance will not affect your ability to protect your principal. You are not required to make withdrawals as part of the program - the guarantee is not lost if you withdraw less than the maximum allowable amount of principal each year under the rules of the program. There is an additional charge if you elect the GMWB program; however, the charge may be waived under certain circumstances described below. Key Feature - Protected Value The Protected Value is the total amount that we guarantee will be available to you through withdrawals from your Annuity and/or benefit payments, regardless of the impact of market performance on your Account Value. The Protected Value is reduced with each withdrawal you make until the Protected Value is reduced to zero. When the Protected Value is reduced to zero due to your withdrawals, the GMWB program terminates. Additionally, the Protected Value is used to determine the maximum annual amount that you can withdraw from your Annuity, called the Protected Annual Withdrawal Amount, without triggering an adjustment in the Protected Value on a proportional basis. The Protected Value is referred to as the "Benefit Base" in the rider we issue for this benefit. The Protected Value is determined as of the date you make your first withdrawal under your Annuity following your election of the GMWB program. The initial Protected Value is equal to the greater of (A) the Account Value on the date you elect the GMWB program, plus any additional Purchase Payments (plus any Credits applied to such Purchase Payments under Optimum Plus) before the date of your first withdrawal; or (B) the Account Value as of the date of the first withdrawal from your Annuity. The Protected Value may be enhanced by increases in your Account Value due to market performance during the period between your election of the GMWB program and the date of your first withdrawal. . If you elect the GMWB program at the time you purchase your Annuity, the Account Value will be your initial Purchase Payment (plus any Credits applied to such Purchase Payments under Optimum Plus). 53 . If we offer the GMWB program to existing Annuity Owners, the Account Value on the anniversary of the Issue Date of your Annuity following your election of the GMWB program will be used to determine the initial Protected Value. . If you make additional Purchase Payments after your first withdrawal, the Protected Value will be increased by the amount of the additional Purchase Payment (plus any Credits applied to such Purchase Payments under Optimum Plus). You may elect to step-up your Protected Value if, due to positive market performance, your Account Value is greater than the Protected Value. You are eligible to step-up the Protected Value on or after the 5/th/ Annuity anniversary following the first withdrawal under the GMWB program. The Protected Value can be stepped up again on or after the 5/th/ Annuity anniversary following the preceding step-up. If you elect to step-up the Protected Value, you must do so during the 30-day period prior to your eligibility date. If you elect to step-up the Protected Value under the program, and on the date you elect to step-up, the charges under the GMWB program have changed for new purchasers, your program may be subject to the new charge going forward. Upon election of the step-up, we reset the Protected Value to be equal to the then current Account Value. For example, assume your initial Protected Value was $100,000 and you have made cumulative withdrawals of $40,000, reducing the Protected Value to $60,000. On the date you are eligible to step-up the Protected Value, your Account Value is equal to $75,000. You could elect to step-up the Protected Value to $75,000 on the date you are eligible. Upon election of the step-up, we also reset the Protected Annual Withdrawal Amount (discussed immediately below) to be equal to the greater of (A) the Protected Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the Protected Value immediately after the reset. Key Feature - Protected Annual Withdrawal Amount The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year are less than or equal to the Protected Annual Withdrawal Amount, your Protected Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is reduced by the actual amount of the withdrawal, including any CDSC or MVA that may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected Annual Withdrawal Amount trigger a proportional adjustment to both the Protected Value and the Protected Annual Withdrawal Amount, as described in the rider for this benefit (see the examples of this calculation below). The Protected Annual Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we issue for this benefit. The GMWB program does not affect your ability to make withdrawals under your Annuity or limit your ability to request withdrawals that exceed the Protected Annual Withdrawal Amount. You are not required to withdraw all or any portion of the Protected Annual Withdrawal Amount each Annuity Year. If, cumulatively, you withdraw an amount less than the Protected Annual Withdrawal Amount in any Annuity Year, you cannot carry-over the unused portion of the Protected Annual Withdrawal Amount to subsequent Annuity Years. However, because the Protected Value is only reduced by the actual amount of withdrawals you make under these circumstances, any unused Protected Annual Withdrawal Amount may extend the period of time until the remaining Protected Value is reduced to zero. .. Additional Purchase Payments will increase the Protected Annual Withdrawal Amount by 7% of the applicable Purchase Payment (and any Credits we apply to such Purchase Payments under Optimum Plus). .. If the Protected Annual Withdrawal Amount after an adjustment exceeds the Protected Value, the Protected Annual Withdrawal Amount will be set equal to the Protected Value. The following examples of dollar-for-dollar and proportional reductions and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and the effective date of the GMWB program are October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any Credits in the case of Optimum Plus); 3.) a Protected Value of $250,000; and 4.) a Protected Annual Withdrawal Amount of $17,500 (7% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GMWB or any other fees and charges. Example 1. Dollar-For-Dollar Reduction A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year). No prior withdrawals have been taken. As the amount withdrawn is less than the Protected Annual Withdrawal Amount: .. The Protected Value is reduced by the amount withdrawn (i.e., by $10,000, from $250,000 to $240,000). .. The remaining Protected Annual Withdrawal Amount for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $17,500 to $7,500). Example 2. Dollar-For-Dollar and Proportional Reductions A second $10,000 withdrawal is taken on December 13, 2005 (still within the first Annuity Year). The Account Value immediately before the withdrawal is $220,000. As the amount withdrawn exceeds the remaining Protected Annual Withdrawal Amount of $7,500 from Example 1: .. The Protected Value is first reduced by the remaining Protected Annual Withdrawal Amount (from $240,000 to $232,500); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the remaining Protected Annual Withdrawal Amount ($10,000 - $7,500, or $2,500). -- B is the Account Value less the remaining Protected Annual Withdrawal Amount ($220,000 - $7,500, or $212,500). 54 The resulting Protected Value is: $232,500 X (1 - $2,500 / $212,500), or $229,764.71. .. The Protected Annual Withdrawal Amount is also reduced by the ratio of A to B: The resulting Protected Annual Withdrawal Amount is: $17,500 X (1 - $2,500 / $212,500), or $17,294.12; .. The remaining Protected Annual Withdrawal Amount is set to zero (0) for the balance of the first Annuity Year. Example 3. Reset of the Maximum Annual Benefit A $10,000 withdrawal is made on October 13, 2006 (second Annuity Year). The remaining Protected Annual Withdrawal Amount has been reset to the Protected Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn is less than the remaining Protected Annual Withdrawal Amount: .. the Protected Value is reduced by the amount withdrawn (i.e., reduced by $10,000, from $229,764.71 to $219,764.71). .. the remaining Protected Annual Withdrawal Amount for the balance of the second Annuity Year is also reduced by the amount withdrawn (from $17,294.12 to $7,294.12). BENEFITS UNDER THE GMWB PROGRAM . In addition to any withdrawals you make under the GMWB program, market performance may reduce your Account Value. If your Account Value is equal to zero, and you have not received all of your Protected Value in the form of withdrawals from your Annuity, we will continue to make payments equal to the remaining Protected Value in the form of fixed, periodic payments until the remainder of the Protected Value is paid, at which time the rider terminates. The fixed, periodic payments will each be equal to the Protected Annual Withdrawal Amount, except for the last payment which may be equal to the remaining Protected Value. We will determine the duration for which periodic payments will continue by dividing the Protected Value by the Protected Annual Withdrawal Amount. You will not have the right to make additional Purchase Payments or receive the remaining Protected Value in a lump sum. You can elect the frequency of payments, subject to our rules then in effect. . If the death benefit under your Annuity becomes payable before you have received all of your Protected Value in the form of withdrawals from your Annuity, your Beneficiary has the option to elect to receive the remaining Protected Value as an alternate death benefit payout in lieu of the amount payable under any other death benefit provided under your Annuity. The remaining Protected Value will be payable in the form of fixed, periodic payments. Your beneficiary can elect the frequency of payments, subject to our rules then in effect. We will determine the duration for which periodic payments will continue by dividing the Protected Value by the Protected Annual Withdrawal Amount. . The Protected Value is not equal to the Account Value for purposes of the Annuity's other death benefit options. The GMWB program does not increase or decrease the amount otherwise payable under the Annuity's other death benefit options. Generally, the GMWB program would be of value to your Beneficiary only when the Protected Value at death exceeds any other amount available as a death benefit. . If you elect to begin receiving annuity payments before you have received all of your Protected Value in the form of withdrawals from your Annuity, an additional annuity payment option will be available that makes fixed annuity payments for a certain period, determined by dividing the Protected Value by the Protected Annual Withdrawal Amount. If you elect to receive annuity payments calculated in this manner, the assumed interest rate used to calculate such payments will be 0%, which is less than the assumed interest rate on other annuity payment options we offer. This 0% assumed interest rate results in lower annuity payments than what would have been paid if the assumed interest rate was higher than 0%. You can also elect to terminate the GMWB program and begin receiving annuity payments based on your then current Account Value (not the remaining Protected Value) under any of the available annuity payment options. Other Important Considerations . Withdrawals under the GMWB program are subject to all of the terms and conditions of your Annuity, including any CDSC and MVA that may apply. . Withdrawals made while the GMWB program is in effect will be treated, for tax purposes, in the same way as any other withdrawals under your Annuity. . The GMWB program does not directly affect your Annuity's Account Value or Surrender Value, but any withdrawal will decrease the Account Value by the amount of the withdrawal. If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the GMWB program. The GMWB program provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Protected Value in the form of periodic benefit payments. . We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. 55 Election of the Program Currently, the GMWB program can only be elected at the time that you purchase your Annuity. In the future, we may offer existing Annuity Owners the option to elect the GMWB program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. If you elect the GMWB program after the Issue Date of your Annuity, the program will be effective as of the next anniversary date. Your Account Value as of such anniversary date will be used to calculate the initial Protected Value and the initial Protected Annual Withdrawal Amount. We reserve the right to restrict the maximum amount of Protected Value that may be covered under the GMWB program under this Annuity or any other annuities that you own that are issued by Prudential Annuities or its affiliated companies. Termination of the Program The program terminates automatically when your Protected Value reaches zero based on your withdrawals. You may terminate the program at any time by notifying us. If you terminate the program, any guarantee provided by the benefit will terminate as of the date the termination is effective. The program terminates upon your surrender of your Annuity, upon due proof of death (unless your surviving spouse elects to continue your Annuity and the GMWB program or your Beneficiary elects to receive the amounts payable under the GMWB program in lieu of the death benefit) or upon your election to begin receiving annuity payments. The charge for the GMWB program will no longer be deducted from your Account Value upon termination of the program. Charges under the Program Currently, we deduct a charge equal to 0.35% of the average daily net assets of the Sub-accounts per year to purchase the GMWB program. The annual charge is deducted daily. .. If, during the seven years following the effective date of the program, you do not make any withdrawals, and do not make any additional Purchase Payments after a five-year period following the effective date of the program, the program will remain in effect; however, we will waive the annual charge going forward. If you make an additional Purchase Payment following the waiver of the annual charge, we will begin charging for the program. After year seven (7) following the effective date of the program, withdrawals will not cause a charge to be re-imposed. .. If you elect to step-up the Protected Value under the program, and on the date you elect to step-up, the charges under the program have changed for new purchasers, your program may be subject to the new charge level for the benefit. Additional Tax Considerations for Qualified Contracts/Arrangements If you purchase an Annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your Annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than 5% owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Protected Annual Withdrawal Amount, which will cause us to recalculate the Protected Value and the Protected Annual Withdrawal Amount, resulting in a lower amount payable in future Annuity Years. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as required minimum distribution provisions under the tax law. GUARANTEED MINIMUM INCOME BENEFIT (GMIB) The Guaranteed Minimum Income Benefit program described below is only being offered in those jurisdictions where we have received regulatory approval, and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Currently, the program can only be elected by new purchasers on the Issue Date of their Annuity. We may offer the program to existing Annuity Owners in the future, subject to our eligibility rules and restrictions. The Guaranteed Minimum Income Benefit program is not available if you elect any other optional living benefit. We offer a program that, after a seven-year waiting period, guarantees your ability to begin receiving income from your Annuity in the form of annuity payments based on a guaranteed minimum value (called the "Protected Income Value") that increases after the waiting period begins, regardless of the impact of market performance on your Account Value. The program may be appropriate for you if you anticipate using your Annuity as a future source of periodic fixed income payments for the remainder of your life and wish to ensure that the basis upon which your income payments will be calculated will achieve at least a minimum amount despite fluctuations in market performance. There is an additional charge if you elect the GMIB program. Key Feature - Protected Income Value The Protected Income Value is the minimum amount that we guarantee will be available (net of any applicable tax charge), after a waiting period of at least seven years, as a basis to begin receiving fixed annuity payments. The Protected Income Value is initially established on the effective date of the GMIB program and is equal to your Account Value on such date. Currently, since the GMIB program may only be elected at issue, the effective date is the Issue Date of your Annuity. The Protected Income Value is 56 increased daily based on an annual growth rate of 5%, subject to the limitations described below. The Protected Income Value is referred to as the "Protected Value" in the rider we issue for this benefit. The 5% annual growth rate is referred to as the "Roll-Up Percentage" in the rider we issue for this benefit. The Protected Income Value is subject to a limit of 200% (2X) of the sum of the Protected Income Value established on the effective date of the GMIB program, or the effective date of any step-up value, plus any additional Purchase Payments (and any Credit that is applied to such Purchase Payments in the case of Optimum Plus) made after the waiting period begins ("Maximum Protected Income Value"), minus the sum of any reductions in the Protected Income Value due to withdrawals you make from your Annuity after the waiting period begins. . Subject to the maximum age/durational limits described immediately below, we will no longer increase the Protected Income Value by the 5% annual growth rate once you reach the Maximum Protected Income Value. However, we will increase the Protected Income Value by the amount of any additional Purchase Payments after you reach the Maximum Protected Income Value. Further, if you make withdrawals after you reach the Maximum Protected Income Value, we will reduce the Protected Income Value and the Maximum Protected Income Value by the proportional impact of the withdrawal on your Account Value. . Subject to the Maximum Protected Income Value, we will no longer increase the Protected Income Value by the 5% annual growth rate after the later of the anniversary date on or immediately following the Annuitant's 80/th/ birthday or the 7/th/ anniversary of the later of the effective date of the GMIB program or the effective date of the most recent step-up. However, we will increase the Protected Income Value by the amount of any additional Purchase Payments (and any Credit that is applied to such Purchase Payments in the case of Optimum Plus). Further, if you make withdrawals after the Annuitant reaches the maximum age/duration limits, we will reduce the Protected Income Value and the Maximum Protected Income Value by the proportional impact of the withdrawal on your Account Value. . Subject to the Maximum Protected Income Value, if you make an additional Purchase Payment, we will increase the Protected Income Value by the amount of the Purchase Payment (and any Credit that is applied to such Purchase Payment in the case of Optimum Plus) and will apply the 5% annual growth rate on the new amount from the date the Purchase Payment is applied. . As described below, after the waiting period begins, cumulative withdrawals each Annuity Year that are up to 5% of the Protected Income Value on the prior anniversary of your Annuity will reduce the Protected Income Value by the amount of the withdrawal. Cumulative withdrawals each Annuity Year in excess of 5% of the Protected Income Value on the prior anniversary of your Annuity will reduce the Protected Income Value proportionately. All withdrawals after the Maximum Protected Income Value is reached will reduce the Protected Income Value proportionately. The 5% annual growth rate will be applied to the reduced Protected Income Value from the date of the withdrawal. Stepping-Up the Protected Income Value - You may elect to "step-up" or "reset" your Protected Income Value if your Account Value is greater than the current Protected Income Value. Upon exercise of the step-up provision, your initial Protected Income Value will be reset equal to your current Account Value. From the date that you elect to step-up the Protected Income Value, we will apply the 5% annual growth rate to the stepped-up Protected Income Value, as described above. You can exercise the step-up provision twice while the GMIB program is in effect, and only while the Annuitant is less than age 76. . A new seven-year waiting period will be established upon the effective date of your election to step-up the Protected Income Value. You cannot exercise your right to begin receiving annuity payments under the GMIB program until the end of the new waiting period. In light of this waiting period upon resets, it is not recommended that you reset your GMIB if the required beginning date under IRS minimum distribution requirements would commence during the 7 year waiting period. See "Tax Considerations" section in this prospectus for additional information on IRS requirements. . The Maximum Protected Income Value will be reset as of the effective date of any step-up. The new Maximum Protected Income Value will be equal to 200% of the sum of the Protected Income Value as of the effective date of the step-up plus any subsequent Purchase Payments (and any Credit that is applied to such Purchase Payments in the case of Optimum Plus), minus the impact of any withdrawals after the date of the step-up. . When determining the guaranteed annuity purchase rates for annuity payments under the GMIB program, we will apply such rates based on the number of years since the most recent step-up. . If you elect to step-up the Protected Income Value under the program, and on the date you elect to step-up, the charges under the GMIB program have changed for new purchasers, your program may be subject to the new charge going forward. . A step-up will increase the dollar-for-dollar limit on the anniversary of the Issue Date of the Annuity following such step-up. Impact of Withdrawals on the Protected Income Value - Cumulative withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals in any Annuity Year in excess of 5% of the Protected Income Value will reduce the Protected Income Value proportionately (see the examples of this calculation below). The 5% annual withdrawal amount is determined on each anniversary of the Issue Date (or on the Issue Date for the first Annuity Year) and applies to any withdrawals during the Annuity Year. This means that the amount available for withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each Annuity anniversary to reflect changes in the Protected Income Value during the prior Annuity Year. 57 The following examples of dollar-for-dollar and proportional reductions assume that: 1.) the Issue Date and the effective date of the GMIB program are October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any Credits in the case of Optimum Plus); 3.) an initial Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5% of $250,000). The values set forth here are purely hypothetical and do not reflect the charge for GMIB or any other fees and charges. Example 1. Dollar-For-Dollar Reduction A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year). No prior withdrawals have been taken. Immediately prior to the withdrawal, the Protected Income Value is $251,038.10 (the initial value accumulated for 31 days at an annual effective rate of 5%). As the amount withdrawn is less than the dollar-for-dollar limit: .. The Protected Income Value is reduced by the amount withdrawn (i.e., by $10,000, from $251,038.10 to $241,038.10). .. The remaining dollar-for-dollar limit ("Remaining Limit") for the balance of the first Annuity Year is also reduced by the amount withdrawn (from $12,500 to $2,500). Example 2. Dollar-For-Dollar and Proportional Reductions A second $10,000 withdrawal is taken on December 13, 2005 (still within the first Annuity Year). Immediately before the withdrawal, the Account Value is $220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn exceeds the Remaining Limit of $2,500 from Example 1: .. The Protected Income Value is first reduced by the Remaining Limit (from $242,006.64 to $239,506.64); .. The result is then further reduced by the ratio of A to B, where: -- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or $7,500). -- B is the Account Value less the Remaining Limit ($220,000 - $2,500, or $217,500). The resulting Protected Income Value is: $239,506.64 X (1 - $7,500 / $217,500), or $231,247.79. .. The Remaining Limit is set to zero (0) for the balance of the first Annuity Year. Example 3. Reset of the Dollar-For-Dollar Limit A $10,000 withdrawal is made on the first anniversary of the Issue Date, October 13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit: .. The Protected Income Value is reduced by the amount withdrawn (i.e., reduced by $10,000, from $240,838.37 to $230,838.37). .. The Remaining Limit for the balance of the second Annuity Year is also reduced by the amount withdrawn (from $12,041.92 to $2,041.92). Key Feature - GMIB Annuity Payments You can elect to apply the Protected Income Value to one of the available GMIB Annuity Payment Options on any anniversary date following the initial waiting period, or any subsequent waiting period established upon your election to step-up the Protected Income Value. Once you have completed the waiting period, you will have a 30-day period each year, prior to the Annuity anniversary, during which you may elect to begin receiving annuity payments under one of the available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on or immediately following the Annuitant's or your 95/th/ birthday or whichever is sooner, except for Annuities used as a funding vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on or immediately following the Annuitant's 92/nd/ birthday. Your Annuity or state law may require you to begin receiving annuity payments at an earlier date. The amount of each GMIB Annuity Payment will be determined based on the age and, where permitted by law, sex of the Annuitant by applying the Protected Income Value (net of any applicable tax charge that may be due) to the GMIB Annuity Payment Option you choose. We use special annuity purchase rates to calculate the amount of each payment due under the GMIB Annuity Payment Options. These special rates for the GMIB Annuity Payment Options are calculated using an assumed interest rate factor that provides for lower growth in the value applied to produce annuity payments than if you elected an annuity payment option that is not part of the GMIB program. These special rates also are calculated using other factors such as "age setbacks" (use of an age lower than the Annuitant's actual age) that result in lower payments than would result if you elected an annuity payment option that is not part of the GMIB program. Use of an age setback entails a longer assumed life for the Annuitant which in turn results in lower annuity payments. On the date that you elect to begin receiving GMIB Annuity Payments, we guarantee that your payments will be calculated based on your Account Value and our then current annuity purchase rates if the payment amount calculated on this basis would be higher than it would be based on the Protected Income Value and the special GMIB annuity purchase rates. 58 GMIB Annuity Payment Option 1 - Payments for Life with a Certain Period Under this option, monthly annuity payments will be made until the death of the Annuitant. If the Annuitant dies before having received 120 monthly annuity payments, the remainder of the 120 monthly annuity payments will be made to the Beneficiary. GMIB Annuity Payment Option 2 - Payments for Joint Lives with a Certain Period Under this option, monthly annuity payments will be made until the death of both the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant die before having received 120 monthly annuity payments, the remainder of the 120 monthly annuity payments will be made to the Beneficiary. .. If the Annuitant dies first, we will continue to make payments until the later of the death of the Joint Annuitant and the end of the period certain. However, if the Joint Annuitant is still receiving annuity payments following the end of the certain period, we will reduce the amount of each subsequent payment to 50% of the original payment amount. .. If the Joint Annuitant dies first, we will continue to make payments until the later of the death of the Annuitant and the end of the period certain. You cannot withdraw your Account Value or the Protected Income Value under either GMIB Annuity Payment Option once annuity payments have begun. We may make other payout frequencies available, such as quarterly, semi-annually or annually. Other Important Considerations .. You should note that GMIB is designed to provide a type of insurance that serves as a safety net only in the event your Account Value declines significantly due to negative investment performance. If your Account Value is not significantly affected by negative investment performance, it is unlikely that the purchase of the GMIB will result in your receiving larger annuity payments than if you had not purchased GMIB. This is because the assumptions that we use in computing the GMIB, such as the annuity purchase rates, (which include assumptions as to age-setbacks and assumed interest rates), are more conservative than the assumptions that we use in computing annuity payout options outside of GMIB. Therefore, you may generate higher income payments if you were to annuitize a lower Account Value at the current annuity purchase rates, than if you were to annuitize under the GMIB with a higher Protected Value than your Account Value but, at the annuity purchase rates guaranteed under the GMIB. The GMIB program does not directly affect an Annuity's Account Value, Surrender Value or the amount payable under either the basic Death Benefit provision of the Annuity or any optional Death Benefit provision. If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Income Value. The Protected Income Value is only applicable if you elect to begin receiving annuity payments under one of the GMIB annuity options after the waiting period. .. Each Annuity offers other annuity payment options that you can elect which do not impose an additional charge, but which do not offer to guarantee a minimum value on which to make annuity payments. .. Where allowed by law, we reserve the right to limit subsequent Purchase Payments if we determine, at our sole discretion, that based on the timing of your Purchase Payments and withdrawals, your Protected Income Value is increasing in ways we did not intend. In determining whether to limit Purchase Payments, we will look at Purchase Payments which are disproportionately larger than your initial Purchase Payment and other actions that may artificially increase the Protected Income Value. .. We currently limit the Sub-accounts in which you may allocate Account Value if you participate in this program. We reserve the right to transfer any Account Value in a prohibited investment option to an eligible investment option. Should we prohibit access to any investment option, any transfers required to move Account Value to eligible investment options will not be counted in determining the number of free transfers during an Annuity Year. We may also require that you allocate your Account Value according to an asset allocation model. .. If you change the Annuitant after the effective date of the GMIB program, the period of time during which we will apply the 5% annual growth rate may be changed based on the age of the new Annuitant. If the new Annuitant would not be eligible to elect the GMIB program based on his or her age at the time of the change, then the GMIB program will terminate. .. Annuity payments made under the GMIB program are subject to the same tax treatment as any other annuity payment. .. At the time you elect to begin receiving annuity payments under the GMIB program or under any other annuity payment option we make available, the protection provided by an Annuity's basic Death Benefit or any optional Death Benefit provision you elected will no longer apply. Election of the Program Currently, the GMIB program can only be elected at the time that you purchase your Annuity. The Annuitant must be age 75 or less as of the effective date of the GMIB program. In the future, we may offer existing Annuity Owners the option to elect the GMIB program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. If you elect the GMIB program after the Issue Date of your Annuity, the program will be effective as of the date of election. Your Account Value as of that date will be used to calculate the Protected Income Value as of the effective date of the program. Termination of the Program The GMIB program cannot be terminated by the Owner once elected. The GMIB program automatically terminates as of the date your Annuity is fully surrendered, on the date the Death Benefit is payable to your Beneficiary (unless your surviving spouse elects 59 to continue your Annuity), or on the date that your Account Value is transferred to begin making annuity payments. The GMIB program may also be terminated if you designate a new Annuitant who would not be eligible to elect the GMIB program based on his or her age at the time of the change. Upon termination of the GMIB program we will deduct the charge from your Account Value for the portion of the Annuity Year since the prior anniversary of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year). Charges under the Program Currently, we deduct a charge equal to 0.50% per year of the average Protected Income Value for the period the charge applies. Because the charge is calculated based on the average Protected Income Value, it does not increase or decrease based on changes to the Annuity's Account Value due to market performance. The dollar amount you pay each year will increase in any year the Protected Income Value increases, and it will decrease in any year the Protected Income Value decreases due to withdrawal, irrespective of whether your Account Value increases or decreases. The charge is deducted annually in arrears each Annuity Year on the anniversary of the Issue Date of an Annuity. We deduct the amount of the charge pro-rata from the Account Value allocated to the Sub-accounts and the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed Allocation. If you surrender your Annuity, begin receiving annuity payments under the GMIB program or any other annuity payment option we make available during an Annuity Year, or the GMIB program terminates, we will deduct the charge for the portion of the Annuity Year since the prior anniversary of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year). No charge applies after the Annuity Date. LIFETIME FIVE/SM/ INCOME BENEFIT (LIFETIME FIVE/SM/) The Lifetime Five Income Benefit program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Lifetime Five can be elected only where the Annuitant and the Owner are the same person or, if the Annuity Owner is an entity, where there is only one Annuitant. Currently, if you elect Lifetime Five and subsequently terminate the benefit, there may be a restriction on your ability to re-elect Lifetime Five and elect another of our lifetime withdrawal benefits. The Annuitant must be at least 45 years old when the program is elected. The Lifetime Five Income Benefit program is not available if you elect any other optional living benefit. As long as your Lifetime Five Income Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available option(s) with this program. Currently, you are required to enroll and maintain your Account Value in the asset allocation program if you elect this benefit. We offer a program that guarantees your ability to withdraw amounts equal to a percentage of an initial principal value (called the "Protected Withdrawal Value"), regardless of the impact of market performance on your Account Value, subject to our program rules regarding the timing and amount of withdrawals. There are two options - one is designed to provide an annual withdrawal amount for life (the "Life Income Benefit") and the other is designed to provide a greater annual withdrawal amount as long as there is Protected Withdrawal Value (adjusted as described below) (the "Withdrawal Benefit"). If there is no Protected Withdrawal Value, the withdrawal benefit will be zero. You do not choose between these two options; each option will continue to be available as long as your Annuity has an Account Value and the Lifetime Five is in effect. Certain benefits under Lifetime Five may remain in effect even if the Account Value of your Annuity is zero. The program may be appropriate if you intend to make periodic withdrawals from your Annuity and wish to ensure that market performance will not affect your ability to receive annual payments. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the program. Key Feature - Protected Withdrawal Value The Protected Withdrawal Value is used to determine the amount of each annual payment under the Life Income Benefit and the Withdrawal Benefit. The initial Protected Withdrawal Value is determined as of the date you make your first withdrawal under your Annuity following your election of Lifetime Five. The initial Protected Withdrawal Value is equal to the greater of (A) the Account Value on the date you elect Lifetime Five, plus any additional Purchase Payments, as applicable, each growing at 5% per year from the date of your election of the program, or application of the Purchase Payment to your Annuity, until the date of your first withdrawal or the 10/th/ anniversary of the benefit effective date, if earlier (B) the Account Value on the date of the first withdrawal from your Annuity, prior to the withdrawal, and (C) the highest Account Value on each Annuity anniversary, plus subsequent Purchase Payments prior to the first withdrawal or the 10th anniversary of the benefit effective date, if earlier. With respect to (A) and (C) above, after the 10th anniversary of the benefit effective date, each value is increased by the amount of any subsequent Purchase Payments. With respect to Optimum Plus, Credits are added to Purchase Payments for purposes of calculating the Protected Withdrawal Value, the Annual Income Amount and the Annual Withdrawal Amount (see below for a description of Annual Income Amount and Annual Withdrawal Amount). . If you elect the Lifetime Five program at the time you purchase your Annuity, the Account Value will be your initial Purchase Payment. 60 . For existing Owners who are electing the Lifetime Five benefit, the Account Value on the date of your election of the Lifetime Five program will be used to determine the initial Protected Withdrawal Value. . If you make additional Purchase Payments after your first withdrawal, the Protected Withdrawal Value will be increased by the amount of each additional Purchase Payment. The Protected Withdrawal Value is reduced each time a withdrawal is made on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata basis for withdrawals in an Annuity Year in excess of that amount until the Protected Withdrawal Value is reduced to zero. At that point the Annual Withdrawal Amount will be zero until such time (if any) as the Annuity reflects a Protected Withdrawal Value (for example, due to a step-up or additional Purchase Payments being made into the Annuity). Step-Up of the Protected Withdrawal Value You may elect to step-up your Protected Withdrawal Value if, due to positive market performance, your Account Value is greater than the Protected Withdrawal Value. If you elected the Lifetime Five program on or after March 20, 2006: . you are eligible to step-up the Protected Withdrawal Value on or after the 1/st/ anniversary of the first withdrawal under the Lifetime Five program . the Protected Withdrawal Value can be stepped up again on or after the 1/st/ anniversary of the preceding step-up If you elected the Lifetime Five program prior to March 20, 2006 and that original election remains in effect: . you are eligible to step-up the Protected Withdrawal Value on or after the 5/th/ anniversary of the first withdrawal under the Lifetime Five program . the Protected Withdrawal Value can be stepped up again on or after the 5/th/ anniversary of the preceding step-up In either scenario (i.e., elections before or after March 20, 2006) if you elect to step-up the Protected Withdrawal Value under the program, and on the date you elect to step-up, the charges under the Lifetime Five program have changed for new purchasers, your program may be subject to the new charge at the time of step-up. Upon election of the step-up, we increase the Protected Withdrawal Value to be equal to the then current Account Value. For example, assume your initial Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you are eligible to step-up the Protected Withdrawal Value, your Account Value is equal to $75,000. You could elect to step-up the Protected Withdrawal Value to $75,000 on the date you are eligible. If your current Annual Income Amount and Annual Withdrawal Amount are less than they would be if we did not reflect the step-up in Protected Withdrawal Value, then we will increase these amounts to reflect the step-up as described below. An optional automatic step-up ("Auto Step-Up") feature is available for this benefit. This feature may be elected at the time the benefit is elected or at any time while the benefit is in force. If you elected the Lifetime Five program on or after March 20, 2006 and have also elected the Auto Step-Up feature: . the first Auto Step-Up opportunity will occur on the 1/st/ Annuity Anniversary that is at least one year after the later of (1) the date of the first withdrawal under the Lifetime Five program or (2) the most recent step-up . your Protected Withdrawal Value will only be stepped-up if 5% of the Account Value is greater than the Annual Income Amount by any amount . if at the time of the first Auto Step-Up opportunity, 5% of the Account Value is not greater than the Annual Income Amount, an Auto Step-Up opportunity will occur on each successive Annuity Anniversary until a step-up occurs . once a step-up occurs, the next Auto Step-Up opportunity will occur on the 1/st/ Annuity Anniversary that is at least one year after the most recent step-up If you elected the Lifetime Five program prior to March 20, 2006 and have also elected the Auto Step-Up feature: . the first Auto Step-Up opportunity will occur on the Annuity Anniversary that is at least 5 years after the later of (1) the date of the first withdrawal under the Lifetime Five Program benefit or (2) the most recent step-up . your Protected Withdrawal Value will only be stepped-up if 5% of the Account Value is greater than the Annual Income Amount by 5% or more . if at the time of the first Auto Step-Up opportunity, 5% of the Account Value does not exceed the Annual Income Amount by 5% or more, an Auto Step-Up opportunity will occur on each successive Annuity Anniversary until a step-up occurs . once a step-up occurs, the next Auto Step-Up opportunity will occur on the Annuity Anniversary that is at least 5 years after the most recent step-up In either scenario (i.e., elections before or after March 20, 2006), if on the date that we implement an Auto Step-Up to your Protected Withdrawal Value, the charge for Lifetime Five has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Subject to our rules and restrictions, you will still be permitted to manually step-up the Protected Withdrawal Value even if you elect the Auto Step-Up feature. 61 Key Feature - Annual Income Amount under the Life Income Benefit The initial Annual Income Amount is equal to 5% of the initial Protected Withdrawal Value. Under the Lifetime Five program, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. A withdrawal can be considered Excess Income under the Life Income Benefit even though it does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When you elect a step-up (or an auto step-up is effected), your Annual Income Amount increases to equal 5% of your Account Value after the step-up if such amount is greater than your Annual Income Amount. Your Annual Income Amount also increases if you make additional Purchase Payments. The amount of the increase is equal to 5% of any additional Purchase Payments (and any associated Credit with respect to Optimum Plus). Any increase will be added to your Annual Income Amount beginning on the day that the step-up is effective or the Purchase Payment is made. A determination of whether you have exceeded your Annual Income Amount is made at the time of each withdrawal; therefore a subsequent increase in the Annual Income Amount will not offset the effect of a withdrawal that exceeded the Annual Income Amount at the time the withdrawal was made. Key Feature - Annual Withdrawal Amount under the Withdrawal Benefit The initial Annual Withdrawal Amount is equal to 7% of the initial Protected Withdrawal Value. Under the Lifetime Five program, if your cumulative withdrawals each Annuity Year are less than or equal to the Annual Withdrawal Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar basis. If your cumulative withdrawals are in excess of the Annual Withdrawal Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Withdrawal to the Account Value immediately prior to such withdrawal (see the examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. When you elect a step-up (or an auto step-up is effected), your Annual Withdrawal Amount increases to equal 7% of your Account Value after the step-up if such amount is greater than your Annual Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make additional Purchase Payments. The amount of the increase is equal to 7% of any additional Purchase Payments (and any associated Credit with respect to Optimum Plus). A determination of whether you have exceeded your Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a subsequent increase in the Annual Withdrawal Amount will not offset the effect of a withdrawal that exceeded the Annual Withdrawal Amount at the time the withdrawal was made. The Lifetime Five program does not affect your ability to make withdrawals under your Annuity or limit your ability to request withdrawals that exceed the Annual Income Amount and the Annual Withdrawal Amount. You are not required to withdraw all or any portion of the Annual Withdrawal Amount or Annual Income Amount in each Annuity Year. . If, cumulatively, you withdraw an amount less than the Annual Withdrawal Amount under the Withdrawal Benefit in any Annuity Year, you cannot carry-over the unused portion of the Annual Withdrawal Amount to subsequent Annuity Years. However, because the Protected Withdrawal Value is only reduced by the actual amount of withdrawals you make under these circumstances, any unused Annual Withdrawal Amount may extend the period of time until the remaining Protected Withdrawal Value is reduced to zero. . If, cumulatively, you withdraw an amount less than the Annual Income Amount under the Life Income Benefit in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. However, because the Protected Withdrawal Value is only reduced by the actual amount of withdrawals you make under these circumstances, any unused Annual Income Amount may extend the period of time until the remaining Protected Withdrawal Value is reduced to zero. Examples of Withdrawal The following examples of dollar-for-dollar and proportional reductions of the Protected Withdrawal Value, Annual Withdrawal Amount and Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of $250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; and 4.) the first withdrawal occurs on March 1, 2006 when the Account Value is equal to $263,000;. The values set forth here are purely hypothetical, and do not reflect the charge for Lifetime Five or any other fees and charges. The initial Protected Withdrawal Value is calculated as the greatest of (a), (b) and (c): (a)Purchase payment accumulated at 5% per year from February 1, 2005 until March 1, 2006 (393 days) = $250,000 X 1.05/(393/365)/ = $263,484.33 (b)Account Value on March 1, 2006 (the date of the first withdrawal) = $263,000 (c)Account Value on February 1, 2006 (the first Annuity Anniversary) = $265,000 62 Therefore, the initial Protected Withdrawal Value is equal to $265,000. The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life Income Benefit (5% of $265,000). Example 1. Dollar-For-Dollar reduction If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual Withdrawal Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 - $10,000 = $8,550 Annual Withdrawal Amount for future Annuity Years remains at $18,550 .. Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000 = $3,250. .. Annual Income Amount for future Annuity Years remains at $13,250 .. Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000 Example 2. Dollar-For-Dollar and Proportional Reductions (a)If $15,000 was withdrawn (more than the Annual Income Amount but less than the Annual Withdrawal Amount) on March 1, 2006, then the following values would result: . Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 - $15,000 = $3,550 . Annual Withdrawal Amount for future Annuity Years remains at $18,550 . Remaining Annual Income Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 = $1,750) reduces Annual Income Amount for future Annuity Years. . Reduction to Annual Income Amount = Excess Income/ Account Value before Excess Income X Annual Income Amount = $1,750/($263,000 - $13,250) X $13,250 = $93. Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157 . Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000 (b)If $25,000 was withdrawn (more than both the Annual Income Amount and the Annual Withdrawal Amount) on March 1, 2006, then the following values would result: . Remaining Annual Withdrawal Amount for current Annuity Year = $0 . Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 = $6,450) reduces Annual Withdrawal Amount for future Annuity Years. . Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value before Excess Withdrawal X Annual Withdrawal Amount = $6,450/($263,000 - $18,550) X $18,550 = $489 Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 = $18,061 . Remaining Annual Income Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 = $11,750) reduces Annual Income Amount for future Annuity Years. . Reduction to Annual Income Amount = Excess Income/ Account Value before Excess Income X Annual Income Amount = $11,750/($263,000 - $13,250) X $13,250 = $623 . Annual Income Amount for future Annuity Years = $13,250 - $623 = $12,627 . Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount ($18,550) from $265,000 to $246,450. It is further reduced by the greater of a dollar-for-dollar reduction or a proportional reduction. Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450 . Proportional reduction = Excess Withdrawal/Account Value before Excess Withdrawal X Protected Withdrawal Value = $6,450/($263,000 - $18,550) X $246,450 = $6,503. Protected Withdrawal Value = $246,450 - max {$6,450, $6,503} = $239,947 BENEFITS UNDER THE LIFETIME FIVE PROGRAM . If your Account Value is equal to zero, and the cumulative withdrawals in the current Annuity Year are greater than the Annual Withdrawal Amount, the Lifetime Five program will terminate. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount and amounts are still payable under both the Life Income Benefit and the Withdrawal Benefit, you will be given the choice of receiving the payments under the Life Income Benefit or under the Withdrawal Benefit. Thus, in that scenario, the remaining amounts under the Life Income Benefit and the Withdrawal Benefit would be payable even though your Account Value was reduced to zero. Once you make this election we will make an additional payment for that Annuity Year equal to either the remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity Year, if any, depending on the option you choose. In subsequent Annuity Years we make payments that equal either the Annual Income Amount or the Annual Withdrawal Amount as described in this Prospectus. You will not be able to change the option after 63 your election and no further Purchase Payments will be accepted under your Annuity. If you do not make an election, we will pay you annually under the Life Income Benefit. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount but less than or equal to the Annual Withdrawal Amount and amounts are still payable under the Withdrawal Benefit, you will receive the payments under the Withdrawal Benefit. In the year of a withdrawal that reduced your Account Value to zero, we will make an additional payment to equal any remaining Annual Withdrawal Amount and make payments equal to the Annual Withdrawal Amount in each subsequent year (until the Protected Withdrawal Value is depleted). Once your Account Value equals zero no further Purchase Payments will be accepted under your Annuity. . If annuity payments are to begin under the terms of your Annuity or if you decide to begin receiving annuity payments and there is any Annual Income Amount due in subsequent Annuity Years or any remaining Protected Withdrawal Value, you can elect one of the following three options: (1)apply your Account Value to any annuity option available; or (2)request that, as of the date annuity payments are to begin, we make annuity payments each year equal to the Annual Income Amount. We make such annuity payments until the Annuitant's death; or (3)request that, as of the date annuity payments are to begin, we pay out any remaining Protected Withdrawal Value as annuity payments. Each year such annuity payments will equal the Annual Withdrawal Amount or the remaining Protected Withdrawal Value if less. We make such annuity payments until the earlier of the Annuitant's death or the date the Protected Withdrawal Value is depleted. We must receive your request in a form acceptable to us at our office. . In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments as a single life fixed annuity with five payments certain using the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such annuity payments will be the greater of: (1)the present value of future Annual Income Amount payments. Such present value will be calculated using the greater of the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. . If no withdrawal was ever taken, we will determine a Protected Withdrawal Value and calculate an Annual Income Amount and an Annual Withdrawal Amount as if you made your first withdrawal on the date the annuity payments are to begin. Other Important Considerations . Withdrawals under the Lifetime Five program are subject to all of the terms and conditions of your Annuity, including any applicable CDSC. . Withdrawals made while the Lifetime Five program is in effect will be treated, for tax purposes, in the same way as any other withdrawals under your Annuity. The Lifetime Five program does not directly affect your Annuity's Account Value or Surrender Value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Withdrawal Value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Lifetime Five program. The Lifetime Five program provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Protected Withdrawal Value or Annual Income Amount in the form of periodic benefit payments. . In general, you must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. Election of the Program The Lifetime Five program can be elected at the time that you purchase your Annuity. We also offer existing Owners the option to elect the Lifetime Five program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. Your Account Value as the date of election will be used as a basis to calculate the initial Protected Withdrawal Value, the initial Protected Annual Withdrawal Amount, and the Annual Income Amount. Currently, if you terminate the program, you generally will only be permitted to re-elect Lifetime Five or elect another lifetime withdrawal benefit on any anniversary of the Issue Date that is at least 90 calendar days from the date the benefit was last terminated. 64 If you elected Lifetime Five prior to March 20, 2006, and you terminate the program, there will be no waiting period before you can re-elect the program or elect Highest Daily Lifetime Five or Spousal Lifetime Five provided that you had not previously elected Lifetime Five after the Issue Date and within the same Annuity Year that you terminated Lifetime Five. If you had previously elected Lifetime Five after the Issue Date and within the same Annuity Year that you terminate Lifetime Five, you will be able to re-elect the program or elect Highest Daily Lifetime Five or Spousal Lifetime Five on any date on or after the next anniversary of the Issue Date. However, once you choose to re-elect/elect, the waiting period described above will apply to subsequent re-elections. We reserve the right to limit the re-election/election frequency in the future. Before making any such change to the re-election/election frequency, we will provide prior notice to Owners who have an effective Lifetime Five Income Benefit. Termination of the Program The program terminates automatically when your Protected Withdrawal Value and Annual Income Amount equal zero. You may terminate the program at any time by notifying us. If you terminate the program, any guarantee provided by the benefit will terminate as of the date the termination is effective and certain restrictions on re-election of the benefit will apply as described above. The program terminates upon your surrender of your Annuity, upon the death of the Annuitant (but your surviving spouse may elect a new Lifetime Five if your spouse elects the spousal continuance option and your spouse would then be eligible to elect the benefit if he or she was a new purchaser), upon a change in ownership of your Annuity that changes the tax identification number of the Owner, upon change in the Annuitant or upon your election to begin receiving annuity payments. While you may terminate your program at any time, we may not terminate the program other than in the circumstances listed above. However, we may stop offering the program for new elections or re-elections at any time in the future. The charge for the Lifetime Five program will no longer be deducted from your Account Value upon termination of the program. Additional Tax Considerations If you purchase an Annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your Annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount required under the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount, which will cause us to increase the Annual Income Amount and the Annual Withdrawal Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. Any such payments will reduce your Protected Withdrawal Value. In addition, the amount and duration of payments under the annuity payment and Death Benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. SPOUSAL LIFETIME FIVE/SM/ INCOME BENEFIT (SPOUSAL LIFETIME FIVE/SM/) The Spousal Lifetime Five program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Currently, if you elect Spousal Lifetime Five and subsequently terminate the benefit, there may be a restriction on your ability to re-elect Spousal Lifetime Five or elect another lifetime withdrawal benefit. (See "Election of and Designations under the Program" below for details) Spousal Lifetime Five must be elected based on two Designated Lives, as described below. Each Designated Life must be at least 55 years old when the benefit is elected. The Spousal Lifetime Five program is not available if you elect any other optional living benefit or optional death benefit. As long as your Spousal Lifetime Five Income Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available option(s) with this program. Currently, you are required to enroll and maintain your Account Value in the asset allocation program if you elect this benefit. We offer a program that guarantees until the later death of two natural persons that are each other's spouses at the time of election of Spousal Lifetime Five and at the first death of one of them (the "Designated Lives", each a "Designated Life") the ability to withdraw an annual amount ("Spousal Life Income Benefit") equal to a percentage of an initial principal value (the "Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The Spousal Life Income Benefit may remain in effect even if the Account Value of the Annuity is zero. The program may be appropriate if you intend to make periodic withdrawals from your Annuity, wish to ensure that market performance will not affect your ability to receive annual payments, and wish either spouse to be able to continue the Spousal Life Income Benefit after the death of the first. