Filed Pursuant to Rule 424(b)(3)
Registration No. 333-62246
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STRATEGIC PARTNERS(SM) SELECT
SUPPLEMENT TO PROSPECTUS DATED MAY 1, 2004
SUPPLEMENT DATED FEBRUARY 28, 2005
This supplement should be retained with the current prospectus for your annuity
contract. If you do not have a current prospectus, please contact us at (888)
PRU-2888.
We are issuing this supplement to reflect the addition of 38 variable investment
options to Strategic Partners Select. Among all the underlying funds within the
annuity, the fund with the highest total operating expenses as of December 31,
2003 is First Defined Portfolio Fund LLC -- Global Target 15 Portfolio, with
total annual expenses of 4.69%.
The "Expense Examples" section of the prospectus is revised as indicated below.
Expense Examples
- --------------------------------------------------------------------------------
THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE
COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE
ACCOUNT ANNUAL EXPENSES, AND UNDERLYING MUTUAL FUND FEES AND EXPENSES.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS
INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH
YEAR AND ASSUME THE MAXIMUM FEES AND EXPENSES OF ANY OF THE MUTUAL FUNDS, WHICH
DO NOT REFLECT ANY EXPENSE REIMBURSEMENTS OR WAIVERS. ALTHOUGH YOUR ACTUAL COSTS
MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE AS
INDICATED IN THE TABLES THAT FOLLOW.
EXAMPLE 1: IF YOU WITHDRAW YOUR ASSETS
Example 1 assumes that:
- - you invest $10,000 in Strategic Partners Select;
- - you allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - you withdraw all your assets at the end of the time period indicated;
- - your investment has a 5% return each year; and
- - the mutual fund's total operating expenses remain the same each year.
EXAMPLE 2: IF YOU DO NOT WITHDRAW YOUR ASSETS
Example 2 assumes that:
- - you invest $10,000 in Strategic Partners Select;
- - you allocate all of your assets to the variable investment option having the
maximum total operating expenses;
- - you DO NOT WITHDRAW any of your assets at the end of the time period
indicated;
- - your investment has a 5% return each year; and
- - The mutual fund's total operating expenses remain the same each year.
NOTES FOR EXPENSE EXAMPLES:
- -----------------------------------
THESE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE
SHOWN.
Note that withdrawal charges (which
are reflected in Example 1 are
assessed in connection with some
annuity options, but not others).
The values shown in the 10 year
column are the same for Example 1
and 2. This is because after 10
years, we would no longer deduct
withdrawal charges when you make a
withdrawal or when you begin the
income phase of your contract.
If your contract value is less than
$50,000, on your contract
anniversary (or upon a surrender),
we deduct a $30 fee. The examples
use an average annual contract fee,
which we calculated based on our
estimate of the total contract fees
we expected to collect in 2004.
Based on these estimates, the
annual contract fee is included as
an annual charge of 0.034% of
contract value. Your actual fees
will vary based on the amount of
your contract and your specific
allocation(s).
The table of accumulation unit
values appears in the appendix to
the prospectus.
EXAMPLE 1: EXAMPLE 2:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR
ASSETS
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,250 $2,287 $3,294 $5,866 $620 $1,837 $3,024 $5,866
2
HERE IS A FEE TABLE THAT SETS OUT THE FEES OF THE NEW UNDERLYING FUNDS THAT ARE
BEING MADE AVAILABLE.
