Pruco Life’s

Variable Appreciable Life ®

Insurance

Prospectus

The Pruco Life

Variable Appeciable
Account

May 1, 2002
Pruco Life Insurance Company
PROSPECTUS
May 1, 2002

PRUCO LIFE INSURANCE COMPANY

VARIABLE APPRECIABLE ACCOUNT

Variable
APPRECIABLE
LIFE®
INSURANCE CONTRACTS
This prospectus describes two forms of an individual variable life insurance contract (the “Contract”) offered by Pruco
Life Insurance Company (“Pruco Life”, “us”, “we”, or “our”) under the name Variable Appreciable Life® Insurance.
Pruco Life, a stock life insurance company, is a wholly-owned subsidiary of The Prudential Insurance Company of
America (“Prudential”). The first form of the Contract provides a death benefit that generally remains fixed in an
amount you, as the Contract owner, choose and cash surrender values that vary daily. The second form also provides
cash surrender values that vary daily and a death benefit that will also vary daily. Under both forms of contract, the
death benefit will never be less than the “face amount” of insurance you choose. There is no guaranteed minimum
cash surrender value.

As of May 1, 1992, Pruco Life no longer offered these Contracts for sale.

You may choose to invest your Contract’s premiums and its earnings in one or more of the following ways:

 Invest in one or more of 13 available subaccounts of the Pruco Life Variable Appreciable Account (the “Account”),
each of which invests in a corresponding portfolio of The Prudential Series Fund, Inc. (the“Series Fund”):

Conservative Balanced Government Income Natural Resources

Diversified Bond High Yield Bond Small Capitalization Stock
Equity Jennison Stock Index
Flexible Managed Money Market Value
Global

 Invest in the fixed-rate option, which pays a guaranteed interest rate.

 Invest in the Pruco Life Variable Contract Real Property Account (the “Real Property Account”), described in a
prospectus attached to this one.

This prospectus describes the Contract generally and the Account. The attached prospectus for the Series Fund, and
the Series Fund’s statement of additional information describe the investment objectives and the risks of investing in
the Series Fund portfolios. Pruco Life may add additional investment options in the future. Please read this
prospectus and keep it for future reference.

The Securities and Exchange Commission (“SEC”) maintains a Web site (http://www.sec.gov) that contains material
incorporated by reference and other information regarding registrants that file electronically with the SEC.

Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.

Pruco Life Insurance Company

213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 778-2255

Appreciable Life is a registered mark of Prudential.

 ÆÆOSÆESTUS
SOHTEHTS Page
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS ............................................................................ 1

INTRODUCTION AND SUMMARY .................................................................................................................................. 2

Brief Description of the Contract............................................................................................................................... 2
Charges ........................................................................................................................................................................ 2
Types of Death Benefit ............................................................................................................................................... 4
Premium Payments ..................................................................................................................................................... 4
Lapse and Guarantee Against Lapse ........................................................................................................................ 4

GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE VARIABLE
APPRECIABLE ACCOUNT, AND THE VARIABLE INVESTMENT OPTIONS AVAILABLE
UNDER THE CONTRACT ................................................................................................................................................ 5
Pruco Life Insurance Company ................................................................................................................................. 5
Pruco Life Variable Appreciable Account ................................................................................................................ 5
The Prudential Series Fund, Inc. ............................................................................................................................... 5
Voting Rights ............................................................................................................................................................... 8
The Fixed-Rate Option ................................................................................................................................................ 8
The Pruco Life Variable Contract Real Property Account ...................................................................................... 8
Which Investment Option Should Be Selected? ...................................................................................................... 8

DETAILED INFORMATION FOR CONTRACT OWNERS .............................................................................................. 9

Charges and Expenses ............................................................................................................................................... 9
Requirements for Issuance of a Contract ............................................................................................................... 13
Short-Term Cancellation Right or “Free-Look” ..................................................................................................... 13
Contract Forms ......................................................................................................................................................... 13
Contract Date ............................................................................................................................................................. 14
Premiums ................................................................................................................................................................... 14
Allocation of Premiums ............................................................................................................................................ 16
Dollar Cost Averaging .............................................................................................................................................. 16
Transfers .................................................................................................................................................................... 16
Reduction of Charges for Concurrent Sales to Several Individuals .................................................................... 17
How a Contract's Cash Surrender Value Will Vary ................................................................................................ 17
How a Contract's Death Benefit Will Vary .............................................................................................................. 18
When a Contract Becomes Paid-Up ........................................................................................................................ 19
Flexibility as to Payment of Premiums ................................................................................................................... 20
Surrender of a Contract ............................................................................................................................................ 20
Withdrawal of Excess Cash Surrender Value ........................................................................................................ 20
Increases in Face Amount ........................................................................................................................................ 21
Decreases in Face Amount ...................................................................................................................................... 23
Lapse and Reinstatement ......................................................................................................................................... 23
When Proceeds Are Paid .......................................................................................................................................... 24
Living Needs Benefit ................................................................................................................................................. 24
Illustrations of Cash Surrender Values, Death Benefits, and Accumulated Premiums ..................................... 25
Contract Loans .......................................................................................................................................................... 26
Reports to Contract Owners .................................................................................................................................... 27
Options on Lapse ...................................................................................................................................................... 27
Right to Exchange a Contract for a Fixed-Benefit Insurance Policy ................................................................... 28
Sale of the Contract and Sales Commissions ........................................................................................................ 28
Tax Treatment of Contract Benefits ........................................................................................................................ 28
Tax-Qualified Pension Plans .................................................................................................................................... 30
Legal Considerations Relating to Sex-Distinct Premiums and Benefits ............................................................. 30
Other General Contract Provisions ......................................................................................................................... 30
Riders ......................................................................................................................................................................... 31
Substitution of Series Fund Shares ........................................................................................................................ 31
State Regulation ........................................................................................................................................................ 31
Experts ....................................................................................................................................................................... 32
Litigation and Regulatory Proceedings .................................................................................................................. 32
 Additional Information .............................................................................................................................................. 33
Financial Statements ................................................................................................................................................ 33

DIRECTORS AND OFFICERS ....................................................................................................................................... 34

FINANCIAL STATEMENTS OF THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF

PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT................................................................................................. A1

CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY

AND ITS SUBSIDIARIES............................................................................................................................................... B1
 DEFIHITIOHS OF SÆESIAL TEÆMS
USED IH THIS ÆÆOSÆESTUS
attained age— The insured’s age on the Contract
date plus the number of Contract years since then.
cash surrender value—The amount payable to the
Contract owner upon surrender of the Contract. It is
equal to the Contract Fund minus any Contract debt
and applicable charges during the first 10 Contract
years or 10 years after an increase in the face amount
of insurance.
Contract—Pruco Life Variable Appreciable Life
Insurance Policy, an individual variable life insurance
contract.
Contract anniversary—The same date as the
Contract date in each later year.
Contract date—The date the Contract is issued, as
specified in the Contract.
Contract debt—The principal amount of all
outstanding loans plus any interest we have charged
that is not yet due and that we have not yet added to
the loan.
Contract Fund—The total amount at any time credited
to the Contract. On any date, it is equal to the sum of
the amounts in all variable investment options and the
fixed-rate option, and the principal amount of any
Contract debt plus any interest earned thereon.
Contract owner— You. Unless a different owner is
named in the application, the owner of the Contract is
the insured.
Contract year—A year that starts on the Contract date
or on a Contract anniversary.
death benefit—The amount payable upon the death of
the insured before the deduction of any outstanding
Contract debt.
face amount—The amount[s] of life insurance as
shown in the Contract's schedule of face amounts.
fixed-rate option— An investment option under which
interest is accrued daily at a rate that Pruco Life
declares periodically, but not less than an effective
annual rate of 4%.
1
issue age—The insured's age as of the Contract date.
loan value—The maximum amount that a Contract
owner may borrow.
Monthly date—The Contract date and the same date
in each subsequent month.
Pruco Life Insurance Company — Us, we, our,
Pruco Life. The company offering the contract.
Pruco Life Variable Appreciable Account (the
"Account")—A separate account of Pruco Life
registered as a unit investment trust under the
Investment Company Act of 1940.
The Prudential Series Fund, Inc. (the “Series
Fund”)—A mutual fund with separate portfolios, one or
more of which may be chosen as an underlying
investment for the Contract.
subaccount—An investment division of the Account,
the assets of which are invested in the shares of the
corresponding portfolio of the Series Fund.
us, we, our—Pruco Life Insurance Company ("Pruco
Life").
valuation period—The period of time from one
determination of the value of the amount invested in a
subaccount to the next. Such determinations are
made when the net asset values of the portfolios of the
Series Fund are calculated, which is generally at 4:00
p.m. Eastern time on each day during which the New
York Stock Exchange is open.
variable investment option— Any of the portfolios
available in the Series Fund and/or the Pruco Life
Variable Contract Real Property Account.
you— The owner of the Contract.
 IHTÆODUSTIOH AHD SUMMAÆY
This Summary provides a brief overview of the more significant aspects of the Contract. We provide further detail in
the subsequent sections of this prospectus and in the Contract.

BLi#f D#s◆Liption of th# SontL&◆t

As of May 1, 1992, Pruco Life no longer offered these Contracts for sale.

The Variable Appreciable Life Insurance Contract (the “Contract”) is issued by Pruco Life Insurance Company
("Pruco Life", “we”, “us”, or “our”). The Contract is a form of flexible premium variable life insurance. It is based on a
Contract Fund, the value of which changes every business day. The Contract Fund is the total amount credited to a
specific Contract. On any date it is equal to the sum of the amounts invested in the variable investment options and
the fixed-rate option, and the principal amount of any Contract debt plus any interest earned thereon. Contract debt is
the principal amount of all outstanding loans plus any interest accrued. You will, however, have to pay a surrender
charge if you decide to surrender the Contract during the first 10 Contract years or 10 years after an increase in the
face amount of insurance.

A broad objective of the Contract is to provide benefits that will increase in value if favorable investment results are
achieved. You may invest premiums in one or more of the 13 available subaccounts, in the fixed-rate option, or in the
Real Property Account.

Although the value of your Contract Fund will increase if there is favorable investment performance in the variable
investment options you select, investment returns in the variable investment options are NOT guaranteed. There is a
risk that investment performance will be unfavorable and that the value of your Contract Fund will decrease. The risk
will be different, depending upon which investment options you choose. See Which Investment Option Should Be
Selected?, page 8. If you select the fixed-rate option, Pruco Life credits your account with a declared rate or rates of
interest. You assume the risk that the rate may change, although it will never be lower than an effective annual rate of
4%.

Variable life insurance contracts are unsuitable as short-term savings vehicles. Withdrawals and loans may negate
any guarantees against lapse (see Lapse and Reinstatement, page 23) and possibly may result in adverse tax
consequences. See Tax Treatment of Contract Benefits, page 28.

Sh&Lg#s

We deduct certain charges from each premium payment and from the amounts held in the designated investment
options. In addition, Pruco Life makes additional charges if a Contract lapses or is surrendered during the first 10
Contract years or 10 years after an increase in the face amount of insurance. All these charges, which are largely
designed to cover insurance costs and risks as well as sales and administrative expenses, are fully described under
Charges and Expenses on page 9. In brief, and subject to that fuller description, the following diagram outlines the
maximum charges which Pruco Life may make:

ÆL#niun Æ&yn#nt

 less a charge for taxes attributable to premiums

 less $2 processing fee
 We deduct a sales charge from the Contract Fund of up to
5% of the portion of the premium remaining after deducting
the $2 processing fee.

2
 H#t ÆL#niun Anount
 To be invested in one or a combination of:
 The invested portfolios of the Series Fund
 The fixed-rate option
 The Real Property Account

D&ily Sh&Lg#s
 We deduct management fees and expenses from the Series Fund and, if applicable, from the Real
Property assets. See Underlying Portfolio Expenses chart, below, and Pruco Life Variable Contract
Real Property Account, page 8.
 We deduct a daily mortality and expense risk charge, equivalent to an annual rate of up to 0.60% from
assets in the variable investment options.

Monthly Sh&Lg#s
 We reduce the Contract Fund by a guaranteed minimum death benefit risk charge of not more than $0.01
per $1,000 of the face amount of insurance.
 We reduce the Contract Fund by an administrative charge of up to $2.50 per Contract and up to $0.02 per
$1,000 of face amount of insurance.
 We deduct a charge for anticipated mortality, with the maximum charge based on 1980 CSO Tables.
 If the Contract includes riders, we deduct rider charges from the Contract Fund.
 If the rating class of the insured results in an extra charge, we will deduct that charge from the Contract
Fund.

Æossibl# Sh&Lg#s
 During the first 10 years or 10 years after an increase in the face amount of insurance, if the Contract
lapses or is surrendered, we assess a contingent deferred sales charge. The maximum contingent
deferred sales charges are reduced for Contracts that have been in-force for more than five years.
 During the first 10 years, if the Contract lapses or is surrendered, we assess a contingent deferred
administrative charge; this charge begins to decline uniformly after the fifth Contract year so that
it disappears on the 10th Contract anniversary.
 We assess an administrative processing charge equal to the lesser of $15 or 2% for each withdrawal of
excess cash surrender value.

Und#Llying ÆoLtfolio Exp#ns#s

Investment Other Total
Portfolio Contractual Total Actual Expenses*
Advisory Fee Expenses
Expenses

Conservative Balanced 0.55% 0.03% 0.58% 0.40%

Diversified Bond 0.40% 0.04% 0.44% 0.40%
Equity 0.45% 0.04% 0.49% 0.40%
Flexible Managed 0.60% 0.04% 0.64% 0.40%
Global 0.75% 0.09% 0.84% 0.84%
Government Income 0.40% 0.07% 0.47% 0.47%
High Yield Bond 0.55% 0.05% 0.60% 0.60%
Jennison 0.60% 0.18% 0.64% 0.64%
Money Market 0.40% 0.03% 0.43% 0.40%
Natural Resources 0.45% 0.07% 0.52% 0.52%
Small Capitalization Stock 0.40% 0.08% 0.48% 0.48%
Stock Index 0.35% 0.04% 0.39% 0.39%
Value 0.40% 0.04% 0.44% 0.44%

3
 * Some investment management fees and expenses charged to the Series Fund may be higher than those that were previously charged to the
Pruco Life Series Fund, Inc. (0.40%), in which the Account previously invested. Pruco Life currently makes payments to the following five
subaccounts so that the portfolio expenses indirectly borne by a Contract owner investing in the, Conservative Balanced, Diversified Bond,
Equity, Flexible Managed, and Money Market Portfolios will not exceed 0.40%. No such offset will be made with respect to the remaining
portfolios, which had no counterparts in the Pruco Life Series Fund, Inc.

Typ#s of D#&th B#n#fit

You choose either of two Contract Forms. Under a newer version, sold in most jurisdictions beginning in September
1986, the death benefit may be increased to ensure that the Contract continues to satisfy the Internal Revenue Code’s
definition of life insurance. Under Contract Form A, the death benefit remains fixed in amount (unless the Contract
becomes paid-up) and only the cash surrender value will vary with investment experience. Under Contract Form B,
both the death benefit and the cash surrender value will vary with investment experience. However, the death benefit
will never be less than the face amount regardless of investment experience. There is no minimum cash surrender
value under either form of the Contract. (Unless we specifically state otherwise, all descriptions of and references to
the "Contract" apply to both old and new Form A and new Form B Contracts.)

ÆL#niun Æ&yn#nts

You have flexibility with respect to the payment of premiums. The Contract sets forth Scheduled Premiums payable
annually, semi-annually, quarterly or monthly. But you are generally permitted, within very broad limits, to pay greater
than Scheduled Premiums. However, the payment of premiums in excess of Scheduled Premiums may cause the
Contract to be classified as a Modified Endowment Contract for federal income tax purposes. See Premiums, page
14 and Tax Treatment of Contract Benefits, page 28. The net portion of such payments will promptly be invested in
the manner you previously selected. Cash surrender values will generally be increased whenever premiums are paid,
unless earlier unfavorable investment experience must first be offset. The amount payable upon death under Contract
Form B will also, generally, be increased by the payment of premiums.

L&ps# &nd Gu&L&nt## Ag&inst L&ps#

As long as you pay Scheduled Premiums on or before the due dates (or within a 61-day grace period after the
scheduled due date) and missed premiums are made up later with interest, the Contract will not lapse, even if
investment experience is unfavorable. Thus, the payment of Scheduled Premiums guarantees insurance protection at
least equal to the face amount of the Contract. However, the failure to pay a minimum Scheduled Premium will not
necessarily result in lapse of the Contract. If the net investment experience has been greater than the 4% assumed
net rate of return used by Pruco Life’s actuaries in designing this Contract, with a consequent increase in the amount
invested under the Contract, and the Contract owner then fails to pay premiums when due, Pruco Life will use the
"excess" amount to pay the charges due under the Contract and thus keep the Contract in-force. See Lapse and
Reinstatement, page 23. In this case, so long as the excess amount is sufficient, the Contract will not lapse despite
the owner’s failure to pay Scheduled Premiums.

The amount of the Scheduled Premium, for a specific face amount of insurance, depends upon the insured’s sex
(except where unisex rates apply), age at issue, and risk classification. The Scheduled Premium cannot be increased
until the Contract anniversary after the insured’s 65th birthday or, if later, 10 years from the date the Contract is issued.
A new, higher Scheduled Premium, called the "second premium amount," is payable after this period. The second
premium amount will be stated in each Contract. It is calculated on the assumptions that only Scheduled Premiums
have been paid, and they have been paid when due, that maximum mortality charges (covering the cost of insurance
for the period in question) and expense charges have been deducted, and that the net investment return upon the
amount invested under the Contract has been equal to the 4% assumed net rate of return. If the amount invested
under the Contract net of any excess premiums is higher than would be the case if the above conservative
assumptions are borne out by experience, premiums after the insured’s 65th birthday (or at 10 years after the issue
date, if later) will be lower than the second premium amount stated in the Contract (and may or may not be higher than
the initial Scheduled Premium).

The replacement of life insurance is generally not in your best interest. In most cases, if you require
additional coverage, the benefits of your existing contract can be protected by purchasing additional
insurance or a supplemental contract. If you are considering replacing a contract, you should compare the
benefits and costs of supplementing your existing contract with the benefits and costs of purchasing another
contract and you should consult a qualified tax adviser.

4
This prospectus was only offered in jurisdictions in which the offering was lawful. No person is authorized to
make any representations in connection with this offering other than those contained in this prospectus, The
Prudential Series Fund prospectus and statement of additional information, and the prospectus for the Real
Property Account.

GEHEÆAL IHFOÆMATIOH ABOUT ÆÆUSO LIFE IHSUÆAHSE

SOMÆAHY, ÆÆUSO LIFE VAÆIABLE AÆÆÆESIABLE ASSOUHT,
AHD THE VAÆIABLE IHVESTMEHT OÆTIOHS AVAILABLE UHDEÆ
THE SOHTÆAST

ÆLu◆o Lif# InsuL&n◆# Sonp&ny

Pruco Life Insurance Company (“Pruco Life”, “us”, “we”, or “our”) is a stock life insurance company, organized in 1971
under the laws of the State of Arizona. It is licensed to sell life insurance and annuities in the District of Columbia,
Guam, and in all states except New York.

Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of America ("Prudential"), a New Jersey
stock life insurance company that has been doing business since 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (“Prudential Financial”), a New Jersey insurance holding company. As Pruco
Life’s ultimate parent, Prudential Financial exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential, nor any other related company has any
legal responsibility to pay amounts that Pruco Life may owe under the contract or policy.