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the program. 65 Key Feature - Initial Protected withdrawal Value The Protected Withdrawal Value is used to determine the amount of each annual payment under the Spousal Life Income Benefit. The initial Protected Withdrawal Value is determined as of the date you make your first withdrawal under the Annuity following your election of Spousal Lifetime Five. The initial Protected Withdrawal Value is equal to the greater of (A) the Account Value on the date you elect Spousal Lifetime Five, plus any additional Purchase Payments as applicable, each growing at 5% per year from the date of your election of the program, or application of the Purchase Payment to your Annuity, until the date of your first withdrawal or the 10/th/ anniversary of the benefit effective date, if earlier (B) the Account Value on the date of the first withdrawal from your Annuity, prior to the withdrawal, and (C) the highest Account Value on each Annuity anniversary, plus subsequent Purchase Payments prior to the first withdrawal or the 10th anniversary of the benefit effective date, if earlier. With respect to (A) and (C) above, after the 10th anniversary of the benefit effective date, each value is increased by the amount of any subsequent Purchase Payments. With respect to Optimum Plus, Credits are added to Purchase Payments for purposes of calculating the Protected Withdrawal Value and the Annual Income Amount (see below for a description of Annual Income Amount). . If you elect the Spousal Lifetime Five program at the time you purchase your Annuity, the Account Value will be your initial Purchase Payment. . For existing Owners who are electing the Spousal Lifetime Five benefit, the Account Value on the date of your election of the Spousal Lifetime Five program will be used to determine the initial Protected Withdrawal Value. Key Feature - Annual Income Amount under the Spousal Life Income Benefit The initial Annual Income Amount is equal to 5% of the initial Protected Withdrawal Value. Under the Spousal Lifetime Five program, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Annual Income Amount under the Spousal Life Income Benefit in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. The Spousal Lifetime Five program does not affect your ability to make withdrawals under your Annuity or limit your ability to request withdrawals that exceed the Annual Income Amount. Step-Up of Annual Income Amount You may elect to step-up your Annual Income Amount if, due to positive market performance, 5% of your Account Value is greater than the Annual Income Amount. You are eligible to step-up the Annual Income Amount on or after the 1/st/ anniversary of the first withdrawal under the Spousal Lifetime Five program. The Annual Income Amount can be stepped up again on or after the 1/st/ anniversary of the preceding step-up. If you elect to step-up the Annual Income Amount under the program, and on the date you elect to step-up, the charges under the Spousal Lifetime Five program have changed for new purchasers, your program may be subject to the new charge at the time of such step-up. When you elect a step-up, your Annual Income Amount increases to equal 5% of your Account Value after the step-up. Your Annual Income Amount also increases if you make additional Purchase Payments. The amount of the increase is equal to 5% of any additional Purchase Payments (plus any Credit with respect to Optimum Plus). Any increase will be added to your Annual Income Amount beginning on the day that the step-up is effective or the Purchase Payment is made. A determination of whether you have exceeded your Annual Income Amount is made at the time of each withdrawal; therefore a subsequent increase in the Annual Income Amount will not offset the effect of a withdrawal that exceeded the Annual Income Amount at the time the withdrawal was made. An optional automatic step-up ("Auto Step-Up") feature is available for this benefit. This feature may be elected at the time the benefit is elected or at any time while the benefit is in force. If you elect this feature, the first Auto Step-Up opportunity will occur on the 1/st/ Annuity Anniversary that is at least one year after the later of (1) the date of the first withdrawal under the Spousal Lifetime Five program or (2) the most recent step-up. At this time, your Annual Income Amount will be stepped-up if 5% of your Account Value is greater than the Annual Income Amount by any amount. If 5% of the Account Value does not exceed the Annual Income Amount, then an Auto Step-Up opportunity will occur on each successive Annuity Anniversary until a step-up occurs. Once a step-up occurs, the next Auto Step-Up opportunity will occur on the 1/st/ Annuity Anniversary that is at least 1 year after the most recent step-up. If, on the date that we implement an Auto Step-Up to your Annual Income Amount, the charge for Spousal Lifetime Five has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Subject to our rules and restrictions, you will still be permitted to manually step-up the Annual Income Amount even if you elect the Auto Step-Up feature. Examples of Withdrawals and Step-Up The following examples of dollar-for-dollar and proportional reductions and the step-up of the Annual Income Amount assume: 1) the Issue Date and the Effective Date of the Spousal Lifetime Five program are February 1, 2005; 2) an initial Purchase Payment of $250,000; 3) the Account Value on February 1, 2006 is equal to $265,000; 4) the first withdrawal occurs on 66 March 1, 2006 when the Account Value is equal to $263,000; and 5) the Account Value on February 1, 2010 is equal to $280,000. The values set forth here are purely hypothetical, and do not reflect the charge for the Spousal Lifetime Five or any other fees and charges. The initial Protected Withdrawal Value is calculated as the greatest of (a), (b) and (c): (a)Purchase payment accumulated at 5% per year from February 1, 2005 until March 1, 2006 (393 days) = $250,000 X 1.05/(393/365)/ = $263,484.33 (b)Account Value on March 1, 2006 (the date of the first withdrawal) = $263,000 (c)Account Value on February 1, 2006 (the first Annuity Anniversary) = $265,000 Therefore, the initial Protected Withdrawal Value is equal to $265,000. The Annual Income Amount is equal to $13,250 under the Spousal Life Income Benefit (5% of $265,000). Example 1. Dollar-For-Dollar Reduction If $10,000 was withdrawn (less than the Annual Income Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000 = $3,250 .. Annual Income Amount for future Annuity Years remains at $13,250 Example 2. Dollar-For-Dollar and Proportional Reductions (a)If $15,000 was withdrawn (more than the Annual Income Amount) on March 1, 2006, then the following values would result: .. Remaining Annual Income Amount for current Annuity Year = $0 Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 = $1,750) reduces Annual Income Amount for future Annuity Years. .. Reduction to Annual Income Amount = Excess Income/ Account Value before Excess Income X Annual Income Amount = $1,750 / ($263,000 - $13,250) X $13,250 = $93 .. Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157 Example 3. Step-Up of the Annual Income Amount If a step-up of the Annual Income Amount is requested on February 1, 2010 or the Auto Step-Up feature was elected, the step-up would occur because 5% of the Account Value, which is $14,000 (5% of $280,000), is greater than the Annual Income Amount of $13,250. The new Annual Income Amount will be equal to $14,000. BENEFITS UNDER THE SPOUSAL LIFETIME FIVE PROGRAM To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount and amounts are still payable under the Spousal Life Income Benefit, we will make an additional payment for that Annuity Year equal to the remaining Annual Income Amount for the Annuity Year, if any. Thus, in that scenario, the remaining Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Annual Income Amount as described in this Prospectus. No further Purchase Payments will be accepted under your Annuity. We will make payments until the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount, the Spousal Life Income Benefit terminates and no additional payments will be made. .. If annuity payments are to begin under the terms of your Annuity or if you decide to begin receiving annuity payments and there is any Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any annuity option available; or (2)request that, as of the date annuity payments are to begin, we make annuity payments each year equal to the Annual Income Amount. We will make payments until the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. We must receive your request in a form acceptable to us at our office. .. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments as a joint and survivor or single (as applicable) life fixed annuity with five payments certain using the same basis that is used to calculate the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such annuity payments will be the greater of: (1)the present value of future Annual Income Amount payments. Such present value will be calculated using the same basis that is used to calculate the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. 67 .. If no withdrawal was ever taken, we will determine an initial Protected Withdrawal Value and calculate an Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. Other Important Considerations . Withdrawals under the Spousal Lifetime Five program are subject to all of the terms and conditions of the Annuity, including any CDSC. . Withdrawals made while the Spousal Lifetime Five program is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Spousal Lifetime Five program does not directly affect the Annuity's Account Value or Surrender Value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity, you will receive the current Surrender Value, not the Protected Withdrawal Value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Spousal Lifetime Five program. The Spousal Lifetime Five program provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. . In general, you must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. . There may be circumstances where you will continue to be charged the full amount for the Spousal Lifetime Five program even when the benefit is only providing a guarantee of income based on one life with no survivorship. . In order for the Surviving Designated Life to continue the Spousal Lifetime Five program upon the death of an owner, the Designated Life must elect to assume ownership of the Annuity under the spousal continuation option. When the Annuity is owned by a Custodial Account, in order for Spousal Lifetime Five to be continued after the death of the first Designated Life (the Annuitant), the Custodial Account must elect to continue the Annuity and the second Designated Life (the Contingent Annuitant) will be named as the new Annuitant. See "Spousal Designations" and "Spousal - Assumption of Annuity" in this Prospectus. Election of and Designations under the Program Spousal Lifetime Five can only be elected based on two Designated Lives. Designated Lives must be natural persons who are each other's spouses at the time of election of the program and at the death of the first of the Designated Lives to die. Currently, the program may only be elected where the Owner, Annuitant and Beneficiary Designations are as follows: . One Annuity Owner, where the Annuitant and the Owner are the same person and the beneficiary is the Owner's spouse. The Owner/Annuitant and the beneficiary each must be at least 55 years old at the time of election; or . Co-Annuity Owners, where the Owners are each other's spouses. The Beneficiary Designation must be the surviving spouse. The first named Owner must be the Annuitant. Both Owners must each be at least 55 years old at the time of election: or . One Annuity Owner, where the Owner is a custodial account established to hold retirement assets for the benefit of the Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code (or any successor Code section thereto) ("Custodial Account"), the Beneficiary is the Custodial Account and the spouse of the Annuitant is the Contingent Annuitant. Both the Annuitant and Contingent Annuitant must each be at least 55 years old at the time of election. No Ownership changes or Annuitant changes will be permitted once this program is elected. However, if the Annuity is co-owned, the Owner that is not the Annuitant may be removed without affecting the benefit. The Spousal Lifetime Five program can be elected at the time that you purchase your Annuity. We also offer existing Owners the option to elect the Spousal Lifetime Five program after the Issue Date of their Annuity, subject to our eligibility rules and restrictions. Your Account Value as the date of election will be used as a basis to calculate the initial Protected Withdrawal Value and the Annual Income Amount. Currently, if you terminate the program, you may, for certain optional benefits, be permitted to elect another lifetime withdrawal benefit only on any anniversary of the Issue Date that is at least 90 calendar days from the date the benefit was last terminated. We reserve the right to further limit the election frequency in the future. Before making any such change to the election frequency, we will provide prior notice to Owners who have an effective Spousal Lifetime Five Income Benefit. Termination of the Program The program terminates automatically when your Annual Income Amount equals zero. You may terminate the program at any time by notifying us. If you terminate the program, any guarantee provided by the benefit will terminate as of the date the termination is effective and certain restrictions on re-election of the benefit will apply as described 68 above. We reserve the right to further limit the frequency election in the future. The program terminates upon your surrender of the Annuity, upon the first Designated Life to die if the Annuity is not continued, upon the second Designated Life to die or upon your election to begin receiving annuity payments. The charge for the Spousal Lifetime Five program will no longer be deducted from your Account Value upon termination of the program. Additional Tax Considerations If you purchase an Annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or an employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your Annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than 5 percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount required under the Code may exceed the Annual Income Amount, which will cause us to increase the Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and Death Benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. HIGHEST DAILY LIFETIME FIVE/SM/ INCOME BENEFIT (HD5/SM/) The Highest Daily Lifetime Five program described below is only being offered in those jurisdictions where we have received regulatory approval and will be offered subsequently in other jurisdictions when we receive regulatory approval in those jurisdictions. Certain terms and conditions may differ between jurisdictions once approved. Highest Daily Lifetime Five is offered as an alternative to Lifetime Five and Spousal Lifetime Five. Currently, if you elect Highest Daily Lifetime Five and subsequently terminate the benefit, you will not be able to re-elect Highest Daily Lifetime Five, and may have a waiting period until you can elect another lifetime withdrawal benefit. See "Election of and Designations under the Program" below for details. The income benefit under Highest Daily Lifetime Five currently is based on a single "designated life" who is at least 55 years old on the date that the benefit is acquired. The Highest Daily Lifetime Five Benefit is not available if you elect any other optional living benefit, although you may elect any optional death benefit (other than the Highest Daily Value Death Benefit). Any DCA program that transfers Account Value from a Fixed Allocation is also not available as Fixed Allocations are not permitted with the benefit. As long as your Highest Daily Lifetime Five Benefit is in effect, you must allocate your Account Value in accordance with the then-permitted and available investment option(s) with this program. Currently, you are required to enroll and maintain your Account Value in the asset allocation program if you elect this benefit. We offer a benefit that guarantees until the death of the single designated life the ability to withdraw an annual amount (the "Total Annual Income Amount") equal to a percentage of an initial principal value (the "Total Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, and wish to ensure that market performance will not affect your ability to receive annual payments. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. As discussed below, we require that you participate in our asset transfer program in order to participate in Highest Daily Lifetime Five, and in the Appendices to this prospectus, we set forth the formula under which we make those asset transfers. As discussed below, a key component of Highest Daily Lifetime Five is the Total Protected Withdrawal Value, which is an amount that is distinct from Account Value. Because each of the Total Protected Withdrawal Value and Total Annual Income Amount is determined in a way that is not solely related to Account Value, it is possible for Account Value to fall to zero, even though the Total Annual Income Amount remains. You are guaranteed to be able to withdraw the Total Annual Income Amount for the rest of your life, provided that you have not made "excess withdrawals." Excess withdrawals, as discussed below, will reduce your Total Annual Income Amount. Thus, you could experience a scenario in which your Account Value was zero, and, due to your excess withdrawals, your Total Annual Income Amount also was reduced to zero. In that scenario, no further amount would be payable under Highest Daily Lifetime Five. Key Feature - Total Protected Withdrawal Value The Total Protected Withdrawal Value is used to determine the amount of the annual payments under Highest Daily Lifetime Five. The Total Protected Withdrawal Value is equal to the greater of the Protected Withdrawal Value and any Enhanced Protected Withdrawal Value that may exist. We describe how we determine Enhanced Protected Withdrawal Value, and when we begin to calculate it, below. If you do not meet the conditions described below for obtaining Enhanced Protected Withdrawal Value then Total Protected Withdrawal Value is simply equal to Protected Withdrawal Value. 69 The Protected Withdrawal Value initially is equal to the Account Value on the date that you elect Highest Daily Lifetime Five. On each Valuation Day thereafter, until the earlier of the first withdrawal or ten years after the date of your election of the benefit, we recalculate the Protected Withdrawal Value. Specifically, on each such Valuation Day (the "Current Valuation Day"), the Protected Withdrawal Value is equal to the greater of: . the Protected Withdrawal Value for the immediately preceding Valuation Day (the "Prior Valuation Day"), appreciated at the daily equivalent of 5% annually during the calendar day(s) between the Prior Valuation Day and the Current Valuation Day (i.e., one day for successive Valuation Days, but more than one calendar day for Valuation Days that are separated by weekends and/or holidays), plus the amount of any Purchase Payment (including any associated credit) made on the Current Valuation Day; and . the Account Value. If you have not made a withdrawal prior to the tenth anniversary of the date you elected Highest Daily Lifetime Five (which we refer to as the "Tenth Anniversary"), we will continue to calculate a Protected Withdrawal Value. On or after the Tenth Anniversary and up until the date of the first withdrawal, your Protected Withdrawal Value is equal to the greater of the Protected Withdrawal Value on the Tenth Anniversary or your Account Value. The Enhanced Protected Withdrawal Value is only calculated if you do not take a withdrawal prior to the Tenth Anniversary. Thus, if you do take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive Enhanced Protected Withdrawal Value. If so, then on or after the Tenth Anniversary up until the date of the first withdrawal, the Enhanced Protected Withdrawal Value is equal to the sum of: (a)200% of the Account Value on the date you elected Highest Daily Lifetime Five; (b)200% of all Purchase Payments (and any associated Credits) made during the one-year period after the date you elected Highest Daily Lifetime Five; and (c)100% of all Purchase Payments (and any associated Credits) made more than one year after the date you elected Highest Daily Lifetime Five, but prior to the date of your first withdrawal. We cease these daily calculations of the Protected Withdrawal Value and Enhanced Protected Withdrawal Value (and therefore, the Total Protected Withdrawal Value) when you make your first withdrawal. However, as discussed below, subsequent Purchase Payments (and any associated Credits) will increase the Total Annual Income Amount, while "excess" withdrawals (as described below) may decrease the Total Annual Income Amount. Key Feature - Total Annual Income Amount under the Highest Daily Lifetime Five Benefit The initial Total Annual Income Amount is equal to 5% of the Total Protected Withdrawal Value. For purposes of the asset transfer formula described below, we also calculate a Highest Daily Annual Income Amount, which is initially equal to 5% of the Protected Withdrawal Value. Under the Highest Daily Lifetime Five benefit, if your cumulative withdrawals in an Annuity Year are less than or equal to the Total Annual Income Amount, they will not reduce your Total Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Total Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Total Annual Income Amount ("Excess Income"), your Total Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. A Purchase Payment that you make will increase the then-existing Total Annual Income Amount and Highest Daily Annual Income Amount by an amount equal to 5% of the Purchase Payment (including the amount of any associated Credits). An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto Step-Up feature can result in a larger Total Annual Income Amount if your Account Value increases subsequent to your first withdrawal. We begin examining the Account Value for purposes of this feature starting with the anniversary of the Issue Date of the Annuity (the "Annuity Anniversary") immediately after your first withdrawal under the benefit. Specifically, upon the first such Annuity Anniversary, we identify the Account Value on the Valuation Days corresponding to the end of each quarter that (i) is based on your Annuity Year, rather than a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls within the immediately preceding Annuity Year. If the end of any such quarter falls on a holiday or a weekend, we use the next Valuation Day. We multiply each of those quarterly Account Values by 5%, adjust each such quarterly value for subsequent withdrawals and Purchase Payments, and then select the highest of those values. If the highest of those values exceeds the existing Total Annual Income Amount, we replace the existing amount with the new, higher amount. Otherwise, we leave the existing Total Annual Income Amount intact. In later years, (i.e., after the first Annuity Anniversary after the first withdrawal) we determine whether an automatic step-up should occur on each Annuity Anniversary, by performing a similar examination of the Account Values on the end of the four immediately preceding quarters. If, on the date that we implement a Highest Quarterly Auto Step-Up to your Total Annual Income Amount, the charge for Highest Daily Lifetime Five has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Prior to increasing your charge for Highest Daily Lifetime Five upon a step-up, we would notify you, and give you the opportunity to cancel the automatic step-up feature. If you receive notice of a proposed step-up and accompanying fee increase, you should carefully evaluate whether the amount of the step-up justifies the increased fee to which you will be subject. 70 The Highest Daily Lifetime Five program does not affect your ability to make withdrawals under your annuity, or limit your ability to request withdrawals that exceed the Total Annual Income Amount. Under Highest Daily Lifetime Five, if your cumulative withdrawals in an Annuity Year are less than or equal to the Total Annual Income Amount, they will not reduce your Total Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Total Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Total Annual Income Amount in any Annuity Year, you cannot carry-over the unused portion of the Total Annual Income Amount to subsequent Annuity Years. Examples of dollar-for-dollar and proportional reductions, and the Highest Quarterly Auto Step-Up are set forth below. The values depicted here are purely hypothetical, and do not reflect the charges for the Highest Daily Lifetime Five benefit or any other fees and charges. Assume the following for all three examples: . The Issue Date is December 1, 2006 . The Highest Daily Lifetime Five benefit is elected on March 5, 2007. Dollar-For-Dollar Reductions On May 2, 2007, the Total Protected Withdrawal Value is $120,000, resulting in a Total Annual Income Amount of $6,000 (5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the remaining Total Annual Income Amount for that Annuity Year (up to and including December 1, 2007) is $3,500. This is the result of a dollar-for-dollar reduction of the Total Annual Income Amount - $6,000 less $2,500 = $3,500. Proportional Reductions Continuing the previous example, assume an additional withdrawal of $5,000 occurs on August 6, 2007 and the Account Value at the time of this withdrawal is $110,000. The first $3,500 of this withdrawal reduces the Total Annual Income Amount for that Annuity Year to $0. The remaining withdrawal amount - $1,500 - reduces the Total Annual Income Amount in future Annuity Years on a proportional basis based on the ratio of the excess withdrawal to the Account Value immediately prior to the excess withdrawal. (Note that if there were other withdrawals in that Annuity Year, each would result in another proportional reduction to the Total Annual Income Amount). Here is the calculation: Account Value before withdrawal $110,000.00 Less amount of "non" excess withdrawal $ 3,500.00 Account Value immediately before excess withdrawal of $1,500 $106,500.00 Excess withdrawal amount $ 1,500.00 Divided by Account Value immediately before excess withdrawal $106,500.00 Ratio 1.41% Total Annual Income Amount $ 6,000.00 Less ratio of 1.41% $ 84.51 Total Annual Income Amount for future Annuity Years $ 5,915.49
Highest Quarterly Auto Step-Up On each Annuity Anniversary date, the Total Annual Income Amount is stepped-up if 5% of the highest quarterly value since your first withdrawal (or last Annuity Anniversary in subsequent years), adjusted for withdrawals and additional Purchase Payments, is higher than the Total Annual Income Amount, adjusted for excess withdrawals and additional Purchase Payments (plus any Credit with respect to Optimum Plus). Continuing the same example as above, the Total Annual Income Amount for this Annuity Year is $6,000. However, the excess withdrawal on August 6 reduces this amount to $5,915.49 for future years (see above). For the next Annuity Year, the Total Annual Income Amount will be stepped-up if 5% of the highest quarterly Account Value, adjusted for withdrawals, is higher than $5,915.49. Here are the calculations for determining the quarterly values. Only the June 1 value is being adjusted for excess withdrawals as the September 1 and December 1 Valuation Days occur after the excess withdrawal on August 6.
Highest Quarterly Value (adjusted with Adjusted Total Annual withdrawal and Purchase Income Amount (5% of the Date* Account value Payments)** Highest Quarterly Value) - ----- ------------- ----------------------- ------------------------ June 1, 2007 $118,000.00 $118,000.00 $5,900.00 August 6, 2007 $110,000.00 $112,885.55 $5,644.28 September 1, 2007 $112,000.00 $112,885.55 $5,644.28 December 1, 2007 $119,000.00 $119,000.00 $5,950.00
71 * In this example, the Annuity Anniversary date is December 1. The quarterly valuation dates are every three months thereafter - March 1, June 1, September 1, and December 1. In this example, we do not use the March 1 date as the first withdrawal took place after March 1. The Annuity Anniversary Date of December 1 is considered the fourth and final quarterly valuation date for the year. ** In this example, the first quarterly value after the first withdrawal is $118,000 on June 1, yielding an adjusted Total Annual Income Amount of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The calculations for the adjustments are: . The Account Value of $118,000 on June 1 is first reduced dollar-for-dollar by $3,500 ($3,500 is the remaining Total Annual Income Amount for the Annuity Year), resulting in an adjusted Account Value of $114,500 before the excess withdrawal. . This amount ($114,500) is further reduced by 1.41% (this is the ratio in the above example which is the excess withdrawal divided by the Account Value immediately preceding the excess withdrawal) resulting in a Highest Quarterly Value of $112,885.55. The adjusted Total Annual Income Amount is carried forward to the next quarterly anniversary date of September 1. At this time, we compare this amount to 5% of the Account Value on September 1. Since the June 1 adjusted Total Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to carry $5,644.28 forward to the next and final quarterly anniversary date of December 1. The Account Value on December 1 is $119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28, the adjusted Total Annual Income Amount is reset to $5,950.00. In this example, 5% of the December 1 value yields the highest amount of $5,950.00. Since this amount is higher than the current year's Total Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Total Annual Income Amount for the next Annuity Year, starting on December 2, 2007 and continuing through December 1, 2008, will be stepped-up to $5,950.00. Benefits under the Highest Daily Lifetime Five Program .. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Total Annual Income Amount and amounts are still payable under Highest Daily Lifetime Five, we will make an additional payment, if any, for that Annuity Year equal to the remaining Total Annual Income Amount for the Annuity Year. Thus, in that scenario, the remaining Total Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Total Annual Income Amount as described in this section. We will make payments until the death of the single designated life. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Total Annual Income Amount, the Highest Daily Lifetime Five benefit terminates, and no additional payments will be made. .. If Annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving Annuity payments and there is a Total Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any Annuity option available; or (2)request that, as of the date Annuity payments are to begin, we make Annuity payments each year equal to the Total Annual Income Amount. We will make payments until the death of the single designated life. We must receive your request in a form acceptable to us at our office. . In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments in the form of a single life fixed annuity with ten payments certain, by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such Annuity payments will be the greater of: (1)the present value of the future Total Annual Income Amount payments. Such present value will be calculated using the greater of the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. . If no withdrawal was ever taken, we will calculate the Total Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. . Please note that if your Annuity has a maximum Annuity Date requirement, payments that we make under this benefit as of that date will be treated as annuity payments. Other Important Considerations . Withdrawals under the Highest Daily Lifetime Five benefit are subject to all of the terms and conditions of the Annuity, including any CDSC. . Withdrawals made while the Highest Daily Lifetime Five Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Highest Daily Lifetime Five Benefit does not directly affect the Account Value or surrender value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity you will receive the current surrender value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Highest Daily Lifetime Five benefit. The Highest Daily Lifetime Five benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Total Annual Income Amount in the form of periodic benefit payments. 72 . Upon inception of the benefit, 100% of your Account Value must be allocated to the permitted sub-accounts. However, the asset transfer component of the benefit as described below may transfer Account Value to the Benefit Fixed Rate Account as of the effective date of the benefit in some circumstances. . You cannot allocate Purchase Payments or transfer Account Value to a Fixed Allocation if you elect this benefit. . Transfers to and from the Sub-accounts and the Benefit Fixed Rate Option triggered by the asset transfer component of the benefit will not count toward the maximum number of free transfers allowable under an Annuity. . In general, you must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the Highest Daily Lifetime Five benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly-adopted requirements. Subsequent to any change in requirements, transfers of Account Value and allocation of additional Purchase Payments may be subject to the new investment limitations. . The charge for Highest Daily Lifetime Five is 0.60% annually, assessed on a daily basis against the Sub-accounts and as a reduction to the interest rate credited under the Benefit Fixed Rate Account. This charge is in addition to any other fees under the annuity. Election of and Designations under the Program For Highest Daily Lifetime Five, there must be either a single Owner who is the same as the Annuitant, or if the Annuity is entity-owned, there must be a single natural person Annuitant. In either case, the Annuitant must be at least 55 years old. Any change of the Annuitant under the Annuity will result in cancellation of Highest Daily Lifetime Five. Similarly, any change of Owner will result in cancellation of Highest Daily Lifetime Five, except if (a) the new Owner has the same taxpayer identification number as the previous owner (b) both the new Owner and previous Owner are entities or (c) the previous Owner is a natural person and the new Owner is an entity. Highest Daily Lifetime Five can be elected at the time that you purchase your Annuity. However, with respect to Optimum Plus, you may elect this benefit at the time you purchase your Annuity only if the CDSC schedule for Optimum Plus Annuities issued on or after November 20, 2006 applies. (See "Summary of Contract Fees and Charges" section of the Prospectus). We also offer existing owners (i.e., those who have already acquired their Annuity) the option to elect Highest Daily Lifetime Five after the Issue Date, subject to our eligibility rules and restrictions. However, for existing Owners of Optimum Plus whose Annuities are subject to the CDSC schedule for Annuities issued prior to November 20, 2006, this benefit may only be elected on or after the first anniversary of the Issue Date. Currently, if you terminate the Highest Daily Lifetime Five benefit, you (a) will not be permitted to re-elect the benefit and (b) may be allowed to elect another lifetime withdrawal benefit only on any anniversary of the Issue Date that is at least 90 calendar days from the date the Highest Daily Lifetime Five Benefit was terminated. We reserve the right to further limit the election frequency in the future. Before making any such change to the election frequency, we will provide prior notice to Owners who have an effective Highest Daily Lifetime Five Benefit. Termination of the Program You may terminate the benefit at any time by notifying us. If you terminate the benefit, any guarantee provided by the benefit will terminate as of the date the termination is effective, and certain restrictions on re-election will apply as described above. The benefit terminates: (i) upon your termination of the benefit (ii) upon your surrender of the Annuity (iii) upon your election to begin receiving annuity payments (iv) upon the death of the Annuitant (v) if both the Account Value and Total Annual Income Amount equal zero or (vi) if you fail to meet our requirements for issuing the benefit. Upon termination of Highest Daily Lifetime Five, we cease deducting the charge for the benefit. With regard to your investment allocations, upon termination we will: (i) leave intact amounts that are held in the variable investment options, and (ii) transfer all amounts held in the Benefit Fixed Rate Account (as defined below) to your variable investment options, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e. in the same proportion as the current balances in your variable investment options). Upon termination, we may limit or prohibit investment in the Fixed Allocations. Return of Principal Guarantee If you have not made a withdrawal before the Tenth Anniversary, we will increase your Account Value on that Tenth Anniversary (or the next Valuation Day, if that anniversary is not a Valuation Day), if the requirements set forth in this paragraph are met. On the Tenth Anniversary, we add: (a)your Account Value on the day that you elected Highest Daily Lifetime Five; and (b)the sum of each Purchase Payment you made (including any Credits with respect to Optimum Plus) during the one-year period after you elected the benefit. 73 If the sum of (a) and (b) is greater than your Account Value on the Tenth Anniversary, we increase your Account Value to equal the sum of (a) and (b), by contributing funds from our general account. If the sum of (a) and (b) is less than or equal to your Account Value on the Tenth Anniversary, we make no such adjustment. The amount that we add to your Account Value under this provision will be allocated to each of your variable investment options and the Benefit Fixed Rate Account (described below), in the same proportion that each such investment option bears to your total Account Value, immediately prior to the application of the amount. Any such amount will not be considered a Purchase Payment when calculating your Total Protected Withdrawal Value, your death benefit, or the amount of any other or optional benefit that you may have selected, and therefore will have no direct impact on any such values at the time we add this amount. This potential addition to Account Value is available only if you have elected Highest Daily Lifetime Five and if you meet the conditions set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive the Return of Principal Guarantee. Asset Transfer Component of Highest Daily Lifetime Five As indicated above, we limit the sub-accounts to which you may allocate Account Value if you elect Highest Daily Lifetime Five. For purposes of this benefit, we refer to those permitted sub-accounts as the "Permitted Sub-accounts". As a requirement of participating in Highest Daily Lifetime Five, we require that you participate in our specialized asset transfer program, under which we may transfer Account Value between the Permitted Sub-accounts and a fixed interest rate account that is part of our general account (the "Benefit Fixed Rate Account"). We determine whether to make a transfer, and the amount of any transfer, under a non-discretionary formula, discussed below. The Benefit Fixed Rate Account is available only with this benefit, and thus you may not allocate Purchase Payments to the Benefit Fixed Rate Account. The interest rate that we pay with respect to the Benefit Fixed Rate Account is reduced by an amount that corresponds generally to the charge that we assess against your variable Sub-accounts for Highest Daily Lifetime Five. The Benefit Fixed Rate Account is not subject to the Investment Company Act of 1940 or the Securities Act of 1933. Under the asset transfer component of Highest Daily Lifetime Five, we monitor your Account Value daily and, if necessary, systematically transfer amounts between the Permitted Sub-accounts you have chosen and the Benefit Fixed Rate Account. Any transfer would be made in accordance with a formula, which is set forth in the schedule supplement to the endorsement for this benefit (and also appears in the Appendices to this prospectus). Speaking generally, the formula, which we apply each Valuation Day, operates as follows. The formula starts by identifying your Protected Withdrawal Value for that day and then multiplies that figure by 5%, to produce a projected (i.e., hypothetical) Highest Daily Annual Income Amount. Then, using our actuarial tables, we produce an estimate of the total amount we would target in our allocation model, based on the projected Highest Daily Annual Income Amount each year for the rest of your life. In the formula, we refer to that value as the "Target Value" or "L". If you have already made a withdrawal, your projected Highest Daily Annual Income Amount (and thus your Target Value) would take into account any automatic step-up that was scheduled to occur according to the step-up formula described above. Next, the formula subtracts from the Target Value the amount held within the Benefit Fixed Rate Account on that day, and divides that difference by the amount held within the Permitted Sub-accounts. That ratio, which essentially isolates the amount of your Target Value that is not offset by amounts held within the Benefit Fixed Rate Account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage, (currently 83%) it means essentially that too much Target Value is not offset by assets within the Benefit Fixed Rate Account, and therefore we will transfer an amount from your Permitted Sub-accounts to the Benefit Fixed Rate Account. Conversely, if the Target Ratio falls below a certain percentage, (currently 77%) then a transfer from the Benefit Fixed Rate Account to the Permitted Sub-accounts would occur. Note that the formula is calculated with reference to the Highest Daily Annual Income Amount, rather than with reference to the Annual Income Amount. As you can glean from the formula, a downturn in the securities markets (i.e., a reduction in the amount held within the Permitted Sub-accounts) may cause us to transfer some of your variable Account Value to the Benefit Fixed Rate Account, because such a reduction will tend to increase the Target Ratio. Moreover, certain market return scenarios involving "flat" returns over a period of time also could result in the transfer of money to the Benefit Fixed Rate Account. In deciding how much to transfer, we use another formula, which essentially seeks to re-balance amounts held in the Permitted Sub-accounts and the Benefit Fixed Rate Account so that the Target Ratio meets a target, which currently is equal to 80%. Once you elect Highest Daily Lifetime Five, the ratios we use will be fixed. For newly issued annuities that elect Highest Daily Lifetime Five and existing annuities that elect Highest Daily Lifetime Five, however, we reserve the right to change the ratios. While you are not notified when your Annuity reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the Benefit Fixed Rate Account. The formula by which the reallocation triggers operate is designed primarily to mitigate the financial risks that we incur in providing the guarantee under Highest Daily Lifetime Five. Depending on the results of the calculation relative to the reallocation triggers, we may, on any day: . Not make any transfer; or . If a portion of your Account Value was previously allocated to the Benefit Fixed Rate Account, transfer all or a portion of those amounts to the Permitted Sub-accounts, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e., in the same proportion as the current balances in your variable investment options). 74 Amounts taken out of the Benefit Fixed Rate Account will be withdrawn for this purpose on a last-in, first-out basis (an amount renewed into a new guarantee period under the Benefit Fixed Rate Account will be deemed a new investment for purposes of this last-in, first-out rule); or . Transfer all or a portion of your Account Value in the Permitted Sub-accounts pro-rata to the Benefit Fixed Rate Account. The interest that you earn on such transferred amount will be equal to the annual rate that we have set for that day, and we will credit the daily equivalent of that annual interest until the earlier of one year from the date of the transfer or the date that such amount in the Benefit Fixed Rate Account is transferred back to the Permitted Sub-accounts. If a significant amount of your Account Value is systematically transferred to the Benefit Fixed Rate Account during periods of market declines or low interest rates, less of your Account Value may be available to participate in the investment experience of the Permitted Sub-accounts if there is a subsequent market recovery. Under the reallocation formula that we employ, it is possible that over time a significant portion, and under certain circumstances all, of your Account Value may be allocated to the Benefit Fixed Rate Account. Note that if your entire Account Value is transferred to the Benefit Fixed Rate Account, then based on the way the formula operates, that value would remain in the Benefit Fixed Rate Account unless you made additional Purchase Payments to the Permitted Sub-Accounts, which could cause Account Value to transfer out of the Benefit Fixed Rate Account. Additional Tax Considerations If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than 5 percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Total Annual Income Amount, which will cause us to increase the Total Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity that are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. Please note, however, that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn to satisfy required minimum distribution rules, will cause you to lose the ability to receive Enhanced Protected Withdrawal Value and an amount under the Return of Principal Guarantee. As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. However, we do note that if you participate in Highest Daily Lifetime Five through a non-qualified annuity, and your annuity has received Enhanced Protected Withdrawal Value and/or an additional amount under the Return of Principal Guarantee, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (HD7/SM/) Highest Daily Lifetime Seven is offered as an alternative to Lifetime Five, Spousal Lifetime Five, and Highest Daily Lifetime Five. Currently, if you elect Highest Daily Lifetime Seven and subsequently terminate the benefit, you may have a waiting period until you can elect another lifetime withdrawal benefit. See "Election of and Designations under the Program" below for details. The income benefit under Highest Daily Lifetime Seven currently is based on a single "designated life" who is at least 55 years old on the date that the benefit is acquired. The Highest Daily Lifetime Seven Benefit is not available if you elect any other optional living benefit, although you may elect any optional death benefit, other than the Highest Daily Value Death Benefit. As long as your Highest Daily Lifetime Seven Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available investment option(s) with this program. For a more detailed description of the permitted investment options, see the Investment options section of this prospectus. We offer a benefit that guarantees until the death of the single designated life the ability to withdraw an annual amount (the "Annual Income Amount") equal to a percentage of an initial principal value (the "Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, and wish to ensure that market performance will not affect your ability to receive annual payments. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. As discussed below, we require that you participate in our asset transfer program in order to participate in Highest Daily Lifetime Seven, and in Appendix H to this prospectus, we set forth the formula under which we make those asset transfers. As discussed below, a key component of Highest Daily Lifetime Seven is the Protected Withdrawal Value. Because each of the Protected Withdrawal Value and Annual Income Amount is determined in a way that is not solely related to Account Value, it is 75 possible for the Account Value to fall to zero, even though the Annual Income Amount remains. You are guaranteed to be able to withdraw the Annual Income Amount for the rest of your life, provided that you have not made "excess withdrawals." Excess withdrawals, as discussed below, will reduce your Annual Income Amount. Thus, you could experience a scenario in which your Account Value was zero, and, due to your excess withdrawals, your Annual Income Amount also was reduced to zero. In that scenario, no further amount would be payable under Highest Daily Lifetime Seven. Key Feature - Protected Withdrawal Value The Protected Withdrawal Value is used to calculate the initial Annual Income Amount. On the effective date of the benefit , the Protected Withdrawal Value is equal to your Account Value. On each Valuation Day thereafter, until the earlier of the tenth anniversary of benefit election (the "Tenth Anniversary Date") or the date of the first withdrawal, the Protected Withdrawal Value is equal to the "Periodic Value" described in the next paragraph. The "Periodic Value" initially is equal to the Account Value on the effective date of the benefit. On each Valuation Day thereafter, until the earlier of the first withdrawal or the Tenth Anniversary Date, we recalculate the Periodic Value. We stop determining the Periodic Value upon the earlier of your first withdrawal after the effective date of the benefit or the Tenth Anniversary Date. On each Valuation Day (the "Current Valuation Day"), the Periodic Value is equal to the greater of: (1)the Periodic Value for the immediately preceding business day (the "Prior Valuation Day") appreciated at the daily equivalent of 7% annually during the calendar day(s) between the Prior Valuation Day and the Current Valuation Day (i.e., one day for successive Valuation Days, but more than one calendar day for Valuation Days that are separated by weekends and/or holidays), plus the amount of any adjusted Purchase Payment made on the Current Valuation Day; and (2)the Account Value. If you make a withdrawal prior to the Tenth Anniversary Date, the Protected Withdrawal Value on the date of the withdrawal is equal to the greatest of: (1)the Account Value; or (2)the Periodic Value on the date of the withdrawal. If you have not made a withdrawal on or before the Tenth Anniversary Date, your Protected Withdrawal Value subsequent to the Tenth Anniversary Date is equal to the greatest of: (1)the Account Value; or (2)the Periodic Value on the Tenth Anniversary Date, increased for subsequent adjusted Purchase Payments; or (3)the sum of: (a)200% of the Account Value on the effective date of the benefit; (b)200% of all adjusted Purchase Payments made within one year after the effective date of the benefit; and (c)all adjusted Purchase Payments made after one year following the effective date of the benefit up to the date of the first withdrawal. On and after the date of your first withdrawal, your Protected Withdrawal Value is increased by the amount of any subsequent Purchase Payments, is reduced by withdrawals, including your first withdrawal (as described below), and is increased if you qualify for a step-up (as described below). Irrespective of these calculations, your Protected Withdrawal Value will always be at least equal to your Account Value. Key Feature - Annual Income Amount under the Highest Daily Lifetime Seven Benefit The Annual Income Amount is equal to a specified percentage of the Protected Withdrawal Value. The percentage depends on the age of the Annuitant on the date of the first withdrawal after election of the benefit. The percentages are: 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85 and older. Under the Highest Daily Lifetime Seven benefit, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. Withdrawals of any amount up to and including the Annual Income Amount will reduce the Protected Withdrawal Value by the amount of the withdrawal. Withdrawals of Excess Income will reduce the Protected Withdrawal Value by the same ratio as the reduction to the Annual Income Amount. A Purchase Payment that you make will (i) increase the then-existing Annual Income Amount by an amount equal to a percentage of the Purchase Payment (including the amount of any associated Credits) based on the age of the Annuitant at the time of the first 76 withdrawal (the percentages are: 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85 and older) and (ii) increase the Protected Withdrawal Value by the amount of the Purchase Payment (including the amount of any associated Credits). An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto Step-Up feature can result in a larger Annual Income Amount if your Account Value increases subsequent to your first withdrawal. We begin examining the Account Value for purposes of the Highest Quarterly Step-Up starting with the anniversary of the Issue Date of the Annuity (the "Annuity Anniversary") immediately after your first withdrawal under the benefit. Specifically, upon the first such Annuity Anniversary, we identify the Account Value on the Valuation Days corresponding to the end of each quarter that (i) is based on your Annuity Year, rather than a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls within the immediately preceding Annuity Year. If the end of any such quarter falls on a holiday or a weekend, we use the next Valuation Day. Having identified each of those quarter-end Account Values, we then multiply each such value by a percentage that varies based on the age of the Annuitant on the Annuity Anniversary as of which the step-up would occur. The percentages are 5% for ages 74 and younger, 6% for ages 75-79, 7% for ages 80-84, and 8% for ages 85 and older. Thus, we multiply each quarterly value by the applicable percentage, adjust each such quarterly value for subsequent withdrawals and Purchase Payments, and then select the highest of those values. If the highest of those values exceeds the existing Annual Income Amount, we replace the existing amount with the new, higher amount. Otherwise, we leave the existing Annual Income Amount intact. In later years, (i.e., after the first Annuity Anniversary after the first withdrawal) we determine whether an automatic step-up should occur on each Annuity Anniversary, by performing a similar examination of the Account Values on the end of the four immediately preceding quarters. At the time that we increase your Annual Income Amount, we also increase your Protected Withdrawal Value to equal the highest quarterly value upon which your step-up was based. If, on the date that we implement a Highest Quarterly Auto Step-Up to your Annual Income Amount, the charge for Highest Daily Lifetime Seven has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Prior to increasing your charge for Highest Daily Lifetime Seven upon a step-up, we would notify you, and give you the opportunity to cancel the automatic step-up feature. If you receive notice of a proposed step-up and accompanying fee increase, you should carefully evaluate whether the amount of the step-up justifies the increased fee to which you will be subject. The Highest Daily Lifetime Seven program does not affect your ability to make withdrawals under your Annuity, or limit your ability to request withdrawals that exceed the Annual Income Amount. Under Highest Daily Lifetime Seven, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Annual Income Amount in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. Examples of dollar-for-dollar and proportional reductions, and the Highest Quarterly Auto Step-Up are set forth below. The values depicted here are purely hypothetical, and do not reflect the charges for the Highest Daily Lifetime Seven benefit or any other fees and charges. Assume the following for all three examples: . The Issue Date is December 1, 2007 . The Highest Daily Lifetime Seven benefit is elected on March 5, 2008 . The Annuitant was 70 years old when he/she elected the Highest Daily Lifetime Seven benefit. Dollar-for-dollar reductions On May 2, 2008, the Protected Withdrawal Value is $120,000, resulting in an Annual Income Amount of $6,000 (since the Annuitant is younger than 75 at the time of the 1/st/ withdrawal, the Annual Income Amount is 5% of the Protected Withdrawal Value, in this case 5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the remaining Annual Income Amount for that Annuity Year (up to and including December 1, 2008) is $3,500. This is the result of a dollar-for-dollar reduction of the Annual Income Amount - $6,000 less $2,500 = $3,500. Proportional reductions Continuing the previous example, assume an additional withdrawal of $5,000 occurs on August 6, 2008 and the Account Value at the time of this withdrawal is $110,000. The first $3,500 of this withdrawal reduces the Annual Income Amount for that Annuity Year to $0. The remaining withdrawal amount - $1,500 - reduces the Annual Income Amount in future Annuity Years on a proportional basis based on the ratio of the excess withdrawal to the Account Value immediately prior to the excess withdrawal. (Note that if there were other withdrawals in that Annuity Year, each would result in another proportional reduction to the Annual Income Amount). 77 Here is the calculation: Account Value before withdrawal $110,000.00 Less amount of "non" excess withdrawal $ 3,500.00 Account Value immediately before excess withdrawal of $1,500 $106,500.00 Excess withdrawal amount $ 1,500.00 Divided by Account Value immediately before excess withdrawal $106,500.00 Ratio 1.41% Annual Income Amount $ 6,000.00 Less ratio of 1.41% $ 84.51 Annual Income Amount for future Annuity Years $ 5,915.49
Highest Quarterly Auto Step-Up On each Annuity Anniversary date, the Annual Income Amount is stepped-up if the appropriate percentage (based on the Annuitant's age on the Annuity Anniversary) of the highest quarterly value since your first withdrawal (or last Annuity Anniversary in subsequent years), adjusted for withdrawals and additional Purchase Payments, is higher than the Annual Income Amount, adjusted for excess withdrawals and additional Purchase Payments (plus any Credits). Continuing the same example as above, the Annual Income Amount for this Annuity Year is $6,000. However, the excess withdrawal on August 6 reduces this amount to $5,915.49 for future years (see above). For the next Annuity Year, the Annual Income Amount will be stepped-up if 5% (since the youngest Designated Life is younger than 75 on the date of the potential step-up) of the highest quarterly Account Value adjusted for withdrawals, is higher than $5,915.49. Here are the calculations for determining the quarterly values. Only the June 1 value is being adjusted for excess withdrawals as the September 1 and December 1 Valuation Days occur after the excess withdrawal on August 6.