- --------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
MANAGEMENT OTHER PORTFOLIO OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) 12B-1 FEES EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST:(2)
AST JPMorgan International Equity(3) 0.88% 0.24% 0.02% 1.14%
AST MFS Global Equity 1.00% 0.40% 0.00% 1.40%
AST DeAM Small-Cap Growth 0.95% 0.22% 0.00% 1.17%
AST Federated Aggressive Growth 0.95% 0.27% 0.00% 1.22%
AST Small-Cap Value(4) 0.90% 0.20% 0.00% 1.10%
AST DeAM Small-Cap Value 0.95% 0.41% 0.00% 1.36%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% 0.16% 1.41%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.21% 0.06% 1.17%
AST Neuberger Berman Mid-Cap Value 0.90% 0.17% 0.08% 1.15%
AST Alger All-Cap Growth 0.95% 0.20% 0.25% 1.40%
AST Gabelli All-Cap Value 0.95% 0.25% 0.00% 1.20%
AST T. Rowe Price Natural Resources 0.90% 0.25% 0.02% 1.17%
AST MFS Growth 0.90% 0.21% 0.14% 1.25%
AST Marsico Capital Growth 0.90% 0.16% 0.05% 1.11%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% 0.06% 1.13%
AST DeAM Large-Cap Value 0.85% 0.24% 0.00% 1.09%
AST Alliance/Bernstein Growth + Value 0.90% 0.25% 0.00% 1.15%
AST Sanford Bernstein Core Value 0.75% 0.24% 0.15% 1.14%
AST Cohen & Steers Realty 1.00% 0.22% 0.02% 1.24%
AST Sanford Bernstein Managed Index 500 0.60% 0.18% 0.06% 0.84%
AST American Century Income & Growth 0.75% 0.24% 0.00% 0.99%
AST Alliance Growth and Income 0.75% 0.16% 0.08% 0.99%
AST Hotchkis & Wiley Large-Cap Value(5) 0.75% 0.19% 0.04% 0.98%
AST DeAM Global Allocation(6) 0.97% 0.29% 0.00% 1.26%
AST American Century Strategic Balanced 0.85% 0.26% 0.00% 1.11%
AST T. Rowe Price Asset Allocation 0.85% 0.27% 0.00% 1.12%
AST T. Rowe Price Global Bond 0.80% 0.26% 0.00% 1.06%
AST Goldman Sachs High Yield(7) 0.75% 0.18% 0.00% 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.24% 0.00% 1.04%
AST PIMCO Limited Maturity Bond 0.65% 0.17% 0.00% 0.82%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.24% 0.25% 1.64%
FIRST DEFINED PORTFOLIO FUND LLC:(8,9)
First Trust(R) 10 Uncommon Values 0.60% 1.51% 0.25% 2.36%
Target Managed VIP 0.60% 0.99% 0.25% 1.84%
S&P Target 24 0.60% 2.22% 0.25% 3.07%
The Dow(SM) DART 10 0.60% 2.59% 0.25% 3.44%
Value Line(R) Target 25 0.60% 2.69% 0.25% 3.54%
Global Target 15 0.60% 3.84% 0.25% 4.69%
Nasdaq Target 15 0.60% 2.29% 0.25% 3.14%
- -------------------------------------------------------------------------------------------------------------------------------
1 As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Some of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the contract under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid under
these arrangements are included under "Other Expenses."
2 The Portfolios' total actual annual operating expenses for the year ended
December 31, 2003 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements
3
are voluntary and may be terminated by American Skandia Investment Services,
Inc. and Prudential Investments LLC at any time. After accounting for the
waivers, reimbursements and offset arrangements, the Portfolios' actual annual
operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING
EXPENSES AFTER
PORTFOLIO NAME EXPENSE REIMBURSEMENT
- -------------- ---------------------
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.15%
AST Goldman Sachs Mid-Cap Growth 1.31%
AST Marsico Capital Growth 1.10%
AST Goldman Sachs Concentrated Growth 1.06%
AST DeAM Large-Cap Value 0.99%
AST Alliance Growth and Income 0.97%
AST DeAM Global Allocation 0.14%
Effective May 1, 2004, the Investment Managers have voluntarily agreed to
waive a portion of their fee equal to .05% of the average daily net assets of
the AST Hotchkis & Wiley Large-Cap Value Portfolio. If such waiver had been
in place at year-end, the Portfolio's actual annual operating expenses would
have been 0.93%.
3 Effective February 23, 2004, J.P. Morgan Investment Management, Inc. became
Subadviser of the Portfolio. Prior to February 23, 2004, Strong Capital
Management, Inc. served as Subadviser of the Portfolio, then named "AST
Strong International Equity."
4 Effective November 22, 2004, JP Morgan Investment Management, Inc., Lee
Munder Investments, Ltd., and Integrity Asset Management, became subadvisers
of the Portfolio. Prior to November 22, 2004, GAMCO Investors, Inc. served as
subadviser of the Portfolio, then named "AST Gabelli Small-Cap Value".
5 Effective May 1, 2004, Hotchkis and Wiley Capital Management LLC became
Subadviser of the Portfolio. Prior to May 1, 2004, INVESCO Funds Group, Inc.
served as Subadviser of the Portfolio, then named "AST INVESCO Capital
Income."