ÆLu◆o Lif# V&Li&bl# AppL#◆i&bl# A◆◆ount

We have established a separate account, the Pruco Life Variable Appreciable Account (the “Account”), to hold the
assets that are associated with the Contracts. The Account was established on January 13, 1984 under Arizona law
and is registered with the Securities and Exchange Commission (“SEC”) under the Investment Company Act of 1940
(“1940 Act”) as a unit investment trust, which is a type of investment company. The Account meets the definition of a
"separate account" under the federal securities laws. The Account holds assets that are segregated from all of Pruco
Life's other assets.

Pruco Life is also the legal owner of the assets in the Account. Pruco Life will maintain assets in the Account with a
total market value at least equal to the reserve and other liabilities relating to the variable benefits attributable to the
Account. These assets may not be charged with liabilities which arise from any other business Pruco Life conducts. In
addition to these assets, the Account's assets may include funds contributed by Pruco Life to commence operation of
the Account and may include accumulations of the charges Pruco Life makes against the Account. From time to time
these additional assets will be transferred to Pruco Life's general account. Before making any such transfer, Pruco Life
will consider any possible adverse impact the transfer might have on the Account.

The obligations to Contract owners and beneficiaries arising under the Contract are general corporate obligations of
Pruco Life.

Currently, you may invest in one or a combination of 13 subaccounts. When you choose a subaccount, we purchase
shares of the Series Fund which are held as an investment for that option. We hold these shares in the Account. We
may add additional subaccounts in the future. The Account's financial statements begin on page A1.

Th# ÆLud#nti&l S#Li#s Fund, In◆-

The Prudential Series Fund, Inc. (the “Series Fund”) is registered under the 1940 Act as an open-end diversified
management investment company. Its shares are currently sold only to separate accounts of Prudential and certain
other insurers that offer variable life insurance and variable annuity contracts. On October 31, 1986, the Pruco Life
Series Fund, Inc., an open-end diversified management investment company, which sold its shares only to separate
accounts of Pruco Life and Pruco Life Insurance Company of New Jersey (“Pruco Life of New Jersey”), was merged
into the Series Fund. Prior to that date, the Account invested only in shares of Pruco Life Series Fund, Inc. The
Account will purchase and redeem shares from the Series Fund at net asset value. Shares will be redeemed to the
extent necessary for Pruco Life to provide benefits under the Contracts and to transfer assets from one subaccount to
another, as requested by Contract owners. Any dividend or capital gain distribution received from a portfolio of the
Series Fund will be reinvested immediately at net asset value in shares of that portfolio and retained as assets of the
corresponding subaccount.
5
The Series Fund has a separate prospectus that is provided with this prospectus. You should read the Series
Fund prospectus before you decide to allocate assets to the Series Fund subaccounts. There is no
assurance that the investment objectives of the Series Fund portfolios will be met.

Listed below are the available portfolios of the Series Fund and their investment objectives:

 Conservative Balanced Portfolio: The investment objective is a total investment return consistent with a
conservatively managed diversified portfolio. The Portfolio invests in a mix of equity securities, debt obligations
and money market instruments.

 Diversified Bond Portfolio: The investment objective is a high level of income over a longer term while providing
reasonable safety of capital. The Portfolio normally invests at least 80% of its investable assets in higher grade
debt obligations and high quality money market investments.

 Equity Portfolio: The investment objective is capital appreciation. The Portfolio normally invests at least 80% of
its investable assets in common stocks of major established corporations as well as smaller companies that we
believe offer attractive prospects of appreciation.

 Flexible Managed Portfolio: The investment objective is a high total return consistent with an aggressively
managed diversified portfolio. The Portfolio invests in a mix of equity securities, debt obligations and money
market instruments.

 Global Portfolio: The investment objective is long-term growth of capital. The Portfolio invests primarily in
common stocks (and their equivalents) of foreign and U.S. companies.

 Government Income Portfolio: The investment objective is a high level of income over the longer term
consistent with the preservation of capital. The Portfolio normally invests at least 80% of its investable assets in
U.S. government securities, including intermediate and long-term U.S. Treasury securities and debt obligations
issued by agencies or instrumentalities established by the U.S. government and collateralized mortgage
obligations.

 High Yield Bond Portfolio: The investment objective is a high total return. The Portfolio normally invests at least
80% if its investable assets in high yield/high risk debt securities.

 Jennison Portfolio (formerly Prudential Jennison Portfolio): The investment objective is long-term growth of
capital. The Portfolio invests primarily in equity securities of major, established corporations that we believe offer
above-average growth prospects.

 Money Market Portfolio: The investment objective is maximum current income consistent with the stability of
capital and the maintenance of liquidity. The Portfolio invests in high quality short-term money market instruments
issued by the U.S. government or its agencies, as well as domestic and foreign corporations and banks.

 Natural Resources Portfolio: The investment objective is long-term growth of capital. The Portfolio normally
invests at least 80% of its investable assets in common stocks and convertible securities of natural resource
companies and securities that are related to the market value of some natural resource.

 Small Capitalization Stock Portfolio: The investment objective is to achieve long-term growth of capital. The
Portfolio invests primarily in equity securities of publicly-traded companies with small market capitalizations. The
Portfolio attempts to duplicate the price and yield performance of the Standard & Poor’s Small Capitalization 600
Stock Index (the “S&P SmallCap 600 Index”) by investing at least 80% of its investable assets in all or a
representative sample of stocks in the S&P SmallCap 600 Index.

 Stock Index Portfolio: The investment objective is investment results that generally correspond to the
performance of publicly-traded common stocks. The Portfolio attempts to duplicate the price and yield of the
Standard & Poor’s 500 Composite Stock Price Index (the “S&P 500”) by investing at least 80% of its investable
assets in S&P 500 stocks.

6
 Value Portfolio: The investment objective is capital appreciation. The Portfolio invests primarily in common
stocks that are trading below their underlying asset value, cash generating ability, and overall earnings and
earnings growth.

Prudential Investments LLC (“PI”), an indirect wholly-owned subsidiary of Prudential Financial, serves as the overall
investment adviser for the Series Fund. PI will furnish investment advisory services in connection with the
management of the Series Fund portfolios under a “manager-of-managers” approach. Under this structure, PI is
authorized to select (with approval of the Series Fund’s independent directors) one or more sub-advisers to handle the
actual day-to-day investment management of each Portfolio. PI’s business address is 100 Mulberry Street, Gateway
Center Three, Newark, New Jersey 07102.

Prudential Investment Management, Inc. (“PIM”), also an indirect wholly-owned subsidiary of Prudential Financial,
serves as the sole sub-adviser for the Conservative Balanced, the Diversified Bond, the Flexible Managed, the
Government Income, the High Yield Bond, the Money Market, the Small Capitalization Stock, the Stock Index, and the
Zero Coupon Bond 2005 Portfolios. PIM’s business address is 100 Mulberry Street, Gateway Center Two, Newark,
New Jersey 07102.

Deutsche Asset Management, Inc. (“DAMI”) serves as a sub-adviser for approximately 25% of the assets of the Value
Portfolio. DAMI is a wholly-owned subsidiary of Deutsche Bank AG. DAMI’s business address is 280 Park Avenue,
New York, New York 10017.

GE Asset Management Incorporated (“GEAM”) serves as a sub-adviser to approximately 25% of the assets of the
Equity Portfolio. GEAM’s ultimate parent is General Electric Company. GEAM’s business address is 3003 Summer
Street, Stamford, Connecticut 06904.

Jennison Associates LLC (“Jennison”), also an indirect wholly-owned subsidiary of Prudential Financial, serves as the
sole sub-adviser for the Global, the Jennison and the Natural Resources Portfolios. Jennison serves as a sub-adviser
for a portion of the assets of the Equity and the Value Portfolios. Jennison’s business address is 466 Lexington
Avenue, New York, New York 10017.

Salomon Brothers Asset Management, Inc. (“Salomon”) serves as a sub-adviser for a portion of the assets of the
Equity Portfolio. It is expected that under normal circumstances Salomon will manage approximately 25% of the
Portfolio. Salomon is a part of the global asset management arm of Citigroup, Inc. which was formed in 1998 as a
result of the merger of Travelers Group and Citicorp, Inc. Salomon’s business address is 388 Greenwich Street, New
York, New York 10013.

Victory Capital Management, Inc. (“Victory”) (formerly Key Asset Management, Inc.) serves as a sub-adviser for
approximately 25% of the assets of the Value Portfolio. Victory is a wholly-owned subsidiary of KeyCorp, Inc. Victory’s
business address is 127 Public Square, Cleveland, Ohio 44114.

As an investment adviser, PI charges the Series Fund a daily investment management fee as compensation for its
services. PI pays each sub-adviser out of the fee that PI receives from the Series Fund. In addition to the investment
management fee, each portfolio incurs certain expenses, such as accounting and custodian fees. See Charges and
Expenses, page 9.

In the future it may become disadvantageous for both variable life insurance and variable annuity contract separate
accounts to invest in the same underlying mutual fund. Neither the companies that invest in the Series Fund nor the
Series Fund currently foresees any such disadvantage. The Series Fund's Board of Directors intends to monitor
events in order to identify any material conflict between variable life insurance and variable annuity contract owners
and to determine what action, if any, should be taken. Material conflicts could result from such things as: (1)changes in
state insurance law; (2) changes in federal income tax law; (3) changes in the investment management of any portfolio
of the Series Fund; or (4) differences between voting instructions given by variable life insurance and variable annuity
contract owners.

7
Voting Æights

We are the legal owner of the shares in the Series Fund associated with the subaccounts. However, we vote the
shares in the Series Fund according to voting instructions we receive from Contract owners. We will mail you a proxy,
which is a form you need to complete and return to us to tell us how you wish us to vote. When we receive those
instructions, we will vote all of the shares we own on your behalf in accordance with those instructions. We will vote
the shares for which we do not receive instructions and shares that we own, in the same proportion as the shares for
which instructions are received. We may change the way your voting instructions are calculated if it is required by
federal regulation. Should the applicable federal securities laws or regulations, or their current interpretation, change
so as to permit Pruco Life to vote shares of the Series Fund in its own right, it may elect to do so.

Th# Fix#d-Æ&t# Option

Because of exemptive and exclusionary provisions, interests in the fixed-rate option under the Contract have
not been registered under the Securities Act of 1933 and the general account has not been registered as an
investment company under the Investment Company Act of 1940. Accordingly, interests in the fixed-rate
option are not subject to the provisions of these Acts, and Pruco Life has been advised that the staff of the
SEC has not reviewed the disclosure in this prospectus relating to the fixed-rate option. Any inaccurate or
misleading disclosure regarding the fixed-rate option may, however, be subject to certain generally applicable
provisions of federal securities laws.

You may choose to allocate, either initially or by transfer, all or part of your Contract Fund to a fixed-rate option. This
amount becomes part of Pruco Life’s general account. The general account consists of all assets owned by Pruco Life
other than those in the Account and in other separate accounts that have been or may be established by Pruco Life.
Subject to applicable law, Pruco Life has sole discretion over the investment of the general account assets. Contract
owners do not share in the investment experience of those assets. Instead, Pruco Life guarantees that the part of the
Contract Fund allocated to the fixed-rate option will accrue interest daily at an effective annual rate that Pruco Life
declares periodically, but not less than an effective annual rate of 4%.

Transfers from the fixed-rate option are subject to strict limits. See Transfers, page 16. The payment of any cash
surrender value attributable to the fixed-rate option may be delayed up to six months. See When Proceeds are Paid,
page 24.

Th# ÆLu◆o Lif# V&Li&bl# SontL&◆t Æ#&l ÆLop#Lty A◆◆ount

The Real Property Account is a separate account of Pruco Life. This account, through a general partnership formed by
Prudential and two of its wholly-owned subsidiaries, Pruco Life and Pruco Life of New Jersey, invests primarily in
income-producing real property such as office buildings, shopping centers, agricultural land, hotels, apartments or
industrial properties. It also invests in mortgage loans and other real estate-related investments, including sale-
leaseback transactions. The objectives of the Real Property Account and the Partnership are to preserve and protect
capital, provide for compounding of income as a result of reinvestment of cash flow from investments, and provide for
increases over time in the amount of such income through appreciation in the asset value.

The Partnership has entered into an investment management agreement with Prudential, under which Prudential
selects the properties and other investments held by the Partnership. Prudential charges the Partnership a daily fee
for investment management which amounts to 1.25% per year of the average daily gross assets of the Partnership.

A full description of the Real Property Account, its management, policies, restrictions, charges and expenses,
investment risks, investment objectives, and all other aspects of the Real Property Account’s and the
Partnership’s operations is contained in the attached prospectus for the Real Property Account. It should be
read together with this prospectus by any Contract owner considering the real estate investment option.
There is no assurance that the investment objectives of the Real Property Account will be met.

Whi◆h Inv#stn#nt Option Should B# S#l#◆t#d?

Historically, for investments held over relatively long periods, the investment performance of common stocks has
generally been superior to that of short or long-term debt securities, even though common stocks have been subject to
much more dramatic changes in value over short periods of time. Accordingly, the Equity, Global, Jennison, Natural
Resources, Small Capitalization Stock, Stock Index, or Value Portfolios may be desirable options for Contract owners
who are willing to accept such volatility in their Contract values. Each of these equity portfolios involves different
investment risks, policies, and programs.
8
You may prefer the somewhat greater protection against loss of principal (and reduced chance of high total return)
provided by the Diversified Bond or Government Income Portfolios. Or, you may want even greater safety of principal
and may prefer the Money Market Portfolio or the fixed-rate option, recognizing that the level of short-term rates may
change rather rapidly. If you are willing to take risks and possibly achieve a higher total return, you may prefer the
High Yield Bond Portfolio, recognizing that the risks are greater for lower quality bonds with normally higher yields. You
may wish to divide your invested premium among two or more of the portfolios. You may wish to obtain diversification
by relying on Prudential’s judgment for an appropriate asset mix by choosing the Conservative Balanced or Flexible
Managed Portfolios. The Real Property Account permits diversification to your investment under the Contract to
include an interest in a pool of income-producing real property, and real estate is often considered to be a hedge
against inflation.

Your choice should take into account how willing you are to accept investment risks, how your other assets are
invested, and what investment results you may experience in the future. You should consult your Pruco Life
representative from time to time about choices available to you under the Contract. Pruco Life recommends against
frequent transfers among the several options. Experience generally indicates that "market timing" investing,
particularly by non-professional investors, is likely to prove unsuccessful.

DETAILED IHFOÆMATIOH FOÆ SOHTÆAST OWHEÆS

Sh&Lg#s &nd Exp#ns#s

This section provides a more detailed description of each charge that is described briefly in the chart on page2.

In several instances we use the terms “maximum charge” and “current charge.” The “maximum charge,” in each
instance, is the highest charge that Pruco Life is entitled to make under the Contract. The “current charge” is the lower
amount that Pruco Life is now charging. If circumstances change, Pruco Life reserves the right to increase each
current charge, up to the maximum charge, without giving any advance notice.

All of the charges we make, whether deducted from premiums or from the Contract Fund, are described below:

1. We deduct a charge of $2 from each premium payment to cover the cost of collecting and processing
premiums. Thus, if you pay premiums annually, you will incur lower aggregate processing charges than those
who pay premiums more frequently. During 2001, 2000, and 1999, Pruco Life received a total of
approximately $2,939,000, $2,937,000, and $1,979,000, respectively, in processing charges.

2. We deduct a charge of up to 5% from each premium payment for sales expenses. This charge, often called a
“sales load”, is deducted to compensate us for the costs of selling the Contracts, including commissions,
advertising, and the printing and distribution of prospectuses and sales literature. We will deduct part of this
sales load from each premium received in an amount up to 5% of the portion of the premium remaining after
the $2 administrative charge has been deducted. We also deduct 5% of each additional premium, whether
scheduled or unscheduled. We will deduct the remainder of the sales load only if the Contract is surrendered
or stays in default past its days of grace. This second part is called the deferred sales charge. However, we
will not deduct the deferred sales charge for Contracts that lapse or are surrendered on or after the Contract's
10th anniversary. The deferred sales charge will be reduced for Contracts that lapse or are surrendered
sometime between the eighth month of the sixth year and the 10th anniversary. No deferred sales charge is
applicable to the death benefit, no matter when that becomes payable.

For Contracts under which premiums are payable annually, we will charge the maximum deferred sales charge
if the Contract lapses or is surrendered, until the seventh month of the sixth Contract year, or an increase in
the face amount of insurance. Thereafter, the sales charge will be the maximum charge reduced uniformly
until it becomes zero at the end of the 10th Contract year. More precisely, the deferred sales charge will be
the maximum charge reduced by a factor equal to the number of complete months that have elapsed between
the end of the sixth month in the Contract's sixth year and the date of surrender or lapse, divided by 54 (since
there are 54 months between that date and the Contract's 10th anniversary). The following table shows
illustrative deferred sales load charges that will be made when such Contracts are surrendered or lapse.

9
 Th# D#f#LL#d S&l#s Whi◆h is EQu&l to th#
FoL SontL&◆ts Sh&Lg# Will FolloWing Æ#L◆#nt&g# of th#
SuLL#nd#L#d b# th# FolloWing S◆h#dul#d
DuLing Æ#L◆#nt&g# ÆL#niuns Du# to D&t# of
of On# S◆h#dul#d SuLL#nd#L
Annu&l ÆL#niun

Entire Year 1 25% 25.00%

Entire Year 2 30% 15.00%
Entire Year 3 35% 11.67%
Entire Year 4 40% 10.00%
Entire Year 5 45% 9.00%
First 7 Months of Year 6 45% 7.50%
First Month of Year 7 40% 5.71%
First Month of Year 8 30% 3.75%
First Month of Year 9 20% 2.22%
First Month of Year 10 10% 1.00%
First Month of Year 11
and Thereafter 0% 0.00%

For Contracts under which premiums are payable more frequently than annually, the deferred sales charge will
be 25% of the first year’s Scheduled Premiums due on or before the date of surrender or lapse and 5% of the
Scheduled Premiums for the second through fifth Contract years due on or before the date of surrender or
lapse. Thus, for such Contracts the maximum deferred sales charge will also be equal to 9% of the total
Scheduled Premiums for the first five Contract years. This amount will be higher in dollar amount than it would
have been had premiums been paid annually because the total of the Scheduled Premiums is higher. See
Premiums, page 14. To compensate for this, the reduction in the deferred sales charge will start slightly
earlier for Contracts under which premiums are paid semi-annually, still earlier if premiums are paid quarterly
and even earlier if premiums are paid monthly. The reductions are graded smoothly so that the dollar amount
of the deferred sales charge for two persons of the same age, sex, contract size, and Contract Date, will be
identical beginning in the seventh month of the sixth Contract year without regard to the frequency at which
premiums were paid.

For purposes of determining the deferred sales charge, the Scheduled Premium is the premium payable for an
insured in the preferred rating class, even if the insured is in a higher rated risk class. Moreover, if premiums
have been paid in excess of the Scheduled Premiums, the charge is based upon the Scheduled Premiums. If
a Contract is surrendered when less than the aggregate amount of the Scheduled Premiums due on or before
the date of surrender has been paid, the deferred sales charge percentages will be applied to the premium
payments due on or before the fifth anniversary date that were actually paid, whether timely or not, before
surrender. During 2001, 2000, and 1999, Pruco Life received a total of approximately $0, $0, and $0,
respectively, in sales load charges.