Highest Quarterly Value (adjusted with Adjusted Annual withdrawal and Purchase Income Amount (5% of the Date* Account Value Payments)** Highest Quarterly Value) - ----- ------------- ----------------------- ------------------------ June 1, 2008 $118,000.00 $118,000.00 $5,900.00 August 6, 2008 $110,000.00 $112,885.55 $5,644.28 September 1, 2008 $112,000.00 $112,885.55 $5,644.28 December 1, 2008 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The quarterly valuation dates are every three months thereafter - March 1, June 1, September 1, and December 1. In this example, we do not use the March 1 date as the first withdrawal took place after March 1. The Annuity Anniversary Date of December 1 is considered the fourth and final quarterly valuation date for the year. ** In this example, the first quarterly value after the first withdrawal is $118,000 on June 1, yielding an adjusted Annual Income Amount of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The calculations for the adjustments are: . The Account Value of $118,000 on June 1 is first reduced dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income Amount for the Annuity Year), resulting in an adjusted Account Value of $114,500 before the excess withdrawal. . This amount ($114,500) is further reduced by 1.41% (this is the ratio in the above example which is the excess withdrawal divided by the Account Value immediately preceding the excess withdrawal) resulting in a Highest Quarterly Value of $112,885.55. . The adjusted Annual Income Amount is carried forward to the next quarterly anniversary date of September 1. At this time, we compare this amount to 5% of the Account Value on September 1. Since the June 1 adjusted Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to carry $5,644.28 forward to the next and final quarterly anniversary date of December 1. The Account Value on December 1 is $119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28, the adjusted Annual Income Amount is reset to $5,950.00. In this example, 5% of the December 1 value yields the highest amount of $5,950.00. Since this amount is higher than the current year's Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Annual Income Amount for the next Annuity Year, starting on December 2, 2008 and continuing through December 1, 2009, will be stepped-up to $5,950.00. Benefits Under The Highest Daily Lifetime Seven Program .. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount or as a result of the fee that we assess for Highest Daily Lifetime Seven, and amounts are still payable under Highest Daily Lifetime Seven, we will make an additional payment, if any, for that Annuity Year equal to the remaining Annual Income Amount for the Annuity Year. Thus, in that scenario, the remaining Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Annual Income Amount as described in this section. We will make payments until the death of the single designated life. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount, the Highest Daily Lifetime Seven benefit terminates, and no additional payments are made. However, if a withdrawal in the latter scenario was taken to meet required minimum distribution requirements under the Annuity, then the benefit will not terminate, and we will continue to pay the Annual Income Amount in the form of a fixed annuity. 78 .. If Annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving Annuity payments and there is a Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any Annuity option available; or (2)request that, as of the date Annuity payments are to begin, we make Annuity payments each year equal to the Annual Income Amount. We will make payments until the death of the single designated life. We must receive your request in a form acceptable to us at our office. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments in the form of a single life fixed annuity with ten payments certain, by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such Annuity payments will be the greater of: (1)the present value of the future Annual Income Amount payments. Such present value will be calculated using the greater of the single life fixed annuity rates then currently available or the single life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. .. If no withdrawal was ever taken, we will calculate the Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. .. Please note that payments that we make under this benefit after the Annuity Anniversary coinciding with or next following the annuitant's 95/th/ birthday will be treated as annuity payments. Other Important Considerations . Withdrawals under the Highest Daily Lifetime Seven benefit are subject to all of the terms and conditions of the Annuity, including any CDSC. . Withdrawals made while the Highest Daily Lifetime Seven Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Highest Daily Lifetime Seven Benefit does not directly affect the Account Value or surrender value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity you will receive the current surrender value. . You can make withdrawals from your Annuity while your Account Value is greater than zero without purchasing the Highest Daily Lifetime Seven benefit. The Highest Daily Lifetime Seven benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. . Upon inception of the benefit, 100% of your Account Value must be allocated to the permitted Sub-accounts. . You cannot allocate Purchase Payments or transfer Account Value to the AST Investment Grade Bond Portfolio Sub-account (see description below) if you elect this benefit. A summary description of the AST Investment Grade Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies of The Portfolios?". Upon the initial transfer of your Account Value into the AST Investment Grade Bond Portfolio, we will send a prospectus for that Portfolio to you, along with your confirmation. In addition, you can find a copy of the AST Investment Grade Bond Portfolio prospectus by going to www.prudentialannuities.com. . Transfers to and from the elected Sub-accounts and an AST Investment Grade Bond Portfolio Sub-account triggered by the asset transfer component of the benefit will not count toward the maximum number of free transfers allowable under an Annuity. . You must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the Highest Daily Lifetime Seven benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly adopted requirements. . The fee for Highest Daily Lifetime Seven is 0.60% annually of the Protected Withdrawal Value. We deduct this fee at the end of each quarter, where each such quarter is part of a year that begins on the effective date of the benefit or an anniversary thereafter. Thus, on each such quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation Day), we deduct 0.15% of the Protected Withdrawal Value at the end of the quarter. We deduct the fee pro rata from each of your Sub-accounts including the AST Investment Grade Bond Portfolio Sub-account. Since this fee is based on the Protected Withdrawal Value the fee for Highest Daily Lifetime Seven may be greater than it would have been, had it been based on the Account Value alone. If the fee to be deducted exceeds the current Account Value, we will reduce the Account Value to zero, and continue the benefit as described above. Election of and Designations under the Program For Highest Daily Lifetime Seven, there must be either a single Owner who is the same as the Annuitant, or if the Annuity is entity owned, there must be a single natural person Annuitant. In either case, the Annuitant must be at least 55 years old. 79 Any change of the Annuitant under the Annuity will result in cancellation of Highest Daily Lifetime Seven. Similarly, any change of Owner will result in cancellation of Highest Daily Lifetime Seven, except if (a) the new Owner has the same taxpayer identification number as the previous owner (b) ownership is transferred from a custodian to the Annuitant, or vice versa or (c) ownership is transferred from one entity to another entity. Highest Daily Lifetime Seven can be elected at the time that you purchase your Annuity or after the Issue Date, subject to our eligibility rules and restrictions. Currently, if you terminate the Highest Daily Lifetime Seven benefit, you generally will only be allowed to re-elect the benefit or elect the Spousal Lifetime Five Benefit, the Lifetime Five Income Benefit, or the Spousal Highest Daily Lifetime Seven Income Benefit on any anniversary of the Issue Date that is at least 90 calendar days from the date the Highest Daily Lifetime Seven Benefit was terminated. We reserve the right to further limit the election frequency in the future. Similarly, we generally will permit those who have terminated Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five or the Spousal Highest Daily Lifetime Seven to elect Highest Daily Lifetime Seven only on an anniversary of the Issue Date that is at least 90 calendar days from the date that such benefit was terminated. We reserve the right to waive that requirement. Return of Principal Guarantee If you have not made a withdrawal before the Tenth Anniversary, we will increase your Account Value on that Tenth Anniversary (or the next Valuation Day, if that anniversary is not a Valuation Day), if the requirements set forth in this paragraph are met. On the Tenth Anniversary, we add: a) your Account Value on the day that you elected Highest Daily Lifetime Seven; and b) the sum of each Purchase Payment you made (including any Credits) during the one-year period after you elected the benefit. If the sum of (a) and (b) is greater than your Account Value on the Tenth Anniversary, we increase your Account Value to equal the sum of (a) and (b), by contributing funds from our general account. If the sum of (a) and (b) is less than or equal to your Account Value on the Tenth Anniversary, we make no such adjustment. The amount that we add to your Account Value under this provision will be allocated to each of your variable investment options (other than a bond Sub-account used with this benefit), in the same proportion that each such Sub-account bears to your total Account Value, immediately before the application of the amount. Any such amount will not be considered a Purchase Payment when calculating your Protected Withdrawal Value, your death benefit, or the amount of any optional benefit that you may have selected, and therefore will have no direct impact on any such values at the time we add this amount. This potential addition to Account Value is available only if you have elected Highest Daily Lifetime Seven and if you meet the conditions set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive the Return of Principal Guarantee. Termination of the Program You may terminate the benefit at any time by notifying us. If you terminate the benefit, any guarantee provided by the benefit will terminate as of the date the termination is effective, and certain restrictions on re-election will apply as described above. The benefit terminates: (i) upon your termination of the benefit (ii) upon your surrender of the Annuity (iii) upon your election to begin receiving annuity payments (although if you have elected to the Annual Income Amount in the form of Annuity payments, we will continue to pay the Annual Income Amount) (iv) upon the death of the Annuitant (v) if both the Account Value and Annual Income Amount equal zero or (vi) if you cease to meet our requirements for issuing the benefit (see Elections and Designations under the Program). Upon termination of Highest Daily Lifetime Seven other than upon the death of the Annuitant, we impose any accrued fee for the benefit (i.e., the fee for the pro-rated portion of the year since the fee was last assessed), and thereafter we cease deducting the charge for the benefit. With regard to your investment allocations, upon termination we will: (i) leave intact amounts that are held in the variable investment options, and (ii) transfer all amounts held in the AST Investment Grade Bond Portfolio Sub-account to your variable investment options, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e. in the same proportion as the current balances in your variable investment options). Asset Transfer Component of Highest Daily Lifetime Seven As indicated above, we limit the Sub-accounts to which you may allocate Account Value if you elect Highest Daily Lifetime Seven. For purposes of this benefit, we refer to those permitted Sub-accounts as the "Permitted Sub-accounts". As a requirement of participating in Highest Daily Lifetime Seven, we require that you participate in our specialized asset transfer program, under which we may transfer Account Value between the Permitted Sub-accounts and a specified bond fund within the Advanced Series Trust (the "AST Investment Grade Bond Sub-account"). We determine whether to make a transfer, and the amount of any transfer, under a non-discretionary formula, discussed below. The AST Investment Grade Bond Sub-account is available only with this benefit, and thus you may not allocate Purchase Payments to the AST Investment Grade Bond Sub-account. Under the asset transfer component of Highest Daily Lifetime Seven, we monitor your Account Value daily and, if dictated by the formula, systematically transfer amounts between the Permitted Sub-accounts you have chosen and the AST Investment Grade Bond 80 Sub-account. Any transfer would be made in accordance with a formula, which is set forth in the Appendices to this prospectus. Speaking generally, the formula, which we apply each Valuation Day, operates as follows. The formula starts by identifying an income basis for that day and then multiplies that figure by 5%, to produce a projected (i.e., hypothetical) income amount. Note that we use 5% in the formula, irrespective of the Annuitant's attained age. Then we produce an estimate of the total amount we would target in our allocation model, based on the projected income amount and factors set forth in the formula. In the formula, we refer to that value as the "Target Value" or "L". If you have already made a withdrawal, your projected income amount (and thus your Target Value) would take into account any automatic step-up, any subsequent purchase payments, and any excess withdrawals. Next, the formula subtracts from the Target Value the amount held within the AST Investment Grade Bond Sub-account on that day, and divides that difference by the amount held within the Permitted Sub-accounts. That ratio, which essentially isolates the amount of your Target Value that is not offset by amounts held within the AST Investment Grade Bond Sub-account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage (currently 83%), it means essentially that too much Target Value is not offset by assets within the AST Investment Grade Bond Sub-account, and therefore we will transfer an amount from your Permitted Sub-accounts to the AST Investment Grade Bond Sub-account. Conversely, if the Target Ratio falls below a certain percentage (currently 77%), then a transfer from the AST Investment Grade Bond Sub-account to the Permitted Sub-accounts would occur. As you can glean from the formula, a downturn in the securities markets (i.e., a reduction in the amount held within the Permitted Sub-accounts) may cause us to transfer some of your variable Account Value to the AST Investment Grade Bond Sub-account, because such a reduction will tend to increase the Target Ratio. Moreover, certain market return scenarios involving "flat" returns over a period of time also could result in the transfer of money to the AST Investment Grade Bond Sub-account. In deciding how much to transfer, we use another formula, which essentially seeks to re-balance amounts held in the Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that the Target Ratio meets a target, which currently is equal to 80%. Once you elect Highest Daily Lifetime Seven, the ratios we use will be fixed. For newly-issued Annuities that elect Highest Daily Lifetime Seven and existing Annuities that elect Highest Daily Lifetime Seven, however, we reserve the right to change the ratios. While you are not notified when your Annuity reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the AST Investment Grade Bond Sub-account. The formula by which the reallocation triggers operate is designed primarily to mitigate the financial risks that we incur in providing the guarantee under Highest Daily Lifetime Seven. Depending on the results of the calculation relative to the reallocation triggers, we may, on any day: . Not make any transfer; or . If a portion of your Account Value was previously allocated to the AST Investment Grade Bond Sub-account, transfer all or a portion of those amounts to the Permitted Sub-accounts, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e., in the same proportion as the current balances in your variable investment options). Amounts taken out of the AST Investment Grade Bond Sub-account will be withdrawn for this purpose on a last-in, first-out basis; or . Transfer all or a portion of your Account Value in the Permitted Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account. If a significant amount of your Account Value is systematically transferred to the AST Investment Grade Bond Sub-account during periods of market declines or low interest rates, less of your Account Value may be available to participate in the investment experience of the Permitted Sub-accounts if there is a subsequent market recovery. If your entire Account Value is transferred to the AST Investment Grade Bond Sub-account, then based on the way the formula operates, that value would remain in the AST Investment Grade Bond Sub-account unless you made additional Purchase Payments to the Permitted Sub-accounts, which could cause Account Value to transfer out of the AST Investment Grade Bond Sub-account. Additional Tax Considerations If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Annual Income Amount, which will cause us to increase the Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. Please note, however, that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn to satisfy required minimum distribution rules, will cause you to lose the ability to receive the Return of Principal Guarantee and the guaranteed amount described above under "KEY FEATURE - Protected Withdrawal Value". 81 As indicated, withdrawals made while this Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this Benefit here. However, we do note that if you participate in Highest Daily Lifetime Seven through a non-qualified annuity, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. SPOUSAL HIGHEST DAILY LIFETIME SEVEN/SM/ INCOME BENEFIT (SHD7/SM/) Spousal Highest Daily Lifetime Seven is the spousal version of Highest Daily Lifetime Seven. Currently, if you elect Spousal Highest Daily Lifetime Seven and subsequently terminate the benefit, you will have a waiting period until you can elect another lifetime withdrawal benefit. See "Election of and Designations under the Program" below for details. Spousal Highest Daily Lifetime Seven must be elected based on two Designated Lives, as described below. Each Designated Life must be at least 59 1/2 years old when the benefit is elected. Spousal Highest Daily Lifetime Seven is not available if you elect any other optional living benefit or optional death benefit. As long as your Spousal Highest Daily Lifetime Seven Benefit is in effect, you must allocate your Account Value in accordance with the then permitted and available investment option(s) with this program. For a more detailed description of permitted investment options, see the Investment options section of this prospectus. We offer a benefit that guarantees until the later death of two natural persons who are each other's spouses at the time of election of the benefit and at the first death of one of them (the "Designated Lives", and each, a "Designated Life") the ability to withdraw an annual amount (the "Annual Income Amount") equal to a percentage of an initial principal value (the "Protected Withdrawal Value") regardless of the impact of market performance on the Account Value, subject to our program rules regarding the timing and amount of withdrawals. The benefit may be appropriate if you intend to make periodic withdrawals from your Annuity, wish to ensure that market performance will not affect your ability to receive annual payments, and wish either spouse to be able to continue the Spousal Highest Daily Lifetime Seven benefit after the death of the first spouse. You are not required to make withdrawals as part of the program - the guarantees are not lost if you withdraw less than the maximum allowable amount each year under the rules of the benefit. As discussed below, we require that you participate in our asset transfer program in order to participate in Spousal Highest Daily Lifetime Seven, and in Appendix H to this prospectus, we set forth the formula under which we make those asset transfers. As discussed below, a key component of Spousal Highest Daily Lifetime Seven is the Protected Withdrawal Value. Because each of the Protected Withdrawal Value and Annual Income Amount is determined in a way that is not solely related to Account Value, it is possible for the Account Value to fall to zero, even though the Annual Income Amount remains. You are guaranteed to be able to withdraw the Annual Income Amount until the death of the second Designated Life, provided that there have not been "excess withdrawals." Excess withdrawals, as discussed below, will reduce your Annual Income Amount. Thus, you could experience a scenario in which your Account Value was zero, and, due to your excess withdrawals, your Annual Income Amount also was reduced to zero. In that scenario, no further amount would be payable under Spousal Highest Daily Lifetime Seven. Key Feature - Protected Withdrawal Value The Protected Withdrawal Value is used to calculate the initial Annual Income Amount. On the effective date of the benefit , the Protected Withdrawal Value is equal to your Account Value. On each Valuation Day thereafter, until the earlier of the tenth anniversary of benefit election (the "Tenth Anniversary Date") or the date of the first withdrawal, the Protected Withdrawal Value is equal to the "Periodic Value" described in the next paragraph. The "Periodic Value" initially is equal to the Account Value on the effective date of the benefit. On each Valuation Day thereafter, until the earlier of the first withdrawal or the Tenth Anniversary Date, we recalculate the Periodic Value. We stop determining the Periodic Value upon the earlier of your first withdrawal after the effective date of the benefit or the Tenth Anniversary Date. On each Valuation Day (the "Current Valuation Day"), the Periodic Value is equal to the greater of: (1)the Periodic Value for the immediately preceding business day (the "Prior Valuation Day") appreciated at the daily equivalent of 7% annually during the calendar day(s) between the Prior Valuation Day and the Current Valuation Day (i.e., one day for successive Valuation Days, but more than one calendar day for Valuation Days that are separated by weekends and/or holidays), plus the amount of any adjusted Purchase Payment made on the Current Valuation Day; and (2)the Account Value. If you make a withdrawal prior to the Tenth Anniversary Date, the Protected Withdrawal Value on the date of the withdrawal is equal to the greatest of: (a)the Account Value; or (b)the Periodic Value on the date of the withdrawal. 82 If you have not made a withdrawal on or before the Tenth Anniversary Date, your Protected Withdrawal Value subsequent to the Tenth Anniversary Date is equal to the greatest of: (1)the Account Value; or (2)the Periodic Value on the Tenth Anniversary Date, increased for subsequent adjusted Purchase Payments; or (3)the sum of: (a)200% of the Account Value on the effective date of the benefit; (b)200% of all adjusted Purchase Payments made within one year after the effective date of the benefit; and (c)all adjusted Purchase Payments made after one year following the effective date of the benefit up to the date of the first withdrawal. On and after the date of your first withdrawal, your Protected Withdrawal Value is increased by the amount of any subsequent Purchase Payments, is reduced by withdrawals, including your first withdrawal (as described below), and is increased if you qualify for a step-up (as described below). Irrespective of these calculations, your Protected Withdrawal Value will always be at least equal to your Account Value. Key Feature - Annual Income Amount under the Spousal Highest Daily Lifetime Seven Benefit The Annual Income Amount is equal to a specified percentage of the Protected Withdrawal Value. The percentage depends on the age of the youngest Designated Life on the date of the first withdrawal after election of the benefit. The percentages are: 5% for ages 79 and younger, 6% for ages 80 to 84, 7% for ages 85 to 89, and 8% for ages 90 and older. We use the age of the youngest Designated Life even if that Designated Life is no longer a participant under the Annuity due to death or divorce. Under the Spousal Highest Daily Lifetime Seven benefit, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If your cumulative withdrawals are in excess of the Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent years will be reduced (except with regard to required minimum distributions) by the result of the ratio of the Excess Income to the Account Value immediately prior to such withdrawal (see examples of this calculation below). Reductions include the actual amount of the withdrawal, including any CDSC that may apply. Withdrawals of any amount up to and including the Annual Income Amount will reduce the Protected Withdrawal Value by the amount of the withdrawal. Withdrawals of Excess Income will reduce the Protected Withdrawal Value by the same ratio as the reduction to the Annual Income Amount. A Purchase Payment that you make will (i) increase the then-existing Annual Income Amount by an amount equal to a percentage of the Purchase Payment (including the amount of any associated Credits) based on the age of the Annuitant at the time of the first withdrawal (the percentages are: 5% for ages 79 and younger, 6% for ages 80-84, 7% for ages 85-89, and 8% for ages 90 and older) and (ii) increase the Protected Withdrawal Value by the amount of the Purchase Payment (including the amount of any associated Credits). An automatic step-up feature ("Highest Quarterly Auto Step-Up") is included as part of this benefit. As detailed in this paragraph, the Highest Quarterly Auto Step-Up feature can result in a larger Annual Income Amount if your Account Value increases subsequent to your first withdrawal. We begin examining the Account Value for purposes of the Highest Quarterly Step-Up starting with the anniversary of the Issue Date of the Annuity (the "Annuity Anniversary") immediately after your first withdrawal under the benefit. Specifically, upon the first such Annuity Anniversary, we identify the Account Value on the Valuation Days corresponding to the end of each quarter that (i) is based on your Annuity Year, rather than a calendar year; (ii) is subsequent to the first withdrawal; and (iii) falls within the immediately preceding Annuity Year. If the end of any such quarter falls on a holiday or a weekend, we use the next Valuation Day. Having identified each of those quarter-end Account Values, we then multiply each such value by a percentage that varies based on the age of the youngest Designated Life on the Annuity Anniversary as of which the step-up would occur. The percentages are 5% for ages 79 and younger, 6% for ages 80-84, 7% for ages 85-89, and 8% for ages 90 and older. Thus, we multiply each quarterly value by the applicable percentage, adjust each such quarterly value for subsequent withdrawals and Purchase Payments, and then select the highest of those values. If the highest of those values exceeds the existing Annual Income Amount, we replace the existing amount with the new, higher amount. Otherwise, we leave the existing Annual Income Amount intact. In later years, (i.e., after the first Annuity Anniversary after the first withdrawal) we determine whether an automatic step-up should occur on each Annuity Anniversary, by performing a similar examination of the Account Values on the end of the four immediately preceding quarters. At the time that we increase your Annual Income Amount, we also increase your Protected Withdrawal Value to equal the highest quarterly value upon which your step-up was based. If, on the date that we implement a Highest Quarterly Auto Step-Up to your Annual Income Amount, the charge for Spousal Highest Daily Lifetime Seven has changed for new purchasers, you may be subject to the new charge at the time of such step-up. Prior to increasing your charge for Spousal Highest Daily Lifetime Seven upon a step-up, we would notify you, and give you the opportunity to cancel the automatic step-up feature. If you receive notice of a proposed step-up and accompanying fee increase, you should carefully evaluate whether the amount of the step-up justifies the increased fee to which you will be subject. 83 The Spousal Highest Daily Lifetime Seven program does not affect your ability to make withdrawals under your annuity, or limit your ability to request withdrawals that exceed the Annual Income Amount. Under Spousal Highest Daily Lifetime Seven, if your cumulative withdrawals in an Annuity Year are less than or equal to the Annual Income Amount, they will not reduce your Annual Income Amount in subsequent Annuity Years, but any such withdrawals will reduce the Annual Income Amount on a dollar-for-dollar basis in that Annuity Year. If, cumulatively, you withdraw an amount less than the Annual Income Amount in any Annuity Year, you cannot carry-over the unused portion of the Annual Income Amount to subsequent Annuity Years. Examples of dollar-for-dollar and proportional reductions, and the Highest Quarterly Auto Step-Up are set forth below. The values depicted here are purely hypothetical, and do not reflect the charges for the Spousal Highest Daily Lifetime Seven benefit or any other fees and charges. Assume the following for all three examples: . The Issue Date is December 1, 2007 . The Spousal Highest Daily Lifetime Seven benefit is elected on March 5, 2008. . The youngest Designated Life was 70 years old when he/she elected the Spousal Highest Daily Lifetime Seven benefit. Dollar-for-dollar reductions On May 2, 2008, the Protected Withdrawal Value is $120,000, resulting in an Annual Income Amount of $6,000 (since the youngest Designated Life is younger than 80 at the time of the 1/st/ withdrawal, the Annual Income Amount is 5% of the Protected Withdrawal Value, in this case 5% of $120,000). Assuming $2,500 is withdrawn from the Annuity on this date, the remaining Annual Income Amount for that Annuity Year (up to and including December 1, 2008) is $3,500. This is the result of a dollar-for-dollar reduction of the Annual Income Amount - $6,000 less $2,500 = $3,500. Proportional reductions Continuing the previous example, assume an additional withdrawal of $5,000 occurs on August 6, 2008 and the Account Value at the time of this withdrawal is $110,000. The first $3,500 of this withdrawal reduces the Annual Income Amount for that Annuity Year to $0. The remaining withdrawal amount - $1,500 - reduces the Annual Income Amount in future Annuity Years on a proportional basis based on the ratio of the excess withdrawal to the Account Value immediately prior to the excess withdrawal. (Note that if there were other withdrawals in that Annuity Year, each would result in another proportional reduction to the Annual Income Amount). Here is the calculation: Account Value before withdrawal $110,000.00 Less amount of "non" excess withdrawal $ 3,500.00 Account Value immediately before excess withdrawal of $1,500 $106,500.00 Excess withdrawal amount $ 1,500.00 Divided by Account Value immediately before excess withdrawal $106,500.00 Ratio 1.41% Annual Income Amount $ 6,000.00 Less ratio of 1.41% $ 84.51 Annual Income Amount for future Annuity Years $ 5,915.49
Highest Quarterly Auto Step-Up On each Annuity Anniversary date, the Annual Income Amount is stepped-up if the appropriate percentage (based on the youngest Designated Life's age on the Annuity Anniversary) of the highest quarterly value since your first withdrawal (or last Annuity Anniversary in subsequent years), adjusted for withdrawals and additional Purchase Payments, is higher than the Annual Income Amount, adjusted for excess withdrawals and additional Purchase Payments (plus any Credits). Continuing the same example as above, the Annual Income Amount for this Annuity Year is $6,000. However, the excess withdrawal on August 6 reduces this amount to $5,915.49 for future years (see above). For the next Annuity Year, the Annual Income Amount will be stepped-up if 5% (since the youngest Designated Life is younger than 80 on the date of the potential step-up) of the highest quarterly Account Value adjusted for withdrawals, is higher than $5,915.49. Here are the calculations for determining the quarterly values. Only the June 1 value is being adjusted for excess withdrawals as the September 1 and December 1 Valuation Days occur after the excess withdrawal on August 6. 84
Highest Quarterly Value (adjusted with Adjusted Annual withdrawal and Purchase Income Amount (5% of the Date* Account Value Payments)** Highest Quarterly Value) - ----- ------------- ----------------------- ------------------------ June 1, 2008 $118,000.00 $118,000.00 $5,900.00 August 6, 2008 $110,000.00 $112,885.55 $5,644.28 September 1, 2008 $112,000.00 $112,885.55 $5,644.28 December 1, 2008 $119,000.00 $119,000.00 $5,950.00
* In this example, the Annuity Anniversary date is December 1. The quarterly valuation dates are every three months thereafter - March 1, June 1, September 1, and December 1. In this example, we do not use the March 1 date as the first withdrawal took place after March 1. The Annuity Anniversary Date of December 1 is considered the fourth and final quarterly valuation date for the year. ** In this example, the first quarterly value after the first withdrawal is $118,000 on June 1, yielding an adjusted Annual Income Amount of $5,900.00. This amount is adjusted on August 6 to reflect the $5,000 withdrawal. The calculations for the adjustments are: . The Account Value of $118,000 on June 1 is first reduced dollar-for-dollar by $3,500 ($3,500 is the remaining Annual Income Amount for the Annuity Year), resulting in an adjusted Account Value of $114,500 before the excess withdrawal. . This amount ($114,500) is further reduced by 1.41% (this is the ratio in the above example which is the excess withdrawal divided by the Account Value immediately preceding the excess withdrawal) resulting in a Highest Quarterly Value of $112,885.55. The adjusted Annual Income Amount is carried forward to the next quarterly anniversary date of September 1. At this time, we compare this amount to 5% of the Account Value on September 1. Since the June 1 adjusted Annual Income Amount of $5,644.28 is higher than $5,600.00 (5% of $112,000), we continue to carry $5,644.28 forward to the next and final quarterly anniversary date of December 1. The Account Value on December 1 is $119,000 and 5% of this amount is $5,950. Since this is higher than $5,644.28, the adjusted Annual Income Amount is reset to $5,950.00. In this example, 5% of the December 1 value yields the highest amount of $5,950.00. Since this amount is higher than the current year's Annual Income Amount of $5,915.49 adjusted for excess withdrawals, the Annual Income Amount for the next Annuity Year, starting on December 2, 2008 and continuing through December 1, 2009, will be stepped-up to $5,950.00. Benefits Under The Spousal Highest Daily Lifetime Seven Program .. To the extent that your Account Value was reduced to zero as a result of cumulative withdrawals that are equal to or less than the Annual Income Amount or as a result of the fee that we assess for Spousal Highest Daily Lifetime Seven, and amounts are still payable under Spousal Highest Daily Lifetime Seven, we will make an additional payment, if any, for that Annuity Year equal to the remaining Annual Income Amount for the Annuity Year. Thus, in that scenario, the remaining Annual Income Amount would be payable even though your Account Value was reduced to zero. In subsequent Annuity Years we make payments that equal the Annual Income Amount as described in this section. We will make payments until the death of the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. To the extent that cumulative withdrawals in the current Annuity Year that reduced your Account Value to zero are more than the Annual Income Amount, the Spousal Highest Daily Lifetime Seven benefit terminates, and no additional payments will be made. However, if a withdrawal in the latter scenario was taken to meet required minimum distribution requirements under the Annuity, then the benefit will not terminate, and we will continue to pay the Annual Income Amount in the form of a fixed annuity. .. If Annuity payments are to begin under the terms of your Annuity, or if you decide to begin receiving Annuity payments and there is a Annual Income Amount due in subsequent Annuity Years, you can elect one of the following two options: (1)apply your Account Value to any Annuity option available; or (2)request that, as of the date Annuity payments are to begin, we make Annuity payments each year equal to the Annual Income Amount. We will make payments until the first of the Designated Lives to die, and will continue to make payments until the death of the second Designated Life as long as the Designated Lives were spouses at the time of the first death. If, due to death of a Designated Life or divorce prior to annuitization, only a single Designated Life remains, then Annuity payments will be made as a life annuity for the lifetime of the Designated Life. We must receive your request in a form acceptable to us at our office. .. In the absence of an election when mandatory annuity payments are to begin, we will make annual annuity payments as a joint and survivor or single (as applicable) life fixed annuity with ten payments certain, by applying the greater of the annuity rates then currently available or the annuity rates guaranteed in your Annuity. The amount that will be applied to provide such Annuity payments will be the greater of: (1)the present value of the future Annual Income Amount payments. Such present value will be calculated using the greater of the joint and survivor or single (as applicable) life fixed annuity rates then currently available or the joint and survivor or single (as applicable) life fixed annuity rates guaranteed in your Annuity; and (2)the Account Value. 85 .. If no withdrawal was ever taken, we will calculate the Annual Income Amount as if you made your first withdrawal on the date the annuity payments are to begin. .. Please note that payments that we make under this benefit after the Annuity Anniversary coinciding with or next following the older of the owner or Annuitant's 95/th/ birthday, will be treated as annuity payments. Other Important Considerations . Withdrawals under the Spousal Highest Daily Lifetime Seven benefit are subject to all of the terms and conditions of the Annuity, including any CDSC. . Withdrawals made while the Spousal Highest Daily Lifetime Seven Benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. The Spousal Highest Daily Lifetime Seven Benefit does not directly affect the Account Value or surrender value, but any withdrawal will decrease the Account Value by the amount of the withdrawal (plus any applicable CDSC). If you surrender your Annuity you will receive the current surrender value. . Upon inception of the benefit, 100% of your Account Value must be allocated to the permitted Sub-accounts. . You cannot allocate Purchase Payments or transfer Account Value to the AST Investment Grade Bond Portfolio Sub-account (as described below) if you elect this benefit. A summary description of the AST Investment Grade Bond Portfolio appears within the prospectus section entitled "What Are The Investment Objectives and Policies of The Portfolios?". Upon the initial transfer of your Account Value into the AST Investment Grade Bond Portfolio, we will send a prospectus for that Portfolio to you, along with your confirmation. In addition, you can find a copy of the AST Investment Grade Bond Portfolio prospectus by going to www.prudentialannuities.com. . You can make withdrawals from your Annuity without purchasing the Spousal Highest Daily Lifetime Seven benefit. The Spousal Highest Daily Lifetime Seven benefit provides a guarantee that if your Account Value declines due to market performance, you will be able to receive your Annual Income Amount in the form of periodic benefit payments. . Transfers to and from the elected Sub-accounts and the AST Investment Grade Bond Portfolio Sub-account triggered by the asset transfer component of the benefit will not count toward the maximum number of free transfers allowable under an Annuity. . You must allocate your Account Value in accordance with the then available investment option(s) that we may prescribe in order to elect and maintain the Spousal Highest Daily Lifetime Seven benefit. If, subsequent to your election of the benefit, we change our requirements for how Account Value must be allocated under the benefit, the new requirement will apply only to new elections of the benefit, and we will not compel you to re-allocate your Account Value in accordance with our newly adopted requirements. . The fee for Spousal Highest Daily Lifetime Seven is 0.75% annually of the Protected Withdrawal Value. We deduct this fee at the end of each quarter, where each such quarter is part of a year that begins on the effective date of the benefit or an anniversary thereafter. Thus, on each such quarter-end (or the next Valuation Day, if the quarter-end is not a Valuation Day), we deduct 0.1875% of the Protected Withdrawal Value at the end of the quarter. We deduct the fee pro rata from each of your Sub-accounts including the AST Investment Grade Bond Sub-account. Since this fee is based on the Protected Withdrawal Value, the fee for Spousal Highest Daily Lifetime Seven may be greater than it would have been, had it been based on the Account Value alone. If the fee to be deducted exceeds the current Account Value, we will reduce the Account Value to zero, and continue the benefit as described above. Election of and Designations under the Program Spousal Highest Daily Lifetime Seven can only be elected based on two Designated Lives. Designated Lives must be natural persons who are each other's spouses at the time of election of the program and at the death of the first of the Designated Lives to die. Currently, Spousal Highest Daily Lifetime Seven only may be elected where the Owner, Annuitant, and Beneficiary designations are as follows: .. One Annuity Owner, where the Annuitant and the Owner are the same person and the beneficiary is the Owner's spouse. The Owner/Annuitant and the beneficiary each must be at least 59 1/2 years old at the time of election; or .. Co-Annuity Owners, where the Owners are each other's spouses. The beneficiary designation must be the surviving spouse, or the spouses named equally. One of the owners must be the Annuitant. Each Owner must each be at least 59 1/2 years old at the time of election; or .. One Annuity Owner, where the Owner is a custodial account established to hold retirement assets for the benefit of the Annuitant pursuant to the provisions of Section 408(a) of the Internal Revenue Code (or any successor Code section thereto) ("Custodial Account"), the beneficiary is the Custodial Account, and the spouse of the Annuitant is the Contingent Annuitant. Both the Annuitant and the Contingent Annuitant each must be at least 59 1/2 years old at the time of election. We do not permit a change of Owner under this benefit, except as follows: (a) if one Owner dies and the surviving spousal Owner assumes the Annuity or (b) if the Annuity initially is co-owned, but thereafter the Owner who is not the Annuitant is removed as Owner. We permit changes of beneficiary under this benefit. If the Designated Lives divorce, the Spousal Highest Daily Lifetime Seven benefit may not be divided as part of the divorce settlement or judgment. Nor may the divorcing spouse who retains ownership of the Annuity appoint a new Designated Life upon re-marriage. 