6 The DeAM Global Asset Allocation Portfolio invests primarily in shares of
other AST Portfolios (the "Underlying Portfolios"). (a) The only management
fee directly paid by the Portfolio is a 0.10% fee paid to American Skandia
Investment Services, Inc. and Prudential Investments LLC. The management fee
shown in the chart for the Portfolio is (i) that 0.10% management fee paid by
the Portfolio plus (ii) an estimate of the management fees paid by the
Underlying Portfolios, which are borne indirectly by investors in the
Portfolio. The estimate was calculated based on the percentage of the
Portfolio invested in each Underlying Portfolio as of December 31, 2003 using
the management fee rates shown in the chart above. (b) The expense
information shown in the chart for the Portfolio reflects (i) the expenses of
the Portfolio itself plus (ii) an estimate of the expenses paid by the
Underlying Portfolios, which are borne indirectly by investors in the
Portfolio. The estimate was calculated based on the percentage of the
Portfolio invested in each Underlying Portfolio as of December 31, 2003 using
the expense rates for the Underlying Portfolios shown in the above chart.
7 Effective May 1, 2004, Goldman Sachs Asset Management, L.P. became Subadviser
of the Portfolio. Prior to May 1, 2004, Federated Investment Counseling
served as Subadviser of the Portfolio, then named "AST Federated High Yield."
8 The Funds' Board of Trustees reserve the right to suspend payments under the
12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for all
Funds except the First Trust 10 Uncommon Values Portfolio. Payments under the
12b-1 Plan will resume effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Target 15 Portfolio, the S&P
Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line Target
25 Portfolio.
9 First Trust has voluntarily agreed to waive fees and reimburse expenses of
the Funds through September 30, 2005 to limit Total Annual Fund Operating
Expenses (excluding brokerage expense and extraordinary expense) as shown in
the table below. There can be no assurance that First Trust will continue to
waive fees and reimburse expenses after September 30, 2005. First Trust may
seek restitution from the Funds for fees waived and expenses reimbursed
within three years following such waiver or reimbursement; however, the
restitution is limited to the extent that it would not cause a Fund to exceed
current expense limitations.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING
EXPENSES AFTER
PORTFOLIO NAME EXPENSE REIMBURSEMENT
- -------------- ---------------------
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(SM) DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Target 15 1.47%
Nasdaq Target 15 1.47%
IN SECTION 2 OF THE PROSPECTUS, THE FOLLOWING PARAGRAPH IS ADDED AFTER THE THIRD
PARAGRAPH UNDER THE SECTION ENTITLED "VARIABLE INVESTMENT OPTIONS".
"The Portfolios of the American Skandia Trust are co-managed by PI and
American Skandia Investment Services, Incorporated, also under a
manager-of-managers approach. American Skandia Investment Services,
Incorporated is an indirect, wholly-owned subsidiary of Prudential
Financial, Inc."
4
IN SECTION 2 OF THE PROSPECTUS, WE ADD THE FOLLOWING BRIEF DESCRIPTIONS OF THE
NEW VARIABLE INVESTMENT OPTIONS:
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
AST JPMORGAN INTERNATIONAL EQUITY: (f/k/a AST Strong
International Equity) seeks long-term capital growth by
investing in a diversified 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 J.P. Morgan Investment
INTERNATIONAL EQUITY of companies located or operating in developed non-U.S. Management Inc.
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.
- ---------------------------------------------------------------------------------------------------------------
AST MFS GLOBAL EQUITY: seeks capital growth. Under normal
circumstances the Portfolio invests at least 80% of its
assets in equity securities of U.S. and foreign issuers Massachusetts Financial
GLOBAL EQUITY (including issuers in developing countries). The Portfolio Services Company
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
- ---------------------------------------------------------------------------------------------------------------
AST DEAM SMALL-CAP GROWTH: seeks maximum growth of
investors' capital from a portfolio of growth stocks of
smaller companies. The Portfolio pursues its objective,
under normal circumstances, by primarily investing at least
SMALL CAP 80% of its total assets in the equity securities of Deutsche Asset
GROWTH small-sized companies included in the Russell 2000 Growth(R) Management, Inc.
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 Growth(R) Index, but which attempts to
outperform the Russell 2000 Growth(R) Index.
- ---------------------------------------------------------------------------------------------------------------
AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The
Portfolio pursues its investment objective by investing in
the stocks of small companies that are traded on national
security exchanges, NASDAQ stock exchange and the Federated Investment
SMALL CAP over-the-counter-market. Small companies will be defined as Counseling/Federated
GROWTH companies with market capitalizations similar to companies Global Investment
in the Russell 2000 Growth Index. Up to 25% of the Management Corp.
Portfolio's net assets may be invested in foreign
securities, which are typically denominated in foreign
currencies.