We waive the portion of the sales load deducted from each premium (5% of the portion of the premium
remaining after the $2 processing charge has been deducted) for premiums paid after total premiums paid
under the Contract exceed five years of Scheduled Premiums on an annual basis. Thus, with respect to a
premium paid after that total is reached, only the 2.5% premium tax charge and the $2 processing charge is
deducted before the premium is allocated to the Account, fixed-rate option, or the Real Property Account,
according to your instructions. We may, on a uniform and non-contractual basis, withdraw or modify this
concession, although we do not currently intend to do so. If you elect to increase the face amount of your
Contract, the rules governing the non-guaranteed waiver of the 5% front-end sales load will apply separately to
the base Contract and the increase, as explained under Increases in Face Amount on page 21.

3. We deduct a charge from each premium payment for state and local premium-based taxes. This charge is
equal to 2.5% of the premium remaining after the $2 processing charge has been deducted. (The 7.5%
deduction referred to on page 16 is made up of the 5% sales load charge and the 2.5% premium tax charge.)
The premium tax charge is Pruco Life’s estimate of the average burden of state taxes generally. The rate
applies uniformly to all contract owners without regard to state of residence. State premium tax rates vary
from jurisdiction to jurisdiction and generally range from 0% to 5% (but in some instances may exceed 5%).
Pruco Life may collect more for this charge than it actually pays for premium taxes. During 2001, 2000, and
1999, Pruco Life received a total of approximately $3,656,000, $3,719,000, and $4,125,000, respectively, in
charges for payment of state and local premium taxes.

10
4. On each Monthly date, we reduce the Contract Fund by an expense charge of $2.50 per Contract and up to
$0.02 per $1,000 of face amount (excluding the automatic increase under Contracts issued on insureds of 14
years of age or less). Currently, this $0.02 per $1,000 charge will not be greater than $2 per month. We
currently waive this $0.02 per $1,000 charge for Contracts issued after June 1, 1987 on a Pru-Matic Plan
basis. Thus, for a Contract with the minimum face amount of $60,000, not issued on a Pru-Matic Plan basis,
the aggregate amount deducted each year will be $44.40. This charge is to compensate Pruco Life for
administrative expenses incurred, among other things, for processing claims, paying cash surrender values,
making Contract changes, keeping records, and communicating with Contract owners. We will not make this
charge if your Contract becomes paid-up or has been continued in-force, after lapse, as variable reduced
paid-up insurance. During 2001, 2000, and 1999, Pruco Life received a total of approximately $11,270,000,
$13,059,000, and $13,813,000, respectively, in monthly administrative charges.

5. On each Monthly date, we reduce the Contract Fund by a charge of $0.01 per $1,000 of face amount
(excluding the automatic increase under Contracts issued on insureds of 14 years of age or less). We deduct
this charge for the risk we assume by guaranteeing that, no matter how unfavorable investment experience
may be, the death benefit will never be less than the face amount, provided Scheduled Premiums are paid on
or before the due date or during the grace period. We do not make this charge if your Contract becomes paid-
up or has been continued in-force, after lapse, as variable reduced paid-up insurance. During 2001, 2000,
and 1999, Pruco Life received a total of approximately $34,000,000, $246,000, and $1,049,000, respectively,
for this risk charge.

6. On each Monthly date, we deduct a mortality charge from the Contract Fund to cover anticipated mortality
costs. When an insured dies, the amount paid to the beneficiary is larger than the Contract Fund and
significantly larger if the insured dies in the early years of a Contract. The mortality charges enable Pruco Life
to pay this larger death benefit. We determine the charge by multiplying the “net amount at risk” under a
Contract (the amount by which the Contract's death benefit, computed as if there were neither riders nor
Contract debt, exceeds the Contract Fund) by a rate based upon: (1)the insured's sex (except where unisex
rates apply); (2) current attained age; and (3) the anticipated mortality for that class of persons. The maximum
rate that Pruco Life may charge is based upon the 1980 CSO Tables. We may determine that a lesser amount
than that called for by these mortality tables will be adequate to defray anticipated mortality costs for insureds
of particular ages. If this occurs, we may make a lower mortality charge for such persons. We reserve the
right to charge full mortality charges based on the applicable 1980 CSO Table, and any lower current mortality
charges are not applicable to Contracts in-force pursuant to an option on lapse. See Options on Lapse, page
27. If a Contract has a face amount of at least $100,000 and the insured has met strict underwriting
requirements so that the Contract is in-force on a “Select Rating” basis for the particular risk classification,
current mortality charges for all ages may be lower still.

Certain Contracts, for example Contracts issued in connection with tax-qualified pension plans, may be issued
on a “guaranteed issue” basis and may have current mortality charges which are different from those mortality
charges for Contracts which are individually underwritten. These Contracts with different current mortality
charges may be offered to categories of individuals meeting eligibility guidelines determined by Pruco Life.

7. We deduct a charge for assuming mortality and expense risks. We deduct daily from the assets of each of the
subaccounts of the Account and/or from the subaccount of the Real Property Account relating to this Contract,
a percentage of those assets equivalent to an effective annual rate of 0.60%. The mortality risk assumed is
that insureds may live for a shorter period of time than Pruco Life estimated. The expense risk assumed is
that expenses incurred in issuing and administering the Contract will be greater than Pruco Life estimated.
During 2001, 2000, and 1999, Pruco Life received a total of approximately $17,692,000, $19,522,000, and
$19,654,000, respectively, in mortality and expense risk charges. This charge is not assessed against
amounts allocated to the fixed-rate option.

8. We deduct an administrative charge of $5 for each $1,000 of face amount of insurance (excluding the
automatic increase under Contracts issued on insureds of 14 years of age or less) upon lapse or surrender of
the Contract. This charge is made to cover the costs of: (1) processing applications; (2) conducting medical
examinations; (3) determining insurability and the insured's risk class; and (4) establishing records relating to
the Contract. However, this charge will not be assessed upon issuance of the Contract, nor will it ever be
deducted from any death benefit payable under the Contract. Rather, it will be deducted only if the Contract is
surrendered or lapses when it is in default past its days of grace, and even then it will not be deducted at all for
Contracts that stay in-force through the end of the Contract’s 10th anniversary (later if additional insurance is
added after issue). And the charge will be reduced for Contracts that lapse or are surrendered before then but
after the Contract’s fifth anniversary. Specifically, the charge of $5 per $1,000 will be assessed upon
11
 surrenders or lapses occurring on or before the Contract’s fifth anniversary. For each additional full month that
the Contract stays in-force on a premium paying basis, this charge is reduced by $0.0833 per $1,000 of initial
face amount, so that it disappears on the 10th anniversary. During 2001, 2000, and 1999, Pruco Life received
a total of approximately $83,000, $110,000, and $221,000, respectively, from surrendered or lapsed Contracts.
Additionally, if a Contract has a face amount of at least $100,000 and was issued on other than a Select
Rating basis (see item 6, above), the owner may request that the Contract be reclassified to a Select Rating
basis. Requests for reclassification to a Select Rating basis may be subject to an underwriting fee of up to
$250, but we currently intend to waive that charge if the reclassification is effected concurrently with an
increase in face amount.

9. We deduct an administrative processing charge, in connection with each withdrawal of cash surrender value,
which is the lesser of: (a) $15; and (b) 2% of each withdrawal amount. See Withdrawal of Excess Cash
Surrender Value, page 20.

10. If the Contract includes riders, we make monthly deductions from the Contract Fund for charges applicable to
those riders. A deduction will also be made if the rating class of the insured results in an extra charge.

11. An investment advisory fee is deducted daily from each portfolio at a rate, on an annualized basis, from 0.35%
for the Stock Index Portfolio to 0.75% for the Global Portfolio. The expenses incurred in conducting the
investment operations of the portfolios (such as custodian fees and preparation and distribution of annual
reports) are paid out of the portfolio's income. These expenses also vary from portfolio to portfolio.

The total expenses of each portfolio for the year ended December 31, 2001, expressed as a percentage of the
average assets during the year, are shown below:

Tot&l ÆoLtfolio Exp#ns#s

Investment Other Total Total Actual
Portfolio Contractual
Advisory Fee Expenses Expenses*
Expenses

Conservative Balanced 0.55% 0.03% 0.58% 0.40%

Diversified Bond 0.40% 0.04% 0.44% 0.40%
Equity 0.45% 0.04% 0.49% 0.40%
Flexible Managed 0.60% 0.04% 0.64% 0.40%
Global 0.75% 0.09% 0.84% 0.84%
Government Income 0.40% 0.07% 0.47% 0.47%
High Yield Bond 0.55% 0.05% 0.60% 0.60%
Jennison 0.60% 0.18% 0.64% 0.64%
Money Market 0.40% 0.03% 0.43% 0.40%
Natural Resources 0.45% 0.07% 0.52% 0.52%
Small Capitalization Stock 0.40% 0.08% 0.48% 0.48%
Stock Index 0.35% 0.04% 0.39% 0.39%
Value 0.40% 0.04% 0.44% 0.44%

* Some investment management fees and expenses charged to the Series Fund may be higher than those that were previously
charged to the Pruco Life Series Fund, Inc. (0.40%), in which the Account previously invested. Pruco Life currently makes
payments to the following five subaccounts so that the portfolio expenses indirectly borne by a Contract owner investing in the
Conservative Balanced, Diversified Bond, Equity, Flexible Managed, and Money Market Portfolios will not exceed 0.40%. No
such offset will be made with respect to the remaining portfolios, which had no counterparts in the Pruco Life Series Fund, Inc.

The earnings of the Account are taxed as part of the operations of Pruco Life. Currently, no charge is being made to
the Account for Pruco Life’s federal income taxes. We will review the question of a charge to the Account for Pruco
Life’s federal income taxes periodically. Such a charge may be made in the future for any federal income taxes that
would be attributable to the Contracts.

Under current laws, Pruco Life may incur state and local taxes (in addition to premium taxes) in several states. At
present, these taxes are not significant and they are not charged against the Contracts or the Account. If there is a
material change in applicable state or local tax laws, the imposition of any such taxes upon Pruco Life that are
attributable to the Account may result in a corresponding charge against the Account.

12
The investment management fee and other expenses charged against the Real Property Account are described in the
attached prospectus for that investment option.

Æ#QuiL#n#nts foL Issu&n◆# of & SontL&◆t

As of May 1, 1992, Pruco Life no longer offered these Contracts for sale. Generally, the minimum initial guaranteed
death benefit was $60,000. However, higher minimums are applied to insureds over the age of 75. Insureds 14 years
of age or less could apply for a minimum initial guaranteed death benefit of $40,000. The Contract was generally
issued on insureds below the age of 81. Before issuing any Contract, Pruco Life required evidence of insurability
which may have included a medical examination. Non-smokers who met preferred underwriting requirements were
offered the most favorable premium rate. A higher premium is charged if an extra mortality risk is involved. Certain
classes of Contracts, for example a Contract issued in connection with a tax-qualified pension plan, may have been
issued on a "guaranteed issue" basis and may have a lower minimum initial death benefit than a Contract which was
individually underwritten. These are the current underwriting requirements. We reserve the right to change them on a
non-discriminatory basis.

ShoLt-T#Ln S&n◆#ll&tion Æight oL “FL##-LookK

Generally, a Contract may be returned for a refund within 10 days after it is received by the Contract owner, within 45
days after Part I of the application for insurance is signed or within 10 days after Pruco Life mails or delivers a Notice of
Withdrawal Right, whichever is latest. Some states allow a longer period of time during which a Contract may be
returned for a refund. A refund can be requested by mailing or delivering the Contract to the representative who sold it
or to the Home Office specified in the Contract. A Contract returned according to this provision shall be deemed void
from the beginning. The Contract owner will then receive a refund of all premium payments made, plus or minus any
change due to investment experience. However, if applicable law so requires, the Contract owner who exercises his or
her short-term cancellation right will receive a refund of all premium payments made, with no adjustment for investment
experience.

SontL&◆t FoLns

Two forms of the Contract were available. The Scheduled Premium for the Contract was the same for a given insured,
regardless of which Contract Form you chose. Contract Form A has a death benefit equal to the initial face amount of
insurance. The death benefit of a Form A Contract does not vary with the investment performance of the investment
options you selected, unless the Contract becomes paid-up or, under a revised version of the Contract, unless the
death benefit is increased to ensure that the Contract meets the Internal Revenue Code’s definition of life insurance.
See How a Contract’s Death Benefit Will Vary, page 18. Favorable investment results on the assets related to the
Contract and greater than Scheduled Premiums will generally result in increases in the cash surrender value. See
How a Contract’s Cash Surrender Value Will Vary, page 17.

Contract Form B also has an initial face amount of insurance but favorable investment performance and greater than
Scheduled Premiums generally result in an increase in the death benefit and, over time, in a lesser increase in the
cash surrender value than under the Form A Contract. The death benefit may be increased to ensure that the
Contract meets the Internal Revenue Code’s definition of life insurance. See How a Contract’s Cash Surrender
Value Will Vary, page 17 and How a Contract’s Death Benefit Will Vary, page 18. Unfavorable investment
performance will result in decreases in the death benefit (but never below the face amount stated in the Contract) and
in the cash surrender value.

Both Form A and Form B Contracts covering insureds of 14 years of age or less contain a special provision providing
that the face amount of insurance will automatically be increased, on the Contract anniversary after the insured’s 21st
birthday, to 150% of the initial face amount, so long as the Contract is not then in default. This new face amount
becomes the new guaranteed minimum death benefit. The death benefit will also usually increase, at the same time,
by the same dollar amount. In certain circumstances, however, it may increase by a smaller amount. See When a
Contract Becomes Paid-Up, page 19 and How a Contract’s Death Benefit Will Vary, page 18. This increase in
death benefit will also generally increase the net amount at risk under the Contract, thus increasing the mortality
charge deducted each month from amounts invested under the Contract. See item 6 under Charges and Expenses,
page 9. The automatic increase in the face amount of insurance may affect the level of future premium payments you
can make without causing the Contract to be classified as a Modified Endowment Contract. See Tax Treatment of
Contract Benefits, page 28. You should consult your tax adviser and Pruco Life representative before making
unscheduled premium payments.

Contract owners of Form A Contracts should note that a withdrawal may result in a portion of the surrender charge
being deducted from the Contract Fund. Furthermore, a Form A Contract owner cannot make withdrawals that would
13
reduce the Contracts face amount below the minimum face amount. Contract owners of Form B Contracts will not
incur a surrender charge for a withdrawal and are not restricted if they purchased a minimum size Contract. See
Withdrawal of Excess Cash Surrender Value, page 20.

Under the original versions of these Contracts, there are other distinctions between the Contract Forms. Contract
Form A will become paid-up more rapidly than a comparable Form B Contract. But Contract owners of Form A
Contracts should be aware that since premium payments and favorable investment experience do not increase the
death benefit, unless the Contract has become paid-up, the beneficiary will not benefit from the possibility that the
Contract will have a large cash surrender value at the time of the insured’s death.

Under a revised version of the Contract that was made available beginning in September 1986, in jurisdictions where it
is approved, the Contract will never become paid-up. Instead, the death benefit under these revised Contracts is
always at least as great as the Contract Fund divided by the net single premium. See How a Contract’s Death
Benefit Will Vary, page 18. Thus, instead of becoming paid-up, the Contract’s death benefit will always be large
enough to meet the Internal Revenue Code’s definition of life insurance. Whenever the death benefit is determined in
this way, Pruco Life reserves the right to refuse to accept further premium payments, although in practice the payment
of at least Scheduled Premiums will be allowed.

SontL&◆t D&t#

The Contract Date will ordinarily be the later of the application date and the medical examination date. Under certain
circumstances, we allowed the Contract to be back-dated, but only to a date not earlier than six months prior to the
application date. This may be advantageous for some Contract owners as a lower issue age may result in lower
current charges. For a Contract that is backdated, we will credit the initial premium as of the date of receipt and will
deduct any charges due on or before that date.

ÆL#niuns

Scheduled Premiums on the Contract are payable during the insured’s lifetime on an annual, semi-annual, quarterly or
monthly basis on due dates set forth in the Contract. If you pay premiums more often than annually, the aggregate
annual premium will be higher to compensate Pruco Life both for the additional processing costs (see item 1 under
Charges and Expenses, page 9) and for the loss of interest (computed generally at an annual rate of 8%) incurred
because premiums are paid throughout rather than at the beginning of each Contract year. The premium amount
depends on the Contract’s initial death benefit and the insured’s age at issue, sex (except where unisex rates apply),
and risk classification. If you pay premiums other than monthly, we will notify you about three weeks before each due
date, that a premium is due. If you pay premiums monthly, we will send to you each year a book with 12 coupons that
will serve as a reminder. You may change the frequency of premium payments with Pruco Life’s consent.

You may elect to have monthly premiums paid automatically under the “Pru-Matic Premium Plan” by pre-authorized
transfers from a bank checking account. Currently, Contract owners selecting the Pru-Matic Premium Plan on
Contracts issued after June 1, 1987 will have reduced current monthly expense charges. See item 4 under Charges
and Expenses, page 9. You may also be eligible to have monthly premiums paid by pre-authorized deductions from
an employer's payroll.

Each Contract sets forth two premium amounts. The initial premium amount is payable on the Contract Date (the date
the Contract was issued, as noted in each individual Contract) and on each subsequent due date until the Contract's
anniversary immediately following the insured's 65th birthday (or until the Contract's tenth anniversary, if that is later).
The second and higher premium amount set forth in the Contract is payable on and after that anniversary (the
“premium change date”). However, if the amount invested under the Contract, net of any excess premiums, is higher
than it would have been had only Scheduled Premiums been paid, had maximum contractual charges been deducted,
and had only an average net rate of return of 4% been earned, then the second premium amount will be lower than the
maximum amount stated in the Contract. We will tell you what the amount of your second premium will be. Under the
original version of the Contracts, if investment experience has been favorable enough, the Contract may become
paid-up before or by the premium change date. We reserve the right not to accept any further premium payments on a
paid-up Contract.

The Contracts include a premium change date, with Scheduled Premiums potentially increasing after that date to a
second premium amount. Thus, you are provided with both the flexibility to pay lower initial Scheduled Premiums and
a guarantee of lifetime insurance coverage, if all Scheduled Premiums are paid. The tables on pages T1 through T4
show how the second premium amount compares with the first premium amount under Contracts and for different
hypothetical investment results.

14
The following table shows, for two face amounts, representative initial preferred rating and standard rating annual
premium amounts under either Form A or Form B Contracts issued on insureds who are not substandard risks:

$6O,OOO F&◆# Anount $1OO,OOO F&◆# Anount

ÆL#f#LL#d St&nd&Ld ÆL#f#LL#d St&nd&Ld

M&l#, &g#
35 $554.80 $669.40 $902.00 $1,093.00
&t issu#

F#n&l#,
&g# 45 &t $698.80 $787.60 $1,142.00 $1,290.00
issu#

M&l#, &g#
55 $1,556.20 $1,832.20 $2,571.00 $3,031.00
&t issu#

The following table compares annual and monthly premiums for insureds who are in the preferred rating class. Note
that in these examples the sum of 12 monthly premiums for a particular Contract is approximately 105% to 109% of
the annual premium for that Contract.

$6O,OOO F&◆# Anount $1OO,OOO F&◆# Anount

Monthly Annu&l Monthly Annu&l

M&l#, &g#
35 $50.00 $554.80 $80.00 $902.00
&t issu#

F#n&l#,
&g# 45 &t $62.60 $698.80 $101.00 $1,142.00
issu#

M&l#, &g#
55 $136.40 $1,556.20 $224.00 $2,571.00
&t issu#

You may select a higher contemplated premium than the Scheduled Premium. We will bill you for the chosen premium.
In general, the regular payment of higher premiums will result in higher cash surrender values and, at least under Form
B, in higher death benefits. Under the original version of the Contracts, such payments may also provide a means of
obtaining a paid-up Contract earlier than if only Scheduled Premiums are paid.