86 Spousal Highest Daily Lifetime Seven can be elected at the time that you purchase your Annuity or after the Issue Date, subject to our eligibility rules and restrictions. Currently, if you terminate the Spousal Highest Daily Lifetime Seven benefit, you generally will only be allowed to re-elect the benefit or to elect the Lifetime Five Benefit, the Spousal Lifetime Five Benefit, or the Highest Daily Lifetime Seven Benefit on any anniversary of the Issue Date that is at least 90 calendar days from the date the Spousal Highest Daily Lifetime Seven Benefit was terminated. We reserve the right to further limit the election frequency in the future. Similarly, we generally will permit those who have terminated Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five, or Highest Daily Lifetime Seven to elect Spousal Highest Daily Lifetime Seven only on an anniversary of the Issue Date that is at least 90 calendar days from the date that such benefit was terminated. We reserve the right to waive that requirement. Return of Principal Guarantee If you have not made a withdrawal before the Tenth Anniversary, we will increase your Account Value on that Tenth Anniversary (or the next Valuation Day, if that anniversary is not a Valuation Day), if the requirements set forth in this paragraph are met. On the Tenth Anniversary, we add: a) your Account Value on the day that you elected Spousal Highest Daily Lifetime Seven; and b) the sum of each Purchase Payment you made (including any Credits) during the one-year period after you elected the benefit. If the sum of (a) and (b) is greater than your Account Value on the Tenth Anniversary, we increase your Account Value to equal the sum of (a) and (b), by contributing funds from our general account. If the sum of (a) and (b) is less than or equal to your Account Value on the Tenth Anniversary, we make no such adjustment. The amount that we add to your Account Value under this provision will be allocated to each of your variable investment options (other than a bond Sub-account used with this benefit), in the same proportion that each such Sub-account bears to your total Account Value, immediately before the application of the amount. Any such amount will not be considered a Purchase Payment when calculating your Protected Withdrawal Value, your death benefit, or the amount of any optional benefit that you may have selected, and therefore will have no direct impact on any such values at the time we add this amount. This potential addition to Account Value is available only if you have elected Spousal Highest Daily Lifetime Seven and if you meet the conditions set forth in this paragraph. Thus, if you take a withdrawal prior to the Tenth Anniversary, you are not eligible to receive the Return of Principal Guarantee. Termination of the Program You may terminate the benefit at any time by notifying us. If you terminate the benefit, any guarantee provided by the benefit will terminate as of the date the termination is effective, and certain restrictions on re-election will apply as described above. The benefit terminates: (i) if upon the death of the first Designated Life, the surviving Designated Life opts to take the death benefit under the Annuity (thus, the benefit does not terminate solely because of the death of the first Designated Life) (ii) upon the death of the second Designated Life, (iii) upon your termination of the benefit (although if you have elected to take annuity payments in the form of the Annual Income Amount, we will continue to pay the Annual Income Amount) (iv) upon your surrender of the Annuity (v) upon your election to begin receiving annuity payments (vi) if both the Account Value and Annual Income Amount equal zero or (vii) if you cease to meet our requirements for issuing the benefit (see Election of and Designations under the Program). Upon termination of Spousal Highest Daily Lifetime Seven other than upon death of a Designated Life, we impose any accrued fee for the benefit (i.e., the fee for the pro-rated portion of the year since the fee was last assessed), and thereafter we cease deducting the charge for the benefit. With regard to your investment allocations, upon termination we will: (i) leave intact amounts that are held in the variable investment options, and (ii) transfer all amounts held in the AST Investment Grade Bond Portfolio Sub-account (as defined below) to your variable investment options, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e. in the same proportion as the current balances in your variable investment options). Asset Transfer Component of Spousal Highest Daily Lifetime Seven As indicated above, we limit the Sub-accounts to which you may allocate Account Value if you elect Spousal Highest Daily Lifetime Seven. For purposes of this benefit, we refer to those permitted Sub-accounts as the "Permitted Sub-accounts". As a requirement of participating in Spousal Highest Daily Lifetime Seven, we require that you participate in our specialized asset transfer program, under which we may transfer Account Value between the Permitted Sub-accounts and a specified bond fund within the Advanced Series Trust (the "AST Investment Grade Bond Sub-account"). We determine whether to make a transfer, and the amount of any transfer, under a non-discretionary formula, discussed below. The AST Investment Grade Bond Sub-account is available only with this benefit, and thus you may not allocate Purchase Payments to the AST Investment Grade Bond Sub-account. Under the asset transfer component of Spousal Highest Daily Lifetime Seven, we monitor your Account Value daily and, if dictated by the formula, systematically transfer amounts between the Permitted Sub-accounts you have chosen and the AST Investment Grade Bond Sub-account. Any transfer would be made in accordance with a formula, which is set forth in the Appendix H to this prospectus. Speaking generally, the formula, which we apply each Valuation Day, operates as follows. The formula starts by identifying an income basis for that day and then multiplies that figure by 5%, to produce a projected 87 (i.e., hypothetical) Highest Daily annual income amount. Note that we use 5% in the formula, irrespective of the youngest Designated Life's attained age. Then we produce an estimate of the total amount we would target in our allocation model, based on the projected income amount and factors set forth in the formula. In the formula, we refer to that value as the "Target Value" or "L". If you have already made a withdrawal, your projected income amount (and thus your Target Value) would take into account any automatic step-up, any subsequent purchase payments, and any excess withdrawals. Next, the formula subtracts from the Target Value the amount held within the AST Investment Grade Bond Sub-account on that day, and divides that difference by the amount held within the Permitted Sub-accounts. That ratio, which essentially isolates the amount of your Target Value that is not offset by amounts held within the AST Investment Grade Bond Sub-account, is called the "Target Ratio" or "r". If the Target Ratio exceeds a certain percentage (currently 83%), it means essentially that too much Target Value is not offset by assets within the AST Investment Grade Bond Sub-account, and therefore we will transfer an amount from your Permitted Sub-accounts to the AST Investment Grade Bond Sub-account. Conversely, if the Target Ratio falls below a certain percentage (currently 77%), then a transfer from the AST Investment Grade Bond Sub-account to the Permitted Sub-accounts would occur. As you can glean from the formula, a downturn in the securities markets (i.e., a reduction in the amount held within the Permitted Sub-accounts) may cause us to transfer some of your variable Account Value to the AST Investment Grade Bond Sub-account, because such a reduction will tend to increase the Target Ratio. Moreover, certain market return scenarios involving "flat" returns over a period of time also could result in the transfer of money to the AST Investment Grade Bond Sub-account. In deciding how much to transfer, we use another formula, which essentially seeks to re-balance amounts held in the Permitted Sub-accounts and the AST Investment Grade Bond Sub-account so that the Target Ratio meets a target, which currently is equal to 80%. Once you elect Spousal Highest Daily Lifetime Seven, the ratios we use will be fixed. For newly-issued Annuities that elect Spousal Highest Daily Lifetime Seven and existing Annuities that elect Spousal Highest Daily Lifetime Seven, however, we reserve the right to change the ratios. While you are not notified when your Annuity reaches a reallocation trigger, you will receive a confirmation statement indicating the transfer of a portion of your Account Value either to or from the AST Investment Grade Bond Sub-account. The formula by which the reallocation triggers operate is designed primarily to mitigate the financial risks that we incur in providing the guarantee under Spousal Highest Daily Lifetime Seven. Depending on the results of the calculation relative to the reallocation triggers, we may, on any day: . Not make any transfer; or . If a portion of your Account Value was previously allocated to the AST Investment Grade Bond Sub-account, transfer all or a portion of those amounts to the Permitted Sub-accounts, based on your existing allocation instructions or (in the absence of such existing instructions) pro rata (i.e., in the same proportion as the current balances in your variable investment options). Amounts taken out of the AST Investment Grade Bond Sub-account will be withdrawn for this purpose on a last-in, first-out basis; or . Transfer all or a portion of your Account Value in the Permitted Sub-accounts pro-rata to the AST Investment Grade Bond Sub-account. If a significant amount of your Account Value is systematically transferred to the AST Investment Grade Bond Sub-account during periods of market declines or low interest rates, less of your Account Value may be available to participate in the investment experience of the Permitted Sub-accounts if there is a subsequent market recovery. If your entire Account Value is transferred to the AST Investment Grade Bond Sub-account, then based on the way the formula operates, that value would remain in the AST Investment Grade Bond Sub-account unless you made additional Purchase Payments to the Permitted Sub-accounts, which could cause Account Value to transfer out of the AST Investment Grade Bond Sub-account. Additional Tax Considerations If you purchase an annuity as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Tax Sheltered Annuity (or 403(b)) or employer plan under Code Section 401(a), the Required Minimum Distribution rules under the Code provide that you begin receiving periodic amounts from your annuity beginning after age 70 1/2. For a Tax Sheltered Annuity or a 401(a) plan for which the participant is not a greater than five (5) percent owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the owner's lifetime. The amount required under the Code may exceed the Annual Income Amount, which will cause us to increase the Annual Income Amount in any Annuity Year that Required Minimum Distributions due from your Annuity are greater than such amounts. In addition, the amount and duration of payments under the annuity payment and death benefit provisions may be adjusted so that the payments do not trigger any penalty or excise taxes due to tax considerations such as Required Minimum Distribution provisions under the tax law. Please note, however, that any withdrawal you take prior to the Tenth Anniversary, even if withdrawn to satisfy required minimum distribution rules, will cause you to lose the ability to receive the Return of Principal Guarantee and the guaranteed amount described above under "KEY FEATURE - Protected Withdrawal Value". 88 As indicated, withdrawals made while this benefit is in effect will be treated, for tax purposes, in the same way as any other withdrawals under the Annuity. Please see the Tax Considerations section of the prospectus for a detailed discussion of the tax treatment of withdrawals. We do not address each potential tax scenario that could arise with respect to this benefit here. However, we do note that if you participate in Spousal Highest Daily Lifetime Seven through a non-qualified annuity, as with all withdrawals, once all Purchase Payments are returned under the Annuity, all subsequent withdrawal amounts will be taxed as ordinary income. 89 DEATH BENEFIT WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT? Each Annuity provides a Death Benefit during its accumulation period. If an Annuity is owned by one or more natural persons, the Death Benefit is payable upon the first death of an Owner. If an Annuity is owned by an entity, the Death Benefit is payable upon the Annuitant's death, if there is no Contingent Annuitant. Generally, if a Contingent Annuitant was designated before the Annuitant's death and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and a Death Benefit will not be paid at that time. The person upon whose death the Death Benefit is paid is referred to below as the "decedent." BASIC DEATH BENEFIT Each Annuity provides a basic Death Benefit at no additional charge. The Insurance Charge we deduct daily from your Account Value allocated to the Sub-accounts is used, in part, to pay us for the risk we assume in providing the basic Death Benefit guarantee under an Annuity. Each Annuity also offers four different optional Death Benefits that can be purchased for an additional charge. The additional charge is deducted to compensate Prudential Annuities for providing increased insurance protection under the optional Death Benefits. Notwithstanding the additional protection provided under the optional Death Benefits, the additional cost has the impact of reducing the net performance of the investment options. In addition, with respect to Optimum Plus, under certain circumstances, your Death Benefit may be reduced by the amount of any Credits we applied to your Purchase Payments. (See "How are Credits Applied to My Account Value".) The basic Death Benefit is the greater of: . The sum of all Purchase Payments (not including any Credits) less the sum of all proportional withdrawals. . The sum of your Account Value in the Sub-accounts and your Interim Value in the Fixed Allocations. With respect to Optimum Plus, the basic Death Benefit is reduced by the amount of any Credits applied within 12 months prior to the date of death. "Proportional withdrawals" are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. For example, a withdrawal of 50% of Account Value would be considered as a 50% reduction in Purchase Payments for purposes of calculating the basic Death Benefit. OPTIONAL DEATH BENEFITS Four optional Death Benefits are offered for purchase with your Annuity to provide an enhanced level of protection for your beneficiaries. Currently, these benefits are only offered in those jurisdictions where we have received regulatory approval and must be elected at the time that you purchase your Annuity. We may, at a later date, allow existing Annuity Owners to purchase an optional Death Benefit subject to our rules and any changes or restrictions in the benefits. Certain terms and conditions may differ between jurisdictions once approved and if you purchase your Annuity as part of an exchange, replacement or transfer, in whole or in part, from any other Annuity we issue. The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit may only be elected individually, and cannot be elected in combination with any other optional Death Benefit. If you elect Spousal Lifetime Five or Spousal Highest Daily Lifetime Seven, you are not permitted to elect an optional Death Benefit. With respect to Optimum Plus, under certain circumstances, each Optional Death Benefit that you elect may be reduced by the amount of Credits applied to your Purchase Payments. Investment Restrictions may apply if you elect certain optional death benefits. Enhanced Beneficiary Protection Optional Death Benefit The Enhanced Beneficiary Protection Optional Death Benefit can provide additional amounts to your Beneficiary that may be used to offset federal and state taxes payable on any taxable gains in your Annuity at the time of your death. Whether this benefit is appropriate for you may depend on your particular circumstances, including other financial resources that may be available to your Beneficiary to pay taxes on your Annuity should you die during the accumulation period. No benefit is payable if death occurs on or after the Annuity Date. The Enhanced Beneficiary Protection Optional Death Benefit provides a benefit that is payable in addition to the basic Death Benefit and certain other optional death benefits you may elect in conjunction with this benefit. If the Annuity has one Owner, the Owner must be age 75 or less at the time the benefit is purchased. If an Annuity has joint Owners, the oldest Owner must be age 75 or less. If an Annuity is owned by an entity, the Annuitant must be age 75 or less. 90 Calculation Of Enhanced Beneficiary Protection Optional Death Benefit If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the Death Benefit is calculated as follows: 1. the basic Death Benefit described above; PLUS 2. 40% of your "Growth" under an Annuity, as defined below. "Growth" means the sum of your Account Value in the Sub-accounts and your Interim Value in the Fixed Allocations, minus the total of all Purchase Payments (less the amount of any Credits applied within 12-months prior to the date of death, with respect to Optimum Plus) reduced by the sum of all proportional withdrawals. "Proportional withdrawals" are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. For example, a withdrawal of 50% of Account Value would be considered as a 50% reduction in Purchase Payments. The Enhanced Beneficiary Protection Optional Death Benefit is subject to a maximum of 100% of all Purchase Payments applied to an Annuity at least 12 months prior to the death of the decedent that triggers the payment of the Death Benefit. The Enhanced Beneficiary Protection Optional Death Benefit is being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. Please refer to the section entitled "Tax Considerations" for a discussion of special tax considerations for purchasers of this benefit. The Enhanced Beneficiary Protection Death Benefit is not available if you elect the "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit or the Spousal Lifetime Five Income Benefit. See Appendix B for examples of how the Enhanced Beneficiary Protection Optional Death Benefit is calculated. Highest Anniversary Value Death Benefit ("HAV") If an Annuity has one Owner, the Owner must be age 79 or less at the time the Highest Anniversary Value Optional Death Benefit is purchased. If an Annuity has joint Owners, the oldest Owner must be age 79 or less. If an Annuity is owned by an entity, the Annuitant must be age 79 or less. Certain of the Portfolios offered as Sub-accounts under the Annuity are not available if you elect the Highest Anniversary Value Death Benefit. In addition, we reserve the right to require you to use certain asset allocation model(s) if you elect this death benefit. Calculation of Highest Anniversary Value Death Benefit The HAV Death Benefit depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above; and 2. the Highest Anniversary Value as of the Owner's date of death. If the Owner dies on or after the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above; and 2. the Highest Anniversary Value on the Death Benefit Target Date plus the sum of all Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to date of death in the case of Optimum Plus) less the sum of all proportional withdrawals since the Death Benefit Target Date. The amount determined by this calculation is increased by any Purchase Payments received after the Owner's date of death and decreased by any proportional withdrawals since such date. The Highest Anniversary Value Death Benefit described above is currently being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. The Highest Anniversary Value Death Benefit is not available if you elect "Combination 5% Roll-up and Highest Anniversary Value" or the "Highest Daily Value" Death Benefit. It is also not available with Spousal Lifetime Five or Spousal Highest Daily Lifetime Seven. 91 Please refer to the definition of Death Benefit Target Date below. This death benefit may not be an appropriate feature where the Owner's age is near the age specified in the Death Benefit Target Date. This is because the benefit may not have the same potential for growth as it otherwise would, since there will be fewer contract anniversaries before the death benefit target date is reached. The death benefit target date under this death benefit is earlier than the death benefit target date under the Combination 5% Roll-up and Highest Anniversary Value Death Benefit for Owners who are age 76 or older when an Annuity is issued, which may result in a lower value on the death benefit, since there will be fewer contract anniversaries before the death benefit target date is reached. See Appendix B for examples of how the Highest Anniversary Value Death Benefit is calculated. Combination 5% Roll-up and Highest Anniversary Value Death Benefit If an Annuity has one Owner, the Owner must be age 79 or less at the time the Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If an Annuity has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is owned by an entity, the Annuitant must be age 79 or less. If you elect this benefit, you must allocate your Account Value in accordance with the then permitted and available option(s) with this benefit. In addition, we reserve the right to require you to use certain asset allocation model(s) if you elect this Death Benefit. Calculation of the Combination 5% Roll-up and Highest Anniversary Value Death Benefit The Combination 5% Roll-up and HAV Death Benefit equals the greatest of: 1. the basic Death Benefit described above; and 2. the Highest Anniversary Value Death Benefit described above; and 3. 5% Roll-up described below. Thecalculation of the 5% Roll-up depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date the 5% Roll up is equal to: . all Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to date of death in the case of Optimum Plus) increasing at an annual effective interest rate of 5% starting on the date that each Purchase Payment is made and ending on the Owner's date of death; MINUS . the sum of all withdrawals, dollar for dollar up to 5% of the Death Benefit's value as of the prior contract anniversary (or Issue Date if the withdrawal is in the first contract year). Any withdrawals in excess of the 5% dollar for dollar limit are proportional. If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up is equal to: . the 5% Roll-up value as of the Death Benefit Target Date increased by total Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to date of death in the case of Optimum Plus) made after the Death Benefit Target Date; MINUS . the sum of all withdrawals which reduce the 5% Roll-up proportionally. In the case of Optimum Plus, as indicated, the amounts calculated in Items 1, 2 and 3 above (before, on or after the Death Benefit Target Date) may be reduced by any Credits under certain circumstances. Please refer to the definitions of Death Benefit Target Date below. This Death Benefit may not be an appropriate feature where the Owner's age is near the age specified in the Death Benefit Target Date. This is because the benefit may not have the same potential for growth as it otherwise would, since there will be fewer Annuity anniversaries before the Death Benefit Target Date is reached. The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit described above is currently being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit is not available if you elect any other optional Death Benefit or elect Spousal Lifetime Five or Spousal Highest Daily Lifetime Seven. 92 See Appendix B for examples of how the "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit is calculated. Key Terms Used with the Highest Anniversary Value Death Benefit and the Combination 5% Roll-up and Highest Anniversary Value Death Benefit: . The Death Benefit Target Date for the Highest Anniversary Value Death Benefit is the contract anniversary on or after the 80/th/ birthday of the current Owner, the oldest of either joint Owner or the Annuitant, if entity owned. . The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death Benefit is the later of the contract anniversary on or after the 80/th/ birthday of the current Owner, the oldest of either joint Owner or the Annuitant, if entity owned, or five years after the Issue Date of an Annuity. . The Highest Anniversary Value equals the highest of all previous "Anniversary Values" less proportional withdrawals since such anniversary and plus any Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of Optimum Plus) since such anniversary. . The Anniversary Value is the Account Value as of each anniversary of the Issue Date of an Annuity. The Anniversary Value on the Issue Date is equal to your Purchase Payment. (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of Optimum Plus). . Proportional withdrawals are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. Proportional withdrawals result in a reduction to the Highest Anniversary Value or 5% Roll-up value by reducing such value in the same proportion as the Account Value was reduced by the withdrawal as of the date the withdrawal occurred. For example, if your Highest Anniversary Value or 5% Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time when your Account Value is equal to $100,000 (a 10% reduction), when calculating the optional Death Benefit we will reduce your Highest Anniversary Value ($ 125,000) by 10% or $12,500. Highest Daily Value Death Benefit ("HDV") If an Annuity has one Owner, the Owner must be age 79 or less at the time the Highest Daily Value Death Benefit is elected. If an Annuity has joint Owners, the older Owner must be age 79 or less. If there are joint Owners, death of the Owner refers to the first to die of the joint Owners. If an Annuity is owned by an entity, the Annuitant must be age 79 or less and death of the Owner refers to the death of the Annuitant. If you elect this benefit, you must allocate your Account Value in accordance with the then permitted and available option(s) with this benefit. Currently, you are required to enroll and maintain your Account Value in the asset allocation program if you elect this benefit. The HDV Death Benefit depends on whether death occurs before or after the Death Benefit Target Date. If the Owner dies before the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of Optimum Plus); and 2. the HDV as of the Owner's date of death. If the Owner dies on or after the Death Benefit Target Date, the Death Benefit equals the greater of: 1. the basic Death Benefit described above; and 2. the HDV on the Death Benefit Target Date plus the sum of all Purchase Payments (including any Credits applied to such Purchase Payments more than twelve (12) months prior to the date of death in the case of Optimum Plus) less the sum of all proportional withdrawals since the Death Benefit Target Date. The amount determined by this calculation is increased by any Purchase Payments received after the Owner's date of death and decreased by any proportional withdrawals since such date. The Highest Daily Value Death Benefit described above is currently being offered in those jurisdictions where we have received regulatory approval. Certain terms and conditions may differ between jurisdictions once approved. The Highest Daily Value Death Benefit is not available if you elect the Guaranteed Return Option, Guaranteed Return Option Plus, Guaranteed Return Option Plus 2008, Highest Daily GRO, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Seven the "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit, or the Highest Anniversary Value Death Benefit. 93 Key Terms Used with the Highest Daily Value Death Benefit: . The Death Benefit Target Date for the Highest Daily Value Death Benefit is the later of an Annuity anniversary on or after the 80/th/ birthday of the current Owner, or the older of either the joint Owner or the Annuitant, if entity owned, or five years after the Issue Date of an Annuity. . The Highest Daily Value equals the highest of all previous "Daily Values" less proportional withdrawals since such date and plus any Purchase Payments (plus associated Credits in the case of Optimum Plus) since such date. . The Daily Value is the Account Value as of the end of each Valuation Day. The Daily Value on the Issue Date is equal to your Purchase Payment (plus associated Credits applied more than twelve (12) months prior to the date of death in the case of Optimum Plus). . Proportional withdrawals are determined by calculating the percentage of your Account Value that each prior withdrawal represented when withdrawn. Proportional withdrawals result in a reduction to the Highest Daily Value by reducing such value in the same proportion as the Account Value was reduced by the withdrawal as of the date the withdrawal occurred. For example, if your Highest Daily Value is $125,000 and you subsequently withdraw $10,000 at a time when your Account Value is equal to $100,000 (a 10% reduction), when calculating the optional Death Benefit we will reduce your Highest Daily Value ($125,000) by 10% or $12,500. Please see Appendix B to this prospectus for a hypothetical example of how the HDV Death Benefit is calculated. Annuities with Joint Owners For Annuities with joint Owners, the Death Benefits are calculated as shown above except that the age of the oldest of the joint Owners is used to determine the Death Benefit Target Date. NOTE: If you and your spouse own your Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary Beneficiary is the surviving spouse, then the surviving spouse can elect to assume ownership of your Annuity and continue the Annuity instead of receiving the Death Benefit. Annuities Owned by Entities For Annuities owned by an entity, the Death Benefits are calculated as shown above except that the age of the Annuitant is used to determine the Death Benefit Target Date. Payment of the Death Benefit is based on the death of the Annuitant (or Contingent Annuitant, if applicable). Can I Terminate the Optional Death Benefits? Do the Optional Death Benefits Terminate under other Circumstances? You can terminate the Enhanced Beneficiary Protection Death Benefit and the Highest Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV Death Benefit" and the HDV Death Benefit may not be terminated once elected. The optional Death Benefits will terminate automatically on the Annuity Date. We may also terminate any optional Death Benefit if necessary to comply with our interpretation of the Code and applicable regulations. What are the Charges for the Optional Death Benefits? We deduct a charge equal to 0.25% per year of the average daily net assets of the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average daily net assets of the Sub-accounts for each of the "Combination 5% Roll-up and HAV Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these benefits to compensate Prudential Annuities for providing increased insurance protection under the optional Death Benefits. The additional annual charge is deducted daily against your Account Value allocated to the Sub-accounts. Please refer to the section entitled "Tax Considerations" for additional considerations in relation to the optional Death Benefit. PRUDENTIAL ANNUITIES' ANNUITY REWARDS What is the Annuity Rewards Benefit? The Annuity Rewards Benefit offers Owners the ability to capture any market gains since the Issue Date of their Annuity as an enhancement to their current Death Benefit so their Beneficiaries will not receive less than an Annuity's value as of the effective date of the benefit. Under the Annuity Rewards Benefit, Prudential Annuities guarantees that the Death Benefit will not be less than: . your Account Value in the Sub-accounts plus the Interim Value in any Fixed Allocations as of the effective date of the benefit . MINUS any proportional withdrawals following the effective date of the benefit . PLUS any additional Purchase Payments applied to your Annuity following the effective date of the benefit. 94 The Annuity Rewards Death Benefit enhancement does not affect the calculation of the basic Death Benefit or any Optional Death Benefits available under an Annuity. If the Death Benefit amount payable under your Annuity's basic Death Benefit or any Optional Death Benefits you purchase is greater than the enhanced Death Benefit under the Annuity Rewards Benefit on the date the Death Benefit is calculated, your Beneficiary will receive the higher amount. Who is Eligible for the Annuity Rewards Benefit? Owners can elect the Annuity Rewards Death Benefit enhancement when there is no longer a CDSC associated with your Annuity. However, the Account Value on the date that the Annuity Rewards benefit is effective, must be greater than the amount that would be payable to the Beneficiary under the Death Benefit (including any amounts payable under any Optional Death Benefit then in effect). The effective date must occur before annuity payments begin. There can only be one effective date for the Annuity Rewards Death Benefit enhancement. There is no additional charge for electing the Annuity Rewards Death Benefit enhancement. PAYMENT OF DEATH BENEFITS Alternative Death Benefit Payment Options - Annuities owned by Individuals (not associated with Tax-Favored Plans) Except in the case of a spousal assumption as described below, upon your death, certain distributions must be made under the contract. The required distributions depend on whether you die before you start taking annuity payments under the contract or after you start taking annuity payments under the contract. If you die on or after the Annuity Date, the remaining portion of the interest in the contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. In the event of your death before the Annuity Date, the Death Benefit must be distributed: . within five (5) years of the date of death; or . as a series of payments not extending beyond the life expectancy of the Beneficiary or over the life of the Beneficiary. Payments under this option must begin within one year of the date of death. Unless you have made an election prior to Death Benefit proceeds becoming due, a Beneficiary can elect to receive the Death Benefit proceeds under the Beneficiary Continuation Option as described below in the section entitled "Beneficiary Continuation Option," as a series of annuity payments. Upon our receipt of proof of death, we will send to the beneficiary materials that list these payment options. Alternative Death Benefit Payment Options - Annuities held by Tax-Favored Plans The Code provides for alternative death benefit payment options when an Annuity is used as an IRA, 403(b) or other "qualified investment" that requires minimum distributions. Upon your death under an IRA, 403(b) or other "qualified investment", the designated Beneficiary may generally elect to continue the Annuity and receive Required Minimum Distributions under the Annuity instead of receiving the death benefit in a single payment. The available payment options will depend on whether you die before the date Required Minimum Distributions under the Code were to begin, whether you have named a designated beneficiary and whether the Beneficiary is your surviving spouse. . If you die after a designated beneficiary has been named, the death benefit must be distributed by December 31/st/ of the year including the five year anniversary of the date of death, or as periodic payments not extending beyond the life expectancy of the designated beneficiary (provided such payments begin by December 31/st/ of the year following the year of death). However, if your surviving spouse is the beneficiary, the death benefit can be paid out over the life expectancy of your spouse with such payments beginning no later than December 31/st/ / of the year following the year of death or December 31/st/ of the year in which you would have reached age 70 1/2, which ever is later. Additionally, if the contract is payable to (or for the benefit of) your surviving spouse, that portion of the contract may be continued with your spouse as the owner. . If you die before a designated beneficiary is named and before the date Required Minimum Distributions must begin under the Code, the death benefit must be paid out by December 31/st/ of the year including the five year anniversary of the date of death. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31/st/ of the year following the year of death, such contract is deemed to have no designated beneficiary. . If you die before a designated beneficiary is named and after the date Required Minimum Distributions must begin under the Code, the death benefit must be paid out at least as rapidly as under the method then in effect. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31/st/ of the year following the year of death, such contract is deemed to have no designated beneficiary. A beneficiary has the flexibility to take out more each year than mandated under the Required Minimum Distribution rules. 95 Until withdrawn, amounts in an IRA, 403(b) or other "qualified investment" continue to be tax deferred. Amounts withdrawn each year, including amounts that are required to be withdrawn under the Required Minimum Distribution rules, are subject to tax. You may wish to consult a professional tax advisor for tax advice as to your particular situation. For a Roth IRA, if death occurs before the entire interest is distributed, the death benefit must be distributed under the same rules applied to IRAs where death occurs before the date Required Minimum Distributions must begin under the Code. The tax consequences to the beneficiary may vary among the different death benefit payment options. See the Tax Considerations section of this prospectus, and consult your tax advisor. Beneficiary Continuation Option Instead of receiving the death benefit in a single payment, or under an Annuity Option, a beneficiary may take the death benefit under an alternative death benefit payment option, as provided by the Code and described above under the sections entitled "Payment of Death Benefits" and "Alternative Death Benefit Payment Options - Annuities Held by Tax-Favored Plans." This "Beneficiary Continuation Option" is described below and is available for both qualified Annuities (i.e. annuities sold to an IRA, Roth IRA, SEP IRA, or 403(b)) and non-qualified Annuities. Under the Beneficiary Continuation Option: . The Owner's Annuity will be continued in the Owner's name, for the benefit of the beneficiary. . Beginning on the date we receive an election by the beneficiary to take the death benefit in a form other than a lump sum, the beneficiary will incur a Settlement Service Charge which is an annual charge assessed on a daily basis against the average assets allocated to the Sub-accounts. For non-qualified Annuities the charge is 1.00% per year, and for qualified Annuities the charge is 1.40% per year. . Beginning on the date we receive an election by the beneficiary to take the death benefit in a form other than a lump sum, the beneficiary will incur an annual maintenance fee equal to the lesser of $30 or 2% of Account Value. For non-qualified annuities, the fee will only apply if the Account Value is less than $25,000 at the time the fee is assessed. The fee will not apply if it is assessed 30 days prior to a surrender request. . The initial Account Value will be equal to any death benefit (including any optional death benefit) that would have been payable to the beneficiary if the beneficiary had taken a lump sum distribution. . The available Sub-accounts will be among those available to the Owner at the time of death, however certain Sub-Accounts may not be available. . The beneficiary may request transfers among Sub-accounts, subject to the same limitations and restrictions that applied to the Owner. Transfers in excess of 20 per year will incur a $10 transfer fee. . No Fixed Allocations or fixed interest rate options will be offered for the non-qualified Beneficiary Continuation Options. However, for qualified Annuities, the Fixed Allocations will be those offered at the time the Beneficiary Continuation Option is elected. . No additional Purchase Payments can be applied to the Annuity. . The basic death benefit and any optional benefits elected by the Owner will no longer apply to the beneficiary. . The beneficiary can request a withdrawal of all or a portion of the Account Value at any time, unless the Beneficiary Continuation Option was the payout predetermined by the Owner and the Owner restricted the beneficiary's withdrawal rights. . Withdrawals are not subject to CDSC. . Upon the death of the beneficiary, any remaining Account Value will be paid in a lump sum to the person(s) named by the beneficiary (successor), unless the successor chooses to continue receiving payments. Currently only Investment Options corresponding to Portfolios of the Advanced Series Trust are available under the Beneficiary Continuation Option. In addition to the materials referenced above, the Beneficiary will be provided with a prospectus and a settlement agreement describing the Beneficiary Continuation Option. We may pay compensation to the broker-dealer of record on the Annuity based on amounts held in the Beneficiary Continuation Option. Please contact us for additional information on the availability, restrictions and limitations that will apply to a beneficiary under the Beneficiary Continuation Option. Spousal Assumption of Annuity You may name your spouse as your Beneficiary. If you and your spouse own your Annuity jointly, we assume that the sole primary Beneficiary will be the surviving spouse unless you elect an alternative Beneficiary Designation. Unless you elect an alternative Beneficiary Designation, the spouse Beneficiary may elect to assume ownership of the Annuity instead of taking the Death Benefit payment. Any Death Benefit (including any optional Death Benefits) that would have been payable to the Beneficiary will become the new Account Value as of the date we receive due proof of death and any required proof of a spousal relationship. As of the date the assumption is effective, the surviving spouse will have all the rights and benefits that would be available under the Annuity to a new purchaser of the same attained age. For purposes of determining any future Death Benefit for 96 the surviving spouse, the new Account Value will be considered as the initial Purchase Payment. No CDSC will apply to the new Account Value. However, any additional Purchase Payments applied after the date the assumption is effective will be subject to all provisions of the Annuity, including any CDSC that may apply to the additional Purchase Payments. See the section entitled "Managing Your Annuity" - "Spousal Designations" and "Contingent Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant in the case of the death of the Annuitant in an Annuity owned by a Custodial Account. Are there any Exceptions to these Rules for Paying the Death Benefit? Yes, there are exceptions that apply no matter how your Death Benefit is calculated. There are exceptions to the Death Benefit if the decedent was not the Owner or Annuitant as of the Issue Date (or within 60 days thereafter) and did not become the Owner or Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit (including any optional Death Benefit) that applies will be suspended for a two-year period from the date he or she first became Owner or Annuitant. After the two-year suspension period is completed, the Death Benefit is the same as if this person had been an Owner or Annuitant on the Issue Date. When do you determine the Death Benefit? We determine the amount of the Death Benefit as of the date we receive "due proof of death" (and in certain limited circumstances as of the date of death), any instructions we require to determine the method of payment and any other written representations we require to determine the proper payment of the Death Benefit to all Beneficiaries. "Due proof of death" may include a certified copy of a death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death or other satisfactory proof of death. Upon our receipt of "due proof of death" we automatically transfer the Death Benefit to the AST Money Market Sub-account until we further determine the universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries has been determined each eligible Beneficiary may allocate his or her eligible share of the Death Benefit to an eligible annuity payment option. Each Beneficiary must make an election as to the method they wish to receive their portion of the Death Benefit. Absent an election of a Death Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may require written acknowledgment of all named Beneficiaries before we can pay the Death Benefit. During the period from the date of death until we receive all required paper work, the amount of the Death Benefit may be subject to market fluctuations. 97 VALUING YOUR INVESTMENT HOW IS MY ACCOUNT VALUE DETERMINED? During the accumulation period, your Annuity has an Account Value. The Account Value is determined separately for each Sub-account allocation and for each Fixed Allocation. The Account Value is the sum of the values of each Sub-account allocation and the value of each Fixed Allocation. For Annuities with a Highest Daily Lifetime Five election, Account Value also includes the value of any allocation to the Benefit Fixed Rate Account. See the "Living Benefit Programs - Highest Daily Lifetime Five" section of the Prospectus for a description of the Benefit Fixed Rate Account. The Account Value does not reflect any CDSC that may apply to a withdrawal or surrender. With respect to Optimum and Optimum Four, the Account Value includes any Loyalty Credit we apply. With respect to Optimum Plus, the Account Value includes any Credits we applied to your Purchase Payments which we are entitled to take back under certain circumstances. When determining the Account Value on a day more than 30 days prior to a Fixed Allocation's Maturity Date, the Account Value may include any Market Value Adjustment that would apply to a Fixed Allocation (if withdrawn or transferred) on that day. WHAT IS THE SURRENDER VALUE OF MY ANNUITY? The Surrender Value of your Annuity is the value available to you on any day during the accumulation period. The Surrender Value is defined under "Glossary of Terms" above. HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS? When you allocate Account Value to a Sub-account, you are purchasing units of the Sub-account. Each Sub-account invests exclusively in shares of an underlying Portfolio. The value of the Units fluctuates with the market fluctuations of the Portfolios. The value of the Units also reflects the daily accrual for the Insurance Charge, the Distribution Charge (if applicable), and if you elected one or more optional benefits whose annual charge is deducted daily, the additional charge made for such benefits. There may be several different Unit Prices for each Sub-account to reflect the Insurance Charge, any Distribution Charge and the charges for any optional benefits. The Unit Price for the Units you purchase will be based on the total charges for the benefits that apply to your Annuity. See the section entitled "What Happens to My Units When There is a Change in Daily Asset-Based Charges?" for a detailed discussion of how Units are purchased and redeemed to reflect changes in the daily charges that apply to your Annuity. Each Valuation Day, we determine the price for a Unit of each Sub-account, called the "Unit Price." The Unit Price is used for determining the value of transactions involving Units of the Sub-accounts. We determine the number of Units involved in any transaction by dividing the dollar value of the transaction by the Unit Price of the Sub-account as of the Valuation Day. Example Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the Sub-account. Assume that later, you wish to transfer $3,000 of your Account Value out of that Sub-account and into another Sub-account. On the Valuation Day you request the transfer, the Unit Price of the original Sub-account has increased to $16.79 and the Unit Price of the new Sub-account is $17.83. To transfer $3,000, we sell 178.677 Units at the current Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of the new Sub-account. HOW DO YOU VALUE FIXED ALLOCATIONS? During the Guarantee Period, we use the concept of an Interim Value. The Interim Value can be calculated on any day and is equal to the initial value allocated to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the date calculated. The Interim Value does not include the impact of any Market Value Adjustment. If you made any transfers or withdrawals from a Fixed Allocation, the Interim Value will reflect the withdrawal of those amounts and any interest credited to those amounts before they were withdrawn. To determine the Account Value of a Fixed Allocation on any day more than 30 days prior to its Maturity Date, we multiply the Account Value of the Fixed Allocation times the Market Value Adjustment factor. WHEN DO YOU PROCESS AND VALUE TRANSACTIONS? Prudential Annuities is generally open to process financial transactions on those days that the New York Stock Exchange (NYSE) is open for trading. There may be circumstances where the NYSE does not open on a regularly scheduled date or time or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Generally, financial transactions requested before the close of the NYSE which meet our requirements will be processed according to the value next determined following the close of business. Financial transactions requested on a non-Valuation Day or after the close of the NYSE will be processed based on the value next computed on the next Valuation Day. There may be circumstances when the opening or closing time of the NYSE is different than other major stock exchanges, such as NASDAQ or the American Stock Exchange. Under such circumstances, the closing time of the NYSE will be used when valuing and processing transactions. There may be circumstances where the NYSE is open, however, due to inclement weather, natural disaster or other circumstances beyond our control, our offices may be closed or our business processing capabilities may be restricted. Under those circumstances, your Account Value may fluctuate based on changes in the Unit Values, but you may not be able to transfer Account Value, or make a purchase or redemption request. 