- ---------------------------------------------------------------------------------------------------------------
AST SMALL-CAP VALUE: seeks to provide long-term capital
growth by investing primarily in small-capitalization stocks
that appear to be undervalued. The Portfolio will have a
non-fundamental policy to invest, under normal
circumstances, at least 80% of the value of its assets in JP Morgan Investments,
small capitalization companies. The 80% investment Inc./Lee Munder
SMALL CAP requirement applies at the time the Portfolio invests its Investments,
VALUE assets. The Portfolio generally defines small capitalization Ltd./Integrity Asset
companies as those with a capitalization of $1.5 billion or Management
less. Reflecting a value approach to investing, the
Portfolio will seek the stocks of companies whose current
stock prices do not appear to adequately reflect their
underlying value as measured by assets, earnings, cash flow
or business franchises.
- ---------------------------------------------------------------------------------------------------------------
AST DEAM SMALL-CAP VALUE: seeks maximum growth of investors'
capital. 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
SMALL CAP companies included in the Russell 2000(R) Value Index. The Deutsche Asset
VALUE Subadviser employs an investment strategy designed to Management, Inc.
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.
- ---------------------------------------------------------------------------------------------------------------
5
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital
growth. The Portfolio pursues its investment objective, by
investing primarily in equity securities selected for their
growth potential, and normally invests at least 80% of the
MID-CAP value of its assets in medium capitalization companies. For Goldman Sachs Asset
GROWTH purposes of the Portfolio, medium-sized companies are those Management, L.P.
whose market capitalizations (measured at the time of
investment) fall within the range of companies in the
Standard & Poor's MidCap 400 Index. The Subadviser seeks to
identify individual companies with earnings growth potential
that may not be recognized by the market at large.
- ---------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth.
Under normal market conditions, the Portfolio primarily
invests at least 80% of its net assets in the common stocks
of mid-cap companies. For purposes of the Portfolio,
MID-CAP companies with equity market capitalizations that fall Neuberger Berman
GROWTH within the range of the Russell Midcap(R) Index, at the time Management Inc.
of investment, are considered mid-cap companies. Some of the
Portfolio's assets may be invested in the securities of
large-cap companies as well as in small-cap companies. The
Subadviser looks for fast-growing companies that are in new
or rapidly evolving industries.
- ---------------------------------------------------------------------------------------------------------------
AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth.
Under normal market conditions, the Portfolio primarily
invests at least 80% of its net assets in the common stocks
of mid-cap companies. For purposes of the Portfolio,
companies with equity market capitalizations that fall
MID-CAP within the range of the Russell Midcap(R) Index at the time Neuberger Berman
VALUE of investment are considered mid-cap companies. Some of the Management Inc.
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.
- ---------------------------------------------------------------------------------------------------------------
AST ALGER ALL-CAP GROWTH: seeks long-term capital growth.
The Portfolio invests primarily in equity securities, such
as common or preferred stocks that are listed on U.S.
ALL-CAP exchanges or in the over-the-counter market. The Portfolio Fred Alger
GROWTH may invest in the equity securities of companies of all Management, Inc.
sizes, and may emphasize either larger or smaller companies
at a given time based on the Subadviser's assessment of
particular companies and market conditions.
- ---------------------------------------------------------------------------------------------------------------
AST GABELLI ALL-CAP VALUE: seeks capital growth. The
Portfolio pursues its objective by investing primarily in
readily marketable equity securities including common
stocks, preferred stocks and securities that may be
converted at a later time into common stock. The Portfolio
ALL-CAP may invest in the securities of companies of all sizes, and
VALUE may emphasize either larger or smaller companies at a given GAMCO Investors, Inc.
time based on the Subadviser's assessment of particular
companies and market conditions. The Portfolio focuses on
companies that appear underpriced relative to their private
market value ("PMV"). PMV is the value that the Portfolio's
Subadviser believes informed investors would be willing to
pay for a company.
- ---------------------------------------------------------------------------------------------------------------
6
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital
growth primarily through the common stocks of companies that
own or develop natural resources (such as energy products,
precious metals and forest products) and other basic
commodities. The Portfolio normally invests primarily (at
least 80% of its total assets) in the common stocks of
SECTOR natural resource companies whose earnings and tangible T. Rowe Price
assets could benefit from accelerating inflation. The Associates, Inc.
Portfolio looks for companies that have the ability to
expand production, to maintain superior exploration programs
and production facilities, and the potential to accumulate
new resources. At least 50% of Portfolio assets will be
invested in U.S. securities, up to 50% of total assets also
may be invested in foreign securities.
- ---------------------------------------------------------------------------------------------------------------
AST MFS GROWTH: seeks long-term capital growth and future
income. Under normal market conditions, the Portfolio
invests at least 80% of its total assets in common stocks
and related securities, such as preferred stocks,
LARGE CAP convertible securities and depositary receipts, of companies Massachusetts Financial
GROWTH that the Subadviser believes offer better than average Services Company
prospects for long-term growth. The Subadviser seeks to
purchase securities of companies that it considers well-run
and poised for growth. The Portfolio may invest up to 35% of
its net assets in foreign securities.