In some cases the payment of greater than Scheduled Premiums or favorable investment experience may result in the
Contract becoming paid-up so that no further premium payments will be necessary. If this happens, Pruco Life may
refuse to accept any further premium payments. If a Contract becomes paid-up, the death benefit then in-force
becomes the guaranteed minimum death benefit; apart from this guarantee, the death benefit and the cash surrender
value of the paid-up Contract will thereafter vary daily to reflect the investment experience of amounts invested under
the Contract. Contracts sold beginning in September 1986 in jurisdictions where all necessary approvals have been
obtained will no longer become paid-up. Instead, the death benefit will be increased so that it is always at least as
great as the Contract Fund divided by the net single premium for the insured’s attained age at such time. See How a
Contract’s Death Benefit Will Vary, page 18. The term “Contract Fund” refers generally to the total amount invested
under the Contract and is defined under Charges and Expenses on page 9. The term “net single premium,” the
factor which determines how much the death benefit will increase for a given increase in the Contract Fund, is defined
and illustrated under item 2 of How a Contract’s Death Benefit Will Vary on page 18. Whenever the death benefit is
determined in this way, Pruco Life reserves the right to refuse to accept further premium payments, although in
practice the payment of the lesser of two years' Scheduled Premiums or the average of all premiums paid over the last
five years will generally be allowed.

15
The payment of premiums substantially in excess of Scheduled Premiums may cause the Contract to be classified as a
Modified Endowment Contract. If this happens, loans and other distributions which otherwise would not be taxable
events may be subject to federal income taxation. See Tax Treatment of Contract Benefits, page 28.

Allo◆&tion of ÆL#niuns

The initial premium, after we deduct applicable charges, is allocated among the subaccounts, the fixed-rate option or
the Real Property Account on the Contract Date, according to the desired allocation specified in the application form.
The invested portion of all subsequent premiums, are placed in the selected investment option[s] on the date of receipt
at a Home Office. A $2 per payment processing charge and a deduction of up to 7.5% to cover certain charges apply
to all subsequent premium payments. The remainder will be invested as of the end of the valuation period in which it is
received at a Home Office in accordance with the allocation you previously designated. The “valuation period” means
the period of time from one determination of the value of the amount invested in a subaccount to the next. Such
determinations are made when the net asset values of the portfolios of the Series Fund are calculated, which is
generally at 4:00 p.m. Eastern time on each day during which the New York Stock Exchange is open.

Provided the Contract is not in default, you may change the way in which subsequent premiums are allocated by giving
written notice to a Home Office or by telephoning a Home Office, provided you are enrolled to use the Telephone
Transfer System. There is no charge for reallocating future premiums among the investment options. If any portion of
a premium is allocated to a particular subaccount, to the fixed-rate option or to the Real Property Account, that portion
must be at least 10% on the date the allocation takes effect. All percentage allocations must be in whole numbers. For
example, 33% can be selected but 33½% cannot. Of course, the total allocation of all selected investment options
must equal 100%.

Doll&L Sost Av#L&ging

Under the Dollar Cost Averaging (“DCA”) feature, either fixed dollar amounts or a percentage of the amount you
designate under the DCA option will be transferred periodically from the DCA Money Market subaccount into other
subaccounts available under the Contract, excluding the Money Market subaccount and the fixed-rate option, but
including the Real Property Account. Automatic monthly transfers must be at least 3% of the amount allocated to the
DCA account and must be a minimum of $20 transferred into any one investment option. These amounts are subject
to change at Pruco Life's discretion. The minimum transfer amount will only be recalculated if the amount designated
for transfer is increased.

Currently, the amount initially designated to DCA must be at least $2,000. This minimum is subject to change at Pruco
Life's discretion. Subject to the limitations on premium payments and transfers, you may allocate or transfer amounts
to the DCA account after DCA has been established and as long as the DCA account has a positive balance. In
addition, if you pay premiums on an annual or semi-annual basis and you have already established DCA, the premium
allocation instructions may include an allocation of all or a portion of all your premium payments to the DCA account.

Each automatic monthly transfer will take effect as of the end of the valuation period on the Monthly Date (i.e. the
Contract Date and the same date in each subsequent month), provided the New York Stock Exchange (“NYSE”) is
open on that date. If the NYSE is not open on the Monthly Date, the transfer will take effect as of the end of the
valuation period on the next day that the NYSE is open. If the Monthly Date does not occur in a particular month (e.g.,
February 30), the transfer will take effect as of the end of the valuation period on the last day of that month that the
NYSE is open. Automatic monthly transfers will continue until the balance in the DCA account reaches zero, or until
the Contract owner gives notification of a change in allocation or cancellation of the feature. If the Contract has
outstanding premium allocation to the DCA account, but the DCA option has previously been canceled, premiums
allocated to the DCA account will be allocated to the Money Market subaccount. Currently, there is no charge for using
the DCA feature.

TL&nsf#Ls

If the Contract is not in default, or if the Contract is in-force as variable reduced paid-up insurance (see Options on
Lapse, page 27), you may, up to four times in each Contract year, transfer amounts from one subaccount to another
subaccount, to the fixed-rate option or to the Real Property Account. Currently, you may make additional transfers with
our consent without charge. All or a portion of the amount credited to a subaccount may be transferred.

Transfers among subaccounts will take effect as of the end of the valuation period in which a proper transfer request is
received at a Home Office. The request may be in terms of dollars, such as a request to transfer $10,000 from one
subaccount to another, or may be in terms of a percentage reallocation among subaccounts. In the latter case, as with
premium reallocations, the percentages must be in whole numbers. You may transfer amounts by proper written
16
notice to a Home Office or by telephone, provided you are enrolled to use the Telephone Transfer System. You will
automatically be enrolled to use the Telephone Transfer System unless the Contract is jointly owned or if you elect not
to have this privilege. Telephone transfers may not be available on Contracts that are assigned, see Assignment,
page 30, depending on the terms of the assignment.

We will use reasonable procedures, such as asking you to provide certain personal information provided on your
application for insurance, to confirm that instructions given by telephone are genuine. We will not be held liable for
following telephone instructions that we reasonably believe to be genuine. Pruco Life cannot guarantee that you will be
able to get through to complete a telephone transfer during peak periods such as periods of drastic economic or
market change.

Only one transfer from the fixed-rate option will be permitted during each Contract year and only during the 30-day
period beginning on the Contract anniversary. The maximum amount which may be transferred out of the fixed-rate
option each year is the greater of: (a) 25% of the amount in the fixed-rate option, and (b) $2,000. Such transfer
requests received prior to the Contract anniversary will be effected on the Contract anniversary. Transfer requests
received within the 30-day period beginning on the Contract anniversary will be effected as of the end of the valuation
period in which a proper transfer request is received at a Home Office. Pruco Life may change these limits in the
future. Transfers to and from the Real Property Account are subject to restrictions described in the attached
prospectus for the Real Property Account.

The Contract was not designed for professional market timing organizations, other organizations, or individuals using
programmed, large, or frequent transfers. A pattern of exchanges that coincides with a “market timing” strategy may
be disruptive to the subaccounts or to the disadvantage of other contract owners. If such a pattern were to be found,
we may modify your right to make transfers by restricting the number, timing, and amount of transfers. We also
reserve the right to prohibit transfer requests made by an individual acting under a power of attorney on behalf of more
than one contract owner.

Æ#du◆tion of Sh&Lg#s foL Son◆uLL#nt S&l#s to S#v#L&l Individu&ls

We may reduce the sales charges and/or other charges on individual Contracts sold to members of a class of
associated individuals, or to a trustee, employer or other entity representing a class, where it is expected that such
multiple sales will result in savings of sales or administrative expenses. Pruco Life determines both the eligibility for
such reduced charges, as well as the amount of such reductions, by considering the following factors:

(1) the number of individuals;

(2) the total amount of premium payments expected to be received from these Contracts;
(3) the nature of the association between these individuals, and the expected persistency of the individual Contracts;
(4) the purpose for which the individual Contracts are purchased and whether that purpose makes it likely that
expenses will be reduced; and
(5) any other circumstances which we believe to be relevant in determining whether reduced sales or administrative
expenses may be expected.

Some of the reductions in charges for these sales may be contractually guaranteed; other reductions may be
withdrawn or modified by Pruco Life on a uniform basis. Pruco Life's reductions in charges for these sales will not be
unfairly discriminatory to the interests of any individual Contract owners.

HoW & SontL&◆t's S&sh SuLL#nd#L V&lu# Will V&Ly

Your Contract has a cash surrender value which may be obtained while the insured is living by surrender of the
Contract. Unlike traditional fixed-benefit whole-life insurance, however, a Contract's cash surrender value is not known
in advance because it varies daily with the investment performance of the subaccount[s] and/or Real Property Account
in which the Contract participates.

On the Contract Date, the Contract Fund value is the invested portion of the initial premium less the first monthly
deductions. This amount is placed in the investment option[s] designated by the owner. Thereafter, the Contract Fund
value changes daily, reflecting increases or decreases in:

(1) the value of the securities in which the assets of the subaccount[s] have been invested;
(2) the investment performance of the Real Property Account if that option has been selected;
(3) interest credited on amounts allocated to the fixed-rate option;

17
(4) the daily asset charge for mortality and expense risk equal to 0.001639% of the assets of the subaccount[s] of
the Account; and
(5) the subaccount of the Real Property Account relating to this Contract.

The Contract Fund value also changes to reflect the receipt of additional premium payments and the monthly
deductions described in the preceding section.

A Contract’s cash surrender value on any date will be the Contract Fund value reduced by the deferred sales and
administrative charges, if any, and any Contract debt. Upon request, Pruco Life will tell a Contract owner the cash
surrender value of his or her Contract. It is possible that the cash surrender value of a Contract could decline to zero
because of unfavorable investment experience, even if a Contract owner continues to pay Scheduled Premiums when
due.

If the net investment return in the selected investment option[s] is greater than 4%, the Contract Fund and cash
surrender value for a Form B Contract can be expected to be less than the Contract Fund and cash surrender value for
a Form A Contract with identical premiums and investment experience. This is because the monthly mortality charges
under the Form B Contract will be higher to compensate for the higher amount of insurance.

The tables on pages T1 through T4 of this prospectus illustrate what the cash surrender values would be for
representative Contracts, assuming uniform hypothetical investment results in the selected Series Fund portfolio[s],
and also provide information about the aggregate Scheduled Premiums payable under those Contracts. Also
illustrated is what the death benefit would be under Form B Contracts given the stated assumptions. The tables also
show the premium amount that would be required on the premium change date to guarantee the Contract against
lapse regardless of investment performance for each illustrated Contract under each of the assumed investment
returns.

HoW & SontL&◆t's D#&th B#n#fit Will V&Ly

As described earlier, there are two forms of the Contract, Form A and Form B. Moreover, in September 1986 Pruco
Life began issuing revised versions of both Form A and Form B Contracts. The primary difference between the original
Contract and the revised Contract is that the original Contract may become paid-up, while the death benefit under the
revised Contract operates differently and will not become paid-up.

1. Original Contracts:

(A) If a Form A Contract is chosen, the death benefit will not vary (except for Contracts issued on insureds of age
14 or less, see Requirements for Issuance of a Contract on page 13) regardless of the payment of
additional premiums or the investment results of the selected investment options, unless the Contract becomes
paid-up. See When a Contract Becomes Paid-Up, page 19. The death benefit does reflect a deduction for
the amount of any Contract debt. See Contract Loans, page 26.

(B) If a Form B Contract is chosen, the death benefit will vary with investment experience and premium payments.
Assuming no Contract debt, the death benefit under a Form B Contract will, on any day, be equal to the face
amount of insurance plus the amount (if any) by which the Contract Fund value exceeds the applicable
“Tabular Contract Fund Value” for the Contract. The “Tabular Contract Fund Value” for each Contract year is
an amount that is slightly less than the Contract Fund value that would result as of the end of such year if:

(1) you paid only Scheduled Premiums;

(2) you paid Scheduled Premiums when due;
(3) your selected investment options earned a net return at a uniform rate of 4% per year;
(4) we deducted full mortality charges based upon the 1980 CSO Table;
(5) we deducted maximum sales load and expense charges; and
(6) there was no Contract debt.

Each Contract contains a table that sets forth the Tabular Contract Fund Value as of the end of each of the first 20
years of the Contract. Tabular Contract Fund Values between Contract anniversaries are determined by interpolation.

Thus, under a Form B Contract with no Contract debt, the death benefit will equal the face amount if the Contract Fund
equals the Tabular Contract Fund Value. If, due to investment results greater than a net return of 4%, or to greater
than Scheduled Premiums, or to lesser than maximum charges, the Contract Fund value is a given amount greater
than the Tabular Contract Fund Value, the death benefit will be the face amount plus that excess amount. If, due to
investment results less favorable than a net return of 4%, the Contract Fund value is less than the Tabular Contract
18
Fund Value, and the Contract nevertheless remains in-force because Scheduled Premiums have been paid, the death
benefit will not fall below the initial face amount stated in the Contract. The death benefit will also reflect a deduction
for the amount of any Contract debt. See Contract Loans, page 26. Any unfavorable investment experience must
subsequently be offset before favorable investment results or greater than Scheduled Premiums will increase the death
benefit.

You may also increase or decrease the face amount of your Contract, subject to certain conditions. See Increases in
Face Amount, page 21 and Decreases in Face Amount, page 23.

2. Revised Contracts:

Under the revised Contracts issued since September 1986 in approved jurisdictions, the death benefit will be
calculated as follows:

(A) Under a Form A Contract, the death benefit will be the greater of (1) the face amount; or (2) the Contract Fund
divided by the net single premium per $1 of death benefit at the insured’s attained age on that date. In other
words, the second alternative ensures that the death benefit will not be less than the amount of life insurance
that could be provided for an invested single premium amount equal to the amount of the Contract Fund.

(B) Under a Form B Contract, the death benefit will be the greater of (1) the face amount plus the excess, if any, of
the Contract Fund over the Tabular Contract Fund Value; or (2) the Contract Fund divided by the net single
premium per $1 of death benefit at the insured’s attained age on that date. Thus, under the revised Contracts,
the death benefit may be increased based on the size of the Contract Fund and the insured’s attained age and
sex. This ensures that the Contract will satisfy the Internal Revenue Code’s definition of life insurance. The
net single premium is used only in the calculation of the death benefit, not for premium payment purposes.
The following is a table of illustrative net single premiums for $1 of death benefit.

,QFUHDVH LQ ,QFUHDVH LQ
0DOH 1HW 6LQJOH ,QVXUDQFH )HPDOH 1HW 6LQJOH ,QVXUDQFH
$WWDLQHG 3UHPLXP $PRXQW 3HU $WWDLQHG 3UHPLXP $PRXQW 3HU
$JH ,QFUHDVH LQ $JH ,QFUHDVH LQ
&RQWUDFW &RQWUDFW
)XQG )XQG

5 .09884 $10.12 5 .08198 $12.20

25 .18455 $ 5.42 25 .15687 $ 6.37
35 .25596 $ 3.91 35 .21874 $ 4.57
55 .47352 $ 2.11 55 .40746 $ 2.45
65 .60986 $ 1.64 65 .54017 $ 1.85

Whenever the death benefit is determined in this way, Pruco Life reserves the right to refuse to accept further premium
payments, although in practice the payment of the average of all premiums paid over the last five years will generally
be allowed.

You may also increase or decrease the face amount of your Contract, subject to certain conditions. See Increases in
Face Amount, page 21 and Decreases in Face Amount, page 23.

Wh#n & SontL&◆t B#◆on#s Æ&id-Up

Under the original Contracts, it is possible that favorable investment experience, either alone or with greater than
Scheduled Premium payments, will cause the Contract Fund to increase. The Contract Fund may increase to the point
where no further premium payments are necessary to provide for the then existing death benefit for the remaining life
of the insured. If this should occur, Pruco Life will notify the owner that no further premium payments are needed. We
reserve the right to refuse to accept further premiums after the Contract becomes paid-up. The purchase of an
additional fixed benefit rider may, in some cases, affect the point at which the Contract becomes paid-up. See Riders,
page 31. The revised Contracts will not become paid-up.

We guarantee that the death benefit of a paid-up Contract then in-force will not be reduced by the investment
experience of the investment options in which the Contract participates. The cash surrender value of a paid-up
Contract continues to vary daily to reflect investment experience and monthly to reflect continuing mortality charges,
but the other monthly deductions (see items 4 and 5 under Charges and Expenses, page 9 ) will not be made. The
death benefit of a paid-up Contract on any day (whether the Contract originally was Form A or Form B) will be equal to
19
the amount of paid-up insurance that can be purchased with the Contract Fund on that day, but never less than the
guaranteed minimum amount.

As noted earlier, Contracts issued on insureds of 14 years of age or less include a special provision under which the
face amount of insurance increases automatically to 150% of the initial face amount on the Contract anniversary after
the insured reaches the age of 21. If a Contract becomes paid-up prior to that anniversary, Pruco Life will, instead of
declaring the Contract to be paid-up, increase the death benefit by the amount necessary to keep the Contract in-force
as a premium paying Contract. If this should occur, the increase in the death benefit on the Contract anniversary after
the insured reaches the age of 21 will be smaller in dollar amount, than the increase in the face amount of insurance.

Fl#xibility &s to Æ&yn#nt of ÆL#niuns

A significant feature of this Contract is that it permits the owner to pay greater than Scheduled Premiums. Conversely,
payment of a Scheduled Premium need not be made if the Contract Fund is large enough to pay the charges due
under the Contract without causing the Contract to lapse. See Lapse and Reinstatement, page 23. In general, we
will accept any premium payment if the payment is at least $25. Pruco Life does reserve the right, however, to limit
unscheduled premiums to a total of $10,000 in any Contract year; to refuse to accept premiums once a Contract
becomes paid-up; and to refuse to accept premiums that would immediately result in more than a dollar-for-dollar
increase in the death benefit. The flexibility of premium payments provides Contract owners with different opportunities
under the two forms of Contract. Greater than scheduled payments under an original version Form A Contract
increase the Contract Fund and make it more likely that the Contract will become paid-up. Greater than scheduled
payments under an original version Form B Contract increase both the Contract Fund and the death benefit, but it is
less likely to become paid-up than a Form A Contract on which the same premiums are paid. For all Contracts, the
privilege of making large or additional premium payments offers a way of investing amounts which accumulate without
current income taxation.

There may, however, be a disadvantage if you make premium payments substantially in excess of Scheduled
Premiums. Such payments may cause the Contract to be classified as a Modified Endowment Contract. The federal
income tax laws, discussed more fully under Tax Treatment of Contract Benefits, page 28, may impose an income
tax, as well as a penalty tax, upon distributions to contract owners under life insurance contracts that are classified as
Modified Endowment Contracts. You should consult your own tax adviser and Pruco Life representative before making
a large premium payment.

SuLL#nd#L of & SontL&◆t

You may surrender your Contract, in whole or in part, for its cash surrender value or a fixed reduced paid-up insurance
benefit while the insured is living. Partial surrender involves splitting the Contract into two Contracts. One is
surrendered for its cash surrender value; the other is continued in-force on the same terms as the original Contract
except that premiums and cash surrender values will be proportionately reduced. The reduction is based upon the
face amount of insurance. The Contract’s face amount of insurance must be at least equal to the minimum face
amount applicable to the insured's Contract. See Requirements for Issuance of a Contract, page 13. For paid-up
Contracts, both the death benefit and the guaranteed minimum death benefit will be reduced. The death benefit
immediately after the partial withdrawal must be at least equal to the minimum face amount applicable to the insured's
Contract.