98 The NYSE is closed on the following nationally recognized holidays: New Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those dates, we will not process any financial transactions involving purchase or redemption orders. Prudential Annuities will also not process financial transactions involving purchase or redemption orders or transfers on any day that: .. trading on the NYSE is restricted; .. an emergency exists making redemption or valuation of securities held in the separate account impractical; or .. the SEC, by order, permits the suspension or postponement for the protection of security holders. Initial Purchase Payments: We are required to allocate your initial Purchase Payment to the Sub-accounts within two (2) Valuation Days after we receive all of our requirements at our office to issue an Annuity. If we do not have all the required information to allow us to issue your Annuity, we may retain the Purchase Payment while we try to reach you or your representative to obtain all of our requirements. If we are unable to obtain all of our required information within five (5) Valuation Days, we are required to return the Purchase Payment to you at that time, unless you specifically consent to our retaining the Purchase Payment while we gather the required information. Once we obtain the required information, we will invest the Purchase Payment (and any associated Credits with respect to Optimum Plus) and issue an Annuity within two (2) Valuation Days. With respect to both your initial Purchase Payment and any subsequent Purchase Payment that is pending investment in our separate account, we may hold the amount temporarily in our general account and may earn interest on such amount. You will not be credited with interest during that period. Additional Purchase Payments: We will apply any additional Purchase Payments (and any associated Credit with respect to Optimum Plus) on the Valuation Day that we receive the Purchase Payment at our office with satisfactory allocation instructions. Scheduled Transactions: Scheduled transactions include transfers made in connection with dollar cost averaging, the asset allocation program, auto-rebalancing, systematic withdrawals, systematic investments, required minimum distributions, substantially equal periodic payments under Section 72(t) of the Code, or annuity payments. Scheduled transactions are processed and valued as of the date they are scheduled, unless the scheduled day is not a Valuation Day. In that case, the transaction will be processed and valued on the next Valuation Day, unless (with respect to required minimum distributions, substantially equal periodic payments under Section 72(t) of the Code, systematic withdrawals and annuity payments only), the next Valuation Day falls in the subsequent calendar year, in which case the transaction will be processed and valued on the prior Valuation Day. Unscheduled Transactions: "Unscheduled" transactions include any other non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals or Surrenders. Unscheduled transactions are processed and valued as of the Valuation Day we receive the request at our Office and have all of the required information. Medically-Related Surrenders & Death Benefits: Medically-related surrender requests and Death Benefit claims require our review and evaluation before processing. We price such transactions as of the date we receive at our Office all supporting documentation we require for such transactions and that are satisfactory to us. WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES? Distribution Charge Applicable to Optimum and Optimum Plus: At the end of the Period during which the Distribution Charge applies, your Annuity will become subject to a different daily asset-based charge. We will process a transaction where your Account Value allocated to the Sub-accounts will be used to purchase new Units of the Sub-accounts that reflect the Insurance Charge (and the charge for any optional benefits you have elected) but not the Distribution Charge. The number of Units attributed to your Annuity will be decreased and the Unit Price of each unit of the Sub-accounts in which you invested will be increased. The adjustment in the number of Units and Unit Price will not affect your Account Value. Beginning on that date, your Account Value will be determined based on the change in the value of Units that reflect the Insurance Charge and any other optional benefits that you have elected. Termination of Optional Benefits: Except for the Guaranteed Minimum Income Benefit, generally the "Combination 5% Roll-up and Highest Anniversary Value Death Benefit" and the Highest Daily Value Death Benefit, which cannot be terminated by the owner once elected, if any optional benefit terminates, we will no longer deduct the charge we apply to purchase the optional benefit. Certain optional benefits may be added after you have purchased your Annuity. On the date a charge no longer applies or a charge for an optional benefit begins to be deducted, your Annuity will become subject to a different daily asset-based charge. This change may result in the number of Units attributed to your Annuity and the value of those Units being different than it was before the change; however, the adjustment in the number of Units and Unit Price will not affect your Account Value (although the change in charges that are deducted will affect your Account Value). 99 TAX CONSIDERATIONS The tax considerations associated with an annuity vary depending on whether the contract is (i) owned by an individual or non-natural person, 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. The information provided is not intended as tax advice. You should consult with a qualified tax advisor for complete information and advice. References to purchase payments below relate to your cost basis in your contract. Generally, your cost basis in a contract not associated with a tax-favored retirement plan is the amount you pay into your contract, or into annuities exchanged for your contract, on an after-tax basis less any withdrawals of such payments. Cost basis for a tax-favored retirement plan is provided only in limited circumstances, such as for contributions to a Roth IRA or nondeductible IRA contributions. The discussion includes a description of certain spousal rights under the contract, and our administration of such spousal rights and related tax reporting accords with our understanding of the Defense of Marriage Act (which defines a "marriage" as a legal union between a man and a woman and a "spouse" as a person of the opposite sex). Depending on the state in which your annuity is issued, we may offer certain spousal benefits to civil union couples. You should be aware, however, that federal tax law does not recognize civil unions. Therefore, we cannot permit a civil union partner to continue the annuity upon the death of the first partner under the annuity's "spousal continuance" provision. Civil union couples should consider that limitation before selecting a spousal benefit under the annuity. NONQUALIFIED ANNUITY CONTRACTS In general, as used in this prospectus, a Nonqualified Annuity is owned by an individual or non-natural person and is not associated with a tax-favored retirement plan. Taxes Payable by You We believe this annuity 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. Charges for investment advisory fees that are taken from the contract are treated as a partial withdrawal from the contract and will be reported as such to the contract owner. It is possible that the Internal Revenue Service (IRS) would assert that some or all of the charges for the optional benefits under the contract should be treated for federal income tax purposes as a partial withdrawal from the contract. If this were the case, the charge for this benefit could be deemed a withdrawal and treated as taxable to the extent there are earnings in the contract. Additionally, for owners under age 59 1/2, the taxable income attributable to the charge for the benefit could be subject to a tax penalty. If the IRS determines that the charges for one or more benefits under the contract are taxable withdrawals, then the sole or surviving owner will be provided with a notice from us describing available alternatives regarding these benefits. You must commence annuity payments no later than the first day of the calendar month next following the maximum Annuity Date for your contract. Please refer to your annuity contract for the applicable maximum Annuity Date. For some of our contracts, you are able to choose to defer the Annuity Date beyond the default Annuity Date described in your contract. However, the IRS may not then consider your contract to be an annuity under the tax law. Taxes on Withdrawals and Surrender If you make a withdrawal from your contract or surrender it before annuity payments begin, the amount you receive will be taxed as ordinary income, rather than as return of purchase payments, until all gain has been withdrawn. Once all gain has been withdrawn, payments will be treated as a nontaxable return of purchase payments until all purchase payments have been returned. After all purchase payments are returned, all subsequent amounts will be taxed as ordinary income. You will generally be taxed on any withdrawals from the contract while you are alive even if the withdrawal is paid to someone else. Withdrawals under any of the optional living benefit programs or as a systematic payment are taxed under these rules. If you assign or pledge all or part of your contract as collateral for a loan, the part assigned generally will be treated as a withdrawal. If you transfer your contract for less than full consideration, such as by gift, you will also trigger tax on any gain in the contract. This rule does not apply if you transfer the contract to your spouse or under most circumstances if you transfer the contract incident to divorce. If you choose to receive payments under an interest payment option, or a beneficiary chooses to receive a death benefit under an interest payment option, that election will be treated, for tax purposes, as surrendering your annuity and will immediately subject any gain in the contract to income tax. 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 100 annuity payment you receive by a fraction, the numerator of which is your purchase payments (less any amounts previously received tax-free) and the denominator of which is the total expected payments under the contract. After the full amount of your purchase payments have been recovered tax-free, the full amount of the annuity payments will be taxable. If annuity payments stop due to the death of the annuitant before the full amount of your purchase payments have been recovered, a tax deduction may be allowed for the unrecovered amount. Tax Penalty for Early Withdrawal from a Nonqualified Annuity Contract You may owe a 10% tax penalty on the taxable part of distributions received from your Nonqualified annuity contract before you attain age 59 1/2. Amounts are not subject to this tax penalty if: .. the amount is paid on or after you reach age 59 1/2 or die; .. the amount received is attributable to your becoming disabled; .. generally the amount paid or received is in the form of substantially equal payments not less frequently than annually (please note that substantially equal payments must continue until the later of reaching age 59 1/2 or 5 years and modification of payments during that time period will result in retroactive application of the 10% tax penalty); or .. the amount received is paid under an immediate annuity contract (in which annuity payments begin within one year of purchase). Other exceptions to this tax may apply. You should consult your tax advisor for further details. Special Rules in Relation to Tax-free Exchanges Under Section 1035 Section 1035 of the Internal Revenue Code of 1986, as amended (Code), permits certain tax-free exchanges of a life insurance, annuity or endowment contract for an annuity. Partial surrenders may be treated in the same way as tax-free 1035 exchanges of entire contracts, therefore avoiding current taxation of any gains in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals. The IRS has reserved the right to treat transactions it considers abusive as ineligible for this favorable partial 1035 exchange treatment. In Revenue Procedure 2008-24, the IRS has indicated that where there is a surrender or distribution from either the initial annuity contract or receiving annuity contract within 12 months of the date on which the partial exchange was completed, the transfer will retroactively be treated as a taxable distribution from the initial annuity contract and a contribution to the receiving annuity contract. Tax free exchange treatment will be retained if the subsequent surrender or distribution would be eligible for an exception to the 10% federal income tax penalty, other than the exceptions for substantially equal periodic payments or distributions under an immediate annuity. It is unclear how the IRS will treat a partial exchange from a life insurance, endowment, or annuity contract into an immediate annuity. As of the date of this prospectus, we will accept a partial 1035 exchange from a non-qualified annuity into an immediate annuity as a "tax-free" exchange for future tax reporting purposes, except to the extent that we, as a reporting and withholding agent, believe that we would be expected to deem the transaction to be abusive. However, some insurance companies may not recognize these partial surrenders as tax-free exchanges and may report them as taxable distributions to the extent of any gain distributed as well as subjecting the taxable portion of the distribution to the 10% tax penalty. We strongly urge you to discuss any transaction of this type with your tax advisor before proceeding with the transaction. If an annuity is purchased through a tax-free exchange of a life insurance, annuity or endowment contract that was purchased prior to August 14, 1982, then any purchase payments made to the original contract prior to August 14, 1982 will be treated as made to the new contract prior to that date. Generally, such pre-August 14, 1982 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% tax penalty. Taxes Payable by Beneficiaries The Death Benefit options are subject to income tax to the extent the distribution exceeds the cost basis in the contract. The value of the Death Benefit, as determined under federal law, is also included in the owner's estate. Generally, the same tax rules described above would also apply to amounts received by your beneficiary. Choosing any option other than a lump sum Death Benefit may defer taxes. Certain minimum distribution requirements apply upon your death, as discussed further below in the Annuity Qualification section. Tax consequences to the beneficiary vary depending upon the Death Benefit payment option selected. Generally, for payment of the Death Benefit .. As a lump sum payment: the beneficiary is taxed on gain in the contract. .. Within 5 years of death of owner: the beneficiary is taxed as amounts are withdrawn (in this case gain is treated as being distributed first). .. Under an annuity or annuity settlement option with distribution beginning within one year of the date of death of the owner: the beneficiary is taxed on each payment (part will be treated as gain and part as return of purchase payments). Considerations for Contingent Annuitants We may allow the naming of a contingent annuitant when a Nonqualified annuity contract is held by a pension plan or a tax favored retirement plan. In such a situation, the annuity may no longer qualify for tax deferral where the annuity contract continues after the death of the Annuitant. 101 Reporting and Withholding on Distributions Taxable amounts distributed from an annuity are subject to federal and state income tax reporting and withholding. In general, we will withhold federal income tax from the taxable portion of such distribution based on the type of distribution. In the case of an annuity or similar periodic payment, we will withhold as if you are a married individual with three (3) exemptions unless you designate a different withholding status. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default. In the case of all other distributions, we will withhold at a 10% rate. You may generally elect not to have tax withheld from your payments. An election out of withholding must be made on forms that we provide. State income tax withholding rules vary and we will withhold based on the rules of your State of residence. Special tax rules apply to withholding for nonresident aliens, and we generally withhold income tax for nonresident aliens at a 30% rate. A different withholding rate may be applicable to a nonresident alien based on the terms of an existing income tax treaty between the United States and the nonresident alien's country. Please refer to the discussion below regarding withholding rules for a Qualified annuity. Regardless of the amount withheld by us, you are liable for payment of federal and state income tax on the taxable portion of annuity distributions. You should consult with your tax advisor regarding the payment of the correct amount of these income taxes and potential liability if you fail to pay such taxes. Entity Owners Where a contract is held by a non-natural person (e.g. a corporation), other than as an agent or nominee for a natural person (or in other limited circumstances), the contract will not be taxed as an annuity and increases in the value of the contract over its cost basis will be subject to tax annually. Where a contract is structured so that it is owned by a grantor trust but the annuitant is not the grantor, then the contract is required to terminate upon the death of the grantor if the grantor pre-deceases the annuitant under Section 72(s) of the Code. Under this circumstance, the contract value will be paid out to the beneficiary and it is not eligible for the death benefit provided under the contract. Annuity Qualification Diversification And Investor Control. In order to qualify for the tax rules applicable to annuity contracts described above, the assets underlying the Sub-accounts of an annuity must be diversified, according to certain rules under the Internal Revenue Code. Each portfolio is required to diversify its investments each quarter so that no more than 55% of the value of its assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. Generally, securities of a single issuer are treated as one investment and obligations of each U.S. Government agency and instrumentality (such as the Government National Mortgage Association) are treated as issued by separate issuers. In addition, any security issued, guaranteed or insured (to the extent so guaranteed or insured) by the United States or an instrumentality of the U.S. will be treated as a security issued by the U.S. Government or its instrumentality, where applicable. We believe the portfolios underlying the variable investment options of the annuity meet these diversification requirements. An additional requirement for qualification for the tax treatment described above is that we, and not you as the contract owner, must have sufficient control over the underlying assets to be treated as the owner of the underlying assets for tax purposes. While we also believe these investor control rules will be met, the Treasury Department may promulgate guidelines under which a variable annuity will not be treated as an annuity for tax purposes if persons with ownership rights have excessive control over the investments underlying such variable annuity. It is unclear whether such guidelines, if in fact promulgated, would have retroactive effect. It is also unclear what effect, if any, such guidelines might have on transfers between the investment options offered pursuant to this Prospectus. We reserve the right to take any action, including modifications to your annuity or the investment options, required to comply with such guidelines if promulgated. Any such changes will apply uniformly to affected owners and will be made with such notice to affected owners as is feasible under the circumstances. Required Distributions Upon Your Death for Nonqualified Annuity Contracts. Upon your death, certain distributions must be made under the contract. The required distributions depend on whether you die before you start taking annuity payments under the contract or after you start taking annuity payments under the contract. If you die on or after the Annuity Date, the remaining portion of the interest in the contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. If you die before the Annuity Date, the entire interest in the contract must be distributed within 5 years after the date of death, or as periodic payments over a period not extending beyond the life or life expectancy of such designated beneficiary (provided such payments begin within one year of your death). Your designated beneficiary is the person to whom benefit rights under the contract pass by reason of death, and must be a natural person in order to elect a periodic payment option based on life expectancy or a period exceeding five years. Additionally, if the annuity 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. For Nonqualified annuity contracts owned by a non-natural person, the required distribution rules apply upon the death of the annuitant. This means that for a contract held by a non-natural person (such as a trust) for which there is named a co-annuitant, then such required distributions will be triggered by the death of the first co-annuitants to die. 102 Changes In Your Annuity. We reserve the right to make any changes we deem necessary to assure that your annuity qualifies as an annuity contract for tax purposes. Any such changes will apply to all contract owners and you will be given notice to the extent feasible under the circumstances. Qualified Annuity Contracts In general, as used in this prospectus, a Qualified annuity is an annuity contract with applicable endorsements for a tax-favored plan or a Nonqualified annuity contract held by a tax-favored retirement plan. The following is a general discussion of the tax considerations for Qualified annuity contracts. This annuity may or may not be available for all types of the tax-favored retirement plans discussed below. This discussion assumes that you have satisfied the eligibility requirements for any tax-favored retirement plan. Please consult your Financial Professional prior to purchase to confirm if this contract is available for a particular type of tax-favored retirement plan or whether we will accept the type of contribution you intend for this contract. A Qualified annuity may typically be purchased for use in connection with: .. Individual retirement accounts and annuities (IRAs) which are subject to Sections 408(a) and 408(b) of the Code; .. Roth IRAs under Section 408A of the Code; .. A corporate Pension or Profit-sharing plan (subject to 401(a) of the Code); .. H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the Code); .. Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax Deferred Annuities or TDAs); .. Section 457 plans (subject to 457 of the Code). A Nonqualified annuity may also be purchased by a 401(a) trust or custodial IRA or Roth IRA account or a Section 457 plan, which can hold other permissible assets. The terms and administration of the trust or custodial account or plan in accordance with the laws and regulations for 401(a) plans, IRAs or Roth IRAs or a Section 457 plan, as applicable, are the responsibility of the applicable trustee or custodian. You should be aware that tax favored plans such as IRAs generally provide income tax deferral regardless of whether they invest in annuity contracts. This means that when a tax favored plan invests in an annuity contract, it generally does not result in any additional tax benefits (such as income tax deferral and income tax free transfers). Types Of Tax-Favored Plans IRAs. If you buy an annuity for use as an IRA, we will provide you a copy of the prospectus and contract. The "IRA Disclosure Statement" and "Roth IRA Disclosure Statement" which accompany the prospectus contain 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 annuity by notifying us in writing, and we will refund all of the purchase payments under the annuity (or, if provided by applicable state law, the amount credited under the annuity, if greater), less any applicable federal and state income tax withholding. Contributions Limits/Rollovers. Subject to the minimum purchase payment requirements of an annuity, you may purchase an annuity for an IRA in connection with a "rollover" of amounts from a qualified retirement plan, as a transfer from another IRA, by making a single contribution consisting of your IRA contributions and catch-up contributions, if applicable, attributable to the prior year and the current year during the period from January 1 to April 15, or as a current year contribution. In 2008 the contribution limit is $5,000. After 2008 the contribution amount will be indexed for inflation. The tax law also provides for a catch-up provision for individuals who are age 50 and above, allowing these individuals an additional $1,000 contribution each year. The catch-up amount is not indexed for inflation. 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 an annuity, you can make regular IRA contributions under the annuity (to the extent permitted by law). However, if you make such regular IRA contributions, you should note that you will not be able to treat the contract as a "conduit IRA," which means that you will not retain possible favorable tax treatment if you subsequently "roll over" the contract funds originally derived from a qualified retirement plan or TDA into another Section 401(a) plan or TDA. In some circumstances, non-spouse beneficiaries may directly roll over to an IRA amounts due from qualified plans, 403(b) plans, and governmental 457(b) plans. 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; 103 .. The annual contribution you pay cannot be greater than the maximum amount allowed by law, including catch-up contributions if applicable (which does not include any rollover amounts); .. The date on which required minimum distributions must begin cannot be later than April 1/st/ of the calendar year after the calendar year you turn age 70 1/2; and .. Death and annuity payments must meet "required minimum distribution" rules 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 regarding a Nonqualified annuity. In addition to this normal tax liability, you may also be liable for the following, depending on your actions: .. A 10% early withdrawal penalty described below; .. Liability for "prohibited transactions" if you, for example, borrow against the value of an IRA; or .. Failure to take a required minimum distribution, also 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) $46,000 in 2008 ($45,000 in 2007) or (b) 25% of your taxable compensation paid by the contributing employer (not including the employer's SEP contribution as compensation for these purposes). However, for these purposes, compensation in excess of certain limits established by the IRS will not be considered. In 2008, this limit is $230,000 ($225,000 for 2007); .. SEPs must satisfy certain participation and nondiscrimination requirements not generally applicable to IRAs; and .. SEPs that contain a salary reduction or "SARSEP" provision prior to 1997 may permit salary deferrals up to $15,500 in 2008 with the employer making these contributions to the SEP. However, no new "salary reduction" or "SARSEPs" can be established after 1996. Individuals participating in a SARSEP who are age 50 or above by the end of the year will be permitted to contribute an additional $5,000 in 2008. These amounts are indexed for inflation. These annuities are not available for SARSEPs. You will also be provided the same information, and have the same "free look" period, as you would have if you purchased the contract for a standard IRA. ROTH IRAs. The "Roth IRA Disclosure Statement" contains information about eligibility, contribution limits, tax particulars and other Roth IRA information. Like standard IRAs, income within a Roth IRA accumulates tax-free, and contributions are subject to specific limits. Roth IRAs have, however, the following differences: .. Contributions to a Roth IRA cannot be deducted from your gross income; .. "Qualified distributions" from a Roth IRA are excludable from gross income. A "qualified distribution" is a distribution that satisfies two requirements: (1) the distribution must be made (a) after the owner of the IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's disability; or (d) for a qualified first time homebuyer distribution within the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that is at least five tax years after the first year for which a contribution was made to any Roth IRA established for the owner or five years after a rollover, transfer, or conversion was made from a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not qualified distributions will be treated as made first from contributions and then from earnings and earnings will be taxed generally in the same manner as distributions from a traditional IRA. .. If eligible (including meeting income limitations and earnings requirements), you may make contributions to a Roth IRA after attaining age 70 1/2, and distributions are not required to begin upon attaining such age or at any time thereafter. Subject to the minimum purchase payment requirements of an annuity, if you meet certain income limitations you may purchase an annuity for a Roth IRA in connection with a "rollover" of amounts of another traditional IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA by making a single contribution consisting of your Roth IRA contributions and catch-up contributions, if applicable, attributable to the prior year and the current year during the period from January 1 to April 15 of the current year, or with a current contribution. The Code permits persons who meet certain income limitations (generally, adjusted gross income under $100,000) who are not married filing a separate return and who receive certain qualifying distributions from such non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover" of all or any part of the amount of such distribution to a Roth IRA which they establish. Beginning January 2008, an individual receiving an eligible rollover distribution from an employer sponsored retirement plan under sections 401(a) or 403(b) of the Code can directly roll over contributions to a Roth IRA, subject to the same income limits. This conversion triggers current taxation (but is not subject to a 10% early distribution penalty). Once an annuity has been purchased, regular Roth IRA contributions will be accepted to the extent permitted by law. In addition, an individual receiving an eligible rollover distribution from a designated Roth account under an employer plan may roll over the distribution to a Roth IRA even if the individual is not eligible to make regular contributions to a Roth IRA. Until 2010, participants with an adjusted gross income greater than $100,000 are not permitted to roll over funds from an employer plan, including a Roth 401(k) distribution, to a Roth IRA. TDAs. You may own a Tax Deferred Annuity (also known as a TDA, Tax Sheltered Annuity (TSA), 403(b) plan or 403(b) annuity) generally if you are either an employer or employee of a tax-exempt organization (as defined under Code Section 501(c)(3)) or a 104 public educational organization, and you may make contributions to a TDA so long as your rights (or your 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 $15,500 in 2008. Individuals participating in a TDA who are age 50 or above by the end of the year will be permitted to contribute an additional $5,000 in 2008. This amount is indexed for inflation. Further, you may roll over TDA amounts to another TDA or an IRA. You may also roll over TDA amounts to a qualified retirement plan, a SEP and a 457 government plan. A contract may generally only qualify as a TDA if distributions of salary deferrals (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, not including earnings attributable to these amounts). In any event, you must begin receiving distributions from your TDA by April 1/st/ 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. Final regulations related to 403(b) contracts were issued in 2007. Under these final regulations, certain contract exchanges may be accepted only if the employer and the issuer have entered into the required information-sharing agreements. Such agreements must be in place by January 1, 2009. We do not currently accept transfers of funds under 403(b) contracts. Funds can only be added to the contract as a current salary deferral under an agreement with your employer or as a direct rollover from another employer plan. We intend to begin accepting such transfers in the future when we can comply with the new regulations. Required Minimum Distributions And Payment Options If you hold the contract under an IRA (or other tax-favored plan), required minimum distribution rules must be satisfied. This means that generally payments must start by April 1 of the year after the year you reach age 70 1/2 and must be made for each year thereafter. For a TDA or a 401(a) plan for which the participant is not a greater than 5% owner of the employer, this required beginning date can generally be deferred to retirement, if later. Roth IRAs are not subject to these rules during the Owner's lifetime. The amount of the payment must at least equal the minimum required under the IRS rules. Several choices are available for calculating the minimum amount. More information on the mechanics of this calculation is available on request. Please contact us at a reasonable time before the IRS deadline so that a timely distribution is made. Please note that there is a 50% tax penalty on the amount of any required minimum distribution not made in a timely manner. Required minimum distributions are calculated based on the sum of the account value and the actuarial value of any additional death benefits and benefits from optional riders that you have purchased under the contract. As a result, the required minimum distributions may be larger than if the calculation were based on the account value only, which may in turn result in an earlier (but not before the required beginning date) distribution of amounts under the annuity and an increased amount of taxable income distributed to the annuity owner, and a reduction of death benefits and the benefits of any optional riders. You can use the Minimum Distribution option to satisfy the required minimum distribution rules for an annuity without either beginning annuity payments or surrendering the annuity. We will distribute to you the required minimum distribution amount, less any other partial withdrawals that you made during the year. Such amount will be based on the value of the contract as of December 31 of the prior year, but is determined without regard to other contracts you may own. Although the IRS rules determine the required amount to be distributed from your IRA each year, certain payment alternatives are still available to you. If you own more than one IRA, you can choose to satisfy your minimum distribution requirement for each of your IRAs by withdrawing that amount from any of your IRAs. If you inherit more than one IRA or more than one Roth IRA from the same owner, similar rules apply. Required Distributions Upon Your Death for Qualified Annuity Contracts Upon your death under an IRA, Roth IRA, 403(b) or other employer sponsored plan, the designated beneficiary may generally elect to continue the contract and receive required minimum distributions under the contract instead of receiving the death benefit in a single payment. The available payment options will depend on whether you die before the date required minimum distributions under the Code were to begin, whether you have named a designated beneficiary and whether that beneficiary is your surviving spouse. .. If you die after a designated beneficiary has been named, the death benefit must be distributed by December 31/st/ of the year including the five year anniversary of the date of death, or as periodic payments not extending beyond the life or life 105 expectancy of the designated beneficiary (as long as payments begin by December 31/st/ of the year following the year of death). However, if your surviving spouse is the beneficiary, the death benefit can be paid out over the life or life expectancy of your spouse with such payments beginning no later than December 31/st/ of the year following the year of death or December 31/st/ of the year in which you would have reached age 70 1/2, which ever is later. Additionally, if the contract is payable to (or for the benefit of) your surviving spouse, that portion of the contract may be continued with your spouse as the owner. .. If you die before a designated beneficiary is named and before the date required minimum distributions must begin under the Code, the death benefit must be paid out by December 31/st/ of the year including the five year anniversary of the date of death. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31/st/ of the year following the year of death, such contract is deemed to have no designated beneficiary. A designated beneficiary may elect to apply the rules for no designated beneficiary if those would provide a smaller payment requirement. .. If you die before a designated beneficiary is named and after the date required minimum distributions must begin under the Code, the death benefit must be paid out at least as rapidly as under the method then in effect. For contracts where multiple beneficiaries have been named and at least one of the beneficiaries does not qualify as a designated beneficiary and the account has not been divided into separate accounts by December 31/st/ of the year following the year of death, such contract is deemed to have no designated beneficiary. A designated beneficiary may elect to apply the rules for no designated beneficiary if those would provide a smaller payment requirement. A beneficiary has the flexibility to take out more each year than mandated under the required minimum distribution rules. Until withdrawn, amounts in a Qualified annuity contract continue to be tax deferred. Amounts withdrawn each year, including amounts that are required to be withdrawn under the required minimum distribution rules, are subject to tax. You may wish to consult a professional tax advisor for tax advice as to your particular situation. For a Roth IRA, if death occurs before the entire interest is distributed, the death benefit must be distributed under the same rules applied to IRAs where death occurs before the date required minimum distributions must begin under the Code. Tax Penalty For Early Withdrawals From Qualified Annuity Contracts You may owe a 10% tax penalty on the taxable part of distributions received from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age 59 1/2. Amounts are not subject to this tax penalty if: .. the amount is paid on or after you reach age 59 1/2 or die; .. the amount received is attributable to your becoming disabled; or .. generally the amount paid or received is in the form of substantially equal payments not less frequently than annually. (Please note that substantially equal payments must continue until the later of reaching age 59 1/2 or 5 years. Modification of payments during that time period will result in retroactive application of the 10% tax penalty.) Other exceptions to this tax may apply. You should consult your tax advisor for further details. Withholding We will withhold federal income tax at the rate of 20% for any eligible rollover distribution paid by us to or for a plan participant, unless such distribution is "directly" rolled over into another qualified plan, IRA (including the IRA variations described above), SEP, 457 government plan or TDA. An eligible rollover distribution is defined under the tax law as a distribution from an employer plan under 401(a), a TDA or a 457 governmental plan, excluding any distribution that is part of a series of substantially equal payments (at least annually) made over the life expectancy of the employee or the joint life expectancies of the employee and his designated beneficiary, any distribution made for a specified period of 10 years or more, any distribution that is a required minimum distribution and any hardship distribution. Regulations also specify certain other items which are not considered eligible rollover distributions. 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: .. 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. If no U.S. taxpayer identification number is provided, we will automatically withhold using single with zero exemptions as the default; and .. For all other distributions, we will withhold at a 10% rate. We will provide you with forms and instructions concerning the right to elect that no amount be withheld from payments in the ordinary course. However, you should know that, in any event, you are liable for payment of federal income taxes on the taxable portion of the distributions, and you should consult with your tax advisor to find out more information on your potential liability if you fail to pay such taxes. There may be additional state income tax withholding requirements. 106 Erisa Requirements ERISA (the "Employee Retirement Income Security Act of 1974") and the Code prevent a fiduciary and other "parties in interest" with respect to a plan (and, for these purposes, an IRA would also constitute a "plan") from receiving any benefit from any party dealing with the plan, as a result of the sale of the contract. Administrative exemptions under ERISA generally permit the sale of insurance/annuity products to plans, provided that certain information is disclosed to the person purchasing the contract. This information has to do primarily with the fees, charges, discounts and other costs related to the contract, as well as any commissions paid to any agent selling the contract. Information about any applicable fees, charges, discounts, penalties or adjustments may be found in the applicable sections of this Prospectus. Information about sales representatives and commissions may be found in the sections of this Prospectus addressing distribution of the annuities. Other relevant information required by the exemptions is contained in the contract and accompanying documentation. Please consult with your tax advisor if you have any questions about ERISA and these disclosure requirements. Spousal Consent Rules For Retirement Plans - Qualified Contracts If you are married at the time your payments commence, you may be required by federal law to choose an income option that provides survivor annuity income to your spouse, unless your spouse waives that right. Similarly, if you are married at the time of your death, federal law may require all or a portion of the Death Benefit to be paid to your spouse, even if you designated someone else as your beneficiary. A brief explanation of the applicable rules follows. For more information, consult the terms of your retirement arrangement. Defined Benefit Plans and Money Purchase Pension Plans. If you are married at the time your payments commence, federal law requires that benefits be paid to you in the form of a "qualified joint and survivor annuity" (QJSA), unless you and your spouse waive that right, in writing. Generally, this means that you will receive a reduced payment during your life and, upon your death, your spouse will receive at least one-half of what you were receiving for life. You may elect to receive another income option if your spouse consents to the election and waives his or her right to receive the QJSA. If your spouse consents to the alternative form of payment, your spouse may not receive any benefits from the plan upon your death. Federal law also requires that the plan pay a Death Benefit to your spouse if you are married and die before you begin receiving your benefit. This benefit must be available in the form of an annuity for your spouse's lifetime and is called a "qualified pre-retirement survivor annuity" (QPSA). If the plan pays Death Benefits to other beneficiaries, you may elect to have a beneficiary other than your spouse receive the Death Benefit, but only if your spouse consents to the election and waives his or her right to receive the QPSA. If your spouse consents to the alternate beneficiary, your spouse will receive no benefits from the plan upon your death. Any QPSA waiver prior to your attaining age 35 will become null and void on the first day of the calendar year in which you attain age 35, if still employed. Defined Contribution Plans (including 401(k) Plans and ERISA 403(b) Annuities). Spousal consent to a distribution is generally not required. Upon your death, your spouse will receive the entire Death Benefit, even if you designated someone else as your beneficiary, unless your spouse consents in writing to waive this right. Also, if you are married and elect an annuity as a periodic income option, federal law requires that you receive a QJSA (as described above), unless you and your spouse consent to waive this right. IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a distribution usually is not required. Upon your death, any Death Benefit will be paid to your designated beneficiary. Additional Information For additional information about federal tax law requirements applicable to IRAs and Roth IRAs, see the IRA Disclosure Statement or Roth IRA Disclosure Statement, as applicable. Generation-Skipping Transfers If you transfer your contract to a person two or more generations younger than you (such as a grandchild or grandniece) or to a person that is more than 37 1/2 years younger than you, there may be generation-skipping transfer tax consequences. 