- ---------------------------------------------------------------------------------------------------------------
AST MARSICO CAPITAL GROWTH: seeks capital 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 larger, more established companies. In selecting
LARGE CAP investments for the Portfolio, the Subadviser uses an Marsico Capital
GROWTH approach that combines "top down" economic analysis with Management, LLC
"bottom up' stock selection. The "top down" approach
identifies sectors, industries and companies that should
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, a "bottom up" stock selection.
- ---------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of
capital in a manner consistent with the preservation of
capital. Realization of income is not a significant
investment consideration and any income realized on the
Portfolio's investments, therefore, will be incidental to
LARGE CAP the Portfolio's objective. The Portfolio will pursue its Goldman Sachs Asset
GROWTH objective by investing primarily in equity securities of Management, L.P.
companies that the Subadviser believes have 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.
- ---------------------------------------------------------------------------------------------------------------
AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by
investing primarily in the value stocks of larger companies.
The Portfolio pursues its objective, under normal market
conditions, by primarily investing at least 80% of the value
LARGE CAP of its assets in the equity securities of large-sized Deutsche Asset
VALUE companies included in the Russell 1000(R) Value Index. The Management, Inc.
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.
- ---------------------------------------------------------------------------------------------------------------
7
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
AST ALLIANCE/BERNSTEIN GROWTH + VALUE: seeks capital growth
by investing approximately 50% of its assets in growth
stocks of large companies and approximately 50% of its
assets in value stocks of large companies. The Portfolio
will invest primarily in common stocks of large U.S.
companies included in the Russell 1000(R) Index (the
"Russell 1000(R)"). The Russell 1000(R) is a market
LARGE CAP capitalization-weighted index that measures the performance Alliance Capital
BLEND of the 1,000 largest U.S. companies. Normally, about 60-85 Management, L.P.
companies will be represented in the Portfolio, with 25-35
companies primarily from the Russell 1000(R) Growth Index
constituting approximately 50% of the Portfolio's net assets
and 35-50 companies primarily from the Russell 1000(R) Value
Index constituting the remainder of the Portfolio's net
assets. There will be a periodic rebalancing of each
segment's assets to take account of market fluctuations in
order to maintain the approximately equal allocation.
- ---------------------------------------------------------------------------------------------------------------
AST SANFORD BERNSTEIN CORE VALUE: seeks long-term capital
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,
LARGE CAP the Portfolio seeks to identify compelling buying Sanford C. Bernstein &
VALUE opportunities created when companies are undervalued on the Co., LLC
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.
- ---------------------------------------------------------------------------------------------------------------
AST COHEN & STEERS REALTY: seeks to maximize total return
through investment in real estate securities. The Portfolio
pursues its investment objective by investing, under normal
circumstances, at least 80% of its net assets in securities
of real estate issuers. Under normal circumstances, the
REAL ESTATE Portfolio will invest substantially all of its assets in the Cohen & Steers Capital
(REIT) equity securities of real estate companies, i.e., a company Management, Inc.
that derives at least 50% of its revenues from the
ownership, construction, financing, management or sale of
real estate or that has at least 50% of its assets in real
estate. Real estate companies may include real estate
investment trusts or REITs.
- ---------------------------------------------------------------------------------------------------------------
AST SANFORD BERNSTEIN MANAGED INDEX 500: will invest, under
normal circumstances, at least 80% of its net assets in
securities included in the Standard & Poor's 500 Composite
Stock Price Index (the "S&P(R) 500 "). The Portfolio seeks
to outperform the S&P 500 through stock selection resulting
in different weightings of common stocks relative to the
index. The Portfolio will invest primarily in the common
stocks of companies included in the S&P 500. In seeking to
outperform the S&P 500, the Subadviser starts with a
MANAGED portfolio of stocks representative of the holdings of the Sanford C. Bernstein &
INDEX index. It then uses a set of fundamental quantitative Co., LLC
criteria that are designed to indicate whether a particular
stock will predictably perform better or worse than the S&P
500. Based on these criteria, the Subadviser determines
whether the Portfolio should over-weight, under-weight or
hold a neutral position in the stock relative to the
proportion of the S&P 500 that the stock represents. In
addition, the Subadviser also may determine that based on
the quantitative criteria, certain equity securities that
are not included in the S&P 500 should be held by the
Portfolio.