To surrender a Contract, in whole or in part, you must deliver or mail the Contract with a written request in a form that
meets Pruco Life’s needs, to a Home Office. The cash surrender value of a surrendered or partially surrendered
Contract (taking into account the deferred sales and administrative charges, if any) will be determined as of the date
such request is received in a Home Office. Surrender of all or part of a Contract may have tax consequences. See
Tax Treatment of Contract Benefits, page 28.

WithdL&W&l of Ex◆#ss S&sh SuLL#nd#L V&lu#

You may surrender your Contract, in whole or in part, for its cash surrender value. This is available only before the
Contract becomes paid up and avoids splitting the Contract into two Contracts. You may make a partial withdrawal
only if the following conditions are satisfied. The basic limiting condition is that you may make a withdrawal only to the
extent that the cash surrender value plus any Contract loan exceeds the applicable tabular cash surrender value. (The
“tabular cash surrender value” refers to the Tabular Contract Fund Value minus any applicable surrender charges.)
But because this excess over the applicable tabular cash surrender value may be made up in part by an outstanding
Contract loan, there is a further condition that the amount withdrawn may not be larger than an amount sufficient to
reduce the cash surrender value to zero. The amount withdrawn must be at least $2,000 under a Form A Contract and
at least $500 under a Form B Contract. You may make no more than four withdrawals in a Contract year, and there is
20
a fee equal to the lesser of $15 or 2% for each withdrawal. You may only repay an amount withdrawn as a scheduled
or unscheduled premium, which is subject to the Contract charges. Upon request, we will tell you how much you may
withdraw. Withdrawal of part of the cash surrender value may have tax consequences. See Tax Treatment of
Contract Benefits, page 28.

Whenever a partial withdrawal is made, the death benefit payable will immediately be reduced, generally by the
amount of the withdrawal. This will not change the guaranteed minimum amount of insurance under a Form B
Contract (i.e., the face amount) or the amount of the Scheduled Premium that will be payable thereafter on such a
Contract. Under a Form A Contract, however, the guaranteed minimum amount of insurance will be reduced by the
amount of the partial withdrawal. A partial withdrawal will not be permitted under a Form A Contract if it would result in
a new face amount less than the minimum face amount applicable to the insured’s Contract. See Requirements for
Issuance of a Contract, page 13. It is important to note, however, that if the face amount is decreased, the Contract
might be classified as a Modified Endowment Contract. See Tax Treatment of Contract Benefits, page 28. Before
making any withdrawal which causes a decrease in face amount, you should consult your tax adviser and Pruco Life
representative. In addition, the amount of the Scheduled Premiums due thereafter under a Form A Contract will be
reduced to reflect the lower face amount of insurance. Since a withdrawal under a Form A Contract may result in a
decrease in the face amount of insurance, the Contract Fund may be reduced, not only by the amount withdrawn but
also by a proportionate part of any applicable surrender charges, based upon the percentage reduction in face amount.
We will send replacement Contract pages showing the new face amount, new tabular values and, if applicable, a new
table of surrender charges to owners of a Form A Contract who make a partial withdrawal.

Withdrawal of part of the cash surrender value increases the risk that the Contract Fund may be insufficient to provide
for benefits under the Contract. If such a withdrawal is followed by unfavorable investment experience, the Contract
may lapse even if Scheduled Premiums continue to be paid when due. This is because, Pruco Life treats withdrawals
as a return of premium for purposes of determining whether a lapse has occurred. Withdrawals from paid up Contracts
may result in an increased mortality charge.

In◆L#&s#s in F&◆# Anount

You may increase the amount of your insurance by increasing the face amount of the Contract (which is also the
guaranteed minimum death benefit), subject to state approval and underwriting requirements determined by Pruco
Life. An increase in face amount is in many ways similar to the purchase of a second Contract. It differs in the
following respects:

(1) the minimum permissible increase is $25,000, while the minimum for a new Contract was $60,000;
(2) monthly fees are lower because only a single $2.50 per month administrative charge is made rather than two;
(3) a combined premium payment results in deduction of a single $2 per premium processing charge while
separate premium payments for separate Contracts would involve two charges;
(4) the monthly expense charge of $0.02 per $1,000 of face amount may be lower if the increase is to a face
amount greater than $100,000; and
(5) the Contract will lapse or become paid-up as a unit, unlike the case if two separate Contracts are purchased.

Despite these differences, the decision to increase face amount is comparable to the purchase of a second Contract in
that it involves a commitment to higher Scheduled Premiums in exchange for greater insurance benefits.

You may elect to increase the face amount of your Contract no earlier than the first anniversary of the Contract. The
following conditions must be met:

(1) You must ask for the increase in writing on an appropriate form;
(2) The amount of the increase in face amount must be at least $25,000;
(3) The insured must supply evidence of insurability for the increase satisfactory to Pruco Life;
(4) If Pruco Life requests, you must send in the Contract to be suitably endorsed;
(5) The Contract must be neither paid-up nor in default on the date the increase takes effect;
(6) You must pay an appropriate premium at the time of the increase;
(7) Pruco Life has the right to deny more than one increase in a Contract year; and
(8) If between the Contract Date and the date that your requested increase in face amount would take effect,
Pruco Life has changed any of the bases on which benefits and charges are calculated for newly issued
Contracts, then we have the right to deny the increase.

An increase in face amount resulting in a total face amount under the Contract of at least $100,000 may, subject to
strict underwriting requirements, render the Contract eligible for a Select Rating for a non-smoker, which provides
lower current cost of insurance rates.
21
Upon an increase in face amount, Pruco Life will recompute the Contract’s Scheduled Premiums, deferred sales and
administrative charges, tabular values, and monthly deductions from the Contract Fund. You have a choice, limited
only by applicable state law, as to whether the recomputation will be made as of the prior or next Contract anniversary.
There may be a payment required on the date of increase; the amount of the payment will depend, in part, on which
Contract anniversary you select for the recomputation. We will tell you the amount of any required payment. You
should also note that an increase in face amount could cause the Contract to be classified as a Modified Endowment
Contract. See Tax Treatment of Contract Benefits, page 28. Therefore, before increasing the face amount, you
should consult your own tax adviser and Pruco Life representative.

Provided the increase is approved, the new insurance will take effect once Pruco Life receives the proper forms, any
medical evidence necessary to underwrite the additional insurance and any amount needed by the company.

We will supply you with pages showing the increased face amount, the effective date of the increase, and the
recomputed items described earlier. The pages will also describe how the face amount increase affects the various
provisions of the Contract. Including a statement that, for the amount of the increase in face amount, the period stated
in the Incontestability and Suicide provisions (see Other General Contract Provisions, page 30) will run from the
effective date of the increase.

Pruco Life will assess, upon lapse or surrender following an increase in face amount, the sum of (a) the deferred sales
and administrative charges that would have been assessed if the initial base Contract had not been amended and had
lapsed or been surrendered; and (b) the deferred sales and administrative charges that would have been assessed if
the increase in death benefit had been achieved by the issuance of a new Contract, and that Contract had lapsed or
been surrendered. All premiums paid after the increase will, for purposes of determining the deferred sales charge
applicable in the event of surrender or lapse, be deemed to have been made partially under the base Contract, and
partially in payment of the increase, in the same proportion as that of the original Scheduled Premium and the increase
in Scheduled Premiums. Because an increase in face amount triggers new contingent deferred sales and
administrative charges, you should not elect to increase the face amount of your Contract if you are contemplating a
total or partial surrender or a decrease in the face amount of insurance.

An increase in face amount will be treated comparably to the issuance of a new Contract for purposes of the non-
guaranteed waiver of the 5% front-end sales load, described under item 2 of Charges and Expenses on page 9.
Thus, premiums paid after the increase will, for purposes of determining whether the 5% front-end sales load will be
waived, be allocated to the base Contract and to the increase based on the proportional premium allocation rule just
described. The waiver will apply to the premiums paid after the increase only after the premiums so allocated exceed
five scheduled annual premiums for the increase. Thus, a Contract owner considering an increase in face amount
should be aware that such an increase will entail sales charges comparable to the purchase of a new Contract.

If you elect to increase the face amount of your Contract, you will receive a “free-look” right and a right to convert to a
fixed-benefit contract, which will apply only to the increase in face amount, not the entire Contract. These rights are
comparable to the rights afforded to the purchaser of a new Contract.

The “free-look” right allows a Contract to be returned for a refund within 10 days after it is received by the Contract
owner, within 45 days after Part I of the application for insurance is signed or within 10 days after Pruco Life mails or
delivers a Notice of Withdrawal Right, whichever is latest. Some states allow a longer period of time during which a
Contract may be returned for a refund. A refund can be requested by mailing or delivering the Contract to the
representative who sold it or to the Home Office specified in the Contract. A Contract returned according to this
provision shall be deemed void from the beginning. The Contract owner will then receive a refund of all premium
payments made, plus or minus any change due to investment experience. However, if applicable law so requires, the
Contract owner who exercises his or her short-term cancellation right will receive a refund of all premium payments
made, with no adjustment for investment experience.

Charges deducted since the increase will be recomputed as though no increase had been effected. The right to
convert the increase in face amount to a fixed-benefit policy will exist for 24 months after the increase is issued and the
form of exchange right will be the same as that available under the base Contract purchased. There may be a cash
payment required upon the exchange.

22
D#◆L#&s#s in F&◆# Anount

As explained earlier, you may effect a partial surrender of a Contract (see Surrender of a Contract, page 20) or a
partial withdrawal of excess cash surrender value (see Withdrawal of Excess Cash Surrender Value, page 20). You
also have the option of decreasing the face amount (which is also the guaranteed minimum death benefit) of your
Contract without withdrawing any cash surrender value. Contract owners who conclude that, because of changed
circumstances, the amount of insurance is greater than needed will be able to decrease their amount of insurance
protection without decreasing their current cash surrender value. This will result in a decrease in the amount of future
Scheduled Premiums and in the monthly deductions for the cost of insurance. The cash surrender value of the
Contract on the date of the decrease will not change, except that an administrative processing fee of $15 may be
deducted from that value (unless that fee is separately paid at the time the decrease in face amount is requested).
Your Contract Fund value, however, will be reduced by deduction of a proportionate part of the contingent deferred
sales and administrative charges, if any. Scheduled Premiums for the Contract will also be proportionately reduced.
The Contracts of owners who exercise the right to reduce face amount will be amended to show the new face amount,
tabular values, Scheduled Premiums, monthly charges, and if applicable, the remaining contingent deferred sales and
administrative charges.

The minimum permissible decrease is $10,000. A decrease will not be permitted if it causes the face amount of the
Contract to drop below the minimum face amount applicable to the insured’s Contract. See Requirements for
Issuance of a Contract, page 13. A reduction will not be permitted if it causes the Contract to fail to qualify as "life
insurance" for purposes of section 7702 of the Internal Revenue Code. A Contract is no longer eligible for the Select
Rating if the face amount is reduced below $100,000.

It is important to note, however, that if the face amount is decreased there is a danger that the Contract might be
classified as a Modified Endowment Contract. See Tax Treatment of Contract Benefits, page 28. Before making
any withdrawal which causes a decrease in face amount, you should consult your own tax adviser and Pruco Life
representative.

L&ps# &nd Æ#inst&t#n#nt

If Scheduled Premiums are paid on or before each due date or within the grace period after each due date, (or missed
premiums are paid later with interest) and there are no withdrawals, a Contract will remain in-force even if the
investment results of that Contract’s variable investment option[s] have been so unfavorable that the Contract Fund
has decreased to zero or less.

In addition, even if a Scheduled Premium is not paid, the Contract will remain in-force as long as the Contract Fund on
any Monthly date is equal to or greater than the Tabular Contract Fund Value on the next Monthly date. This could
occur because of such factors as favorable investment experience, deduction of less than the maximum permissible
charges, or the previous payment of greater than Scheduled Premiums.

However, if a Scheduled Premium is not paid, and the Contract Fund is insufficient to keep the Contract in-force, the
Contract will go into default. Should this happen, Pruco Life will send the Contract owner a notice of default setting
forth the payment necessary to keep the Contract in-force on a premium paying basis. This payment must be received
at a Home Office within the 61 day grace period after the notice of default is mailed or the Contract will lapse. A
Contract that lapses with an outstanding Contract loan may have tax consequences. See Tax Treatment of Contract
Benefits on page 28.

A Contract that has lapsed may be reinstated within three years after the date of default unless the Contract has been
surrendered for its cash surrender value. To reinstate a lapsed Contract, Pruco Life requires renewed evidence of
insurability, and submission of certain payments due under the Contract.

If a Contract does lapse, it may still provide some benefits. Those benefits are described under Options on Lapse,
page 27.

23
Wh#n ÆLo◆##ds AL# Æ&id

We will generally pay any death benefit, cash surrender value, loan proceeds or partial withdrawal within seven days
after receipt at a Home Office of all the documents required for such a payment. Other than the death benefit, which is
determined as of the date of death, the amount will be determined as of the end of the valuation period in which the
necessary documents are received at a Home Office. However, we may delay payment of proceeds from the
subaccount[s] and the variable portion of the death benefit due under the Contract if the disposal or valuation of the
Account’s assets is not reasonably practicable because: (1) the New York Stock Exchange is closed for other than a
regular holiday or weekend; (2) trading is restricted by the SEC; or (3) the SEC declares that an emergency exists.

With respect to the amount of any cash surrender value allocated to the fixed-rate option, and with respect to a
Contract in-force as extended term insurance, we expect to pay the cash surrender value promptly upon request.
However, we have the right to delay payment of such cash surrender value for up to six months (or a shorter period if
required by applicable law). We will pay interest of at least 3% a year if we delay such a payment for more than 30
days (or a shorter period if required by applicable law).

Living H##ds B#n#fit

The Living Needs Benefit™ is available on your Contract. The benefit may vary by state. There is no charge for
adding the benefit to a Contract. However, an administrative charge (not to exceed $150) will be made at the time the
Living Needs Benefit is paid.

Subject to state regulatory approval, the Living Needs Benefit allows you to elect to receive an accelerated payment
of all or part of the Contract’s death benefit, adjusted to reflect current value, at a time when certain special needs
exist. The adjusted death benefit will always be less than the death benefit, but will generally be greater than the
Contract’s cash surrender value. One or both of the following options may be available. You should consult with a
Pruco Life representative as to whether additional options may be available.

Terminal Illness Option. This option is available if the insured is diagnosed as terminally ill with a life expectancy of
six months or less. When satisfactory evidence is provided, Pruco Life will provide an accelerated payment of the
portion of the death benefit selected by the Contract owner as a Living Needs Benefit. The Contract owner may (1)
elect to receive the benefit in a single sum or (2) receive equal monthly payments for six months. If the insured dies
before all of the payments have been made, the present value of the remaining payments will be paid to the beneficiary
designated in the Living Needs Benefit claim form.

Nursing Home Option. This option is available after the insured has been confined to an eligible nursing home for six
months or more. When satisfactory evidence is provided, including certification by a licensed physician, that the
insured is expected to remain in the nursing home until death, Pruco Life will provide an accelerated payment of the
portion of the death benefit selected by the Contract owner as a Living Needs Benefit. The Contract owner may (1)
elect to receive the benefit in a single sum or (2) receive equal monthly payments for a specified number of years (not
more than 10 nor less than two), depending upon the age of the insured. If the insured dies before all of the payments
have been made, the present value of the remaining payments will be paid to the beneficiary designated in the Living
Needs Benefit claim form in a single sum.

All or part of the Contract’s death benefit may be accelerated under the Living Needs Benefit. If the benefit is only
partially accelerated, a death benefit of at least $25,000 must remain under the Contract. Pruco Life reserves the right
to determine the minimum amount that may be accelerated.

No benefit will be payable if the Contract owner is required to elect it in order to meet the claims of creditors or to
obtain a government benefit. Pruco Life can furnish details about the amount of Living Needs Benefit that is available
to an eligible Contract owner under a particular Contract, and the adjusted premium payments that would be in effect if
less than the entire death benefit is accelerated.

You should consider whether adding this settlement option is appropriate in your given situation. Adding the Living
Needs Benefit to the Contract has no adverse consequences; however, electing to use it could. With the exception of
certain business-related policies, the Living Needs Benefit is excluded from income if the insured is terminally ill or
chronically ill as defined in the tax law (although the exclusion in the latter case may be limited). You should consult a
qualified tax adviser before electing to receive this benefit. Receipt of a Living Needs Benefit payment may also
affect your eligibility for certain government benefits or entitlements.

24
IllustL&tions of S&sh SuLL#nd#L V&lu#s, D#&th B#n#fits, &nd A◆◆unul&t#d ÆL#niuns

The following four tables show how a Contract’s death benefit and cash surrender values change with the investment
performance of the Account. They are “hypothetical” because they are based, in part, upon several assumptions
which are described below. All four tables assume the following:

 a Contract with a face amount of $60,000 bought by a 35 year old male, non-smoker, with no extra risks or
substandard ratings, and no extra benefit riders added to the Contract.

 the Scheduled Premium of $554.80 is paid on each Contract anniversary and no loans are taken.

 the Contract Fund has been invested in equal amounts in each of the 13 available portfolios of the Series Fund
and no portion of the Contract Fund has been allocated to the fixed-rate option or the Real Property Account.

The tables are not applicable to Contracts issued on a guaranteed issue basis or to Contracts where the risk
classification is on a multiple life basis.

The tables reflect values applicable to both revised and original Contracts. However, these values are not applicable
to the original Contracts where the death benefit has been increased to the Contract Fund divided by the net single
premium.

The first table (page T1) assumes a Form A Contract has been purchased and the second table (page T2) assumes a
Form B Contract has been purchased. Both assume the current charges will continue for the indefinite future.
Moreover, these tables reflect Pruco Life's current practice of waiving the front-end sales load of 5% after total
premiums paid exceeds five scheduled annual premiums. See Charges and Expenses, page 9. The tables also
reflect Pruco Life's current practice of increasing the Contract Fund on a percentage basis based on the attained age
of the insured. While we do not currently intend to withdraw or modify these reductions in charges or additions to the
Contract Fund, we reserve the right to do so.

The third and fourth tables (pages T3 and T4) assume that Form A and Form B Contracts have been purchased,
respectively, and the maximum contractual charges have been made from the beginning. Neither reflect the waiver of
the front-end sales load nor the monthly additions to the Contract Fund that further reduce the cost of insurance
charge.

Finally, there are four assumptions, shown separately, about the average investment performance of the portfolios.
The first is that there will be a uniform 0% gross rate of return with the average value of the Contract Fund uniformly
adversely affected by very unfavorable investment performance. The other three assumptions are that investment
performance will be at a uniform gross annual rate of 4%, 8% and 12%. Actual returns will fluctuate from year to year.
In addition, death benefits and cash surrender values would be different from those shown if investment returns
averaged 0%, 4%, 8% and 12% but fluctuated from those averages throughout the years. Nevertheless, these
assumptions help show how the Contract values change with investment experience.

The first column in the following four tables (pages T1 through T4) shows the Contract year. The second column, to
provide context, shows what the aggregate amount would be if the Scheduled Premiums had been invested to earn
interest, after taxes, at 4% compounded annually. The next four columns show the death benefit payable in each of
the years shown for the four different assumed investment returns. The last four columns show the cash surrender
value payable in each of the years shown for the four different assumed investment returns. The cash surrender values
in the first 10 years reflect the surrender charges that would be deducted if the Contract were surrendered in those
years.