107 GENERAL INFORMATION HOW WILL I RECEIVE STATEMENTS AND REPORTS? We send any statements and reports required by applicable law or regulation to you at your last known address of record. You should therefore give us prompt notice of any address change. We reserve the right, to the extent permitted by law and subject to your prior consent, to provide any prospectus, prospectus supplements, confirmations, statements and reports required by applicable law or regulation to you through our Internet Website at www. prudentialannuities.com or any other electronic means, including diskettes or CD ROMs. We send a confirmation statement to you each time a transaction is made affecting Account Value, such as making additional Purchase Payments, transfers, exchanges or withdrawals. We may also send quarterly statements detailing the activity affecting your Annuity during the calendar quarter. We may confirm regularly scheduled transactions, including, but not limited to, the Annual Maintenance Fee, Systematic Withdrawals (including 72(t) payments and required minimum distributions), electronic funds transfers, Dollar Cost Averaging, and static rebalancing, in quarterly statements instead of confirming them immediately. You should review the information in these statements carefully. You may request additional reports. We reserve the right to charge up to $50 for each such additional report. We may also send an annual report and a semi-annual report containing applicable financial statements for the Separate Account and the Portfolios, as of December 31 and June 30, respectively, to Owners or, with your prior consent, make such documents available electronically through our Internet Website or other electronic means. WHO IS PRUDENTIAL ANNUITIES? Prudential Annuities Life Assurance Corporation, a Prudential Financial Company, ("Prudential Annuities") is a stock life insurance company domiciled in Connecticut with licenses in all 50 states, the District of Columbia and Puerto Rico. Prudential Annuities is a wholly-owned subsidiary of Prudential Annuities, Inc. whose ultimate parent is Prudential Financial, Inc. Prudential Annuities markets its products to broker-dealers and financial planners through an internal field marketing staff. In addition, Prudential Annuities markets through and in conjunction with financial institutions such as banks that are permitted directly, or through affiliates, to sell annuities. Prudential Annuities offers a wide array of annuities, including (1) deferred variable annuities that are registered with the SEC, including fixed interest rate annuities that are offered as a companion to certain of our variable annuities and are registered because of their market value adjustment feature and (2) fixed annuities that are not registered with the SEC. In addition, Prudential Annuities has in force a relatively small block of variable life insurance policies and immediate variable annuities, but it no longer actively sells such policies. No company other than Prudential Annuities has any legal responsibility to pay amounts that it owes under its annuity and variable life insurance contracts. However, Prudential Financial exercises significant influence over the operations and capital structure of Prudential Annuities. Prudential Annuities conducts the bulk of its operations through staff employed by it or by affiliated companies within the Prudential Financial family. Certain discrete functions have been delegated to non-affiliates that could be deemed "service providers" under the Investment Company Act of 1940. The entities engaged by Prudential Annuities may change over time. As of December 31, 2007, non-affiliated entities that could be deemed service providers to Prudential Annuities and/or another insurer within the Prudential Annuities business unit consisted of the following: ADP (proxy tabulation services) located at 100 Burma Road Jersey City, New Jersey 07305, Alliance-One Services Inc. (administration of variable life policies) located at 55 Hartland Street East Hartford CT 06108, BISYS Retirement Services (qualified plan administrator) located at 200 Dryden Road Dresher, PA 19025, Blue Frog Solutions, Inc. (order entry systems provider) located at 555 SW 12th Ave, Suite 202 Pompano Beach, FL 33069, EBIX Inc. (order-entry system) located at 5 Concourse Parkway Suite 3200 Atlanta, GA 30328, Diversified Information Technologies Inc. (records management) located at 123 Wyoming Ave Scranton, PA 18503, Fosdick Fulfillment Corp. (fulfillment of prospectuses and marketing materials) located at 26 Barnes Industrial Park Road North Wallingford, CT 06492, Insurance Technologies (annuity illustrations) located at Two South Cascade Avenue, Suite 200 Colorado Springs, CO 80903, Lason Systems Inc. (contract printing and mailing) located at 1305 Stephenson Highway Troy, MI 48083, Morningstar Associates LLC (asset allocation recommendations) located at 225 West Wacker Drive Chicago, IL 60606, Pershing LLC (order-entry systems provider) located at One Pershing Plaza Jersey City, NJ 07399, Personix (printing and fulfillment of confirmations and client statements) located at 13100 North Promenade Boulevard Stafford, TX 77477, RR Donnelley Receivables Inc. (printing annual reports and prospectuses) located at 111 South Wacker Drive Chicago, IL 60606-4301, Stanton Group (qualified plan administrator) located at Two Pine Tree Drive Suite 400 Arden Hills, MN 55112 Attention: Alerus Retirement Solutions, State Street (accumulation unit value calculations) located at State Street Financial Center One Lincoln Street Boston, Massachusetts 02111, The Harty Press, Inc. (printing and fulfillment of marketing materials) located at 25 James Street New Haven, CT 06513, VG Reed & Sons Inc. (printing and fulfillment of annual reports) located at 1002 South 12/th/ Street Louisville, KY 40210, William B. Meyer (printing and fulfillment of prospectuses and marketing materials) located at 255 Long Beach Boulevard Stratford, CT 06615 . 108 WHAT ARE SEPARATE ACCOUNTS? The separate accounts are where Prudential Annuities sets aside and invests the assets of some of our annuities. In the accumulation period, assets supporting Account Values of the Annuities are held in a separate account established under the laws of the State of Connecticut. We are the legal owner of assets in the separate accounts. In the payout period, assets supporting fixed annuity payments and any adjustable annuity payments we make available are held in our general account. Assets supporting variable annuity payment options may be invested in our separate accounts. Income, gains and losses from assets allocated to these separate accounts are credited to or charged against each such separate account without regard to other income, gains or losses of Prudential Annuities or of any other of our separate accounts. These assets may only be charged with liabilities which arise from the Annuities issued by Prudential Annuities. The amount of our obligation in relation to allocations to the Sub-accounts is based on the investment performance of such Sub-accounts. However, the obligations themselves are our general corporate obligations. Separate Account B During the accumulation period, the assets supporting obligations based on allocations to the Sub-accounts are held in Sub-accounts of Prudential Annuities Life Assurance Corporation Variable Account B, also referred to as "Separate Account B". Separate Account B was established by us pursuant to Connecticut law on November 25, 1987. Separate Account B also holds assets of other annuities issued by us with values and benefits that vary according to the investment performance of Separate Account B. Separate Account B consists of multiple Sub-accounts. Each Sub-account invests only in a single mutual fund or mutual fund portfolio. The name of each Sub-account generally corresponds to the name of the underlying Portfolio. Each Sub-account in Separate Account B may have several different Unit Prices to reflect the Insurance Charge, Distribution Charge (when applicable) and the charges for any optional benefits that are offered under the Annuities issued by us through Separate Account B. Separate Account B is registered with the SEC under the Investment Company Act of 1940 ("Investment Company Act") as a unit investment trust, which is a type of investment company. The SEC does not supervise investment policies, management or practices of Separate Account B. We reserve the right to make changes to the Sub-accounts available under the Annuities as we determine appropriate. We may offer new Sub-accounts, eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may also close Sub-accounts to additional Purchase Payments on existing Annuities or close Sub-accounts for Annuities purchased on or after specified dates. We may also substitute an underlying mutual fund or portfolio of an underlying mutual fund for another underlying mutual fund or portfolio of an underlying mutual fund, subject to our receipt of any exemptive relief that we are required to obtain under the Investment Company Act. We will notify Owners of changes we make to the Sub-accounts available under their Annuity. Values and benefits based on allocations to the Sub-accounts will vary with the investment performance of the underlying mutual funds or fund portfolios, as applicable. We do not guarantee the investment results of any Sub-account. Your Account Value allocated to the Sub-accounts may increase or decrease. You bear the entire investment risk. There is no assurance that the Account Value of your Annuity will equal or be greater than the total of the Purchase Payments you make to us. Separate Account D During the accumulation period, assets supporting our obligations based on Fixed Allocations are held in Prudential Annuities Life Assurance Corporation Separate Account D, also referred to as "Separate Account D". Such obligations are based on the fixed interest rates we credit to Fixed Allocations and the terms of the Annuities. These obligations do not depend on the investment performance of the assets in Separate Account D. Separate Account D was established by us pursuant to Connecticut law. There are no units in Separate Account D. The Fixed Allocations are guaranteed by our general account. An Annuity Owner who allocates a portion of their Account Value to Separate Account D does not participate in the investment gain or loss on assets maintained in Separate Account D. Such gain or loss accrues solely to us. We retain the risk that the value of the assets in Separate Account D may drop below the reserves and other liabilities we must maintain. Should the value of the assets in Separate Account D drop below the reserve and other liabilities we must maintain in relation to the annuities supported by such assets, we will transfer assets from our general account to Separate Account D to make up the difference. We have the right to transfer to our general account any assets of Separate Account D in excess of such reserves and other liabilities. We maintain assets in Separate Account D supporting a number of annuities we offer. We may employ investment managers to manage the assets maintained in Separate Account D. Each manager we employ is responsible for investment management of a different portion of Separate Account D. From time to time additional investment managers may be employed or investment managers may cease being employed. We are under no obligation to employ or continue to employ any investment manager(s) and have sole discretion over the investment managers we retain. We are not obligated to invest according to specific guidelines or strategies except as may be required by Connecticut and other state insurance laws. 109 WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS? Each underlying mutual fund is registered as an open-end management investment company under the Investment Company Act. Shares of the underlying mutual fund portfolios are sold to separate accounts of life insurance companies offering variable annuity and variable life insurance products. The shares may also be sold directly to qualified pension and retirement plans. Voting Rights We are the legal owner of the shares of the underlying mutual funds in which the Sub-accounts invest. However, under SEC rules, you have voting rights in relation to Account Value maintained in the Sub-accounts. If an underlying mutual fund portfolio requests a vote of shareholders, we will vote our shares based on instructions received from Owners with Account Value allocated to that Sub-account. Owners have the right to vote an amount equal to the number of shares attributable to their contracts. If we do not receive voting instructions in relation to certain shares, we will vote those shares in the same manner and proportion as the shares for which we have received instructions. This voting procedure is sometimes referred to as "mirror voting" because, as indicated in the immediately preceding sentence, we mirror the votes that are actually cast, rather than decide on our own how to vote. In addition, because all the shares of a given mutual fund held within our separate account are legally owned by us, we intend to vote all of such shares when that underlying fund seeks a vote of its shareholders. As such, all such shares will be counted towards whether there is a quorum at the underlying fund's shareholder meeting and towards the ultimate outcome of the vote. Thus, under "mirror voting," it is possible that the votes of a small percentage of contractholders who actually vote will determine the ultimate outcome. We will furnish those Owners who have Account Value allocated to a Sub-account whose underlying mutual fund portfolio has requested a "proxy" vote with proxy materials and the necessary forms to provide us with their voting instructions. Generally, you will be asked to provide instructions for us to vote on matters such as changes in a fundamental investment strategy, adoption of a new investment advisory agreement, or matters relating to the structure of the underlying mutual fund that require a vote of shareholders. Advanced Series Trust (the "Trust") has obtained an exemption from the Securities and Exchange Commission that permits its co-investment advisers, AST Investment Services, Inc. and Prudential Investments LLC, subject to approval by the Board of Trustees of the Trust, to change sub-advisors for a Portfolio and to enter into new sub-advisory agreements, without obtaining shareholder approval of the changes. This exemption (which is similar to exemptions granted to other investment companies that are organized in a similar manner as the Trust) is intended to facilitate the efficient supervision and management of the sub-advisors by AST Investment Services, Inc., Prudential Investments LLC and the Trustees. The Trust is required, under the terms of the exemption, to provide certain information to shareholders following these types of changes. We may add new Sub-accounts that invest in a series of underlying funds other than the Trust that is managed by an affiliate. Such series of funds may have a similar order from the SEC. You also should review the prospectuses for the other underlying funds in which various Sub-accounts invest as to whether they have obtained similar orders from the SEC. Material Conflicts It is possible that differences may occur between companies that offer shares of an underlying mutual fund portfolio to their respective separate accounts issuing variable annuities and/or variable life insurance products. Differences may also occur surrounding the offering of an underlying mutual fund portfolio to variable life insurance policies and variable annuity contracts that we offer. Under certain circumstances, these differences could be considered "material conflicts," in which case we would take necessary action to protect persons with voting rights under our variable annuity contracts and variable life insurance policies against persons with voting rights under other insurance companies' variable insurance products. If a "material conflict" were to arise between owners of variable annuity contracts and variable life insurance policies issued by us we would take necessary action to treat such persons equitably in resolving the conflict. "Material conflicts" could arise due to differences in voting instructions between owners of variable life insurance and variable annuity contracts of the same or different companies. We monitor any potential conflicts that may exist. Service Fees Payable to Prudential Annuities Prudential Annuities or our affiliates have entered into agreements with the investment adviser or distributor of the underlying Portfolios. Under the terms of these agreements, Prudential Annuities, or our affiliates may provide administrative and support services to the Portfolios for which it receives a fee of up to 0.75% (currently) of the average assets allocated to the Portfolios under each Annuity from the investment adviser, distributor and/or the fund. These agreements may be different for each underlying mutual fund whose portfolios are offered as Sub-accounts. In addition, an investment adviser, sub-adviser or distributor of the underlying Portfolios may also compensate us by providing reimbursement, defraying the costs of, or paying directly for, among other things, marketing and/or administrative services and/or other services they provide in connection with the Annuity. These services may include, but are not limited to: sponsoring or co-sponsoring various promotional, educational or marketing meetings and seminars attended by distributors, wholesalers, and/or broker dealer firms' registered representatives, and creating marketing material discussing the contract, available options, and underlying Portfolios. The amounts paid depend on the nature of the meetings, the number of meetings attended by the adviser, sub-adviser, or distributor, the number of participants and attendees at the meetings, the costs expected to be incurred, and the level of the adviser's, sub-adviser's or distributor's participation. These payments or reimbursements may not be offered by all advisers, sub-advisers, or distributor and the amounts of such payments may vary between and among each adviser, sub-adviser and distributor depending on their respective participation. 110 During 2007, with regard to amounts that were paid under these kinds of arrangements, the amounts ranged from approximately $750 to approximately $981,102. These amounts may have been paid to one or more Prudential-affiliated insurers issuing individual variable annuities. WHO DISTRIBUTES ANNUITIES OFFERED BY PRUDENTIAL ANNUITIES? Prudential Annuities Distributors, Inc. (PAD), a wholly-owned subsidiary of Prudential Annuities, Inc., is the distributor and principal underwriter of the Annuities offered through this prospectus. PAD acts as the distributor of a number of annuity and life insurance products, and is the co-distributor of the Advanced Series Trust. PAD's principal business address is One Corporate Drive, Shelton, Connecticut 06484. PAD is registered as a broker-dealer under the Securities Exchange Act of 1934 (Exchange Act), and is a member of the Financial Industry Regulatory Authority (FINRA). Each Annuity is offered on a continuous basis. PAD enters into distribution agreements with broker-dealers who are registered under the Exchange Act and with entities that may offer the Annuities but are exempt from registration ("firms"). Applications for each Annuity are solicited by registered representatives of those firms. Such representatives will also be our appointed insurance agents under state insurance law. In addition, PAD may offer the Annuities directly to potential purchasers. Prudential Annuities sells its annuity products through multiple distribution channels, including (1) independent broker-dealer firms and financial planners; (2) broker-dealers that are members of the New York Stock Exchange, including "wirehouse" and regional broker-dealer firms; and (3) broker-dealers affiliated with banks or that specialize in marketing to customers of banks. Although we are active in each of those distribution channels, the majority of our sales have come from the independent broker-dealer firms and financial planners. On June 1, 2006, The Prudential Insurance Company of America, an affiliate of Prudential Annuities, acquired the variable annuity business of The Allstate Corporation ("Allstate"), which included exclusive access to the Allstate affiliated broker-dealer. We began selling variable annuities through the Allstate affiliated broker-dealer registered representatives in the third quarter of 2006. Commissions are paid to firms on sales of the Annuities according to one or more schedules. The individual representative will receive a portion of the compensation, depending on the practice of his or her firm. Commissions are generally based on a percentage of Purchase Payments made, up to a maximum of 7.0% for Optimum, 6.0% for Optimum Plus and 5.5% for Optimum Four. Alternative compensation schedules are available that provide a lower initial commission plus ongoing annual compensation based on all or a portion of the Account Value. We may also provide compensation to the distributing firm for providing ongoing service to you in relation to your Annuity. Commissions and other compensation paid in relation to your Annuity do not result in any additional charge to you or to the Separate Account. In addition, in an effort to promote the sale of our products (which may include the placement of Prudential Annuities and/or the Annuities on a preferred or recommended company or product list and/or access to the firm's registered representatives), we or PAD may enter into compensation arrangements with certain broker-dealer firms (including Linsco/Private Ledger, Corp.) with respect to certain or all registered representatives of such firms under which such firms may receive separate compensation or reimbursement for, among other things, training of sales personnel and/or marketing and/or administrative services and/or other services they provide. These services may include, but are not limited to: educating customers of the firm on the Annuity's features; conducting due diligence and analysis, providing office access, operations and systems support; holding seminars intended to educate the firm's registered representatives and make them more knowledgeable about the Annuities; providing a dedicated marketing coordinator; providing priority sales desk support; and providing expedited marketing compliance approval. To the extent permitted by FINRA rules and other applicable laws and regulations, PAD may pay or allow other promotional incentives or payments in the form of cash or non-cash compensation. These arrangements may not be offered to all firms and the terms of such arrangements may differ between firms. You should note that firms and individual registered representatives and branch managers within some firms participating in one of these compensation arrangements might receive greater compensation for selling the Annuities than for selling a different annuity that is not eligible for these compensation arrangements. While compensation is generally taken into account as an expense in considering the charges applicable to an annuity product, any such compensation will be paid by us or PAD and will not result in any additional charge to you. Overall compensation paid to the distributing firm does not exceed, based on actuarial assumptions, 8.5% of the total Purchase Payments made. Your registered representative can provide you with more information about the compensation arrangements that apply upon the sale of the Annuity. Further information about the firms that are part of these compensation arrangements appears in the Statement of Additional Information, which is available without charge upon request. We or PAD also may compensate third-party vendors, for services that such vendors render to broker-dealer firms. To the extent permitted by the FINRA rules and other applicable laws and regulations, PAD may pay or allow other promotional incentives or payments in the forms of cash or non-cash compensation. These arrangements may not be offered to all firms and the terms of such arrangements may differ between firms. The list below identifies three general types of payments that PAD pays which are broadly defined as follows: . Percentage Payments based upon "Assets under Management" or "AUM": This type of payment is a percentage payment that is based upon the total amount held in all Prudential Annuities products that were sold through the firm (or its affiliated broker-dealers). 111 . Percentage Payments based upon sales: This type of payment is a percentage payment that is based upon the total amount of money received as purchase payments under Prudential Annuities annuity products sold through the firm (or its affiliated broker-dealers). . Fixed Payments: These types of payments are made directly to or in sponsorship of the firm (or its affiliated broker-dealers). Examples of arrangements under which such payments may be made currently include, but are not limited to: sponsorships, conferences (national, regional and top producer), speaker fees, promotional items and reimbursements to firms for marketing activities or services paid by the firms and/or their individual representatives. The amount of these payments varies widely because some payments may encompass only a single event, such as a conference, and others have a much broader scope. In addition, we may make payments upon the initiation of a relationship for systems, operational and other support. The list below includes the names of the firms (or their affiliated broker/dealers) that we are aware (as of December 31, 2007) received payment with respect to annuity business during 2007 (or as to which a payment amount was accrued during 2007). The firms listed below include payments in connection with products issued by Prudential Annuities Life Assurance Corporation. Your registered representative can provide you with more information about the compensation arrangements that apply upon the sale of the contract. During 2007, the least amount paid, and greatest amount paid, were $46 and $8,664,735, respectively. Name of Firm: 1717 Capital Management Co. CFD Investments, Inc. GunnAllen Financial, Inc. 1/st/ Global Capital Corporation Citigroup Global Markets Inc GWN Securities, Inc. A.G. Edwards & Sons City Securities Corporation H&R Block Financial Advisors, Inc. Advantage Capital Corporation Commonwealth Financial Group H. Beck, Inc. AICPA Commonwealth Financial Network Hantz Financial Services, Inc. AIG Financial Advisors Inc Contemporary Fin'l Solutions Harbour Investments, Inc. Allegheny Investments LTD. Crown Capital Securities, L.P. Hazard & Siegel, Inc. Allegiant Securities LLC Cumberland Brokerage Corporation HBW Securities Alliance Bernstein CUNA Brokerage Hornor, Townsend & Kent Alliance Financial Group, Inc. CUSO Financial Services, L.P. Huntington Investment Services Allianz Deutsche ICC Allstate Financial Srvcs, LLC EDI Financial IFMG Securities, Inc. Almax Financial Solutions, LLC ePlanning Securities, Inc. IMS Securities, Inc. Alternative Wealth Strategies Equity Services, Inc. Independent Financial Group, LLC American General Securities, Inc. Ferris Baker Watts, Inc Infinex Investments Inc. AMERICAN PORTFOLIO FIN SVCS FFP Securities, Inc. ING Financial Advisors, LLC INC Financial Network Investments Corp. ING Financial Partners, LLC Ameritas Investment Corp Financial Planning Consultants Institutional Securities Corp. Arrowhead Investment Center Financial West Group InterSecurities, Inc. Associated Securities Fintegra, LLC Invest Financial Corporation AXA Advisors First Allied Securities, Inc. Investacorp BancorpSouth Investment Services, Inc. First Financial Services Investment Centers of America BB&T Investments First Heartland Capital, Inc. Investment Management Corp BCG Securities, Inc. First Montauk Securities Corp. Investment Planners, Inc. Benefit Funding Services Group First Trust Portfolios Investment Professionals Berthel Fisher & Company First Western Advisors Investors Capital Corporation Brecek & Young Advisors, Inc. Foothill Securities, Inc. Investors Security Co, Inc. Broker Dealer Financial Fortune Financial Services, Inc. ISG Equity Sales Brookstone Securities, Inc. Founders Financial Securities J.W. Cole Financial, Inc. Brookstreet Securities Corp. Fox & Co. Investments, Inc. Janney Montgomery Scott, LLC. Butler Freeman Tally Fn Gp LLC Freedom Investors Corp. JB Hanauer Cadaret, Grant & Co., Inc. FSC Securities Corp Jefferson Pilot Securities Co. Calton & Associates, Inc FSIC JJB Hilliard Lyons Cambridge Investment Research, Inc. Garden State Securities, Inc. Key Investment Services LLC Cantella & Co., Inc Gary Goldberg & Co. KMS FINANCIAL SERVICES, INC Capital Analysts Geneos Wealth Management, Inc. Kovack Securities, Inc Capital Financial Services Genworth Financial Securities Leaders Group Inc. Capital Investment Group Corporation Legacy Advisors, LLC Capital One Investments Girard Securities, Inc. Legacy Financial Services, Inc. Capital Securities Management Goldman Sachs Asset Management Legend Equities Corporation Centaurus Financial, Inc. Great American Advisors, Inc. Legend Securities, Inc. - -------------------------------------------------------------------------------------------------------------------
112 Leonard & Company ProEquities, Inc SunAmerica Securities Lewis Financial Group, L.C. Prospera Financial Svcs, Inc. Sunset Financial Services, Inc Lincoln Financial Advisors Pruco Securities SWS Financial Services, Inc Lincoln Investment Planning Prudential Annuities Synergy Investment Group, LLC Linsco Private Ledger Corp Prudential Financial T. Rowe Price Associates Lombard Securities Inc. Prudential Securities Incorporated TFS Securities, Inc. M Holdings Securities, Inc QA3 Financial Corp. The Investment Center, Inc. Main Street Securities, LLC Questar Capital Corporation Tower Square Securities Inc MarketMax R. Seelaus & Co., Inc. Transamerica Financial Advisors Medallion Investment Services Rampart Financial Services Inc Triad Advisors, Inc. MFS Raymond James & Associates Trustmont Financial Group, Inc. Michigan Securities, Inc. Raymond James Financial Services UBS Financial Services, Inc. MML Investors Services, Inc. RBC Dain Rauscher United Planners Financial Services of Money Concepts Capital Corp. Resource Horizon Group, LLC America United Securities Alliance, Inc. Moors & Cabot, Inc Resource Marketing USA Financial Securities Corporation Morgan Keegan Rhodes Securities, Inc. UVEST Financial Services Group, Inc. MTL Equity Products, Inc. RNR Securities, L.L.C. Valley National Investments, Inc. Multi Financial Securities Corp. Robert W. Baird & Co., Inc. Veritrust Financial LLC Mutual Service Corporation Royal Alliance VSR Financial Services, Inc. Mutual Trust Co. of America Sec Ryan Beck & Co, Inc. Wachovia Bank National Planning Corporation Rydex Distributors Inc Wachovia Wirehouse Neuberger/Berman SAIC Wall Street Financial Group New England Securities Sammons Securities Walnut Street Securities Next Financial Group, Inc. Saunders Discount Brokerage Waterstone Financial Group Inc NFP Securities, Inc. Scottsdale Capital Advisors Waterstone Investor Services North Ridge Securities Corp. Securian Financial Services, Inc. Webster Investment Services, Inc. Oppenheimer & Co, Inc. Securities America, Inc. Wellstone Securities, LLC Pacific West Securities, Inc. Securities Service Network Westcom Financial Services Packerland Brokerage Svcs, Inc Sentra/Spelman Wilbanks Securities, Inc. Partnervest Securities, Inc. Sigma Financial Corporation Williams Financial Group Paulson Investment Company, Inc. Signator Investor, Inc Woodbury Financial Services, Inc. Planmember Securities Corporation SII Investments, Inc. World Choice Securities, Inc. PNC Investment Silver Oaks Securities World Equity Group, Inc. Preferred Financial Group Stanford Group Company World Group Securities, Inc. Presidential Brokerage Stifel Nicolaus & Co., Inc. Worth Financial Group, Inc. PrimeVest Financial Services Summit Brokerage Services, Inc WRP Investments, Inc. Principal Financial Group Summit Equities, Incorporated Your Money Matters Brokerage - -------------------------------------------------------------------------------------------------------------------
On July 1, 2003, Prudential Financial combined its retail securities brokerage and clearing operations with those of Wachovia Corporation ("Wachovia") and formed Wachovia Securities Financial Holdings, LLC ("Wachovia Securities"), a joint venture headquartered in Richmond, Virginia. Prudential Financial has a 38% ownership interest in the joint venture, while Wachovia owns the remaining 62%. Wachovia and Wachovia Securities are key distribution partners for certain products of Prudential Financial affiliates, including mutual funds and individual annuities that are distributed through their financial advisors, bank channel and independent channel. In addition, Wachovia is the majority owner and Prudential Financial, indirectly through subsidiaries, is a minority owner of Wachovia Securities. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Prudential Annuities publishes annual and quarterly reports that are filed with the SEC. These reports contain financial information about Prudential Annuities that is annually audited by an independent registered public accounting firm. Prudential Annuities' annual report for the year ended December 31, 2007, together with subsequent periodic reports that Prudential Annuities files with the SEC, are incorporated by reference into this prospectus. You can obtain copies, at no cost, of any and all of this information, including the Prudential Annuities annual report that is not ordinarily mailed to contract owners, the more current reports and any subsequently filed documents at no cost by contacting us at Prudential Annuities - Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176 (Telephone: 203-926-1888). The SEC file number for Prudential Annuities is 33-44202. You may read and copy any filings made by Prudential Annuities with the SEC at the SEC's Public Reference Room at 100 F Street, N.E. Washington, D.C. 20549. You can obtain information on the operation of the Public Reference Room by calling (202) 551-8090. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. 113 FINANCIAL STATEMENTS The financial statements of the separate account and Prudential Annuities Life Assurance Corporation are included in the Statement of Additional Information. HOW TO CONTACT US You can contact us by: .. calling our Customer Service Team at 1-800-752-6342 during our normal business hours, Monday through Friday, or our telephone automated response system at 1-800-766-4530. .. writing to us via regular mail at Prudential Annuities - Variable Annuities, P.O. Box 7960, Philadelphia, PA 19176 OR for express mail Prudential Annuities - Variable Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to send mail to the proper address may result in a delay in our receiving and processing your request. .. sending an email to customerservice@prudential.com or visiting our Internet Website at www. prudentialannuities.com. .. accessing information about your Annuity through our Internet Website at www. prudentialannuities.com. You can obtain account information by calling our automated response system and at www. prudentialannuities.com, our Internet Website. Our Customer Service representatives are also available during business hours to provide you with information about your account. You can request certain transactions through our telephone voice response system, our Internet Website or through a customer service representative. You can provide authorization for a third party, including your attorney-in-fact acting pursuant to a power of attorney or your Financial Professional, to access your account information and perform certain transactions on your account. You will need to complete a form provided by us which identifies those transactions that you wish to authorize via telephonic and electronic means and whether you wish to authorize a third party to perform any such transactions. Please note that unless you tell us otherwise, we deem that all transactions that are directed by your Financial Professional with respect to your Annuity have been authorized by you. We require that you or your representative provide proper identification before performing transactions over the telephone or through our Internet Website. This may include a Personal Identification Number (PIN) that will be provided to you upon issue of your Annuity or you may establish or change your PIN by calling our automated response system and at www. prudentialannuities.com, our Internet Website. Any third party that you authorize to perform financial transactions on your account will be assigned a PIN for your account. Transactions requested via telephone are recorded. To the extent permitted by law, we will not be responsible for any claims, loss, liability or expense in connection with a transaction requested by telephone or other electronic means if we acted on such transaction instructions after following reasonable procedures to identify those persons authorized to perform transactions on your Annuity using verification methods which may include a request for your Social Security number, PIN or other form of electronic identification. We may be liable for losses due to unauthorized or fraudulent instructions if we did not follow such procedures. Prudential Annuities does not guarantee access to telephonic, facsimile, Internet or any other electronic information or that we will be able to accept transaction instructions via such means at all times. Regular and/or express mail will be the only means by which we will accept transaction instructions when telephonic, facsimile, Internet or any other electronic means are unavailable or delayed. Prudential Annuities reserves the right to limit, restrict or terminate telephonic, facsimile, Internet or any other electronic transaction privileges at any time. INDEMNIFICATION Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. LEGAL PROCEEDINGS We are subject to legal and regulatory actions in the ordinary course of our businesses, including class action lawsuits. Our pending legal and regulatory actions include proceedings specific to us and proceedings generally applicable to business practices in the industry in which we operate. We are subject to class action lawsuits and other litigation alleging, among other things, that we made improper or inadequate disclosures in connection with the sale of annuity products or charged excessive or impermissible fees on these products, recommended unsuitable products to customers, mishandled customer accounts or breached fiduciary duties to customers. We are also subject to litigation arising out of our general business activities, such as our investments and contracts, and could be exposed to claims or litigation concerning certain business or process patents. Regulatory authorities from time to time make inquiries and conduct investigations and examinations relating particularly to us and our products. In addition, we, along with other participants in the business in which we engage, may be subject from time to time to investigations, examinations and inquiries, in some cases industry-wide, concerning issues or matters upon which such regulators have determined to focus. In some of our pending legal and regulatory actions, parties are seeking large and/or indeterminate amounts, including punitive or exemplary damages. The outcome of a litigation or regulatory matter, and the amount or range of potential loss at any particular time, is inherently uncertain. The following is a summary of certain pending proceedings. 114 We have commenced a remediation program to correct errors in the administration of approximately 11,000 annuity contracts issued by us. The owners of these contracts did not receive notification that the contracts were approaching or past their designated annuitization date or default annuitization date (both dates referred to as the "contractual annuity date") and the contracts were not annuitized at their contractual annuity dates. Some of these contracts also were affected by data integrity errors resulting in incorrect contractual annuity dates. The lack of notice and the data integrity errors, as reflected on the annuities administrative system, all occurred before the acquisition of Prudential Annuities by Prudential Financial, Inc. (the "Acquisition"). The remediation and administrative costs of the remediation program are subject to the indemnification provisions of the agreement (the "Acquisition Agreement") pursuant to which Prudential Financial, Inc. acquired Prudential Annuities from Skandia Insurance Company Ltd. (publ) ("Skandia"). Commencing in 2003, we received formal requests for information from the SEC and the New York Attorney General ("NYAG") relating to market timing in variable annuities by us and certain affiliated companies. In connection with these investigations, with the approval of Skandia an offer was made by us to the authorities investigating our companies, the SEC and NYAG, to settle these matters by paying restitution and a civil penalty of $95 million in the aggregate. While not assured, we believe these discussions are likely to lead to settlements with these authorities by us or our affiliates. Any regulatory settlement involving us and certain affiliates would be subject to the indemnification provisions of the Acquisition Agreement pursuant to which Prudential Financial, Inc. purchased Prudential Annuities and certain affiliates in May 2003 from Skandia. If achieved, settlement of the matters relating to us and certain affiliates also could involve continuing monitoring, changes to and/or supervision of business practices, findings that may adversely affect existing or cause additional litigation, adverse publicity and other adverse impacts to our businesses. During the third quarter of 2004, we identified a system-generated calculation error in our annuity contract administration system that existed prior to the Acquisition. This error related to the calculation of amounts due to customers for certain transactions subject to a market value adjustment upon the surrender or transfer of monies out of their annuity contract's fixed allocation options. The error resulted in an underpayment to policyholders, as well as additional anticipated costs to us associated with remediation, breakage and other costs. Our consultants have developed the systems functionality to compute remediation amounts and are in the process of running the computations on affected contracts. We contacted state insurance regulators and commenced Phase I of our outreach to customers on November 12, 2007. We have advised Skandia that a portion of the remediation and related administrative costs are subject to the indemnification provisions of the Acquisition Agreement. From January 2006 to May 2007, thirty complaints were filed in 17/th/ Judicial Circuit Court, Broward County, Florida alleging misrepresentations in the sale of annuities against us and in certain of the cases, the two brokers who sold the annuities. The complaints allege that the brokers represented that any losses in the annuities would be insured or paid by a state guaranty fund and purport to state claims of breach of fiduciary duty, negligence, fraud, fraudulent inducement, negligent misrepresentation and seek damages in unspecified amounts but in excess of $15,000 per case. The matter is subject to the indemnification provisions of the Acquisition Agreement. Our litigation and regulatory matters are subject to many uncertainties, and given their complexity and scope, the outcomes cannot be predicted. It is possible that the results of operations or the cash flow of Prudential Annuities in a particular quarterly or annual period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters depending, in part, upon the results of operations or cash flow for such period. In light of the unpredictability of our litigation and regulatory matters, it is also possible that in certain cases an ultimate unfavorable resolution of one or more pending litigation or regulatory matters could have a material adverse effect on our financial position. Management believes, however, that, based on information currently known to it, the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights to indemnification, is not likely to have a material adverse effect on our financial position. It should be noted that the judgments, settlements and expenses associated with many of these lawsuits, administrative and regulatory matters, and contingencies, including certain claims described above, may, in whole or in part, after satisfaction of certain retention requirements, fall within Skandia's indemnification obligations to Prudential Financial and its subsidiaries under the terms of the Acquisition Agreement. Those obligations of Skandia provide for indemnification of certain judgments, settlements, and costs and expenses associated with lawsuits and other claims against Prudential Annuities ("matters"), and apply only to matters, or groups of related matters, for which the costs and expenses exceed $25,000 individually. Additionally, those obligations only apply to such otherwise indemnifiable losses that exceed $10 million in the aggregate, subject to reduction for insurance proceeds, certain accruals and any realized tax benefit applicable to such amounts, and those obligations do not apply to the extent that such aggregate exceeds $1 billion. We are in discussions with Skandia regarding the satisfaction of the $10 million deductible. 115 CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION The following are the contents of the Statement of Additional Information: General Information about Prudential Annuities Prudential Annuities Life Assurance Corporation Prudential Annuities Life Assurance Corporation Variable Account B Prudential Annuities Life Assurance Corporation Separate Account D Principal Underwriter/Distributor - Prudential Annuities Distributors, Inc. How the Unit Price is Determined Additional Information on Fixed Allocations How We Calculate the Market Value Adjustment General Information Voting Rights Modification Deferral of Transactions Misstatement of Age or Sex Ending the Offer Annuitization Experts Legal Experts Financial Statements