- ---------------------------------------------------------------------------------------------------------------
8
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth
with current income as a secondary objective. The Portfolio
invests primarily in common stocks that offer potential for
capital growth, and may, consistent with its investment
GROWTH objective, invest in stocks that offer potential for current American Century
AND income. The Subadviser utilizes a quantitative management Investment
INCOME technique with a goal of building an equity portfolio that Management, Inc.
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.
- ---------------------------------------------------------------------------------------------------------------
AST ALLIANCE GROWTH AND INCOME: seeks long-term growth of
capital and income while attempting to avoid excessive
fluctuations in market value. The Portfolio normally will
GROWTH invest in common stocks (and securities convertible into
AND common stocks). The Subadviser will take a value-oriented Alliance Capital
INCOME approach, in that it will try to keep the Portfolio's assets Management, L.P.
invested in securities that are selling at reasonable
valuations in relation to their fundamental business
prospects. The stocks that the Portfolio will normally
invest in are those of seasoned companies.
- ---------------------------------------------------------------------------------------------------------------
AST HOTCHKIS & WILEY LARGE-CAP VALUE (f/k/a AST INVESCO
Capital Income): seeks current income and long-term growth
of income, as well as capital appreciation. The Portfolio
invests, under normal circumstances, at least 80% of its net
LARGE CAP assets plus borrowings for investment purposes in common Hotchkis & Wiley Capital
VALUE stocks of large cap U.S. companies, that have a high cash Management, LLC
dividend or payout yield relative to the market. The
Subadviser currently considers large cap companies to be
those with market capitalizations like those founding the
Russell 1000 Index. Additionally, the Portfolio can invest
up to 20% of its total assets in foreign securities.
- ---------------------------------------------------------------------------------------------------------------
AST DEAM GLOBAL ALLOCATION: seeks a high level of total
return by investing primarily in a diversified portfolio of
mutual funds. The Portfolio seeks to achieve its investment
objective by investing in several other AST Portfolios
("Underlying Portfolios"). The Portfolio intends its
BALANCED strategy of investing in combinations of Underlying Deutsche Asset
Portfolios to result in investment diversification that an Management, Inc.
investor could otherwise achieve only by holding numerous
investments. The Portfolio is expected to be invested in at
least six such Underlying Portfolios at any time. It is
expected that the investment objectives of such AST
Portfolios will be diversified.
- ---------------------------------------------------------------------------------------------------------------
AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital
growth and current income. The Subadviser intends to
maintain approximately 60% of the Portfolio's assets in
equity securities and the remainder in bonds and other fixed
income securities. Both the Portfolio's equity and fixed American Century
BALANCED income investments will fluctuate in value. The equity Investment Management,
securities will fluctuate depending on the performance of Inc.
the companies that issued them, general market and economic
conditions, and investor confidence. The fixed income
investments will be affected primarily by rising or falling
interest rates and the credit quality of the issuers.
- ---------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of
total return by investing primarily 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
ASSET ALLOCATION securities. The Subadviser concentrates common stock T. Rowe Price Associates,
investments in larger, more established companies, but the Inc.
Portfolio may include small and medium-sized companies with
good growth prospects. The fixed income portion of the
Portfolio will be allocated among investment grade
securities, high yield or "junk" bonds, foreign high quality
debt securities and cash reserves.
- ---------------------------------------------------------------------------------------------------------------
9
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
AST T. ROWE PRICE GLOBAL BOND: seeks to provide high 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 all types of
high quality 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 and mortgage and
asset-backed securities of U.S. and foreign issuers. The
GLOBAL Portfolio generally invests in countries where the T. Rowe Price
BOND combination of fixed-income returns and currency exchange International, Inc.
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-backed (including derivatives, such as
collateralized mortgage obligations and stripped mortgage
securities) and asset-backed securities.
- ---------------------------------------------------------------------------------------------------------------
AST GOLDMAN SACHS HIGH YIELD (f/k/a AST Federated High
Yield): seeks a high level of current income and may also
consider the potential for capital appreciation. The
Portfolio invests, under normal circumstances, at least 80%
of its net assets plus any borrowings for investment
purposes (measured at time of purchase) ("Net Assets") in
high-yield, fixed-income securities that, at the time of
purchase, are non-investment grade securities.