A gross return (as well as the net return) is shown at the top of each column. The gross return represents the
combined effect of investment income and capital gains and losses, realized or unrealized, of the portfolios before any
reduction is made for investment advisory fees or other Series Fund expenses. The net return reflects average total
annual expenses of the 13 portfolios of 0.49%, and the daily deduction from the Contract Fund of 0.60% per year.
Thus, based on the above assumptions, gross investment returns of 0%, 4%, 8% and 12% are the equivalent of net
investment returns of -1.09%, 2.91%, 6.91% and 10.91%, respectively. The actual fees and expenses of the portfolios
associated with a particular Contract may be more or less than 0.49% and will depend on which subaccounts are
selected. The death benefits and cash surrender values shown reflect the deduction of all expenses and charges both
from the Series Fund and under the Contract.

Your Pruco Life representative can provide you with a hypothetical illustration for your own age, sex and rating class.

25
 ILLUSTRATIONS
-------------
VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM A -- FIXED DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (4)
USING CURRENT SCHEDULE OF CHARGES
Death Benefit (2)(3) Cash Surrender Value (2)(3)
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (4) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
1 $ 577 $60,000 $60,000 $ 60,000 $ 60,000 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $ 60,000 $ 60,000 $ 226 $ 274 $ 323 $ 375
3 $ 1,801 $60,000 $60,000 $ 60,000 $ 60,000 $ 527 $ 621 $ 720 $ 825
4 $ 2,450 $60,000 $60,000 $ 60,000 $ 60,000 $ 820 $ 974 $ 1,141 $ 1,322
5 $ 3,125 $60,000 $60,000 $ 60,000 $ 60,000 $ 1,102 $ 1,330 $ 1,586 $ 1,870
6 $ 3,827 $60,000 $60,000 $ 60,000 $ 60,000 $ 1,513 $ 1,832 $ 2,197 $ 2,616
7 $ 4,557 $60,000 $60,000 $ 60,000 $ 60,000 $ 1,939 $ 2,363 $ 2,864 $ 3,453
8 $ 5,317 $60,000 $60,000 $ 60,000 $ 60,000 $ 2,353 $ 2,899 $ 3,561 $ 4,361
9 $ 6,106 $60,000 $60,000 $ 60,000 $ 60,000 $ 2,755 $ 3,439 $ 4,291 $ 5,350
10 $ 6,927 $60,000 $60,000 $ 60,000 $ 60,000 $ 3,147 $ 3,984 $ 5,057 $ 6,428
15 $11,553 $60,000 $60,000 $ 60,000 $ 60,000 $ 4,494 $ 6,416 $ 9,258 $ 13,465
20 $17,182 $60,000 $60,000 $ 60,000 $ 60,000 $ 5,426 $ 8,952 $ 15,035 $ 25,565
25 $24,029 $60,000 $60,000 $ 60,000 $ 85,622 $ 5,694 $11,400 $ 23,034 $ 46,275
30 (Age 65) $32,361 $60,000 $60,000 $ 60,000 $132,557 $ 4,924 $13,455 $ 34,384 $ 80,841
35 $49,748 $60,000 $60,000 $ 74,482 $203,082 $16,904 $21,925 $ 50,556 $137,844
40 $70,902 $60,000 $60,000 $ 97,318 $310,266 $27,908 $31,137 $ 72,424 $230,900
45 $96,639 $60,000 $60,000 $126,761 $475,643 $38,160 $41,626 $101,578 $381,152

(1) If premiums are paid more frequently than annually, the initial payments would be $284.80 semi-annually, $145.40
quarterly or $50 monthly. The ultimate payments would be $1,775.20 semi-annually, $897.80 quarterly
or $302.60 monthly. The death benefits and cash surrender values would be slightly different for a Contract
with more frequent premium payments.
(2) Assumes no Contract loan has been made.
(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts
that first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased
to the Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures
shown are applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up.
(4) For a hypothetical gross investment return of 0%, the second Scheduled Premium will be $3,399.91. For a gross return of 4%, the
second Scheduled Premium will be $1,842.04. For a gross return of 8%, the second Scheduled Premium will be $554.80. For a
gross return of 12%, the second Scheduled Premium will be $554.80. The premiums accumulated at 4% interest in column 2 are
those payable if the gross investment return is 4%. For an explanation of why the scheduled premium may increase on the premium
change date, see Premiums.

The hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should
not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less
than those shown and will depend on a number of factors including the investment allocations made by an owner, prevailing
interest rates, and rates of inflation. The death benefit and cash surrender value for a contract would be different from
those shown if the actual rates of return averaged 0%, 4%, 8%, and 12% over a period of years but also fluctuated above or
below those averages for individual contract years. No representations can be made by Pruco Life or the Series Fund
that these hypothetical rates of return can be achieved for any one year or sustained over any period of time.

T1
 VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM B -- VARIABLE DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (4)
USING CURRENT SCHEDULE OF CHARGES
Death Benefit (2)(3) Cash Surrender Value (2)(3)
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (4) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
1 $ 577 $60,000 $60,016 $ 60,033 $ 60,050 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,031 $ 60,081 $ 60,132 $ 225 $ 273 $ 322 $ 373
3 $ 1,801 $60,000 $60,048 $ 60,147 $ 60,251 $ 526 $ 619 $ 718 $ 823
4 $ 2,450 $60,000 $60,066 $ 60,232 $ 60,413 $ 818 $ 971 $ 1,138 $ 1,318
5 $ 3,125 $60,000 $60,086 $ 60,340 $ 60,622 $ 1,100 $ 1,327 $ 1,581 $ 1,863
6 $ 3,827 $60,000 $60,137 $ 60,500 $ 60,916 $ 1,511 $ 1,827 $ 2,190 $ 2,606
7 $ 4,557 $60,000 $60,193 $ 60,689 $ 61,273 $ 1,936 $ 2,357 $ 2,854 $ 3,438
8 $ 5,317 $60,000 $60,254 $ 60,910 $ 61,702 $ 2,350 $ 2,892 $ 3,547 $ 4,340
9 $ 6,106 $60,000 $60,322 $ 61,164 $ 62,211 $ 2,752 $ 3,430 $ 4,272 $ 5,319
10 $ 6,927 $60,000 $60,398 $ 61,457 $ 62,810 $ 3,143 $ 3,972 $ 5,032 $ 6,385
15 $ 11,553 $60,000 $61,166 $ 63,956 $ 68,075 $ 4,509 $ 6,407 $ 9,197 $ 13,316
20 $ 17,182 $60,000 $62,460 $ 68,351 $ 78,503 $ 5,465 $ 8,921 $14,812 $ 24,964
25 $ 24,029 $60,000 $64,663 $ 75,649 $ 97,961 $ 5,761 $11,252 $22,238 $ 44,549
30 (Age 65) $ 32,361 $60,510 $68,399 $ 87,302 $133,008 $ 5,010 $12,899 $31,802 $ 77,508
35 $ 51,884 $62,448 $68,227 $ 89,837 $195,651 $16,750 $22,529 $44,139 $132,800
40 $ 75,637 $63,521 $69,177 $ 97,040 $300,408 $27,131 $32,787 $60,650 $223,563
45 $104,537 $64,227 $71,826 $111,244 $462,718 $35,966 $43,564 $82,982 $370,794

(1) If premiums are paid more frequently than annually, the initial payments would be $284.80 semi-annually, $145.40
quarterly or $50 monthly. The ultimate payments would be $1,775.20 semi-annually, $897.80 quarterly
or $302.60 monthly. The death benefits and cash surrender values would be slightly different for a Contract
with more frequent premium payments.
(2) Assumes no Contract loan has been made.
(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts
that first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased
to the Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures
shown are applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up.
(4) For a hypothetical gross investment return of 0%, the second Scheduled Premium will be $3,401.07. For a gross return of 4%, the
second Scheduled Premium will be $2,221.30. For a gross return of 8%, the second Scheduled Premium will be $554.80. For a
gross return of 12%, the second Scheduled Premium will be $554.80. The premiums accumulated at 4% interest in column 2 are
those payable if the gross investment return is 4%. For an explanation of why the scheduled premium may increase on the premium
change date, see Premiums.
The hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should
not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less
than those shown and will depend on a number of factors including the investment allocations made by an owner, prevailing
interest rates, and rates of inflation. The death benefit and cash surrender value for a contract would be different from
those shown if the actual rates of return averaged 0%, 4%, 8%, and 12% over a period of years but also fluctuated above or
below those averages for individual contract years. No representations can be made by Pruco Life or the Series Fund
that these hypothetical rates of return can be achieved for any one year or sustained over any period of time.

T2
 VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM A -- FIXED DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (4)
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (2)(3) Cash Surrender Value (2)(3)
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (4) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
1 $ 577 $60,000 $60,000 $60,000 $ 60,000 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $60,000 $ 60,000 $ 185 $ 231 $ 279 $ 328
3 $ 1,801 $60,000 $60,000 $60,000 $ 60,000 $ 460 $ 550 $ 645 $ 746
4 $ 2,450 $60,000 $60,000 $60,000 $ 60,000 $ 723 $ 869 $ 1,028 $ 1,202
5 $ 3,125 $60,000 $60,000 $60,000 $ 60,000 $ 970 $ 1,186 $ 1,428 $ 1,698
6 $ 3,827 $60,000 $60,000 $60,000 $ 60,000 $1,312 $ 1,611 $ 1,955 $ 2,350
7 $ 4,557 $60,000 $60,000 $60,000 $ 60,000 $1,664 $ 2,058 $ 2,524 $ 3,075
8 $ 5,317 $60,000 $60,000 $60,000 $ 60,000 $1,996 $ 2,498 $ 3,109 $ 3,852
9 $ 6,106 $60,000 $60,000 $60,000 $ 60,000 $2,309 $ 2,931 $ 3,711 $ 4,686
10 $ 6,927 $60,000 $60,000 $60,000 $ 60,000 $2,601 $ 3,355 $ 4,328 $ 5,582
15 $ 11,553 $60,000 $60,000 $60,000 $ 60,000 $3,150 $ 4,728 $ 7,108 $ 10,690
20 $ 17,182 $60,000 $60,000 $60,000 $ 60,000 $2,886 $ 5,514 $10,234 $ 18,658
25 $ 24,029 $60,000 $60,000 $60,000 $ 60,000 $1,284 $ 5,066 $13,432 $ 31,500
30 (Age 65) $ 32,361 $60,000 $60,000 $60,000 $ 85,420 $ 0 $ 2,288 $16,235 $ 52,094
35 $ 58,960 $60,000 $60,000 $60,000 $122,416 $3,958 $11,137 $28,064 $ 83,091
40 $ 91,322 $60,000 $60,000 $60,075 $173,275 $6,104 $18,472 $44,708 $128,951
45 $130,695 $60,000 $60,000 $83,553 $243,785 $ 0 $22,502 $66,954 $195,355

(1) If premiums are paid more frequently than annually, the payments would be $284.80 semi-annually, $145.40 quarterly
or $50 monthly. The death benefits and cash surrender values would be slightly different for a Contract with more
frequent premium payments.

(2) Assumes no Contract loan has been made.

(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts
that first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased
to the Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures
shown are applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up.
(4) For a hypothetical gross investment return of 0%, the premium after age 65 will be $3,477.40. for a
gross return of 4% the premium after age 65 will be $3,477.40. for a gross return of 8% the premium
after age 65 will be $2,226.73. for a gross return of 12% the premium after age 65
will be $554.80. The premiums accumulated at 4% interest in column 2 are those payable if the gross investment
return is 4%. For an explanation of why the scheduled premium may increase on the premium change date, see Premiums.
The hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should
not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less
than those shown and will depend on a number of factors including the investment allocations made by an owner, prevailing
interest rates, and rates of inflation. The death benefit and cash surrender value for a contract would be different from
those shown if the actual rates of return averaged 0%, 4%, 8%, and 12% over a period of years but also fluctuated above or
below those averages for individual contract years. No representations can be made by Pruco Life or the Series Fund
that these hypothetical rates of return can be achieved for any one year or sustained over any period of time.

T3
 VARIABLE APPRECIABLE LIFE INSURANCE CONTRACT
FORM B -- VARIABLE DEATH BENEFIT
MALE PREFERRED ISSUE AGE 35
$60,000 GUARANTEED DEATH BENEFIT
$554.80 MINIMUM INITIAL SCHEDULED PREMIUM (1) (4)
USING MAXIMUM CONTRACTUAL CHARGES
Death Benefit (2)(3) Cash Surrender Value (2)(3)
---------------------------------------------------- ----------------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------------- ----------------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 12% Gross 0% Gross 4% Gross 8% Gross 12% Gross
Year Per Year (4) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net) (-1.09% Net) (2.91% Net) (6.91% Net) (10.91% Net)
------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
1 $ 577 $60,000 $60,000 $60,013 $ 60,030 $ 0 $ 0 $ 0 $ 0
2 $ 1,177 $60,000 $60,000 $60,036 $ 60,085 $ 183 $ 230 $ 278 $ 327
3 $ 1,801 $60,000 $60,000 $60,072 $ 60,172 $ 459 $ 548 $ 643 $ 743
4 $ 2,450 $60,000 $60,000 $60,120 $ 60,292 $ 721 $ 866 $ 1,025 $ 1,197
5 $ 3,125 $60,000 $60,000 $60,182 $ 60,450 $ 967 $ 1,182 $ 1,423 $ 1,691
6 $ 3,827 $60,000 $60,000 $60,258 $ 60,649 $1,310 $ 1,607 $ 1,948 $ 2,339
7 $ 4,557 $60,000 $60,000 $60,350 $ 60,895 $1,661 $ 2,053 $ 2,515 $ 3,060
8 $ 5,317 $60,000 $60,000 $60,459 $ 61,192 $1,993 $ 2,492 $ 3,096 $ 3,830
9 $ 6,106 $60,000 $60,000 $60,585 $ 61,546 $2,306 $ 2,924 $ 3,693 $ 4,654
10 $ 6,927 $60,000 $60,000 $60,731 $ 61,963 $2,599 $ 3,348 $ 4,306 $ 5,538
15 $ 11,553 $60,000 $60,000 $61,786 $ 65,240 $3,148 $ 4,719 $ 7,027 $ 10,481
20 $ 17,182 $60,000 $60,000 $63,510 $ 71,379 $2,884 $ 5,503 $ 9,971 $ 17,840
25 $ 24,029 $60,000 $60,000 $66,056 $ 82,021 $1,281 $ 5,052 $12,644 $ 28,609
30 (Age 65) $ 32,361 $60,000 $60,000 $69,517 $ 99,598 $ 0 $ 2,269 $14,017 $ 44,098
35 $ 58,960 $60,000 $60,000 $72,204 $117,021 $3,955 $11,094 $26,506 $ 71,324
40 $ 91,322 $60,000 $60,000 $77,694 $153,188 $6,101 $18,408 $41,304 $114,002
45 $130,695 $60,000 $60,000 $87,111 $221,243 $ 0 $22,391 $58,849 $177,291

(1) If premiums are paid more frequently than annually, the payments would be $284.80 semi-annually, $145.40 quarterly
or $50 monthly. The death benefits and cash surrender values would be slightly different for a Contract with more
frequent premium payments.

(2) Assumes no Contract loan has been made.

(3) Values shown in the table are applicable to both the original Contracts (the "1984 Contracts") and the revised Contracts
that first began to be issued in September of 1986 (the "1986 Contracts"), except where the death benefit has been increased
to the Contract fund divided by the net single premium, in which case the cash surrender value and death benefit figures
shown are applicable only to the 1986 Contracts. This first occurs at the time when the 1984 Contracts would become paid-up.
(4) For a hypothetical gross investment return of 0%, the premium after age 65 will be $3,477.40. for a
gross return of 4% the premium after age 65 will be $3,477.40. for a gross return of 8% the premium
after age 65 will be $2,947.35. for a gross return of 12% the premium after age 65
will be $1,272.04. The premiums accumulated at 4% interest in column 2 are those payable if the gross investment
return is 4%. For an explanation of why the scheduled premium may increase on the premium change date, see Premiums.
The hypothetical investment rates of return shown above and elsewhere in this prospectus are illustrative only and should
not be deemed a representation of past or future investment rates of return. Actual rates of return may be more or less
than those shown and will depend on a number of factors including the investment allocations made by an owner, prevailing
interest rates, and rates of inflation. The death benefit and cash surrender value for a contract would be different from
those shown if the actual rates of return averaged 0%, 4%, 8%, and 12% over a period of years but also fluctuated above or
below those averages for individual contract years. No representations can be made by Pruco Life or the Series Fund
that these hypothetical rates of return can be achieved for any one year or sustained over any period of time.

T4
SontL&◆t Lo&ns

You may borrow from Pruco Life an amount up to the current loan value of your Contract using the Contract as the
only security for the loan. The loan value of a Contract is 90% of an amount equal to its Contract Fund, reduced by
any charges due upon surrender. However, we will, on a non-contractual basis (contractual in Texas), increase the
loan value by permitting you to borrow up to 100% of the portion of the Contract Fund attributable to the fixed-rate
option (or any portion of the Contract Fund attributable to a prior loan supported by the fixed-rate option), reduced by
any charges due upon surrender. The minimum amount that may be borrowed at any one time is $500, unless the
loan is used to pay premiums on the Contract. A Contract in default has no loan value.

If you request a loan you may choose one of two interest rates. You may elect to have interest charges accrued daily
at a fixed effective annual rate of 5.5%. Alternatively, you may elect a variable interest rate that changes from time to
time. You may switch from the fixed to variable interest loan provision, or vice-versa, with Pruco Life’s consent.

If you elect the variable loan interest rate provision, interest charged on any loan will accrue daily at an annual rate
Pruco Life determines at the start of each Contract year (instead of at the fixed 5.5% rate). This interest rate will not
exceed the greatest of: (1) the “Published Monthly Average” for the calendar month ending two months before the
calendar month of the Contract anniversary; (2) 5%; or (3) the rate permitted by law in the state of issue of the
Contract. The “Published Monthly Average” means Moody's Corporate Bond Yield Average-Monthly Average
Corporates, as published by Moody's Investors Service, Inc. or any successor to that service, or if that average is no
longer published, a substantially similar average established by the insurance regulator where the Contract is issued.
For example, the Published Monthly Average in 2001 ranged from 7.32% to 7.69%.

Interest payments on any loan are due at the end of each Contract year. If interest is not paid when due, it is added to
the principal amount of the loan. The Contract debt is the principal amount of all outstanding loans plus any interest
accrued thereon. If at any time your Contract debt exceeds your Contract Fund, Pruco Life will notify you of its intent
to terminate the Contract in 61 days, within which time you may repay all or enough of the loan to keep the Contract in-
force.

If you fail to keep the Contract in-force, the amount of unpaid Contract debt will be treated as a distribution and will be
immediately taxable to the extent of gain in the Contract. Reinstatement of the Contract after lapse will not eliminate
the taxable income which we are required to report to the Internal Revenue Service. See Lapse and Reinstatement,
page 23 and Tax Treatment of Contract Benefits - Pre-Death Distributions, page 29.

When a loan is made, an amount equal to the loan proceeds is transferred out of the applicable investment options.
The reduction is generally made in the same proportions as the value that each investment option bears to the total
value of the Contract. While a fixed-rate loan is outstanding, the amount that was so transferred will continue to be
treated as part of the Contract Fund, but it will be credited with the assumed rate of return of 4% rather than with the
actual rate of return of the applicable investment option[s]. While a loan made pursuant to the variable loan interest
rate provision is outstanding, the amount that was transferred is credited with a rate which is less than the loan interest
rate for the Contract year by no more than 1.5%, rather than with the actual rate of return of the subaccount[s], the
fixed-rate option or the Real Property Account. Currently, we credit such amounts at a rate that is 1% less than the
loan interest rate for the Contract year. If a loan remains outstanding at a time when Pruco Life fixes a new rate, the
new interest rate applies.