116 APPENDIX A - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B ACCUMULATION UNIT VALUES Separate Account B consists of multiple Sub-accounts that are available as investment options for the Prudential Annuities' Annuities. Each Sub-account invests only in a single mutual fund or mutual fund portfolio. All or some of these Sub-accounts are available as investment options for other variable annuities we offer pursuant to different prospectuses. Unit Prices And Numbers Of Units: The following tables show for each Annuity: (a) the historical Unit Price, corresponding to the Annuity features bearing the highest and lowest combinations of asset-based charges*, as of the dates shown, for Units in each of the Sub-accounts of Separate Account B that are being offered pursuant to this Prospectus**; and (b) the number of Units outstanding for each such Sub-account as of the dates shown. The period for each year begins on January 1 and ends on December 31. Since November 18, 2002, we have been determining, on a daily basis, multiple Unit Prices for each Sub-account of Separate Account B. We compute multiple Unit Prices because several of our variable annuities invest in the same Sub-accounts, and these annuities deduct varying charges that correspond to each combination of the applicable Insurance Charge, Distribution Charge (when applicable) and the charges for each optional benefit. Where an asset-based charge corresponding to a particular Sub-account within a new annuity product is identical to that in the same Sub-account within an existing annuity, the Unit Price for the new annuity will be identical to that of the existing annuity. In such cases, we will for reference purposes depict, in the condensed financial information for the new annuity, Unit Prices of the existing annuity. To the extent a Sub-account commenced operations during a particular calendar year, the Unit Price as of the end of the period reflects only the partial year results from the commencement of operations until December 31st of the applicable year. When a Unit Price was first calculated for a particular Sub-account, we set the price of that Unit at $10.00 per Unit. Thereafter, Unit Prices vary based on market performance. Unit Prices and Units are provided for Sub-accounts that commenced operations prior to January 1, 2008. * Note: While a unit price is reflected for the maximum combination of asset based charges for each Sub-account, not all Sub-accounts are available if you elect certain optional benefits. ** The remaining unit values appear in the Statement of Additional Information, which you may obtain free of charge by sending in the request form at the end of the Prospectus or contacting us at 1-800-752-6342. Optimum Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2000 to 12/31/2000 $8.99 33,897 1/1/2001 to 12/31/2001 $8.99 $6.86 136,976 1/1/2002 to 12/31/2002 $6.86 $5.53 153,652 1/1/2003 to 12/31/2003 $5.53 $7.13 362,254 1/1/2004 to 12/31/2004 $7.13 $8.24 553,542 1/1/2005 to 12/31/2005 $8.24 $9.04 1,051,557 1/1/2006 to 12/31/2006 $9.04 $10.96 1,002,727 1/1/2007 to 12/31/2007 $10.96 $11.84 985,495 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2000 to 12/31/2000 $18.68 6,782 1/1/2001 to 12/31/2001 $18.68 $14.10 5,277 1/1/2002 to 12/31/2002 $14.10 $10.35 7,064 1/1/2003 to 12/31/2003 $10.35 $14.32 1,166,396 1/1/2004 to 12/31/2004 $14.32 $16.42 1,953,908 1/1/2005 to 12/31/2005 $16.42 $18.90 2,113,594 1/1/2006 to 12/31/2006 $18.90 $22.58 1,664,525 1/1/2007 to 12/31/2007 $22.58 $26.55 1,428,930
A-1
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST International Value 1/1/2000 to 12/31/2000 $8.08 20,311 1/1/2001 to 12/31/2001 $8.08 $5.41 29,954 1/1/2002 to 12/31/2002 $5.41 $4.43 32,967 1/1/2003 to 12/31/2003 $4.43 $5.86 91,736 1/1/2004 to 12/31/2004 $5.86 $7.01 233,045 1/1/2005 to 12/31/2005 $7.01 $7.87 402,497 1/1/2006 to 12/31/2006 $7.87 $9.90 593,098 1/1/2007 to 12/31/2007 $9.90 $11.52 794,549 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2000 to 12/31/2000 $20.25 978 1/1/2001 to 12/31/2001 $20.25 $18.70 2,439 1/1/2002 to 12/31/2002 $18.70 $12.12 6,331 1/1/2003 to 12/31/2003 $12.12 $17.38 145,364 1/1/2004 to 12/31/2004 $17.38 $15.97 107,136 1/1/2005 to 12/31/2005 $15.97 $16.00 126,824 1/1/2006 to 12/31/2006 $16.00 $17.80 111,114 1/1/2007 to 12/31/2007 $17.80 $18.83 118,021 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2000 to 12/31/2000 $9.17 35,743 1/1/2001 to 12/31/2001 $9.17 $6.48 41,602 1/1/2002 to 12/31/2002 $6.48 $4.71 44,611 1/1/2003 to 12/31/2003 $4.71 $6.86 258,089 1/1/2004 to 12/31/2004 $6.86 $7.41 293,384 1/1/2005 to 12/31/2005 $7.41 $7.35 267,925 1/1/2006 to 12/31/2006 $7.35 $7.82 344,893 1/1/2007 to 12/31/2007 $7.82 $9.17 382,635 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2000 to 12/31/2000 $9.08 243 1/1/2001 to 12/31/2001 $9.08 $7.12 10,912 1/1/2002 to 12/31/2002 $7.12 $4.98 25,040 1/1/2003 to 12/31/2003 $4.98 $8.33 859,909 1/1/2004 to 12/31/2004 $8.33 $10.12 1,169,995 1/1/2005 to 12/31/2005 $10.12 $10.94 1,386,930 1/1/2006 to 12/31/2006 $10.94 $12.20 1,165,926 1/1/2007 to 12/31/2007 $12.20 $13.39 1,078,773 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2000 to 12/31/2000 $11.41 15,339 1/1/2001 to 12/31/2001 $11.41 $12.06 33,608 1/1/2002 to 12/31/2002 $12.06 $10.79 66,744 1/1/2003 to 12/31/2003 $10.79 $14.47 962,965 1/1/2004 to 12/31/2004 $14.47 $16.64 1,293,786 1/1/2005 to 12/31/2005 $16.64 $17.52 1,484,712 1/1/2006 to 12/31/2006 $17.52 $20.77 1,198,255 1/1/2007 to 12/31/2007 $20.77 $19.36 1,176,566 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2000 to 12/31/2000 $7.03 2,473 1/1/2001 to 12/31/2001 $7.03 $4.15 17,882 1/1/2002 to 12/31/2002 $4.15 $2.98 28,812 1/1/2003 to 12/31/2003 $2.98 $3.87 1,535,565 1/1/2004 to 12/31/2004 $3.87 $4.44 2,232,502 1/1/2005 to 12/31/2005 $4.44 $4.60 2,666,933 1/1/2006 to 12/31/2006 $4.60 $4.83 2,231,991 1/1/2007 to 12/31/2007 $4.83 $5.69 2,097,846
A-2
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2000 to 12/31/2000 $12.13 16,574 1/1/2001 to 12/31/2001 $12.13 $11.62 56,219 1/1/2002 to 12/31/2002 $11.62 $10.26 69,657 1/1/2003 to 12/31/2003 $10.26 $13.82 781,348 1/1/2004 to 12/31/2004 $13.82 $16.76 1,116,503 1/1/2005 to 12/31/2005 $16.76 $18.55 1,303,740 1/1/2006 to 12/31/2006 $18.55 $20.28 1,086,861 1/1/2007 to 12/31/2007 $20.28 $20.66 975,347 - --------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2000 to 12/31/2000 $8.46 97,356 1/1/2001 to 12/31/2001 $8.46 $7.12 106,762 1/1/2002 to 12/31/2002 $7.12 $4.86 106,056 1/1/2003 to 12/31/2003 $4.86 $5.93 263,698 1/1/2004 to 12/31/2004 $5.93 $6.19 326,194 1/1/2005 to 12/31/2005 $6.19 $7.12 512,012 1/1/2006 to 12/31/2006 $7.12 $7.43 608,747 1/1/2007 to 12/31/2007 $7.43 $7.94 919,355 - --------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2000 to 12/31/2000 $9.68 3,089 1/1/2001 to 12/31/2001 $9.68 $7.48 47,656 1/1/2002 to 12/31/2002 $7.48 $5.31 112,701 1/1/2003 to 12/31/2003 $5.31 $6.44 893,170 1/1/2004 to 12/31/2004 $6.44 $7.04 791,823 1/1/2005 to 12/31/2005 $7.04 $7.39 1,025,239 1/1/2006 to 12/31/2006 $7.39 $8.01 758,550 1/1/2007 to 12/31/2007 $8.01 $9.10 686,498 - --------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2000 to 12/31/2000 $10.09 114,992 1/1/2001 to 12/31/2001 $10.09 $7.80 182,904 1/1/2002 to 12/31/2002 $7.80 $6.50 228,033 1/1/2003 to 12/31/2003 $6.50 $8.46 4,075,719 1/1/2004 to 12/31/2004 $8.46 $9.67 5,717,404 1/1/2005 to 12/31/2005 $9.67 $10.20 7,048,021 1/1/2006 to 12/31/2006 $10.20 $10.80 5,983,458 1/1/2007 to 12/31/2007 $10.80 $12.26 5,638,342 - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 $10.05 18,453 1/1/2002 to 12/31/2002 $10.05 $8.61 82,054 1/1/2003 to 12/31/2003 $8.61 $10.91 453,569 1/1/2004 to 12/31/2004 $10.91 $12.28 603,508 1/1/2005 to 12/31/2005 $12.28 $12.79 635,232 1/1/2006 to 12/31/2006 $12.79 $15.33 815,109 1/1/2007 to 12/31/2007 $15.33 $14.60 776,427 - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2000 to 12/31/2000 $10.53 34,439 1/1/2001 to 12/31/2001 $10.53 $10.35 205,232 1/1/2002 to 12/31/2002 $10.35 $7.84 142,152 1/1/2003 to 12/31/2003 $7.84 $10.25 3,076,626 1/1/2004 to 12/31/2004 $10.25 $11.24 4,119,501 1/1/2005 to 12/31/2005 $11.24 $11.63 5,200,126 1/1/2006 to 12/31/2006 $11.63 $13.46 3,863,961 1/1/2007 to 12/31/2007 $13.46 $13.98 3,567,122
A-3
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2000 to 12/31/2000 $10.32 8,596 1/1/2001 to 12/31/2001 $10.32 $9.31 44,212 1/1/2002 to 12/31/2002 $9.31 $7.59 44,419 1/1/2003 to 12/31/2003 $7.59 $8.99 204,589 1/1/2004 to 12/31/2004 $8.99 $10.25 417,314 1/1/2005 to 12/31/2005 $10.25 $10.77 694,885 1/1/2006 to 12/31/2006 $10.77 $12.60 680,203 1/1/2007 to 12/31/2007 $12.60 $12.07 680,350 - -------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2000 to 12/31/2000 $10.70 -- 1/1/2001 to 12/31/2001 $10.70 $10.84 16,390 1/1/2002 to 12/31/2002 $10.84 $12.32 36,987 1/1/2003 to 12/31/2003 $12.32 $13.73 289,862 1/1/2004 to 12/31/2004 $13.73 $14.73 657,913 1/1/2005 to 12/31/2005 $14.73 $13.89 938,585 1/1/2006 to 12/31/2006 $13.89 $14.58 836,914 1/1/2007 to 12/31/2007 $14.58 $15.79 874,210 - -------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2000 to 12/31/2000 $10.13 425 1/1/2001 to 12/31/2001 $10.13 $10.30 16,628 1/1/2002 to 12/31/2002 $10.30 $10.22 43,077 1/1/2003 to 12/31/2003 $10.22 $11.98 814,135 1/1/2004 to 12/31/2004 $11.98 $12.71 1,012,739 1/1/2005 to 12/31/2005 $12.71 $12.69 1,294,706 1/1/2006 to 12/31/2006 $12.69 $13.76 1,196,608 1/1/2007 to 12/31/2007 $13.76 $14.42 1,051,089 - -------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2000 to 12/31/2000 $10.97 37,918 1/1/2001 to 12/31/2001 $10.97 $11.80 275,317 1/1/2002 to 12/31/2002 $11.80 $12.72 362,294 1/1/2003 to 12/31/2003 $12.72 $13.23 2,301,863 1/1/2004 to 12/31/2004 $13.23 $13.72 3,074,732 1/1/2005 to 12/31/2005 $13.72 $13.88 1,924,370 1/1/2006 to 12/31/2006 $13.88 $14.22 2,004,498 1/1/2007 to 12/31/2007 $14.22 $15.21 2,344,694 - -------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2000 to 12/31/2000 $10.59 1,940 1/1/2001 to 12/31/2001 $10.59 $11.29 112,948 1/1/2002 to 12/31/2002 $11.29 $10.09 38,260 1/1/2003 to 12/31/2003 $10.09 $12.08 956,856 1/1/2004 to 12/31/2004 $12.08 $12.18 2,189,975 1/1/2005 to 12/31/2005 $12.18 $12.22 2,996,257 1/1/2006 to 12/31/2006 $12.22 $12.53 2,687,532 1/1/2007 to 12/31/2007 $12.53 $13.21 2,594,813 - -------------------------------------------------------------------------------------- AST Money Market 1/1/2000 to 12/31/2000 $10.32 29,567 1/1/2001 to 12/31/2001 $10.32 $10.57 179,509 1/1/2002 to 12/31/2002 $10.57 $10.57 403,604 1/1/2003 to 12/31/2003 $10.57 $10.51 1,245,396 1/1/2004 to 12/31/2004 $10.51 $10.46 1,663,940 1/1/2005 to 12/31/2005 $10.46 $10.62 3,179,376 1/1/2006 to 12/31/2006 $10.62 $10.96 3,505,960 1/1/2007 to 12/31/2007 $10.96 $11.36 4,361,361
A-4
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- -- 1/1/2003 to 12/31/2003 -- $10.46 24,847 1/1/2004 to 12/31/2004 $10.46 $12.31 62,400 1/1/2005 to 12/31/2005 $12.31 $14.10 130,750 1/1/2006 to 12/31/2006 $14.10 $17.15 182,002 1/1/2007 to 12/31/2007 $17.15 $19.47 167,896 - ------------------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 $9.04 -- 1/1/2002 to 12/31/2002 $9.04 -- -- 1/1/2003 to 12/31/2003 -- $9.21 15,743 1/1/2004 to 12/31/2004 $9.21 $9.75 26,849 1/1/2005 to 12/31/2005 $9.75 $10.00 18,356 1/1/2006 to 12/31/2006 $10.00 $10.47 19,700 1/1/2007 to 12/31/2007 $10.47 $11.58 38,907 - ------------------------------------------------------------------------------------------------- AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 48,832
* Denotes the start date of these sub-accounts. Optimum Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV, and EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.57 0 1/1/2006 to 12/31/2006 $10.57 $12.64 0 1/1/2007 to 12/31/2007 $12.64 $13.47 0 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.20 0 1/1/2006 to 12/31/2006 $11.20 $13.19 0 1/1/2007 to 12/31/2007 $13.19 $15.30 0
A-5
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST International Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.62 0 1/1/2006 to 12/31/2006 $10.62 $13.19 0 1/1/2007 to 12/31/2007 $13.19 $15.13 0 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.35 0 1/1/2006 to 12/31/2006 $10.35 $11.35 0 1/1/2007 to 12/31/2007 $11.35 $11.84 0 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.23 0 1/1/2006 to 12/31/2006 $10.23 $10.74 0 1/1/2007 to 12/31/2007 $10.74 $12.41 0 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.87 0 1/1/2006 to 12/31/2006 $10.87 $11.96 0 1/1/2007 to 12/31/2007 $11.96 $12.95 0 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.56 0 1/1/2006 to 12/31/2006 $10.56 $12.35 0 1/1/2007 to 12/31/2007 $12.35 $11.35 0
A-6
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.49 0 1/1/2006 to 12/31/2006 $10.49 $10.86 0 1/1/2007 to 12/31/2007 $10.86 $12.63 0 - ----------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.80 0 1/1/2006 to 12/31/2006 $10.80 $11.65 0 1/1/2007 to 12/31/2007 $11.65 $11.70 0 - ----------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $12.02 0 1/1/2006 to 12/31/2006 $12.02 $12.37 0 1/1/2007 to 12/31/2007 $12.37 $13.04 0 - ----------------------------------------------------------------------------------------- AST MFS Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.67 0 1/1/2006 to 12/31/2006 $10.67 $11.40 0 1/1/2007 to 12/31/2007 $11.40 $12.78 0 - ----------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.82 0 1/1/2006 to 12/31/2006 $10.82 $11.30 0 1/1/2007 to 12/31/2007 $11.30 $12.65 0 - ----------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.23 0 1/1/2006 to 12/31/2006 $10.23 $12.09 0 1/1/2007 to 12/31/2007 $12.09 $11.36 0
A-7
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.18 0 1/1/2006 to 12/31/2006 $10.18 $11.63 0 1/1/2007 to 12/31/2007 $11.63 $11.91 0 - --------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.47 0 1/1/2006 to 12/31/2006 $10.47 $12.08 0 1/1/2007 to 12/31/2007 $12.08 $11.42 0 - --------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.37 0 1/1/2006 to 12/31/2006 $9.37 $9.70 0 1/1/2007 to 12/31/2007 $9.70 $10.36 0 - --------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.87 0 1/1/2006 to 12/31/2006 $9.87 $10.56 0 1/1/2007 to 12/31/2007 $10.56 $10.91 0 - --------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.07 0 1/1/2006 to 12/31/2006 $10.07 $10.17 0 1/1/2007 to 12/31/2007 $10.17 $10.73 0 - --------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.98 0 1/1/2006 to 12/31/2006 $9.98 $10.09 0 1/1/2007 to 12/31/2007 $10.09 $10.49 0
A-8
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------- AST Money Market 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.02 0 1/1/2006 to 12/31/2006 $10.02 $10.21 0 1/1/2007 to 12/31/2007 $10.21 $10.43 0 - ------------------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.92 0 1/1/2006 to 12/31/2006 $10.92 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.67 0 - ------------------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2000 to 12/31/2000 -- -- 1/1/2001 to 12/31/2001 -- -- 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.53 0 1/1/2006 to 12/31/2006 $10.53 $10.87 0 1/1/2007 to 12/31/2007 $10.87 $11.86 0 - ------------------------------------------------------------------------------------------------- AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.97 0
* Denotes the start date of these sub-accounts. Optimum Four Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 $8.56 2,569,506 1/1/2003 to 12/31/2003 $8.56 $11.00 2,415,394 1/1/2004 to 12/31/2004 $11.00 $12.67 3,227,381 1/1/2005 to 12/31/2005 $12.67 $13.84 5,621,836 1/1/2006 to 12/31/2006 $13.84 $16.71 4,715,269 1/1/2007 to 12/31/2007 $16.71 $17.98 4,504,935
A-9
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 $9.72 835,523 1/1/2003 to 12/31/2003 $9.72 $13.39 5,547,558 1/1/2004 to 12/31/2004 $13.39 $15.30 11,265,469 1/1/2005 to 12/31/2005 $15.30 $17.54 12,141,522 1/1/2006 to 12/31/2006 $17.54 $20.87 9,628,446 1/1/2007 to 12/31/2007 $20.87 $24.43 8,347,423 - -------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 $8.19 269,995 1/1/2003 to 12/31/2003 $8.19 $10.79 1,201,268 1/1/2004 to 12/31/2004 $10.79 $12.84 1,897,469 1/1/2005 to 12/31/2005 $12.84 $14.36 2,013,544 1/1/2006 to 12/31/2006 $14.36 $18.00 3,305,620 1/1/2007 to 12/31/2007 $18.00 $20.85 4,044,519 - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 $6.92 1,970,250 1/1/2003 to 12/31/2003 $6.92 $9.89 3,292,593 1/1/2004 to 12/31/2004 $9.89 $9.05 2,242,129 1/1/2005 to 12/31/2005 $9.05 $9.04 2,134,730 1/1/2006 to 12/31/2006 $9.04 $10.01 1,867,490 1/1/2007 to 12/31/2007 $10.01 $10.55 1,740,242 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 $7.67 639,695 1/1/2003 to 12/31/2003 $7.67 $11.13 1,682,193 1/1/2004 to 12/31/2004 $11.13 $11.98 1,618,719 1/1/2005 to 12/31/2005 $11.98 $11.83 1,385,430 1/1/2006 to 12/31/2006 $11.83 $12.53 1,174,654 1/1/2007 to 12/31/2007 $12.53 $14.63 1,215,825 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 $7.64 1,255,415 1/1/2003 to 12/31/2003 $7.64 $12.74 3,085,373 1/1/2004 to 12/31/2004 $12.74 $15.42 4,808,453 1/1/2005 to 12/31/2005 $15.42 $16.60 5,464,856 1/1/2006 to 12/31/2006 $16.60 $18.43 4,641,175 1/1/2007 to 12/31/2007 $18.43 $20.16 4,026,646 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2002 to 12/31/2002 $9.30 6,141,523 1/1/2003 to 12/31/2003 $9.30 $12.42 10,183,346 1/1/2004 to 12/31/2004 $12.42 $14.22 10,785,030 1/1/2005 to 12/31/2005 $14.22 $14.91 11,285,282 1/1/2006 to 12/31/2006 $14.91 $17.61 9,098,178 1/1/2007 to 12/31/2007 $17.61 $16.34 8,130,632 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.97 1,273,118 1/1/2003 to 12/31/2003 $7.97 $10.31 3,027,057 1/1/2004 to 12/31/2004 $10.31 $11.80 4,375,813 1/1/2005 to 12/31/2005 $11.80 $12.16 5,391,424 1/1/2006 to 12/31/2006 $12.16 $12.71 4,189,111 1/1/2007 to 12/31/2007 $12.71 $14.92 3,918,725
A-10
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 $8.96 5,118,558 1/1/2003 to 12/31/2003 $8.96 $12.01 8,530,129 1/1/2004 to 12/31/2004 $12.01 $14.51 11,461,684 1/1/2005 to 12/31/2005 $14.51 $15.99 12,260,007 1/1/2006 to 12/31/2006 $15.99 $17.42 9,574,218 1/1/2007 to 12/31/2007 $17.42 $17.67 8,191,847 - --------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 $7.46 1,869,353 1/1/2003 to 12/31/2003 $7.46 $9.08 2,098,873 1/1/2004 to 12/31/2004 $9.08 $9.44 2,378,881 1/1/2005 to 12/31/2005 $9.44 $10.81 3,925,740 1/1/2006 to 12/31/2006 $10.81 $11.23 4,132,529 1/1/2007 to 12/31/2007 $11.23 $11.96 5,137,246 - --------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 $7.58 2,930,432 1/1/2003 to 12/31/2003 $7.58 $9.16 4,784,269 1/1/2004 to 12/31/2004 $9.16 $9.97 4,529,834 1/1/2005 to 12/31/2005 $9.97 $10.43 5,915,443 1/1/2006 to 12/31/2006 $10.43 $11.25 4,572,301 1/1/2007 to 12/31/2007 $11.25 $12.73 3,902,210 - --------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 $8.32 10,144,317 1/1/2003 to 12/31/2003 $8.32 $10.78 20,138,164 1/1/2004 to 12/31/2004 $10.78 $12.26 28,117,310 1/1/2005 to 12/31/2005 $12.26 $12.88 32,140,125 1/1/2006 to 12/31/2006 $12.88 $13.59 26,497,526 1/1/2007 to 12/31/2007 $13.59 $15.36 23,963,028 - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 $8.76 6,005,922 1/1/2003 to 12/31/2003 $8.76 $11.06 3,621,862 1/1/2004 to 12/31/2004 $11.06 $12.39 4,643,022 1/1/2005 to 12/31/2005 $12.39 $12.86 4,311,857 1/1/2006 to 12/31/2006 $12.86 $15.34 5,318,094 1/1/2007 to 12/31/2007 $15.34 $14.55 4,469,636 - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 $8.06 6,667,373 1/1/2003 to 12/31/2003 $8.06 $10.50 21,264,670 1/1/2004 to 12/31/2004 $10.50 $11.46 25,850,506 1/1/2005 to 12/31/2005 $11.46 $11.81 31,190,346 1/1/2006 to 12/31/2006 $11.81 $13.62 23,350,650 1/1/2007 to 12/31/2007 $13.62 $14.08 19,997,748 - --------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 $8.34 2,110,071 1/1/2003 to 12/31/2003 $8.34 $9.83 2,647,064 1/1/2004 to 12/31/2004 $9.83 $11.17 3,717,848 1/1/2005 to 12/31/2005 $11.17 $11.69 5,245,455 1/1/2006 to 12/31/2006 $11.69 $13.62 5,568,043 1/1/2007 to 12/31/2007 $13.62 $13.00 4,973,375
A-11
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 $11.34 1,739,313 1/1/2003 to 12/31/2003 $11.34 $12.59 2,962,471 1/1/2004 to 12/31/2004 $12.59 $13.45 4,717,822 1/1/2005 to 12/31/2005 $13.45 $12.64 6,261,824 1/1/2006 to 12/31/2006 $12.64 $13.21 6,093,700 1/1/2007 to 12/31/2007 $13.21 $14.24 6,452,566 - ------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 $9.94 4,146,530 1/1/2003 to 12/31/2003 $9.94 $11.61 7,751,236 1/1/2004 to 12/31/2004 $11.61 $12.26 8,369,008 1/1/2005 to 12/31/2005 $12.26 $12.20 12,427,806 1/1/2006 to 12/31/2006 $12.20 $13.17 10,147,675 1/1/2007 to 12/31/2007 $13.17 $13.74 8,365,789 - ------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 $10.57 20,544,075 1/1/2003 to 12/31/2003 $10.57 $10.95 26,287,388 1/1/2004 to 12/31/2004 $10.95 $11.31 33,208,757 1/1/2005 to 12/31/2005 $11.31 $11.40 22,436,395 1/1/2006 to 12/31/2006 $11.40 $11.63 21,700,661 1/1/2007 to 12/31/2007 $11.63 $12.39 21,645,194 - ------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 $10.34 11,274,642 1/1/2003 to 12/31/2003 $10.34 $10.51 15,242,856 1/1/2004 to 12/31/2004 $10.51 $10.55 21,299,789 1/1/2005 to 12/31/2005 $10.55 $10.54 28,031,653 1/1/2006 to 12/31/2006 $10.54 $10.76 22,394,558 1/1/2007 to 12/31/2007 $10.76 $11.31 20,392,150 - ------------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 $9.96 36,255,772 1/1/2003 to 12/31/2003 $9.96 $9.86 32,730,501 1/1/2004 to 12/31/2004 $9.86 $9.78 29,870,585 1/1/2005 to 12/31/2005 $9.78 $9.88 42,442,274 1/1/2006 to 12/31/2006 $9.88 $10.16 46,325,237 1/1/2007 to 12/31/2007 $10.16 $10.48 56,111,128 - ------------------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 $8.15 113,389 1/1/2003 to 12/31/2003 $8.15 $11.65 189,143 1/1/2004 to 12/31/2004 $11.65 $13.66 414,631 1/1/2005 to 12/31/2005 $13.66 $15.59 689,816 1/1/2006 to 12/31/2006 $15.59 $18.88 1,081,552 1/1/2007 to 12/31/2007 $18.88 $21.35 1,401,663 - ------------------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 $7.78 39,943 1/1/2003 to 12/31/2003 $7.78 $10.71 404,789 1/1/2004 to 12/31/2004 $10.71 $11.29 570,123 1/1/2005 to 12/31/2005 $11.29 $11.53 281,775 1/1/2006 to 12/31/2006 $11.53 $12.03 241,307 1/1/2007 to 12/31/2007 $12.03 $13.24 249,298 - ------------------------------------------------------------------------------------------------- AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 213,630
* Denotes the start date of these sub-accounts. A-12 Optimum Four Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV & EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $13.32 0 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.16 0 1/1/2006 to 12/31/2006 $11.16 $13.10 0 1/1/2007 to 12/31/2007 $13.10 $15.12 0 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.59 0 1/1/2006 to 12/31/2006 $10.59 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.95 0 - --------------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.31 0 1/1/2006 to 12/31/2006 $10.31 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $11.71 0 - --------------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.66 0 1/1/2007 to 12/31/2007 $10.66 $12.27 0 - --------------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.84 0 1/1/2006 to 12/31/2006 $10.84 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $12.80 0
A-13
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $11.22 0 - ----------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.78 0 1/1/2007 to 12/31/2007 $10.78 $12.48 0 - ----------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.76 0 1/1/2006 to 12/31/2006 $10.76 $11.56 0 1/1/2007 to 12/31/2007 $11.56 $11.57 0 - ----------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.98 0 1/1/2006 to 12/31/2006 $11.98 $12.28 0 1/1/2007 to 12/31/2007 $12.28 $12.89 0 - ----------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $12.63 0 - ----------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.78 0 1/1/2006 to 12/31/2006 $10.78 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $12.50 0 - ----------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.20 0 1/1/2006 to 12/31/2006 $10.20 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $11.22 0
A-14
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.15 0 1/1/2006 to 12/31/2006 $10.15 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.77 0 - --------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.99 0 1/1/2007 to 12/31/2007 $11.99 $11.29 0 - --------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.34 0 1/1/2006 to 12/31/2006 $9.34 $9.63 0 1/1/2007 to 12/31/2007 $9.63 $10.24 0 - --------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.84 0 1/1/2006 to 12/31/2006 $9.84 $10.48 0 1/1/2007 to 12/31/2007 $10.48 $10.78 0 - --------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.04 0 1/1/2006 to 12/31/2006 $10.04 $10.10 0 1/1/2007 to 12/31/2007 $10.10 $10.61 0 - --------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.94 0 1/1/2006 to 12/31/2006 $9.94 $10.01 0 1/1/2007 to 12/31/2007 $10.01 $10.37 0 - --------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.99 0 1/1/2006 to 12/31/2006 $9.99 $10.13 0 1/1/2007 to 12/31/2007 $10.13 $10.31 0
A-15
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.88 0 1/1/2006 to 12/31/2006 $10.88 $13.00 0 1/1/2007 to 12/31/2007 $13.00 $14.50 0 - ------------------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.50 0 1/1/2006 to 12/31/2006 $10.50 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $11.72 0 - ------------------------------------------------------------------------------------------------- AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.96 0
* Denotes the start date of these sub-accounts. Optimum Plus Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With No Optional Benefits
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 $8.56 2,569,506 1/1/2003 to 12/31/2003 $8.56 $11.00 2,415,394 1/1/2004 to 12/31/2004 $11.00 $12.67 3,227,381 1/1/2005 to 12/31/2005 $12.67 $13.84 5,621,836 1/1/2006 to 12/31/2006 $13.84 $16.71 4,715,269 1/1/2007 to 12/31/2007 $16.71 $17.98 4,504,935 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 $9.72 835,523 1/1/2003 to 12/31/2003 $9.72 $13.39 5,547,558 1/1/2004 to 12/31/2004 $13.39 $15.30 11,265,469 1/1/2005 to 12/31/2005 $15.30 $17.54 12,141,522 1/1/2006 to 12/31/2006 $17.54 $20.87 9,628,446 1/1/2007 to 12/31/2007 $20.87 $24.43 8,347,423 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 $8.19 269,995 1/1/2003 to 12/31/2003 $8.19 $10.79 1,201,268 1/1/2004 to 12/31/2004 $10.79 $12.84 1,897,469 1/1/2005 to 12/31/2005 $12.84 $14.36 2,013,544 1/1/2006 to 12/31/2006 $14.36 $18.00 3,305,620 1/1/2007 to 12/31/2007 $18.00 $20.85 4,044,519
A-16
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - -------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 $6.92 1,970,250 1/1/2003 to 12/31/2003 $6.92 $9.89 3,292,593 1/1/2004 to 12/31/2004 $9.89 $9.05 2,242,129 1/1/2005 to 12/31/2005 $9.05 $9.04 2,134,730 1/1/2006 to 12/31/2006 $9.04 $10.01 1,867,490 1/1/2007 to 12/31/2007 $10.01 $10.55 1,740,242 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 $7.67 639,695 1/1/2003 to 12/31/2003 $7.67 $11.13 1,682,193 1/1/2004 to 12/31/2004 $11.13 $11.98 1,618,719 1/1/2005 to 12/31/2005 $11.98 $11.83 1,385,430 1/1/2006 to 12/31/2006 $11.83 $12.53 1,174,654 1/1/2007 to 12/31/2007 $12.53 $14.63 1,215,825 - -------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 $7.64 1,255,415 1/1/2003 to 12/31/2003 $7.64 $12.74 3,085,373 1/1/2004 to 12/31/2004 $12.74 $15.42 4,808,453 1/1/2005 to 12/31/2005 $15.42 $16.60 5,464,856 1/1/2006 to 12/31/2006 $16.60 $18.43 4,641,175 1/1/2007 to 12/31/2007 $18.43 $20.16 4,026,646 - -------------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2002 to 12/31/2002 $9.30 6,141,523 1/1/2003 to 12/31/2003 $9.30 $12.42 10,183,346 1/1/2004 to 12/31/2004 $12.42 $14.22 10,785,030 1/1/2005 to 12/31/2005 $14.22 $14.91 11,285,282 1/1/2006 to 12/31/2006 $14.91 $17.61 9,098,178 1/1/2007 to 12/31/2007 $17.61 $16.34 8,130,632 - -------------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 $7.97 1,273,118 1/1/2003 to 12/31/2003 $7.97 $10.31 3,027,057 1/1/2004 to 12/31/2004 $10.31 $11.80 4,375,813 1/1/2005 to 12/31/2005 $11.80 $12.16 5,391,424 1/1/2006 to 12/31/2006 $12.16 $12.71 4,189,111 1/1/2007 to 12/31/2007 $12.71 $14.92 3,918,725 - -------------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 $8.96 5,118,558 1/1/2003 to 12/31/2003 $8.96 $12.01 8,530,129 1/1/2004 to 12/31/2004 $12.01 $14.51 11,461,684 1/1/2005 to 12/31/2005 $14.51 $15.99 12,260,007 1/1/2006 to 12/31/2006 $15.99 $17.42 9,574,218 1/1/2007 to 12/31/2007 $17.42 $17.67 8,191,847 - -------------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 $7.46 1,869,353 1/1/2003 to 12/31/2003 $7.46 $9.08 2,098,873 1/1/2004 to 12/31/2004 $9.08 $9.44 2,378,881 1/1/2005 to 12/31/2005 $9.44 $10.81 3,925,740 1/1/2006 to 12/31/2006 $10.81 $11.23 4,132,529 1/1/2007 to 12/31/2007 $11.23 $11.96 5,137,246
A-17
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 $7.58 2,930,432 1/1/2003 to 12/31/2003 $7.58 $9.16 4,784,269 1/1/2004 to 12/31/2004 $9.16 $9.97 4,529,834 1/1/2005 to 12/31/2005 $9.97 $10.43 5,915,443 1/1/2006 to 12/31/2006 $10.43 $11.25 4,572,301 1/1/2007 to 12/31/2007 $11.25 $12.73 3,902,210 - --------------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 $8.32 10,144,317 1/1/2003 to 12/31/2003 $8.32 $10.78 20,138,164 1/1/2004 to 12/31/2004 $10.78 $12.26 28,117,310 1/1/2005 to 12/31/2005 $12.26 $12.88 32,140,125 1/1/2006 to 12/31/2006 $12.88 $13.59 26,497,526 1/1/2007 to 12/31/2007 $13.59 $15.36 23,963,028 - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 $8.76 6,005,922 1/1/2003 to 12/31/2003 $8.76 $11.06 3,621,862 1/1/2004 to 12/31/2004 $11.06 $12.39 4,643,022 1/1/2005 to 12/31/2005 $12.39 $12.86 4,311,857 1/1/2006 to 12/31/2006 $12.86 $15.34 5,318,094 1/1/2007 to 12/31/2007 $15.34 $14.55 4,469,636 - --------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 $8.06 6,667,373 1/1/2003 to 12/31/2003 $8.06 $10.50 21,264,670 1/1/2004 to 12/31/2004 $10.50 $11.46 25,850,506 1/1/2005 to 12/31/2005 $11.46 $11.81 31,190,346 1/1/2006 to 12/31/2006 $11.81 $13.62 23,350,650 1/1/2007 to 12/31/2007 $13.62 $14.08 19,997,748 - --------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 $8.34 2,110,071 1/1/2003 to 12/31/2003 $8.34 $9.83 2,647,064 1/1/2004 to 12/31/2004 $9.83 $11.17 3,717,848 1/1/2005 to 12/31/2005 $11.17 $11.69 5,245,455 1/1/2006 to 12/31/2006 $11.69 $13.62 5,568,043 1/1/2007 to 12/31/2007 $13.62 $13.00 4,973,375 - --------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 $11.34 1,739,313 1/1/2003 to 12/31/2003 $11.34 $12.59 2,962,471 1/1/2004 to 12/31/2004 $12.59 $13.45 4,717,822 1/1/2005 to 12/31/2005 $13.45 $12.64 6,261,824 1/1/2006 to 12/31/2006 $12.64 $13.21 6,093,700 1/1/2007 to 12/31/2007 $13.21 $14.24 6,452,566 - --------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 $9.94 4,146,530 1/1/2003 to 12/31/2003 $9.94 $11.61 7,751,236 1/1/2004 to 12/31/2004 $11.61 $12.26 8,369,008 1/1/2005 to 12/31/2005 $12.26 $12.20 12,427,806 1/1/2006 to 12/31/2006 $12.20 $13.17 10,147,675 1/1/2007 to 12/31/2007 $13.17 $13.74 8,365,789
A-18
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 $10.57 20,544,075 1/1/2003 to 12/31/2003 $10.57 $10.95 26,287,388 1/1/2004 to 12/31/2004 $10.95 $11.31 33,208,757 1/1/2005 to 12/31/2005 $11.31 $11.40 22,436,395 1/1/2006 to 12/31/2006 $11.40 $11.63 21,700,661 1/1/2007 to 12/31/2007 $11.63 $12.39 21,645,194 - ------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 $10.34 11,274,642 1/1/2003 to 12/31/2003 $10.34 $10.51 15,242,856 1/1/2004 to 12/31/2004 $10.51 $10.55 21,299,789 1/1/2005 to 12/31/2005 $10.55 $10.54 28,031,653 1/1/2006 to 12/31/2006 $10.54 $10.76 22,394,558 1/1/2007 to 12/31/2007 $10.76 $11.31 20,392,150 - ------------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 $9.96 36,255,772 1/1/2003 to 12/31/2003 $9.96 $9.86 32,730,501 1/1/2004 to 12/31/2004 $9.86 $9.78 29,870,585 1/1/2005 to 12/31/2005 $9.78 $9.88 42,442,274 1/1/2006 to 12/31/2006 $9.88 $10.16 46,325,237 1/1/2007 to 12/31/2007 $10.16 $10.48 56,111,128 - ------------------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 $8.15 113,389 1/1/2003 to 12/31/2003 $8.15 $11.65 189,143 1/1/2004 to 12/31/2004 $11.65 $13.66 414,631 1/1/2005 to 12/31/2005 $13.66 $15.59 689,816 1/1/2006 to 12/31/2006 $15.59 $18.88 1,081,552 1/1/2007 to 12/31/2007 $18.88 $21.35 1,401,663 - ------------------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 $7.78 39,943 1/1/2003 to 12/31/2003 $7.78 $10.71 404,789 1/1/2004 to 12/31/2004 $10.71 $11.29 570,123 1/1/2005 to 12/31/2005 $11.29 $11.53 281,775 1/1/2006 to 12/31/2006 $11.53 $12.03 241,307 1/1/2007 to 12/31/2007 $12.03 $13.24 249,298 - ------------------------------------------------------------------------------------------------- AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.98 213,630
* Denotes the start date of these sub-accounts. A-19 Optimum Plus Prudential Annuities Life Assurance Corporation Prospectus ACCUMULATION UNIT VALUES: With LT5, HDV, and EBP
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - --------------------------------------------------------------------------------------------------- AST JP Morgan International Equity Portfolio 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.55 0 1/1/2007 to 12/31/2007 $12.55 $13.32 0 - --------------------------------------------------------------------------------------------------- AST International Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.16 0 1/1/2006 to 12/31/2006 $11.16 $13.10 0 1/1/2007 to 12/31/2007 $13.10 $15.12 0 - --------------------------------------------------------------------------------------------------- AST International Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.59 0 1/1/2006 to 12/31/2006 $10.59 $13.09 0 1/1/2007 to 12/31/2007 $13.09 $14.95 0 - --------------------------------------------------------------------------------------------------- AST Small Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.31 0 1/1/2006 to 12/31/2006 $10.31 $11.27 0 1/1/2007 to 12/31/2007 $11.27 $11.71 0 - --------------------------------------------------------------------------------------------------- AST Neuberger Berman Small-Cap Growth formerly, AST DeAM Small-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.20 0 1/1/2006 to 12/31/2006 $10.20 $10.66 0 1/1/2007 to 12/31/2007 $10.66 $12.27 0 - --------------------------------------------------------------------------------------------------- AST Federated Aggressive Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.84 0 1/1/2006 to 12/31/2006 $10.84 $11.87 0 1/1/2007 to 12/31/2007 $11.87 $12.80 0
A-20
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- AST Small-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.53 0 1/1/2006 to 12/31/2006 $10.53 $12.26 0 1/1/2007 to 12/31/2007 $12.26 $11.22 0 - ----------------------------------------------------------------------------------------- AST Goldman Sachs Mid-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.46 0 1/1/2006 to 12/31/2006 $10.46 $10.78 0 1/1/2007 to 12/31/2007 $10.78 $12.48 0 - ----------------------------------------------------------------------------------------- AST Neuberger Berman Mid-Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.76 0 1/1/2006 to 12/31/2006 $10.76 $11.56 0 1/1/2007 to 12/31/2007 $11.56 $11.57 0 - ----------------------------------------------------------------------------------------- AST T. Rowe Price Large-Cap Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $11.98 0 1/1/2006 to 12/31/2006 $11.98 $12.28 0 1/1/2007 to 12/31/2007 $12.28 $12.89 0 - ----------------------------------------------------------------------------------------- AST MFS Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.64 0 1/1/2006 to 12/31/2006 $10.64 $11.32 0 1/1/2007 to 12/31/2007 $11.32 $12.63 0 - ----------------------------------------------------------------------------------------- AST Marsico Capital Growth 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.78 0 1/1/2006 to 12/31/2006 $10.78 $11.21 0 1/1/2007 to 12/31/2007 $11.21 $12.50 0 - ----------------------------------------------------------------------------------------- AST Alliance Bernstein Core Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.20 0 1/1/2006 to 12/31/2006 $10.20 $12.00 0 1/1/2007 to 12/31/2007 $12.00 $11.22 0
A-21
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ------------------------------------------------------------------------------------------------- AST Alliance Bernstein Growth & Income 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.15 0 1/1/2006 to 12/31/2006 $10.15 $11.55 0 1/1/2007 to 12/31/2007 $11.55 $11.77 0 - ------------------------------------------------------------------------------------------------- AST Large Cap Value 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.44 0 1/1/2006 to 12/31/2006 $10.44 $11.99 0 1/1/2007 to 12/31/2007 $11.99 $11.29 0 - ------------------------------------------------------------------------------------------------- AST T. Rowe Price Global Bond 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.34 0 1/1/2006 to 12/31/2006 $9.34 $9.63 0 1/1/2007 to 12/31/2007 $9.63 $10.24 0 - ------------------------------------------------------------------------------------------------- AST Lord Abbett Bond-Debenture 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.84 0 1/1/2006 to 12/31/2006 $9.84 $10.48 0 1/1/2007 to 12/31/2007 $10.48 $10.78 0 - ------------------------------------------------------------------------------------------------- AST PIMCO Total Return Bond 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.04 0 1/1/2006 to 12/31/2006 $10.04 $10.10 0 1/1/2007 to 12/31/2007 $10.10 $10.61 0 - ------------------------------------------------------------------------------------------------- AST PIMCO Limited Maturity Bond 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.94 0 1/1/2006 to 12/31/2006 $9.94 $10.01 0 1/1/2007 to 12/31/2007 $10.01 $10.37 0 - ------------------------------------------------------------------------------------------------- AST Money Market 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $9.99 0 1/1/2006 to 12/31/2006 $9.99 $10.13 0 1/1/2007 to 12/31/2007 $10.13 $10.31 0 - ------------------------------------------------------------------------------------------------- AST Western Asset Core Plus Bond Portfolio 11/19/2007* to 12/31/2007 $10.00 $9.96 0
A-22
Number of Accumulation Accumulation Accumulation Unit Value at Unit Value at Units Outstanding at Beginning of Period End of Period End of Period - ----------------------------------------------------------------------------------------- Evergreen VA--International Equity 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.88 0 1/1/2006 to 12/31/2006 $10.88 $13.00 0 1/1/2007 to 12/31/2007 $13.00 $14.50 0 - ----------------------------------------------------------------------------------------- Evergreen VA--Omega 1/1/2002 to 12/31/2002 -- -- 1/1/2003 to 12/31/2003 -- -- -- 1/1/2004 to 12/31/2004 -- -- -- 1/1/2005 to 12/31/2005 -- $10.50 0 1/1/2006 to 12/31/2006 $10.50 $10.79 0 1/1/2007 to 12/31/2007 $10.79 $11.72 0
A-23 APPENDIX B - CALCULATION OF OPTIONAL DEATH BENEFITS Examples of Enhanced Beneficiary Protection Optional Death Benefit Calculation The following are examples of how the Enhanced Beneficiary Protection Optional Death Benefit is calculated. Each example assumes that a $50,000 initial Purchase Payment is made. Each example assumes that there is one Owner who is age 50 on the Issue Date and that all Account Value is maintained in the variable investment options. The formula for determining the Enhanced Beneficiary Protection Optional Death Benefit is as follows: Growth = Account Value of variable minus Purchase Payments - investment options plus Interim proportional withdrawals Value of Fixed Allocations (no MVA applies)
Example with market increase Assume that the Owner has made no withdrawals and that the Account Value has been increasing due to positive market performance. On the date we receive due proof of death, the Account Value is $75,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value, which ever is greater. Therefore, the basic Death Benefit is equal to $75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the "Growth" under the Annuity. Growth = $75,000 - [$50,000 - $0] = $25,000 Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit = 40% of Growth = $25,000 * 0.40 = $10,000 Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection Optional Death Benefit = $85,000
Examples with market decline Assume that the Owner has made no withdrawals and that the Account Value has been decreasing due to declines in market performance. On the date we receive due proof of death, the Account Value is $45,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value, which ever is greater. Therefore, the basic Death Benefit is equal to $50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth" under the Annuity. Growth = $45,000 - [$50,000 - $0] = $-5,000 Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit = 40% of Growth NO BENEFIT IS PAYABLE Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection Optional Death Benefit = $50,000
In this example you would receive no additional benefit from purchasing the Enhanced Beneficiary Protection Optional Death Benefit. B-1 Example with market increase and withdrawals Assume that the Account Value has been increasing due to positive market performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when the Account Value was $75,000. On the date we receive due proof of death, the Account Value is $90,000. The basic Death Benefit is calculated as Purchase Payments minus proportional withdrawals, or Account Value, which ever is greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to the amount payable under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the Annuity. Growth = $90,000 - [$50,000 - ($50,000 * $15,000/$75,000)] = $90,000 - [$50,000 - $10,000] = $90,000 - $40,000 = $50,000 Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit = 40% of Growth = $50,000 * 0.40 = $20,000 Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection Optional Death Benefit = $110,000
Examples of Highest Anniversary Value Death Benefit Calculation The following are examples of how the Highest Anniversary Value Death Benefit is calculated. Each example assumes an initial Purchase Payment of $50,000. Each example assumes that there is one Owner who is age 70 on the Issue Date and that all Account Value is maintained in the variable investment options. Example with market increase and death before Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals have been made. On the date we receive due proof of death, the Account Value is $75,000; however, the Anniversary Value on the 5/th/ anniversary of the Issue Date was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Anniversary Value or the basic Death Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000) because it is greater than the amount that would have been payable under the basic Death Benefit ($75,000). Example with withdrawals Assume that the Account Value has been increasing due to positive market performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when the Account Value was $75,000. On the date we receive due proof of death, the Account Value is $80,000; however, the Anniversary Value on the 5/th/ anniversary of the Issue Date was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Anniversary Value or the basic Death Benefit. = $90,000 - [$90,000 * $15,000/$75,000] = $90,000 - $18,000 = $72,000 Basic = max [$80,000, $50,000 - ($50,000 * $15,000/$75,000)] Death Benefit = max [$80,000, $40,000] = $80,000 The Death Benefit therefore is $80,000.
B-2 Example with death after Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals had been made prior to the Death Benefit Target Date. Further assume that the Owner dies after the Death Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary Value on the Death Benefit Target Date was $80,000; however, following the Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account Value was $70,000. The Death Benefit is equal to the greater of the Highest Anniversary Value plus Purchase Payments minus proportional withdrawals after the Death Benefit Target Date or the basic Death Benefit. Highest Anniversary Value = $80,000 + $15,000 - [($ 80,000 + $15,000) * $5,000/$70,000] = $80,000 + $15,000 - $6,786 = $88,214 Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) * $5,000/$70,000}] = max [$75,000, $60,357] = $75,000 The Death Benefit therefore is $88,214.
Examples of Combination 5% Roll-up and Highest Anniversary Value Death Benefit Calculation The following are examples of how the Combination 5% Roll-Up and Highest Anniversary Value Death Benefit are calculated. Each example assumes an initial Purchase Payment of $50,000. Each example assumes that there is one Owner who is age 70 on the Issue Date and that all Account Value is maintained in the variable investment options. Example with market increase and death before Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals have been made. On the 7/th/ anniversary of the Issue Date we receive due proof of death, at which time the Account Value is $75,000; however, the Anniversary Value on the 5/th/ anniversary of the Issue Date was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000) because it is greater than both the Roll-Up Value ($67,005) and the amount that would have been payable under the basic Death Benefit ($75,000). Example with withdrawals Assume that the Owner made a withdrawal of $5,000 on the 6/th/ anniversary of the Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6/th/ anniversary of the Issue Date is equal to initial Purchase Payment accumulated at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the 7/th/ annuity year is equal to 5% of the Roll-Up Value as of the 6/th/ anniversary of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal results in a proportional reduction to the Roll-Up Value. On the 7/th/ anniversary of the Issue Date we receive due proof of death, at which time the Account Value is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue Date was $70,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death Benefit. Roll-Up Value = {(67,005 - $3,350) - [($67,005 - $3,350) * $1,650/($45,000 - $3,350)]} * 1.05 = ($63,655 - $2,522) * 1.05 = $64,190 Highest Anniversary Value = $70,000 - [$70,000 * $5,000/$45,000] = $70,000 - $7,778 = $62,222 Basic Death Benefit = max [$43,000, $50,000 - ($50,000 * $5,000/$45,000)] = max [$43,000, $44,444] = $44,444 The Death Benefit therefore is $64,190.
B-3 Example with death after Death Benefit Target Date Assume that the Owner has not made any withdrawals prior to the Death Benefit Target Date. Further assume that the Owner dies after the Death Benefit Target Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit Target Date (the contract anniversary on or following the Owner's 80/th/ birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was $85,000; however, following the Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the Death Benefit Target Date; each increased by subsequent Purchase Payments and reduced proportionally for subsequent withdrawals. Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) * $5,000/$70,000] = $81,445 + $15,000 - $6,889 = $89,556 Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) * $5,000/$70,000] = $85,000 + $15,000 - $7,143 = $92,857 Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000 + $15,000) * $5,000/$70,000}] = max [$75,000, $60,357] = $75,000 The Death Benefit therefore is $92,857.
Examples of Highest Daily Value Death Benefit Calculation The following are examples of how the HDV Death Benefit is calculated. Each example assumes an initial Purchase Payment of $50,000. Each example assumes that there is one Owner who is age 70 on the Issue Date. Example with market increase and death before Death Benefit Target Date Assume that the Owner's Account Value has generally been increasing due to positive market performance and that no withdrawals have been made. On the date we receive due proof of death, the Account Value is $75,000; however, the Highest Daily Value was $90,000. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Daily Value or the basic Death Benefit. The Death Benefit would be the HDV ($90,000) because it is greater than the amount that would have been payable under the basic Death Benefit ($75,000). Example with withdrawals Assume that the Account Value has been increasing due to positive market performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when the Account Value was $75,000. On the date we receive due proof of death, the Account Value is $80,000; however, the Highest Daily Value ($90,000) was attained during the fifth Annuity Year. Assume as well that the Owner has died before the Death Benefit Target Date. The Death Benefit is equal to the greater of the Highest Daily Value (proportionally reduced by the subsequent withdrawal) or the basic Death Benefit. Highest Daily Value = $90,000 - [$90,000 * $15,000/$75,000] = $90,000 - $18,000 = $72,000 Basic Death Benefit = max [$80,000, $50,000 - ($50,000 * $15,000/$75,000)] = max [$80,000, $40,000] = $80,000 The Death Benefit therefore is $80,000.