Non-investment grade securities are securities rated BB, Ba
or below by a NRSRO, or, if unrated, determined by the
HIGH Subadviser to be of comparable quality. The Portfolio may
YIELD invest in all types of fixed income securities, including, Goldman Sachs Asset
BOND senior and subordinated corporate debt obligations (such as Management, L.P.
bonds, debentures, notes and commercial paper), convertible
and non-convertible corporate debt obligations, loan
participations, custodial receipts, municipal securities and
preferred stock. The Portfolio may invest up to 25% of its
total assets in obligations of domestic and foreign issuers
which are denominated in currencies other than the U.S.
dollar and in securities of issuers located in emerging
countries denominated in any currency. Under normal market
conditions, the Portfolio may invest up to 20% of its net
assets in investment grade fixed-income securities,
including U.S. Government Securities.
- ---------------------------------------------------------------------------------------------------------------
AST LORD ABBETT BOND-DEBENTURE: seeks high current income
and the opportunity for capital appreciation to produce a
high total return. To pursue its objective, the Portfolio
will invest, under normal circumstances, at least 80% of the
value of its assets in fixed income securities and normally
invests primarily in high yield and investment grade debt
securities, securities convertible in common stock and
preferred stocks. The Portfolio may find good value in high
yield securities, sometimes called "lower-rated bonds" or
BOND "junk bonds," and frequently may have more than half of its Lord, Abbett & Co. LLC
assets invested in those securities. At least 20% of the
Portfolio's assets must be invested in any combination of
investment grade debt securities, U.S. Government securities
and cash equivalents. The Portfolio may also make
significant investments in mortgage-backed securities.
Although the Portfolio expects to maintain a weighted
average maturity in the range of five to twelve years, there
are no restrictions on the overall Portfolio or on
individual securities. The Portfolio may invest up to 20% of
its net assets in equity securities.
- ---------------------------------------------------------------------------------------------------------------
AST PIMCO LIMITED MATURITY BOND: seeks to maximize total
return consistent with preservation of capital and prudent
investment management. The Portfolio will invest in a Pacific Investment
BOND diversified portfolio of fixed-income securities of varying Management Company LLC
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.
- ---------------------------------------------------------------------------------------------------------------
10
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
GVIT DEVELOPING MARKETS (f/k/a Montgomery Variable
Series -- Emerging Markets): seeks long-term capital
appreciation, under normal conditions by investing at least Gartmore Global Asset
EMERGING MARKETS 80% of its total assets in stocks of companies of any size Management Trust/Gartmore
based in the world's developing economies. Under normal Global Partners
market conditions, investments are maintained in at least
six countries at all times and no more than 35% of total
assets in any single one of them.
- ---------------------------------------------------------------------------------------------------------------
EACH PORTFOLIO OF THE FIRST DEFINED PORTFOLIO FUND LLC INVESTS IN THE SECURITIES OF A RELATIVELY FEW NUMBER OF
ISSUERS OR IN A PARTICULAR SECTOR OF THE ECONOMY. SINCE THE ASSETS OF EACH PORTFOLIO ARE INVESTED IN A LIMITED
NUMBER OF ISSUERS OR A LIMITED SECTOR OF THE ECONOMY, THE NET ASSET VALUE OF THE PORTFOLIO MAY BE MORE
SUSCEPTIBLE TO A SINGLE ADVERSE ECONOMIC, POLITICAL OR REGULATORY OCCURRENCE. CERTAIN OF THE PORTFOLIOS MAY
ALSO BE SUBJECT TO ADDITIONAL MARKET RISK DUE TO THEIR POLICY OF INVESTING BASED ON AN INVESTMENT STRATEGY AND
GENERALLY NOT BUYING OR SELLING SECURITIES IN RESPONSE TO MARKET FLUCTUATIONS. EACH PORTFOLIO'S RELATIVE LACK
OF DIVERSITY AND LIMITED ONGOING MANAGEMENT MAY SUBJECT CONTRACT OWNERS TO GREATER MARKET RISK THAN OTHER
PORTFOLIOS.
THE STOCK SELECTION DATE FOR EACH OF THE STRATEGY PORTFOLIOS OF THE FIRST DEFINED PORTFOLIO FUND LLC IS ON OR
ABOUT DECEMBER 31ST OF EACH YEAR. THE HOLDINGS FOR EACH STRATEGY PORTFOLIO WILL BE ADJUSTED ANNUALLY ON OR
ABOUT DECEMBER 31ST IN ACCORDANCE WITH THE PORTFOLIO'S INVESTMENT STRATEGY. AT THAT TIME, THE PERCENTAGE
RELATIONSHIP AMONG THE SHARES OF EACH ISSUER HELD BY THE PORTFOLIO IS ESTABLISHED. THROUGH THE NEXT ONE-YEAR
PERIOD THAT PERCENTAGE WILL BE MAINTAINED AS CLOSELY AS PRACTICABLE WHEN THE PORTFOLIO MAKES SUBSEQUENT
PURCHASES AND SALES OF THE SECURITIES.