Loans you take against the Contract are ordinarily treated as debt and are not considered distributions subject to tax.
However, you should know that the Internal Revenue Service may take the position that the variable rate loan should
be treated as a distribution for tax purposes because of the relatively low differential between the loan interest rate and
the Contract’s crediting rate. Distributions are subject to income tax. Were the Internal Revenue Service to take this
position, Prudential would take reasonable steps to attempt to avoid this result, including modifying the Contract’s loan
provisions, but cannot guarantee that such efforts would be successful.

A loan will not affect the amount of the premiums due. If the death benefit becomes payable while a loan is
outstanding, or should the Contract be surrendered, any Contract debt will be deducted from the death benefit or the
cash surrender value otherwise payable.

A loan will have a permanent effect on a Contract's cash surrender value and may have a permanent effect on the
death benefit because the investment results of the selected investment options will apply only to the amount
remaining in those investment options. The longer the loan is outstanding, the greater the effect is likely to be. The
effect could be favorable or unfavorable. If investment results are greater than the rate being credited upon the
amount of the loan while the loan is outstanding, Contract values will not increase as rapidly as they would have if no

26
loan had been made. If investment results are below that rate, Contract values will be higher than they would have
been had no loan been made. Loan repayments are allocated to the investment options proportionately based on their
balances at the time of the loan repayment.

Loans from Modified Endowment Contracts may be treated for tax purposes as distributions of income. See Tax
Treatment of Contract Benefits, page 28.

Æ#poLts to SontL&◆t OWn#Ls

Once each Contract year (except where the Contract is in-force as fixed extended term insurance), Pruco Life will send
you a statement that provides certain information pertinent to your own Contract. This statement will detail values,
transactions made, and specific Contract data that apply only to your particular Contract. On request, you will be sent
a current statement in a form similar to that of the annual statement described above, but Pruco Life may limit the
number of such requests or impose a reasonable charge if such requests are made too frequently.

You will also be sent annual and semi-annual reports of the Series Fund showing the financial condition of the
portfolios and the investments held in each portfolio.

Options on L&ps#

If your Contract does lapse, it will still provide some benefits. You can receive the cash surrender value by making a
request of Pruco Life prior to the end of the 61 day grace period. You may also choose one of the three forms of
insurance described below for which no further premiums are payable.

1. Fixed Extended Term Insurance. With two exceptions explained below, if you do not communicate at all with
Pruco Life, life insurance coverage will continue for a length of time that depends on the cash surrender value on
the date of default (which reflects the deduction of the deferred sales load, administrative charges, and Contract
debt, if any), the amount of insurance, and the age and sex (except where unisex rates apply) of the insured. The
insurance amount will be what it would have been on the date of default taking into account any Contract debt on
that date. The amount will not change while the insurance stays in-force. This benefit is known as extended term
insurance. If you request, we will tell you in writing how long the insurance will be in effect. Extended term
insurance has a cash surrender value, but no loan value.

Contracts issued on the lives of certain insureds in high risk rating classes and Contracts issued in connection with
tax qualified pension plans will include a statement that extended term insurance will not be provided. In those
cases, variable reduced paid-up insurance will be the automatic benefit provided on lapse.

2. Variable Reduced Paid-Up Insurance. Variable reduced paid-up insurance provides insurance coverage for the
lifetime of the insured. The initial insurance amount will depend upon the cash surrender value on the date of
default (which reflects the deduction of the deferred sales load, administrative charges, and Contract debt, if any),
and the age and sex of the insured. This will be a new guaranteed minimum death benefit. Aside from this
guarantee, the cash surrender value and the amount of insurance will vary with investment performance in the
same manner as the paid-up Contract described earlier. See When a Contract Becomes Paid-Up, page 19.
Variable reduced paid-up insurance has a loan privilege identical to that available on premium paying Contracts.
See Contract Loans, page 26. Acquisition of reduced paid-up insurance may result in your Contract becoming a
Modified Endowment Contract. See Tax Treatment of Contract Benefits, page 28.

As explained above, variable reduced paid-up insurance is the automatic benefit on lapse for Contracts issued on
certain insureds. Owners of other Contracts who want variable reduced paid-up insurance must ask for it in
writing, in a form that meets Pruco Life’s needs, within three months of the date of default; it will be available to
such Contract owners only if the initial amount of variable reduced paid-up insurance would be at least $5,000.
This minimum is not applicable to Contracts for which variable reduced paid-up insurance is the automatic benefit
upon lapse.

3. Payment of Cash Surrender Value. You can receive the cash surrender value by surrendering the Contract and
making a written request in a form that meets Pruco Life’s needs. If we receive the request after the 61-day grace
period has expired, the cash surrender value will be the net value of any extended term insurance then in-force, or
the net value of any reduced paid-up insurance then in-force, less any Contract debt. Surrender of your Contract
may have tax consequences. See Tax Treatment of Contract Benefits, page 28.

27
Æight to Ex◆h&ng# & SontL&◆t foL & Fix#d-B#n#fit InsuL&n◆# Æoli◆y

The only right to exchange the Contract for a fixed-benefit contract is provided by allowing Contract owners to transfer
their entire Contract Fund to the fixed-rate option at any time within two years of any increase in face amount with
respect to the amount of the increase. This is done without regard to the otherwise applicable limit of four transfers per
year. See Transfers, page 16. This conversion right will also be provided if the Series Fund or one of its portfolios
has a material change in its investment policy, as explained above.

S&l# of th# SontL&◆t &nd S&l#s Sonnissions

Pruco Securities Corporation (“Prusec”), an indirect wholly-owned subsidiary of Prudential, acts as the principal
underwriter of the Contract. Prusec, organized in 1971 under New Jersey law, is registered as a broker and dealer
under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc.
Prusec's principal business address is 751 Broad Street, Newark, New Jersey 07102-3777. The Contract was sold by
registered representatives of Prusec who are also authorized by state insurance departments to do so. The Contract
may also have been sold through other broker-dealers authorized by Prusec and applicable law to do so.

Registered representatives of such other broker-dealers may be paid on a different basis than described below.
Where the insured is less than 60 years of age, the representative will generally receive a commission of no more than
50% of the Scheduled Premiums for the first year, no more than 12% of the Scheduled Premiums for the second, third,
and fourth years, no more than 3% of the Scheduled Premiums for the fifth through 10th years, and no more than 2%
of the Scheduled Premiums thereafter. For insureds over 59 years of age, the commission will be lower. The
representative may be required to return all or part of the first year commission if the Contract is not continued through
the second year.

Representatives with less than three years of service may be paid on a different basis. Representatives who met
certain productivity, profitability, and persistency standards with regard to the sale of the Contract may be eligible for
additional compensation.

Sales expenses in any year are not equal to the deduction for sales load in that year. Pruco Life expects to recover its
total sales expenses over the periods the Contracts are in effect. To the extent that the sales charges are insufficient
to cover total sales expenses, the sales expenses will be recovered from Pruco Life's surplus, which may include
amounts derived from the mortality and expense risk charge and the guaranteed minimum death benefit risk charge
described in items 5 and 7 under Charges and Expenses, page 9.

T&x TL#&tn#nt of SontL&◆t B#n#fits

This summary provides general information on the federal income tax treatment of the Contract. It is not a complete
statement of what the federal income taxes will be in all circumstances. It is based on current law and interpretations,
which may change. It does not cover state taxes or other taxes. It is not intended as tax advice. You should consult
your own qualified tax adviser for complete information and advice.

Treatment as Life Insurance. The Contract must meet certain requirements to qualify as life insurance for tax
purposes. These requirements include certain definitional tests and rules for diversification of the Contract’s
investments. For further information on the diversification requirements, see Taxation of the Fund in the statement of
additional information for the Series Fund.
We believe we have taken adequate steps to ensure that the Contract qualifies as life insurance for tax purposes.
Generally speaking, this means that:

 you will not be taxed on the growth of the funds in the Contract, unless you receive a distribution from the
Contract,

 the Contract’s death benefit will be income tax free to your beneficiary.

Although we believe that the Contract should qualify as life insurance for tax purposes, there are some uncertainties,
particularly because the Secretary of Treasury has not yet issued permanent regulations that bear on this question.
Accordingly, we reserve the right to make changes -- which will be applied uniformly to all Contract owners after
advance written notice -- that we deem necessary to ensure that the Contract will qualify as life insurance.

28
Pre-Death Distributions. The tax treatment of any distribution you receive before the insured’s death depends on
whether the Contract is classified as a Modified Endowment Contract.
Contracts Not Classified as Modified Endowment Contracts.

 If you surrender the Contract or allow it to lapse, you will be taxed on the amount you receive in excess of
the premiums you paid less the untaxed portion of any prior withdrawals. For this purpose, you will be
treated as receiving any portion of the cash surrender value used to repay Contract debt. In other words,
you will immediately have taxable income to the extent of gain in the Contract. Reinstatement of the
Contract will not eliminate the taxable income which we are required to report to the Internal Revenue
Service. The tax consequences of a surrender may differ if you take the proceeds under an income
payment settlement option.

 Generally, you will be taxed on a withdrawal to the extent the amount you receive exceeds the premiums
you paid for the Contract less the untaxed portion of any prior withdrawals. However, under some limited
circumstances, in the first 15 Contract years, all or a portion of a withdrawal may be taxed if the Contract
Fund exceeds the total premiums paid less the untaxed portions of any prior withdrawals, even if total
withdrawals do not exceed total premiums paid.

 Extra premiums for optional benefits and riders generally do not count in computing the premiums paid
for the Contract for the purposes of determining whether a withdrawal is taxable.

 Loans you take against the Contract are ordinarily treated as debt and are not considered distributions
subject to tax.

Modified Endowment Contracts.

 The rules change if the Contract is classified as a Modified Endowment Contract. The Contract could be
classified as a Modified Endowment Contract if premiums substantially in excess of Scheduled Premiums
are paid or a decrease in the face amount of insurance is made (or a rider removed). The addition of a
rider or an increase in the face amount of insurance may also cause the Contract to be classified as a
Modified Endowment Contract. You should first consult a qualified tax adviser and your Pruco Life
representative if you are contemplating any of these steps.

 If the Contract is classified as a Modified Endowment Contract, then amounts you receive under the
Contract before the insured’s death, including loans and withdrawals, are included in income to the extent
that the Contract Fund before surrender charges exceeds the premiums paid for the Contract increased
by the amount of any loans previously included in income and reduced by any untaxed amounts
previously received other than the amount of any loans excludable from income. An assignment of a
Modified Endowment Contract is taxable in the same way. These rules also apply to pre-death
distributions, including loans and assignments, made during the two-year period before the time that the
Contract became a Modified Endowment Contract.

 Any taxable income on pre-death distributions (including full surrenders) is subject to a penalty of 10
percent unless the amount is received on or after age 59½, on account of your becoming disabled or as a
life annuity. It is presently unclear how the penalty tax provisions apply to Contracts owned by
businesses.

 All Modified Endowment Contracts issued by us to you during the same calendar year are treated as a
single Contract for purposes of applying these rules.

Investor Control. Treasury Department regulations do not provide guidance concerning the extent to which you may
direct your investment in the particular variable investment options without causing you, instead of Prudential, to be
considered the owner of the underlying assets. Because of this uncertainty, Prudential reserves the right to make such
changes as it deems necessary to assure that the Contract qualifies as life insurance for tax purposes. Any such
changes will apply uniformly to affected Contract owners and will be made with such notice to affected Contract
owners as is feasible under the circumstances.

29
Withholding. You must affirmatively elect that no taxes be withheld from a pre-death distribution. Otherwise, the
taxable portion of any amounts you receive will be subject to withholding. You are not permitted to elect out of
withholding if you do not provide a social security number or other taxpayer identification number. You may be subject
to penalties under the estimated tax payment rules if your withholding and estimated tax payments are insufficient to
cover the tax due.

Other Tax Considerations. If you transfer or assign the Contract to someone else, there may be gift, estate and/or
income tax consequences. If you transfer the Contract to a person two or more generations younger than you (or
designate such a younger person as a beneficiary), there may be Generation Skipping Transfer tax consequences.
Deductions for interest paid or accrued on Contract debt or on other loans that are incurred or continued to purchase
or carry the Contract may be denied. Your individual situation or that of your beneficiary will determine the federal
estate taxes and the state and local estate, inheritance and other taxes due if you or the insured dies.

Business-Owned Life Insurance. If a business, rather than an individual, is the owner of the Contract, there are
some additional rules. Business Contract owners generally cannot deduct premium payments. Business Contract
owners generally cannot take tax deductions for interest on Contract debt paid or accrued after October 13, 1995. An
exception permits the deduction of interest on policy loans on Contracts for up to 20 key persons. The interest
deduction for Contract debt on these loans is limited to a prescribed interest rate and a maximum aggregate loan
amount of $50,000 per key insured person. The corporate alternative minimum tax also applies to business-owned life
insurance. This is an indirect tax on additions to the Contract Fund or death benefits received under business-owned
life insurance policies.

T&x-Qu&lifi#d Æ#nsion Æl&ns

You may have acquired the Contract to fund a pension plan that qualifies for tax favored treatment under the Internal
Revenue Code. We issue such a Contract with a minimum face amount of $10,000, with increases and decreases in
face amount in minimum increments of $10,000. The monthly charge for anticipated mortality costs and the scheduled
premiums is the same for male and female insureds of a particular age and underwriting classification, as required for
insurance and annuity contracts sold to tax-qualified pension plans. We provided you with illustrations showing
premiums and charges if you wished to fund a tax-qualified pension plan. Only certain riders are available for
Contracts issued in connection with a tax-qualified pension plan. Fixed reduced paid-up insurance and payment of the
cash surrender value are the only options on lapse available for a Contract issued in connection with a tax-qualified
pension plan. See Lapse and Reinstatement, page 22. Finally, a Contract issued in connection with a tax-qualified
pension plan may not invest in the Real Property Account.
You should consult a qualified tax adviser before purchasing a Contract in connection with a tax-qualified pension plan
to confirm, among other things, the suitability of the Contract for your particular plan.

L#g&l Sonsid#L&tions Æ#l&ting to S#x-Distin◆t ÆL#niuns &nd B#n#fits

The Contract generally employs mortality tables that distinguish between males and females. Thus, premiums and
benefits differ under Contracts issued on males and females of the same age. However, in those states that have
adopted regulations prohibiting sex-distinct insurance rates, premiums and cost of insurance charges will be based on
a blended unisex rate whether the insured is male or female. In addition, employers and employee organizations who
purchased a Contract should consult their legal advisers to determine whether a Contract based on sex-distinct
actuarial tables is consistent with Title VII of the Civil Rights Act of 1964 or other applicable law.

Oth#L G#n#L&l SontL&◆t ÆLovisions

Assignment. This Contract may not be assigned if the assignment would violate any federal, state or local law or
regulation. Generally, the Contract may not be assigned to another insurance company or to an employee benefit plan
without Pruco Life’s consent. Pruco Life assumes no responsibility for the validity or sufficiency of any assignment. We
will not be obligated to comply with any assignment unless we receive a copy at a Home Office.

Beneficiary. You designate and name your beneficiary in the application. Thereafter, you may change the
beneficiary, provided it is in accordance with the terms of the Contract. Should the insured die with no surviving
beneficiary, the insured’s estate will become the beneficiary.

30
Incontestability. We will not contest the Contract after it has been in-force during the insured’s lifetime for two years
from the issue date except when any change is made in the Contract that requires Pruco Life's approval and would
increase our liability. We will not contest such change after it has been in effect for two years during the lifetime of the
insured.

Misstatement of Age or Sex. If the insured’s stated age or sex (except where unisex rates apply) or both are
incorrect in the Contract, Pruco Life will adjust the death benefits payable, as required by law, to reflect the correct age
and sex. Any such benefit will be based on what the most recent charge for mortality would have provided at the
correct age and sex.

Settlement Options. The Contract grants to most owners, or to the beneficiary, a variety of optional ways of receiving
Contract proceeds, other than in a lump sum. Any Pruco Life representative authorized to sell this Contract can
explain these options upon request.

Suicide Exclusion. If the insured dies by suicide within two years from the effective date of an increase in the face
amount of insurance, we will pay, as to the increase in amount, no more than the sum of the Scheduled Premiums
attributable to the increase.

Æid#Ls

Contract owners may be able to obtain extra fixed benefits, which may require an additional premium. These optional
insurance benefits will be described in what is known as a "rider" to the Contract. Charges applicable to the riders will
be deducted from the Contract Fund on each Monthly date.

One rider pays certain premiums into the Contract if the insured dies in an accident. Others waive certain premiums if
the insured is disabled within the meaning of the provision (or, in the case of a Contract issued on an insured under the
age of 15, if the applicant dies or becomes disabled within the meaning of the provision). Others pay certain premiums
into the Contract if the insured dies within a stated number of years after issue; similar term insurance riders may be
available for the insured’s spouse or child. The amounts of these benefits are fully guaranteed at issue and do not
depend on the performance of the Account. Certain restrictions may apply; they are clearly described in the applicable
rider. Any Pruco Life representative authorized to sell the Contract can explain these extra benefits further. Samples
of the provisions are available from Pruco Life upon written request.

Under one form of rider, which provides monthly renewable term life insurance, the amount payable upon the death of
the insured may be substantially increased. If this rider is purchased, even the original Contract will not become paid-
up, although, if the Contract Fund becomes sufficiently large, a time may come when Pruco Life will have the right to
refuse to accept further premiums. See When a Contract Becomes Paid-Up, page 19.

Under another form of rider that is purchased for a single premium, businesses that own a Contract covering certain
employees may be able to change the insured person from one key employee to another if certain requirements are
met.

Substitution of S#Li#s Fund Sh&L#s

Although Pruco Life believes it to be unlikely, it is possible that in the Judgement of its management, one or more of
the portfolios of the Series Fund may become unsuitable for investment by Contract owners because of investment
policy changes, tax law changes, or the unavailability of shares for investment. In that event, Pruco Life may seek to
substitute the shares of another portfolio or of an entirely different mutual fund. Before this can be done, the approval
of the SEC, and possibly one or more state insurance departments, will be required. Contract owners will be notified of
such substitution.

St&t# Æ#gul&tion

Pruco Life is subject to regulation and supervision by the Department of Insurance of the State of Arizona, which
periodically examines its operations and financial condition. It is also subject to the insurance laws and regulations of
all jurisdictions in which it is authorized to do business.

Pruco Life is required to submit annual statements of its operations, including financial statements, to the insurance
departments of the various jurisdictions in which it does business to determine solvency and compliance with local
insurance laws and regulations.

31
In addition to the annual statements referred to above, Pruco Life is required to file with Arizona and other jurisdictions
a separate statement with respect to the operations of all its variable contract accounts, in a form promulgated by the
National Association of Insurance Commissioners.

Exp#Lts

The consolidated financial statements of Pruco Life and its subsidiaries as of December 31, 2001 and 2000 and for
each of the three years in the period ended December 31, 2001 and the financial statements of the Account as of
December 31, 2001 and for each of the three years in the period then ended included in this prospectus have been so
included in reliance on the reports of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP’s principal business address is 1177
Avenue of the Americas, New York, New York 10036.

Actuarial matters included in this prospectus have been examined by Pamela A. Schiz, FSA, MAAA, Vice President
and Actuary of Prudential, whose opinion is filed as an exhibit to the registration statement.