B-4 APPENDIX C - ADDITIONAL INFORMATION ON ASSET ALLOCATION PROGRAMS PROGRAM RULES . You can elect an asset allocation program provided by Linsco/Private Ledger, Corp, ("LPL"), the firm selling the Annuity. Under the program, the Sub-accounts for each asset class in each model portfolio are designated based on LPL's evaluation of available Sub-accounts. If you elect the Highest Daily Lifetime Five Benefit ("HD5"), the Lifetime Five Benefit ("LT5"), Spousal Lifetime Five Benefit ("SLT5"), the Highest Daily Lifetime Seven Benefit ("HD7"), the Spousal Highest Daily Lifetime Seven Benefit ("SHD7") or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one of the eligible model portfolios. Asset allocation is a sophisticated method of diversification that allocates assets among asset classes in order to manage investment risk and potentially enhance returns over the long term. However, asset allocation does not guarantee a profit or protect against a loss. . Prudential Annuities does not design the program or the models, and it is not responsible for the program or the models. Prudential Annuities does not provide investment advice and is responsible only for administering the model you select. . Please see your program materials for a detailed description of LPL's asset allocation program including the available model portfolios. You can obtain these materials from your LPL Financial Professional. HOW THE ASSET ALLOCATION PROGRAM WORKS . Amounts will automatically be allocated in accordance with the percentages and to Sub-accounts indicated for the model portfolio that you choose with your LPL Financial Professional. If you allocate your Account Value or transfer your Account Value among any Sub-accounts that are outside of your model portfolio, we will allocate these amounts according to the allocation percentages of the applicable model portfolio upon the next rebalancing. You may only choose one model portfolio at a time. When you enroll in the asset allocation program and upon each rebalance thereafter, 100% of your Account Value allocated to the variable Sub-accounts will be allocated to the asset allocation program. Any Account Value not invested in the Sub-accounts will not be part of the program. . Additional Purchase Payments: Unless otherwise requested, any additional Purchase Payments applied to the variable Sub-accounts in the Annuity will be allocated to the Sub-accounts according to the allocation percentages for the model portfolio you choose. Allocation of additional Purchase Payments outside of your model portfolio but into a Sub-account, will be reallocated according to the allocation percentages of the applicable model portfolio upon the next rebalancing. . Rebalancing Your Model Portfolio: Changes in the value of the Sub-account will cause your Account Value allocated to the Sub-accounts to vary from the percentage allocations of the model portfolio you select. By selecting the asset allocation program, you have directed us to periodically (e.g., quarterly) rebalance your Account Value allocated to the Sub-accounts in accordance with the percentage allocations assigned to each Sub-account within your model portfolio at the time you elected the program or as later modified with your consent. Some asset allocation programs will only require that a rebalancing occur when the percent of your Account Value allocated to the Sub-accounts are outside of the acceptable range permitted under such asset allocation program. Note - Any Account Value not invested in the Sub-accounts will not be affected by any rebalance. . Owner Changes in Choice of Model Portfolio: Generally, you may change from the model portfolio that you have elected to any other currently available model portfolio at any time. The change will be implemented on the date we receive all required information in the manner that is then permitted or required. Restrictions and limitations may apply, see LPL program materials for details. TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM: . You may request to terminate your asset allocation program at any time unless you have elected an optional benefit that requires that you maintain your Account Value in the asset allocation program. Any termination will be effective on the date that Prudential Annuities receives your termination request in good order. If you move your account from LPL to another firm, and you have elected one of the optional benefits mentioned above, then termination of your asset allocation program with LPL must coincide with enrollment in a then currently available and approved asset allocation program or other approved option. LPL reserves the right to terminate or modify the asset allocation program at any time. Prudential Annuities reserves the right to change the way in which we administer the program and to terminate our administration of the program. RESTRICTIONS ON ELECTING THE ASSET ALLOCATION: . You cannot participate in auto-rebalancing or a DCA program while enrolled in an asset allocation program. Upon election of an asset allocation program, Prudential Annuities will automatically terminate your enrollment in any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can only be made as flat dollar amounts. C-1 APPENDIX D - SELECTING THE VARIABLE ANNUITY THAT'S RIGHT FOR YOU Prudential Annuities Life Assurance Corporation offers several deferred variable annuity products. Each annuity has different features and benefits that may be appropriate for you based on your individual financial situation and how you intend to use the annuity. Not all of these annuities may be available to you, depending on your state of residence and/or the broker-dealer through which your annuity was sold. You can verify which of these annuities is available to you by speaking to your Financial Professional or calling 1-800-752-6342. The different features and benefits may include variations on your ability to access funds in your annuity without the imposition of a withdrawal charge as well as different ongoing fees and charges you pay to stay in the contract. Additionally, differences may exist on various optional benefits such as guaranteed living benefits or death benefit protection. Among the factors you should consider when choosing which annuity product may be most appropriate for your individual needs are the following: .. Your age; .. The amount of your investment and any planned future deposits into the annuity; .. How long you intend to hold the annuity (also referred to as investment time horizon); .. Your desire to make withdrawals from the annuity; and the timing thereof; .. Your investment return objectives; .. The effect of optional benefits that may be elected, .. The value of being able to "lock-in" growth in your annuity after the initial withdrawal charge period for purposes of calculating the death benefit payable from the annuity; and .. Your desire to minimize costs and/or maximize return associated with the annuity. The following chart outlines some of the different features for each sold through this prospectus. The availability of optional features, such as those noted in the chart, may increase the cost of the annuity. Therefore you should carefully consider which features you plan to use when selecting your annuity. You should also consider the investment objectives, risks, charges and expenses of an investment carefully before investing. In addition, the hypothetical illustrations below reflect the account value and surrender value of each variable annuity over a variety of holding periods. These charts are meant to reflect how your annuities can grow or decrease depending on market conditions and the comparable value of each of the annuities (which reflects the charges associated with the annuities) under the assumptions noted. You can compare the costs of each Annuity by examining the section in this prospectus entitled "Summary of Contract Fees and Charges". For example, Optimum Plus has the highest contingent deferred sales charge ("CDSC") and has an Insurance charge/Distribution charge that is as high as the Insurance charge of Optimum Four (in Annuity Years 1-10). However, Optimum Plus offers purchase credits that the other Annuities do not. Optimum has the lowest Insurance Charge in Annuity Years 1-10, but does not offer purchase credits. Optimum Four has the same Insurance charge as the Insurance charge/Distribution charge of Optimum Plus (in Annuity Years 1-10), and offers the shortest CDSC period among the three Annuities. Optimum and Optimum Four offer Loyalty credits, whereas Optimum Plus does not offer such credits. As you can see, there are trade-offs associated with the costs and benefits provided by each of the Annuities. In choosing the Annuity to purchase, you should consider which features are most important to you, and whether the associated costs offer the greatest value to you. Prudential Annuities Annuity Product Comparison Below is a summary of Prudential Annuities' sold annuity products through this prospectus offered exclusively through Linsco/Private Ledger. You should consider the investment objectives, risks, charges and expenses of an investment in any Annuity carefully before investing. The prospectus for the Annuities as well as the underlying portfolio prospectuses contain this and other information about the variable annuities and underlying investment options. Your registered Financial Professional can provide you with prospectuses for the Annuities and the underlying portfolios and can guide you through Selecting the Variable Annuity That's Right for You, and help you decide upon the Annuity that would be most advantageous for you given your individual needs. Please read the prospectuses carefully before investing. D-1
Optimum Four Optimum - ------------------------------------------------------------------------------------------------------------------------ Minimum Investment $10,000 $1,000 - ------------------------------------------------------------------------------------------------------------------------ Maximum Issue Age 85 80 - ------------------------------------------------------------------------------------------------------------------------ Contingent Deferred Sales 4 Years 8 Years Charge Schedule (8.5%, 8%, 7%, 6%) (7.5%, 7%, 6.5%, 6%, 5%, 4%, 3%, 2%) - ------------------------------------------------------------------------------------------------------------------------ Insurance and Distribution 1.65% 1.25% years 1-8; Charge 0.65% years 9+ - ------------------------------------------------------------------------------------------------------------------------ Annual Maintenance Fee Lesser of $35 or Lesser of $35 or 2% of Account Value* 2% of Account Value* - ------------------------------------------------------------------------------------------------------------------------ Contract Credit Yes. Generally, we apply a Yes. Generally, we apply a Loyalty Credit to your Annuity's Loyalty Credit to your Annuity's Account Value at the end of your Account Value at the end of your fifth contract year (i.e., on your fifth contract year (i.e., on your fifth Contract Anniversary). The fifth Contract Anniversary). The Loyalty Credit is equal to 2.75% Loyalty Credit is equal to 0.50% of total Purchase Payments made of total Purchase Payments made during the first four contract years during the first four contract years less the cumulative amount of less the cumulative amount of withdrawals made (including the withdrawals made (including the deduction of any CDSC amounts) deduction of any CDSC amounts) through the fifth Contract through the fifth Contract Anniversary Anniversary - ------------------------------------------------------------------------------------------------------------------------ Fixed Allocation (early Fixed Allocation Available Fixed Allocation Available withdrawals are subject (currently offering durations of: (currently offering durations of: to a Market Value 1,2,3,5,7,10 years) 1,2,3,5,7,10 years) Adjustment) - ------------------------------------------------------------------------------------------------------------------------ Variable Investment See "Investment Options" section See "Investment Options" section Options of Prospectus. Not all options of Prospectus. Not all options available with certain optional available with certain optional benefits. benefits. - ------------------------------------------------------------------------------------------------------------------------ Basic Death Benefit The greater of: Purchase Payments The greater of: Purchase Payments less proportional withdrawals or less proportional withdrawals or account value (no MVA Applied). account value (no MVA Applied). - ------------------------------------------------------------------------------------------------------------------------ Optional Death Benefits Enhanced Beneficiary Protection EBP II, (for an additional cost) (EBPII) HDV, Highest Daily Value (HDV) HAV, Highest Anniversary Value (HAV) Combo 5% Roll-up/HAV Combo 5% Roll Up/HAV - ------------------------------------------------------------------------------------------------------------------------ Living Benefits (for an GRO/GRO Plus, HD GRO, GRO/GRO Plus, HD GRO, additional cost) GMWB, GMWB, GMIB, GMIB, Lifetime Five, Spousal Lifetime Five, Spousal Lifetime Five, Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Highest Daily Lifetime Seven (and Five, Highest Daily Lifetime spousal version) Seven (and spousal version) - ------------------------------------------------------------------------------------------------------------------------ Annuity Rewards Available after initial withdrawal Available after initial period withdrawal period - ------------------------------------------------------------------------------------------------------------------------
Optimum Plus - -------------------------------------------------------------------------- Minimum Investment $10,000 - -------------------------------------------------------------------------- Maximum Issue Age 75 - -------------------------------------------------------------------------- Contingent Deferred Sales 10 Years Charge Schedule (9%, 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%) - -------------------------------------------------------------------------- Insurance and Distribution 1.65% years 1-10; Charge 0.65% years 11+ - -------------------------------------------------------------------------- Annual Maintenance Fee Lesser of $35 or 2% of Account Value - -------------------------------------------------------------------------- Contract Credit Yes. The amount of the credit applied to a Purchase Payment is based on the year the Purchase Payment is received, for the first 6 years of the contract as follows: the credit percentages for each year, starting with the first, are 6.50%, 5.00%, 4.00%, 3.00%, 2.00%, and 1.00%. Recaptured in certain circumstances - -------------------------------------------------------------------------- Fixed Allocation (early Fixed Allocation Available withdrawals are subject (currently offering durations of: to a Market Value 1,2,3,5,7,10 years) Adjustment) - -------------------------------------------------------------------------- Variable Investment See "Investment Options" section Options of Prospectus. Not all options available with certain optional benefits. - -------------------------------------------------------------------------- Basic Death Benefit The greater of: Purchase Payments less proportional withdrawals or account value (no MVA Applied) less an amount equal to the credits applied within the 12 months prior to date of death. - -------------------------------------------------------------------------- Optional Death Benefits EBP II, (for an additional cost) HDV, HAV, Combo 5% Roll-up/HAV - -------------------------------------------------------------------------- Living Benefits (for an GRO/GRO Plus, HD GRO, additional cost) GMWB, GMIB, Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven (and spousal version) - -------------------------------------------------------------------------- Annuity Rewards Available after initial withdrawal period - --------------------------------------------------------------------------
D-2 The Account Value assumes no surrender, while the Surrender Value assumes a 100% surrender two days prior to the anniversary of the Issue Date of the Annuity ("Annuity Anniversary"), therefore reflecting the withdrawal charge applicable to that Annuity year. Note that a withdrawal on the Annuity Anniversary would be subject to the withdrawal charge applicable to the next Annuity year, which usually is lower. The values that you actually experience under an Annuity will be different than what is depicted here if any of the assumptions we make here differ from your circumstances, however the relative values for each product reflected below will remain the same. (We will provide you with a personalized illustration upon request). 0% Gross Rate of Return
--------------------------------------------------------- Optimum Four Optimum Optimum Plus --------------------------------------------------------- Net rate of return Net rate of return Net rate of return All years -2.60% Yrs 1-8 -2.21% Yrs 1-10 -2.60% Yrs 9+ -1.61% Yrs 11+ -1.61% --------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Value Value Value Value Value Value ------------------------------------------------------------- 1 97,403 88,903 97,798 90,298 103,734 94,734 ------------------------------------------------------------- 2 94,833 86,833 95,605 88,605 100,999 91,999 ------------------------------------------------------------- 3 92,329 85,329 93,460 86,960 98,335 90,335 ------------------------------------------------------------- 4 89,891 83,891 91,362 85,362 95,740 88,740 ------------------------------------------------------------- 5 87,516 87,516 89,310 84,310 93,213 87,213 ------------------------------------------------------------- 6 87,881 87,881 87,793 83,793 90,752 85,752 ------------------------------------------------------------- 7 85,559 85,559 85,821 82,821 88,354 84,354 ------------------------------------------------------------- 8 83,297 83,297 83,892 81,892 86,019 83,019 ------------------------------------------------------------- 9 81,094 81,094 82,502 82,502 83,745 81,745 ------------------------------------------------------------- 10 78,948 78,948 81,136 81,136 81,531 80,531 ------------------------------------------------------------- 11 76,858 76,858 79,793 79,793 80,178 80,178 ------------------------------------------------------------- 12 74,823 74,823 78,471 78,471 78,850 78,850 ------------------------------------------------------------- 13 72,840 72,840 77,170 77,170 77,543 77,543 ------------------------------------------------------------- 14 70,909 70,909 75,890 75,890 76,257 76,257 ------------------------------------------------------------- 15 69,029 69,029 74,631 74,631 74,992 74,992 ------------------------------------------------------------- 16 67,197 67,197 73,392 73,392 73,748 73,748 ------------------------------------------------------------- 17 65,413 65,413 72,174 72,174 72,523 72,523 ------------------------------------------------------------- 18 63,676 63,676 70,974 70,974 71,319 71,319 ------------------------------------------------------------- 19 61,984 61,984 69,795 69,795 70,133 70,133 ------------------------------------------------------------- 20 60,335 60,335 68,634 68,634 68,967 68,967 ------------------------------------------------------------- 21 58,730 58,730 67,492 67,492 67,820 67,820 ------------------------------------------------------------- 22 57,167 57,167 66,368 66,368 66,691 66,691 ------------------------------------------------------------- 23 55,644 55,644 65,263 65,263 65,580 65,580 ------------------------------------------------------------- 24 54,161 54,161 64,175 64,175 64,488 64,488 ------------------------------------------------------------- 25 52,717 52,717 63,105 63,105 63,413 63,413 -------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses =0.97% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary
-------------------- Gross Return 0.00% -------------------- L Share Bonus 2.75% -------------------- B Share Bonus 0.50% -------------------- X Share Credit 6.50% --------------------
Over 30 Years, days won Total Days Year Actual Days ------------------------------------------------------ OPTIMUM FOUR 1459 4-5 1460-1824 6-8 1826-2919 ------------------------------------------------------ OPTIMUM 575 9 2972-3284 10 3388-3649 ------------------------------------------------------ OPTIMUM PLUS 7091 1-4 1-1459 5 1825 8-9 2920-2971 9-10 3285-3387 10-25 3650-9125 ------------------------------------------------------
D-3 6% Gross Rate of Return
--------------------------------------------------------- Optimum Four Optimum Optimum Plus --------------------------------------------------------- Net rate of return Net rate of return Net rate of return All years 3.24% Yrs 1-8 3.66% Yrs 1-10 3.24% Yrs 9+ 4.29% Yrs 11+ 4.29% --------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Value Value Value Value Value Value ------------------------------------------------------------- 1 103,231 94,731 103,649 96,149 109,941 100,941 ------------------------------------------------------------- 2 106,575 98,575 107,443 100,443 113,466 104,466 ------------------------------------------------------------- 3 110,028 103,028 111,375 104,875 117,106 109,106 ------------------------------------------------------------- 4 113,593 107,593 115,451 109,451 120,864 113,864 ------------------------------------------------------------- 5 117,273 117,273 119,676 114,676 124,744 118,744 ------------------------------------------------------------- 6 123,911 123,911 124,574 120,574 128,749 123,749 ------------------------------------------------------------- 7 127,925 127,925 129,133 126,133 132,884 128,884 ------------------------------------------------------------- 8 132,070 132,070 133,858 131,858 137,153 134,153 ------------------------------------------------------------- 9 136,349 136,349 139,598 139,598 141,560 139,560 ------------------------------------------------------------- 10 140,766 140,766 145,586 145,586 146,110 145,110 ------------------------------------------------------------- 11 145,326 145,326 151,831 151,831 152,337 152,337 ------------------------------------------------------------- 12 150,035 150,035 158,344 158,344 158,835 158,835 ------------------------------------------------------------- 13 154,895 154,895 165,136 165,136 165,612 165,612 ------------------------------------------------------------- 14 159,914 159,914 172,219 172,219 172,679 172,679 ------------------------------------------------------------- 15 165,095 165,095 179,607 179,607 180,050 180,050 ------------------------------------------------------------- 16 170,443 170,443 187,311 187,311 187,737 187,737 ------------------------------------------------------------- 17 175,965 175,965 195,345 195,345 195,753 195,753 ------------------------------------------------------------- 18 181,666 181,666 203,725 203,725 204,113 204,113 ------------------------------------------------------------- 19 187,552 187,552 212,463 212,463 212,832 212,832 ------------------------------------------------------------- 20 193,628 193,628 221,577 221,577 221,925 221,925 ------------------------------------------------------------- 21 199,901 199,901 231,082 231,082 231,408 231,408 ------------------------------------------------------------- 22 206,377 206,377 240,994 240,994 241,298 241,298 ------------------------------------------------------------- 23 213,063 213,063 251,331 251,331 251,612 251,612 ------------------------------------------------------------- 24 219,966 219,966 262,112 262,112 262,368 262,368 ------------------------------------------------------------- 25 227,093 227,093 273,355 273,355 273,586 273,586 -------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses = 0.97% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary
-------------------- Gross Return 6.00% -------------------- L Share Bonus 2.75% -------------------- B Share Bonus 0.50% -------------------- X Share Credit 6.50% --------------------
Over 30 Years, days won Total Days Year Actual Days ------------------------------------------------------ OPTIMUM FOUR 364 6 1826-2189 ------------------------------------------------------ OPTIMUM 132 9 3274-3284 10 3529-3649 ------------------------------------------------------ OPTIMUM PLUS 8629 1-5 1-1825 6-9 2190-3273 9-10 3285-3528 10-25 3650-9125 ------------------------------------------------------
D-4 10% Gross Rate of Return
--------------------------------------------------------- Optimum Four Optimum Optimum Plus --------------------------------------------------------- Net rate of return Net rate of return Net rate of return All years 7.14% Yrs 1-8 7.57% Yrs 1-10 7.14% Yrs 9+ 8.22% Yrs 11+ 8.22% --------------------------------------------------------- Contract Surrender Contract Surrender Contract Surrender Value Value Value Value Value Value ------------------------------------------------------------- 1 107,115 98,615 107,550 100,050 114,078 105,078 ------------------------------------------------------------- 2 114,759 106,759 115,693 108,693 122,181 113,181 ------------------------------------------------------------- 3 122,947 115,947 124,452 117,952 130,861 122,861 ------------------------------------------------------------- 4 131,720 125,720 133,875 127,875 140,162 133,162 ------------------------------------------------------------- 5 141,120 141,120 144,011 139,011 150,126 144,126 ------------------------------------------------------------- 6 154,135 154,135 155,452 151,452 160,800 155,800 ------------------------------------------------------------- 7 165,133 165,133 167,222 164,222 172,237 168,237 ------------------------------------------------------------- 8 176,917 176,917 179,883 177,883 184,490 181,490 ------------------------------------------------------------- 9 189,541 189,541 194,675 194,675 197,617 195,617 ------------------------------------------------------------- 10 203,066 203,066 210,687 210,687 211,680 210,680 ------------------------------------------------------------- 11 217,556 217,556 228,016 228,016 229,047 229,047 ------------------------------------------------------------- 12 233,079 233,079 246,770 246,770 247,848 247,848 ------------------------------------------------------------- 13 249,711 249,711 267,067 267,067 268,195 268,195 ------------------------------------------------------------- 14 267,530 267,530 289,033 289,033 290,216 290,216 ------------------------------------------------------------- 15 286,619 286,619 312,806 312,806 314,048 314,048 ------------------------------------------------------------- 16 307,071 307,071 338,534 338,534 339,841 339,841 ------------------------------------------------------------- 17 328,983 328,983 366,378 366,378 367,755 367,755 ------------------------------------------------------------- 18 352,458 352,458 396,512 396,512 397,964 397,964 ------------------------------------------------------------- 19 377,608 377,608 429,125 429,125 430,659 430,659 ------------------------------------------------------------- 20 404,552 404,552 464,421 464,421 466,042 466,042 ------------------------------------------------------------- 21 433,420 433,420 502,619 502,619 504,336 504,336 ------------------------------------------------------------- 22 464,347 464,347 543,959 543,959 545,779 545,779 ------------------------------------------------------------- 23 497,481 497,481 588,699 588,699 590,632 590,632 ------------------------------------------------------------- 24 532,979 532,979 637,119 637,119 639,173 639,173 ------------------------------------------------------------- 25 571,010 571,010 689,522 689,522 691,706 691,706 -------------------------------------------------------------
Assumptions: a. $100,000 initial investment b. Fund Expenses =0.97% c. No optional death benefits or living benefits elected d. Annuity was issued on or after February 13, 2006 e. Surrender value assumes surrender 2 days before policy anniversary D-5 APPENDIX E - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME FIVE INCOME BENEFIT We set out below the current formula under which we may transfer amounts between the variable investment options and the Benefit Fixed Rate Account. Upon your election of Highest Daily Lifetime Five, we will not alter the asset transfer formula that applies to your Annuity. However, as discussed in the "Living Benefits" section, we reserve the right to modify this formula with respect to those who elect Highest Daily Lifetime Five in the future. TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULA: . C\\u\\ - the upper target is established on the effective date of the Highest Daily Lifetime Five benefit (the "Effective Date") and is not changed for the life of the guarantee. Currently, it is 83%. . C\\t\\ - the target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 80%. . C\\l\\ - the lower target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 77%. . L - the target value as of the current Valuation Day. . r - the target ratio. . a - the factors used in calculating the target value. These factors are established on the Effective Date and are not changed for the life of the guarantee. The factors that we use currently are derived from the a2000 Individual Annuity Mortality Table with an assumed interest rate of 3%. Each number in the table "a" factors (which appears below) represents a factor, which when multiplied by the Highest Daily Annual Income Amount, projects our total liability for the purpose of asset transfers under the guarantee. . Q - age based factors used in calculating the target value. These factors are established on the Effective Date and are not changed for the life of the guarantee. The factor is currently set equal to 1. . V - the total value of all Permitted Sub-accounts in the Annuity. . F - the total value of all Benefit Fixed Rate Account allocations. . I - the income value prior to the first withdrawal. The income value is equal to what the Highest Daily Annual Income Amount would be if the first withdrawal were taken on the date of calculation. After the first withdrawal the income value equals the greater of the Highest Daily Annual Income Amount, the quarterly step-up amount times the annual income percentage, and the Account Value times the annual income percentage. . T - the amount of a transfer into or out of the Benefit Fixed Rate Account. . I% - annual income amount percentage. This factor is established on the Effective Date and is not changed for the life of the guarantee. Currently, this percentage is equal to 5% TARGET VALUE CALCULATION: On each Valuation Day, a target value (L) is calculated, according to the following formula. If the variable Account Value (V) is equal to zero, no calculation is necessary. L = I * Q * a Transfer Calculation: The following formula, which is set on the Effective Date and is not changed for the life of the guarantee, determines when a transfer is required: Target Ratio r = (L - F) / V.
. If r ((greater than)) C\\u\\, assets in the Permitted Sub-accounts are transferred to Benefit Fixed Rate Account. . If r ((less than)) C\\l\\, and there are currently assets in the Benefit Fixed Rate Account (F ((greater than)) 0), assets in the Benefit Fixed Rate Account are transferred to the Permitted Sub-accounts. E-1 The following formula, which is set on the Effective Date and is not changed for the life of the guarantee, determines the transfer amount: T = {Min(V, [L - F - V * C\\t\\] / (1-C\\t\\))} T(greater than)0, Money moving from the Permitted Sub-accounts to the Benefit Fixed Rate Account T = {Min(F, [L - F - V * C\\t\\] / (1-C\\t\\))} T(less than)0, Money moving from the Benefit Fixed Rate Account to the Permitted Sub-accounts]
Example: Male age 65 contributes $100,000 into the Permitted Sub accounts and the value drops to $92,300 during year one, end of day one. A table of values for "a" appears below. Target Value Calculation: L = I * Q * a = 5000.67 * 1 * 15.34 = 76,710.28
Target Ratio: r = (L - F) / V = (76,710.28 - 0) / 92,300.00 = 83.11%
Since r ((greater than)) Cu (because 83.11% (greater than) 83%) a transfer into the Benefit Fixed rate Account occurs. T = { Min ( V, [ L - F - V * Ct] / ( 1 - Ct))} = { Min ( 92,300.00, [ 76,710.28 - 0 - 92,300.00 * 0.80] / ( 1 - 0.80))} = { Min ( 92,300.00, 14,351.40 )} = 14,351.40
E-2 Age 65 "a" Factors for Liability Calculations (in Years and Months since Benefit Effective Date)*
Months Years 1 2 3 4 5 6 7 8 9 10 11 12 ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- 1 15.34 15.31 15.27 15.23 15.2 15.16 15.13 15.09 15.05 15.02 14.98 14.95 2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51 3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07 4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63 5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19 6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75 7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30 8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86 9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42 10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98 11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54 12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11 13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68 14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26 15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84 16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44 17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04 18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65 19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27 20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91 21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55 22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22 23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89 24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58 25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29 26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01 27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75 28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51 29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28 30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06 31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84 32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64 33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44 34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24 35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03 36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83 37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62 38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42 39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22 40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02 41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
* The values set forth in this table are applied to all ages. E-3 APPENDIX F - ANNUITIES APPROVED FOR SALE BY THE NEW YORK STATE INSURANCE DEPARTMENT
Optimum Four NY Optimum NY Optimum Plus NY ------------------------------------------------------------------------------ Minimum $10,000 $1,000 $10,000 Investment ------------------------------------------------------------------------------ Maximum Issue Annuitant 85 Annuitant 85 Annuitant 85 Age Oldest Owner 85 Oldest Owner 80 Oldest Owner 75 ------------------------------------------------------------------------------ Contingent 4 Years 7 Years 10 Years Deferred (7%, 6%, 5%, 4%) (7%, 6%, 5%, 4%, (9%, 9%, 8%, 7%, Sales Charge (Applied to 3%, 2%, 1%) 6%, 5%, 4%, 3%, 2%, Schedule Purchase Payments (Applied to 1%) (Applied to based on the Purchase Payments Purchase Payments inception date of based on the based on the the Annuity) inception date of inception date of the Annuity) the Annuity) ------------------------------------------------------------------------------ Insurance 1.65% 0.65% 0.65% Charge ------------------------------------------------------------------------------ Distribution N/A 0.60% annuity years 1.00% annuity years Charge 1-7 1-10 0.0% annuity years 0.00% annuity years 8+ 11+ ------------------------------------------------------------------------------ Annual Lesser of $30 or 2% Lesser of $30 or 2% Lesser of $30 or 2% Maintenance of Account Value of Account Value of Account Value Fee Waived for Account Waived for Account Values exceeding Values exceeding $100,000 $100,000 ------------------------------------------------------------------------------ Transfer Fee $10 after twenty in $10 after twenty in $10 after twenty in any annuity year. any annuity year. any annuity year May be increased to $15 after eight in any annuity year ------------------------------------------------------------------------------ Contract Credit Yes. Effective for Yes. Effective for Yes The amount of Contracts issued on Contracts issued on the credit applied or after June 20, or after July 24, to a Purchase 2005. Generally we 2006. Generally we Payment is based on apply a Loyalty apply a Loyalty the year the Credit to your Credit to your Purchase Payment is Annuity's Account Annuity's Account received, for the Value at the end of Value at the end of first 6 years of your fifth contract your fifth contract the contract. year (i.e. on your year (i.e. on your Currently the fifth Contract fifth Contract credit percentages Anniversary). Anniversary). for each year Currently the Currently the starting with the Loyalty Credit is Loyalty Credit is first year are: equal to 2.75% of equal to 0.50% of 6.50%, 5.00%, total Purchase total Purchase 4.00%, 3.00%, Payments made Payments made 2.00%, and 1.00%. during the first during the first four contract years four contract years less the cumulative less the cumulative amount of amount of withdrawals made withdrawals made (including the (including the deduction of any deduction of any CDSC amounts) CDSC amounts) through the fifth through the fifth Contract Anniversary Contract Anniversary. ------------------------------------------------------------------------------ Fixed Fixed Allocations Fixed Allocations No Allocation Available Available (If (Currently offering (Currently offering available, durations of: 5, 7, durations of: 2, 3, early and 10 years) The 5, 7, and 10 years) withdrawals MVA formula for NY The MVA formula for are subject is [(1+I)/ (1+J)] NY is [(1+I)/ to a Market N 365 The MVA (1+J)] N 365 The Value formula does not MVA formula does Adjustment) apply during the 30 not apply during ("MVA") day period the 30 day period immediately before immediately before the end of the the end of the Guarantee Period. Guarantee Period. ------------------------------------------------------------------------------ Variable All options All options All options Investment generally available generally available generally available Options except where except where except where restrictions apply restrictions apply restrictions apply when certain riders when certain riders when certain riders are purchased. are purchased. are purchased. ------------------------------------------------------------------------------ Basic Death The greater of: The greater of: The greater of: Benefit Purchase Payments Purchase Payments Purchase Payments less proportional less proportional less proportional withdrawals or withdrawals or withdrawals or Account Value Account Value Account Value (variable) plus (variable) plus (variable) (No MVA Interim Value Interim Value applied) (fixed). (No MVA (fixed). (No MVA applied) applied) ------------------------------------------------------------------------------
F-1
Optimum Four NY Optimum NY - -------------------------------------------------------------------------------------------------------------------------------- Optional Death Benefits (for an HAV HAV additional cost)/(1)/ - -------------------------------------------------------------------------------------------------------------------------------- Optional Living Benefits (for an GRO/GRO Plus, Highest Daily GRO/GRO Plus, Highest Daily additional cost)/(2,3)/ GRO, GMWB, GMIB, Lifetime GRO, GMWB, GMIB, Lifetime Five, Spousal Lifetime Five, Five, Spousal Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Five, Highest Daily Lifetime Seven, Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Spousal Highest Daily Lifetime Seven Seven - -------------------------------------------------------------------------------------------------------------------------------- Annuity Rewards/(4)/ Available after initial CDSC Available after initial CDSC period period - -------------------------------------------------------------------------------------------------------------------------------- Annuitization Options Fixed option only Annuity date Fixed option only Annuity date cannot exceed the first day of the cannot exceed the first day of the calendar month following calendar month following Annuitant's 90/th/ birthday The Annuitant's 90/th/ birthday The maximum Annuity Date is based maximum Annuity Date is based on the first Owner or Annuitant to on the first Owner or Annuitant to reach the maximum age, as reach the maximum age, as indicated in your Annuity. indicated in your Annuity. - --------------------------------------------------------------------------------------------------------------------------------
Optimum Plus NY - ---------------------------------------------------------------------------------- Optional Death Benefits (for an HAV additional cost)/(1)/ - ---------------------------------------------------------------------------------- Optional Living Benefits (for an GRO/GRO Plus, Highest Daily additional cost)/(2,3)/ GRO, GMWB, GMIB, Lifetime Five, Spousal Lifetime Five, Highest Daily Lifetime Five Highest Daily Lifetime Seven, Spousal Highest Daily Lifetime Seven - ---------------------------------------------------------------------------------- Annuity Rewards/(4)/ Available after initial CDSC period - ---------------------------------------------------------------------------------- Annuitization Options Fixed option only Annuity date cannot exceed the first day of the calendar month following Annuitant's 90/th/ birthday The maximum Annuity Date is based on the first Owner or Annuitant to reach the maximum age, as indicated in your Annuity. - ----------------------------------------------------------------------------------
(1)For more information on these benefits, refer to the "Death Benefit" section in the Prospectus. (2)For more information on these benefits, refer to the "Living Benefit Programs" section in the Prospectus. (3)Please note that Highest Daily GRO, Highest Daily Lifetime Seven, and Spousal Highest Daily Seven are subject to review by the New York Insurance Department, and will be offered in New York upon our receipt of the Department's approval. (4)The Annuity rewards benefit offers Owners an ability to increase the guaranteed death benefit so that the death benefit will at least equal the Annuity's Account Value on the effective date of the Annuity Rewards benefits, if the terms of the Annuity Rewards benefit are met. F-2 APPENDIX G - ASSET TRANSFER FORMULA UNDER GRO PLUS 2008 AND HIGHEST DAILY GRO The following are the Terms and Definitions referenced in the Transfer Calculation Formula: . AV is the current Account Value of the Annuity . V is the current Account Value of the elected Sub-accounts of the Annuity . B is the total current value of the AST bond portfolio Sub-account . C\\l\\ is the lower target value. Currently, it is 79%. . C\\t\\ is the middle target value. Currently, it is 82%. . C\\u\\ is the upper target value. Currently, it is 85%. For each guarantee provided under the program, . G\\i\\ is the guarantee amount . N\\i\\ is the number of days until the maturity date . d\\i\\ is the discount rate applicable to the number of days until the maturity date. It is determined with reference to a benchmark index, reduced by the Discount Rate Adjustment. Once selected, we will not change the applicable benchmark index. However, if the benchmark index is discontinued, we will substitute a successor benchmark index, if there is one. Otherwise we will substitute a comparable benchmark index. We will obtain any required regulatory approvals prior to substitution of the benchmark index. The formula, which is set on the Effective Date and is not changed while the Rider is in effect, determines, on each Valuation Day, when a transfer is required. The formula begins by determining the value on that Valuation Day that, if appreciated at the applicable discount rate, would equal the guarantee amount at the end of the Base Guarantee Period or Step-Up Guarantee Period. We call the greatest of these values the "current liability (L)." L = MAX (Li), where Li = Gi / (1 + di)/(Ni/365)/.
Next the formula calculates the following formula ratio: r = (L - B) / V.
If the formula ratio exceeds an upper target value, then all or a portion of the Account Value will be transferred to the bond fund Sub-account associated with the current liability. If at the time we make a transfer to the bond fund Sub-account associated with the current liability there is Account Value allocated to a bond fund Sub-account not associated with the current liability, we will transfer all assets from that bond fund Sub-account to the bond fund Sub-account associated with the current liability. The formula will transfer assets into the Transfer Account if r (greater than) C\\u\\. The transfer amount is calculated by the following formula: T = {Min(V, [L - B - V*Ct] / (1 - Ct))}
If the formula ratio is less than a lower target value and there are assets in the Transfer Account, then the formula will transfer assets out of the Transfer Account into the elected Sub-accounts. The transfer amount is calculated by the following formula: T = {Min(B, - [L - B- V*Ct] / (1 - Ct))}
If following a transfer to the elected Sub-accounts, there are assets remaining in a bond fund Sub-account not associated with the current liability, we will transfer all assets from that bond fund Sub-account to the bond fund Sub-account associated with the current liability. G-1 APPENDIX H - ASSET TRANSFER FORMULA UNDER HIGHEST DAILY LIFETIME SEVEN INCOME BENEFIT AND SPOUSAL HIGHEST DAILY LIFETIME SEVEN INCOME BENEFIT TERMS AND DEFINITIONS REFERENCED IN THE CALCULATION FORMULA: . C\\u\\ - the upper target is established on the effective date of the Highest Daily Lifetime Seven benefit (the "Effective Date") and is not changed for the life of the guarantee. Currently, it is 83%. . C\\t\\ - the target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 80%. . C\\l\\ - the lower target is established on the Effective Date and is not changed for the life of the guarantee. Currently, it is 77%. . L - the target value as of the current business day. . r - the target ratio. . a - factors used in calculating the target value. These factors are established on the Effective Date and are not changed for the life of the guarantee. . V - the total value of all Permitted Sub-accounts in the annuity. . B - the total value of the AST Investment Grade Bond Portfolio Sub-account. . P - Income Basis. Prior to the first withdrawal, the Income Basis is the Protected Withdrawal Value calculated as if the first withdrawal were taken on the date of calculation. After the first withdrawal, the Income Basis is equal to the greater of (1) the Protected Withdrawal Value at the time of the first withdrawal, adjusted for additional purchase payments including the amount of any associated Credits, and adjusted proportionally for excess withdrawals*, (2) any highest quarterly value increased for additional purchase payments including the amount of any associated Credits, and adjusted for withdrawals, and (3) the Account Value. . T - the amount of a transfer into or out of the AST Investment Grade Bond Portfolio Sub-account * Note: withdrawals of less than the Annual Income Amount do not reduce the Income Basis. TARGET VALUE CALCULATION: On each business day, a target value (L) is calculated, according to the following formula. If the variable account value (V) is equal to zero, no calculation is necessary. L = 0.05 * P * a Transfer Calculation: The following formula, which is set on the Benefit Effective Date and is not changed for the life of the guarantee, determines when a transfer is required: Target Ratio r = (L - B) / V.
. If r (greater than) Cu, assets in the Permitted Sub-accounts are transferred to the AST Investment Grade Bond Portfolio Sub-account. . If r (less than) Cl, and there are currently assets in the AST Investment Grade Bond Portfolio Sub-account (B (greater than) 0), assets in the AST Investment Grade Bond Portfolio Sub-account are transferred to the Permitted Sub-accounts according to most recent allocation instructions. The following formula, which is set on the Benefit Effective Date and is not changed for the life of the guarantee, determines the transfer amount: T = {Min(V, [L - B - V * Ct] / (1 - Ct))}, Money moving from the Permitted Sub-accounts to the AST Investment Grade Bond Portfolio Sub-account T = {Min(B, -- [L - B - V * Ct] / (1 - Ct))}, Money moving from the AST Investment Grade Bond Portfolio Sub-account to the Permitted Sub-accounts]
H-1 "a" Factors for Liability Calculations (in Years and Months since Benefit Effective Date)*
Months Years 1 2 3 4 5 6 7 8 9 10 11 12 ----- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- 1 15.34 15.31 15.27 15.23 15.20 15.16 15.13 15.09 15.05 15.02 14.98 14.95 2 14.91 14.87 14.84 14.80 14.76 14.73 14.69 14.66 14.62 14.58 14.55 14.51 3 14.47 14.44 14.40 14.36 14.33 14.29 14.26 14.22 14.18 14.15 14.11 14.07 4 14.04 14.00 13.96 13.93 13.89 13.85 13.82 13.78 13.74 13.71 13.67 13.63 5 13.60 13.56 13.52 13.48 13.45 13.41 13.37 13.34 13.30 13.26 13.23 13.19 6 13.15 13.12 13.08 13.04 13.00 12.97 12.93 12.89 12.86 12.82 12.78 12.75 7 12.71 12.67 12.63 12.60 12.56 12.52 12.49 12.45 12.41 12.38 12.34 12.30 8 12.26 12.23 12.19 12.15 12.12 12.08 12.04 12.01 11.97 11.93 11.90 11.86 9 11.82 11.78 11.75 11.71 11.67 11.64 11.60 11.56 11.53 11.49 11.45 11.42 10 11.38 11.34 11.31 11.27 11.23 11.20 11.16 11.12 11.09 11.05 11.01 10.98 11 10.94 10.90 10.87 10.83 10.79 10.76 10.72 10.69 10.65 10.61 10.58 10.54 12 10.50 10.47 10.43 10.40 10.36 10.32 10.29 10.25 10.21 10.18 10.14 10.11 13 10.07 10.04 10.00 9.96 9.93 9.89 9.86 9.82 9.79 9.75 9.71 9.68 14 9.64 9.61 9.57 9.54 9.50 9.47 9.43 9.40 9.36 9.33 9.29 9.26 15 9.22 9.19 9.15 9.12 9.08 9.05 9.02 8.98 8.95 8.91 8.88 8.84 16 8.81 8.77 8.74 8.71 8.67 8.64 8.60 8.57 8.54 8.50 8.47 8.44 17 8.40 8.37 8.34 8.30 8.27 8.24 8.20 8.17 8.14 8.10 8.07 8.04 18 8.00 7.97 7.94 7.91 7.88 7.84 7.81 7.78 7.75 7.71 7.68 7.65 19 7.62 7.59 7.55 7.52 7.49 7.46 7.43 7.40 7.37 7.33 7.30 7.27 20 7.24 7.21 7.18 7.15 7.12 7.09 7.06 7.03 7.00 6.97 6.94 6.91 21 6.88 6.85 6.82 6.79 6.76 6.73 6.70 6.67 6.64 6.61 6.58 6.55 22 6.52 6.50 6.47 6.44 6.41 6.38 6.36 6.33 6.30 6.27 6.24 6.22 23 6.19 6.16 6.13 6.11 6.08 6.05 6.03 6.00 5.97 5.94 5.92 5.89 24 5.86 5.84 5.81 5.79 5.76 5.74 5.71 5.69 5.66 5.63 5.61 5.58 25 5.56 5.53 5.51 5.48 5.46 5.44 5.41 5.39 5.36 5.34 5.32 5.29 26 5.27 5.24 5.22 5.20 5.18 5.15 5.13 5.11 5.08 5.06 5.04 5.01 27 4.99 4.97 4.95 4.93 4.91 4.88 4.86 4.84 4.82 4.80 4.78 4.75 28 4.73 4.71 4.69 4.67 4.65 4.63 4.61 4.59 4.57 4.55 4.53 4.51 29 4.49 4.47 4.45 4.43 4.41 4.39 4.37 4.35 4.33 4.32 4.30 4.28 30 4.26 4.24 4.22 4.20 4.18 4.17 4.15 4.13 4.11 4.09 4.07 4.06 31 4.04 4.02 4.00 3.98 3.97 3.95 3.93 3.91 3.90 3.88 3.86 3.84 32 3.83 3.81 3.79 3.78 3.76 3.74 3.72 3.71 3.69 3.67 3.66 3.64 33 3.62 3.61 3.59 3.57 3.55 3.54 3.52 3.50 3.49 3.47 3.45 3.44 34 3.42 3.40 3.39 3.37 3.35 3.34 3.32 3.30 3.29 3.27 3.25 3.24 35 3.22 3.20 3.18 3.17 3.15 3.13 3.12 3.10 3.08 3.07 3.05 3.03 36 3.02 3.00 2.98 2.96 2.95 2.93 2.91 2.90 2.88 2.86 2.85 2.83 37 2.81 2.79 2.78 2.76 2.74 2.73 2.71 2.69 2.68 2.66 2.64 2.62 38 2.61 2.59 2.57 2.56 2.54 2.52 2.51 2.49 2.47 2.45 2.44 2.42 39 2.40 2.39 2.37 2.35 2.34 2.32 2.30 2.29 2.27 2.25 2.24 2.22 40 2.20 2.19 2.17 2.15 2.14 2.12 2.11 2.09 2.07 2.06 2.04 2.02 41 2.01 1.84 1.67 1.51 1.34 1.17 1.00 0.84 0.67 0.50 0.33 0.17
* The values set forth in this table are applied to all ages. H-2 PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER DETAILS ABOUT THE PRUDENTIAL ANNUITY DESCRIBED IN PROSPECTUS (PLEASE CHECK ONE) OPTIMUM (05/2008) ______, OPTIMUM FOUR (05/2008) ______, OPTIMUM PLUS (05/2008) ______. --------------------------------------- (print your name) --------------------------------------- (address) --------------------------------------- (city/state/zip code)
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