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide
above-average capital appreciation. The Portfolio seeks to
achieve its objective by investing primarily in the ten
common stocks selected by the Investment Policy Committee of
LARGE CAP Lehman Brothers Inc. ("Lehman Brothers") with the assistance First Trust
BLEND of the Research Department of Lehman Brothers which, in Advisors L.P.
their opinion have the greatest potential for capital
appreciation during the next year. The stocks included in
the Portfolio are adjusted annually on or about July 1st in
accordance with the selections of Lehman Brothers.
- ---------------------------------------------------------------------------------------------------------------
TARGET MANAGED VIP: seeks to provide above-average total
return. The Portfolio seeks to achieve its objective by
BLENDED investing in common stocks of the most attractive companies First Trust
STRATEGY that are identified by a model based on six uniquely Advisors L.P.
specialized strategies -- The Dow(SM) DART 5, the European
Target 20, the Nasdaq(R) Target 15, the S&P Target 24, the
Target Small Cap and the Value Line(R) Target 25.
- ---------------------------------------------------------------------------------------------------------------
S&P TARGET 24: seeks to provide above-average total return.
The Portfolio seeks to achieve its objective by investing in
common stocks issued by companies that have the potential
LARGE CAP for capital appreciation. The Portfolio invests primarily in First Trust
GROWTH the common stocks of twenty-four companies selected from a Advisors L.P.
subset of the stocks included in the Standard & Poor's 500
Composite Stock Price Index. The subset of stocks will be
taken from each of the eight largest economic sectors of the
S&P 500 Index based on the sector's market capitalization.
- ---------------------------------------------------------------------------------------------------------------
THE DOW(SM) DART 10: seeks to provide above-average total
return. The Portfolio seeks to achieve its objective by
investing in common stocks issued by companies that are
LARGE CAP expected to provide income and to have the potential for First Trust
VALUE capital appreciation. The Portfolio invests primarily in the Advisors L.P.
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.
- ---------------------------------------------------------------------------------------------------------------
11
- ---------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUBADVISER
- ---------------------------------------------------------------------------------------------------------------
VALUE LINE(R) TARGET 25: seeks to provide above-average
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 Timeliness(TM) which
have recently exhibited certain positive financial
attributes. Value Line(R) ranks 1,700 stocks which represent
approximately 94% of the trading volume on all U.S. stock
exchanges. Of these 1,700 stocks, only 100 are given their
VALUE #1 ranking for Timeliness(TM), which measures Value Line's First Trust
EQUITY view of their probable price performance during the next six Advisors L.P.
to 12 months relative to the others. Value Line(R) bases
their rankings on a long-term trend of earnings, prices,
recent earnings, price momentum, and earnings surprise. To
select the stocks for the Portfolio, the Subadviser follows
a disciplined investment strategy that invests primarily in
the common stocks of 25 companies selected from a subset of
the stocks that receive Value Line's(R) #1 ranking for
Timeliness as of the close of business on or about the
applicable stock selection date.
- ---------------------------------------------------------------------------------------------------------------
GLOBAL TARGET 15: seeks to provide 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. The Portfolio invests primarily in the
common stocks of the companies which are components of the
GLOBAL DJIA, the Financial Times Industrial Ordinary Share Index First Trust
EQUITY ("FT Index") and the Hang Seng Index. The Portfolio Advisors L.P.
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, FT Index and Hang Seng Index,
respectively, that have the highest dividend yield in the
respective index on or about the applicable stock selection
date.
- ---------------------------------------------------------------------------------------------------------------
NASDAQ(R) TARGET 15: seeks to provide above-average total
return. The Portfolio seeks to achieve its objective by
investing in common stocks issued by companies that are
LARGE CAP expected to have the potential for capital appreciation. The First Trust
GROWTH Portfolio invests primarily in the common stocks of fifteen Advisors L.P.
companies selected from a pre-screened subset of the stocks
included in the Nasdaq-100 Index on or about the applicable
stock selection date through a multi-step process.
- ---------------------------------------------------------------------------------------------------------------
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by American Skandia Investment Services, Incorporated. The Portfolio is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Portfolio.
"Dow Jones Industrial Average(SM)", "DJIA(SM)", "Dow Industrials(SM)", "The
Dow(SM)", and "The Dow 10(SM)", 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, including, and in particular the
Target Managed VIP portfolio and The Dow(SM) DART 10 portfolio, 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 on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. 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
12
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 is 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.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
13