Litig&tion &nd Æ#gul&toLy ÆLo◆##dings

We are subject to legal and regulatory actions in the ordinary course of our businesses, including class actions.
Pending legal and regulatory actions include proceedings specific to our practices and proceedings generally
applicable to business practices in the industries in which we operate. In certain of these lawsuits, large and/or
indeterminate amounts are sought, including punitive or exemplary damages.

Beginning in 1995, regulatory authorities and customers brought significant regulatory actions and civil litigation
against Pruco Life and Prudential involving individual life insurance sales practices. In 1996, Prudential, on behalf of
itself and many of its life insurance subsidiaries, including Pruco Life, entered into settlement agreements with relevant
insurance regulatory authorities and plaintiffs in the principal life insurance sales practices class action lawsuit covering
policyholders of individual permanent life insurance policies issued in the United States from 1982 to 1995. Pursuant
to the settlements, the companies agreed to various changes to their sales and business practices controls, to a series
of fines, and to provide specific forms of relief to eligible class members. Virtually all claims by class members filed in
connection with the settlements have been resolved and virtually all aspects of the remediation program have been
satisfied.

As of December 31, 2001 Prudential and/or Pruco Life remained a party to approximately 44 individual sales practices
actions filed by policyholders who “opted out” of the class action settlement relating to permanent life insurance
policies issued in the United States between 1982 and 1995. In addition, there were 19 sales practices actions
pending that were filed by policyholders who were members of the class and who failed to “opt out” of the class action
settlement. Prudential and Pruco Life believed that those actions are governed by the class settlement release and
expects them to be enjoined and/or dismissed. Additional suits may be filed by class members who “opted out” of the
class settlements or who failed to “opt out” but nevertheless seek to proceed against Prudential and/or Pruco Life. A
number of the plaintiffs in these cases seek large and/or indeterminate amounts, including punitive or exemplary
damages. Some of these actions are brought on behalf of multiple plaintiffs. It is possible that substantial punitive
damages might be awarded in any of these actions and particularly in an action involving multiple plaintiffs.

Prudential has indemnified Pruco Life for any liabilities incurred in connection with sales practices litigation covering
policyholders of individual permanent life insurance policies issued in the United States from 1982 to 1995.

Pruco Life’s litigation is subject to many uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of Pruco Life in a particular quarterly or annual
period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters.
Management believes, however, that the ultimate outcome of all pending litigation and regulatory matters should not
have a material adverse effect on Pruco Life’s financial position.

32
Addition&l InfoLn&tion

Pruco Life has filed a registration statement with the SEC under the Securities Act of 1933, relating to the offering
described in this prospectus. This prospectus does not include all the information set forth in the registration
statement. Certain portions have been omitted pursuant to the rules and regulations of the SEC. The omitted
information may, however, be obtained from the SEC’s Public Reference Section at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or by telephoning (800) SEC-0330, upon payment of a prescribed fee.

To reduce costs, we now generally send only a single copy of prospectuses and shareholder reports to each
household ("householding"), in lieu of sending a copy to each contract owner that resides in the household. You
should be aware that you can revoke or "opt out" of householding at any time by calling 1-877-778-5008.

Further information may also be obtained from Pruco Life. Its address and telephone number are set forth on the
inside front cover of this prospectus.

Fin&n◆i&l St&t#n#nts

The financial statements of the Account should be distinguished from the consolidated financial statements of Pruco
Life and its subsidiaries which should be considered only as bearing upon the ability of Pruco Life to meet its
obligations under the Contracts.

33
 DIÆESTOÆS AHD OFFISEÆS

The directors and major officers of Pruco Life, listed with their principal occupations during the past 5 years, are shown
below.

DIÆESTOÆS OF ÆÆUSO LIFE

JAMES J. AVERY, JR., Vice Chairman and Director – President, Prudential Individual Life Insurance since 1998;
prior to 1998: Senior Vice President, Chief Actuary and CFO, Prudential Individual Insurance Group.

VIVIAN L. BANTA, President, Chairman, and Director - Executive Vice President, Individual Financial Services, U.S.
Consumer Group since 2000; 1998 to 1999: Consultant, Individual Financial Services; prior to 1998: Consultant,
Morgan Stanley.

RICHARD J. CARBONE, Director – Senior Vice President and Chief Financial Officer since 1997.

HELEN M. GALT, Director – Company Actuary, Prudential since 1993.

JEAN D. HAMILTON, Director – Executive Vice President, Prudential Institutional since 1998; prior to 1998: President,
Diversified Group.

RONALD P. JOELSON, Director – Senior Vice President, Prudential Asset, Liability and Risk Management since
1999; prior to 1999: President, Guaranteed Products, Prudential Institutional.

DAVID R. ODENATH, JR., Director – President, Prudential Investments since 1999; prior to 1999: Senior Vice
President and Director of Sales, Investment Consulting Group, PaineWebber.

OFFISEÆS WHO AÆE HOT DIÆESTOÆS

SHAUN M. BYRNES, Senior Vice President – Senior Vice President, Director of Mutual Funds, Annuities and UITs,
Prudential Investments since 2001; 2000 to 2001: Senior Vice President, Director of Research, Prudential
Investments; 1999 to 2000: Senior Vice President, Director of Mutual Funds, Prudential Investments; prior to 1999:
Vice President, Mutual Funds, Prudential Investments.

C. EDWARD CHAPLIN, Treasurer – Senior Vice President and Treasurer, Prudential since 2000; prior to 2000, Vice
President and Treasurer, Prudential.

THOMAS F. HIGGINS, Senior Vice President – Vice President, Annuity Services, Prudential Individual Financial
Services since 1999; 1998 to 1999: Vice President, Mutual Funds, Prudential Individual Financial Services; prior to
1998: Principal, Mutual Fund Operations, The Vanguard Group.

CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary – Chief Counsel, Variable Products, Prudential Law
Department since 1995.

ANDREW J. MAKO, Executive Vice President – Vice President, Finance, U.S. Consumer Group since 1999; prior to
1999: Vice President, Business Performance Management Group.

ESTHER H. MILNES, Senior Vice President – Vice President and Chief Actuary, Prudential Individual Life Insurance
since 1999; prior to 1999: Vice President and Actuary, Prudential Individual Insurance Group.

JAMES M. O’CONNOR, Senior Vice President and Actuary – Vice President, Guaranteed Products since 2001; 1998
to 2000: Corporate Vice President, Guaranteed Products; prior to 1998: Corporate Actuary, Prudential Investments.

SHIRLEY H. SHAO, Senior Vice President and Chief Actuary – Vice President and Associate Actuary, Prudential
since 1996.

34
WILLIAM J. ECKERT, IV, Vice President and Chief Accounting Officer – Vice President and IFS Controller,
Prudential Enterprise Financial Management since 2000; 1999 to 2000: Vice President and Individual Life Controller,
Prudential Enterprise Financial Management; prior to 1999: Vice President, Accounting, Enterprise Financial
Management.

The business address of all directors and officers of Pruco Life is 213 Washington Street, Newark, New Jersey 07102-
2992.

Pruco Life directors and officers are elected annually.

35
(This page intentionally left blank.)
Variable
APPRECIABLE
®
LIFE
INSURANCE
7
Variable Appreciable Life was issued by
Pruco Life Insurance Company, 213
Washington Street, Newark, NJ 07102-2992
and offered through Pruco Securities
Corporation, 751 Broad Street, Newark, NJ
07102-3777, both subsidiaries of The
Prudential Insurance Company of America,
751 Broad Street, Newark, NJ 07102-3777.
Appreciable Life is a registered mark of
Prudential.

Pruco Life Insurance Company

213 Washington Street, Newark, NJ 07102-2992
Telephone 800 778-2255

VAL-1 Ed. 5/2002

 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF NET ASSETS

December 31, 2001
SUBACCOUNTS

Money Diversified Flexible Conservative

Market Bond Equity Managed Balanced
Portfolio Portfolio Portfolio Portfolio Portfolio
ASSETS
Investment in The Prudential Series Fund, Inc.
Portfolios at net asset value [Note 3] . . . . . . . . . . . $349,839,083 $110,731,045 $703,215,510 $955,949,976 $519,655,583
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $349,839,083 $110,731,045 $703,215,510 $955,949,976 $519,655,583
NET ASSETS, representing:
Accumulation units [Note 9] . . . . . . . . . . . . . . . . . . . $349,839,083 $110,731,045 $703,215,510 $955,949,976 $519,655,583
$349,839,083 $110,731,045 $703,215,510 $955,949,976 $519,655,583
Units outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261,935,942 46,789,362 116,535,070 215,067,105 140,725,098

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A1
 SUBACCOUNTS (Continued)
Small
High Yield Stock Natural Government Prudential Capitalization
Bond Index Value Resources Global Income Jennison Stock
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio

$123,195,197 $346,036,521 $126,261,132 $ 30,077,398 $149,253,440 $ 12,362,157 $188,382,064 $ 39,942,068

$123,195,197 $346,036,521 $126,261,132 $ 30,077,398 $149,253,440 $ 12,362,157 $188,382,064 $ 39,942,068

$123,195,197 $346,036,521 $126,261,132 $ 30,077,398 $149,253,440 $ 12,362,157 $188,382,064 $ 39,942,068

$123,195,197 $346,036,521 $126,261,132 $ 30,077,398 $149,253,440 $ 12,362,157 $188,382,064 $ 39,942,068
105,849,938 138,625,056 38,853,389 7,826,745 104,124,371 4,940,930 91,199,469 17,358,041

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A2
 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF OPERATIONS
For the years ended December 31, 2001, 2000 and 1999
SUBACCOUNTS

Money Diversified
Market Bond
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
INVESTMENT INCOME
Dividend income . . . . . . . . . . . . . . . . . . . $ 15,473,101 $ 21,923,321 $ 11,957,892 $ 6,380,881 $ 5,176,774 $ 0

EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk
[Note 4A] . . . . . . . . . . . . . . . . . . . . . . . 2,303,740 2,167,079 1,437,464 613,429 488,119 467,557
Reimbursement for excess expenses
[Note 4D]. . . . . . . . . . . . . . . . . . . . . . . (15,258) (17,693) (10,332) (30,105) (33,239) (18,429)
NET EXPENSES . . . . . . . . . . . . . . . . . . . . 2,288,482 2,149,386 1,427,132 583,324 454,880 449,128
NET INVESTMENT INCOME (LOSS) . . . . . . 13,184,619 19,773,935 10,530,760 5,797,557 4,721,894 (449,128)

NET REALIZED AND UNREALIZED GAIN

(LOSS) ON INVESTMENTS
Capital gains distributions received . . . . . . 0 0 0 0 9,972 217,355
Realized gain (loss) on shares redeemed. . 0 0 0 207,050 197,518 69,374
Net change in unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . . 0 0 0 (193,949) 2,385,205 (831,201)
NET GAIN (LOSS) ON INVESTMENTS . . . . 0 0 0 13,101 2,592,695 (544,472)
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS. . . . . . . . . . . . . . . . . . . . . $ 13,184,619 $ 19,773,935 $ 10,530,760 $ 5,810,658 $ 7,314,589 $ (993,600)

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A3
 SUBACCOUNTS (Continued)

Flexible Conservative
Equity Managed Balanced
Portfolio Portfolio Portfolio
2001 2000 1999 2001 2000 1999 2001 2000 1999

$ 6,147,094 $ 15,250,367 $ 14,415,104 $ 37,245,389 $ 39,776,142 $ 53,182 $ 18,119,680 $ 21,005,230 $ 24,546,800

4,445,708 4,831,399 5,122,283 5,930,666 6,662,208 7,020,385 3,181,724 3,462,486 3,606,639

(699,934) (739,884) (692,806) (2,404,604) (2,677,881) (2,725,324) (969,399) (1,119,468) (1,065,488)

3,745,774 4,091,515 4,429,477 3,526,062 3,984,327 4,295,061 2,212,325 2,343,018 2,541,151
2,401,320 11,158,852 9,985,627 33,719,327 35,791,815 (4,241,879) 15,907,355 18,662,212 22,005,649

39,313,409 133,707,648 101,838,960 14,435,412 15,770,519 13,493,901 5,530,731 4,283,674 3,418,854

(6,226,455) 12,759,291 30,562,177 (766,904) 9,064,141 8,687,128 25,993 3,922,178 4,164,171

(130,167,379) (137,457,632) (45,860,592) (110,624,014) (80,774,371) 66,161,585 (34,874,461) (31,790,718) 7,019,129

(97,080,425) 9,009,307 86,540,545 (96,955,506) (55,939,711) 88,342,614 (29,317,737) (23,584,866) 14,602,154

$ (94,679,105) $ 20,168,159 $ 96,526,172 $ (63,236,179) $ (20,147,896) $ 84,100,735 $ (13,410,382) $ (4,922,654) $ 36,607,803

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A4
 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF OPERATIONS
For the years ended December 31, 2001, 2000 and 1999
SUBACCOUNTS

High Yield Stock

Bond Index
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
INVESTMENT INCOME
Dividend income . . . . . . . . . . . . . . . . . . . $ 9,415,103 $ 9,035,452 $ 231,604 $ 3,533,175 $ 3,342,887 $ 3,454,325
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk
[Note 4A] . . . . . . . . . . . . . . . . . . . . . . . 461,217 462,703 491,069 2,082,296 2,296,284 1,869,495
Reimbursement for excess expenses
[Note 4D]. . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0
NET EXPENSES . . . . . . . . . . . . . . . . . . . . 461,217 462,703 491,069 2,082,296 2,296,284 1,869,495
NET INVESTMENT INCOME (LOSS) . . . . . . 8,953,886 8,572,749 (259,465) 1,450,879 1,046,603 1,584,830
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received . . . . . . 0 0 0 20,100,170 13,128,272 4,290,756
Realized gain (loss) on shares redeemed. . (1,309,365) (666,603) (829,891) (10,468,125) 10,510,388 15,770,959
Net change in unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . . (8,079,289) (14,601,384) 4,361,938 (59,008,116) (63,495,247) 36,090,405
NET GAIN (LOSS) ON INVESTMENTS . . . . (9,388,654) (15,267,987) 3,532,047 (49,376,071) (39,856,587) 56,152,120
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS. . . . . . . . . . . . . . . . . . . . . $ (434,768) $ (6,695,238) $ 3,272,582 $ (47,925,192) $ (38,809,984) $ 57,736,950

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A5
 SUBACCOUNTS (Continued)

Natural
Value Resources Global
Portfolio Portfolio Portfolio
2001 2000 1999 2001 2000 1999 2001 2000 1999

$ 1,904,411 $ 2,310,478 $ 2,352,951 $ 815,100 $ 379,227 $ 139,023 $ 563,568 $ 1,450,526 $ 582,037

721,077 604,613 611,129 187,649 158,545 120,170 956,939 1,182,883 794,369

0 0 0 0 0 0 0 0
721,077 604,613 611,129 187,649 158,545 120,170 956,939 1,182,883 794,369
1,183,334 1,705,865 1,741,822 627,451 220,682 18,853 (393,371) 267,643 (212,332)

11,274,676 8,208,818 11,452,953 2,160,269 0 0 36,932,786 12,714,275 1,020,553

(2,902,326) 235,309 2,443,128 483,540 295,040 (463,855) (44,447,974) 14,596,534 14,965,295

(12,867,316) 5,167,691 (4,214,000) (7,078,448) 8,105,009 7,825,406 (24,049,939) (65,229,412) 45,405,939

(4,494,966) 13,611,818 9,682,081 (4,434,639) 8,400,049 7,361,551 (31,565,127) (37,918,603) 61,391,787

$ (3,311,632) $ 15,317,683 $ 11,423,903 $ (3,807,188) $ 8,620,731 $ 7,380,404 $ (31,958,498) $ (37,650,960) $ 61,179,455

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A6
 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF OPERATIONS
For the years ended December 31, 2001, 2000 and 1999
SUBACCOUNTS

Prudential
Government Income Jennison
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
INVESTMENT INCOME
Dividend income . . . . . . . . . . . . . . . . . . . $ 639,983 $ 669,345 $ 0 $ 328,013 $ 153,030 $ 187,237
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk
[Note 4A] . . . . . . . . . . . . . . . . . . . . . . . 63,347 52,434 59,622 1,154,010 1,333,546 641,227
Reimbursement for excess expenses
[Note 4D]. . . . . . . . . . . . . . . . . . . . . . . 0 0 0 0 0 0
NET EXPENSES . . . . . . . . . . . . . . . . . . . . 63,347 52,434 59,622 1,154,010 1,333,546 641,227

NET INVESTMENT INCOME (LOSS) . . . . . . 576,636 616,911 (59,622) (825,997) (1,180,516) (453,900)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received . . . . . . 0 24,944 0 1,880,687 30,686,678 6,522,518
Realized gain (loss) on shares
redeemed . . . . . . . . . . . . . . . . . . . . . . 36,599 44,983 35,517 (30,303,947) 2,706,746 6,738,415
Net change in unrealized gain (loss) on
investments . . . . . . . . . . . . . . . . . . . . . 120,708 318,275 (311,189) (12,056,705) (81,921,624) 29,898,188
NET GAIN (LOSS) ON INVESTMENTS . . . . 157,307 388,202 (275,672) (40,479,965) (48,528,200) 43,159,121
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS. . . . . . . . . . . . . . . . . . . . . $ 733,943 $ 1,005,113 $ (335,294) $ (41,305,962) $ (49,708,716) $ 42,705,221

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A7
 SUBACCOUNTS (Continued)
Small
Capitalization
Stock
Portfolio
2001 2000 1999

$ 186,989 $ 153,412 $ 0

217,360 176,766 126,214

0 0 0
217,360 176,766 126,214

(30,371) (23,354) (126,214)

4,837,912 1,528,426 389,215

(58,755) 68,742 (52,227)

(2,905,868) 1,740,263 2,341,904

1,873,289 3,337,431 2,678,892

$ 1,842,918 $ 3,314,077 $ 2,552,678

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A8
 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

For the years ended December 31, 2001, 2000 and 1999
SUBACCOUNTS

Money Diversified
Market Bond
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
OPERATIONS
Net investment income (loss) . . . . . . . $ 13,184,619 $ 19,773,935 $ 10,530,760 $ 5,797,557 $ 4,721,894 $ (449,128)
Capital gains distributions received . . . 0 0 0 0 9,972 217,355
Realized gain (loss) on shares
redeemed . . . . . . . . . . . . . . . . . . . 0 0 0 207,050 197,518 69,374
Net change in unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . 0 0 0 (193,949) 2,385,205 (831,201)

NET INCREASE (DECREASE) IN

NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . 13,184,619 19,773,935 10,530,760 5,810,658 7,314,589 (993,600)

CONTRACT OWNER TRANSACTIONS

Contract Owner Net Payments . . . . . . 34,096,846 46,510,902 291,867,279 10,765,650 11,819,293 9,213,218
Policy Loans . . . . . . . . . . . . . . . . . . . (1,844,612) (7,829,678) (4,003,912) (2,000,490) (1,659,052) (1,646,549)
Policy Loan Repayments and
Interest . . . . . . . . . . . . . . . . . . . . . 2,013,475 3,136,456 3,688,681 1,891,514 1,668,688 1,939,244
Surrenders, Withdrawals and Death
Benefits. . . . . . . . . . . . . . . . . . . . . (4,832,020) (4,229,392) (3,216,419) (3,549,654) (5,010,626) (3,977,332)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Option. . (57,159,116) (26,777,857) (68,358,175) 12,509,096 2,592,035 (41,084)
Administrative and Other Charges . . . . (10,238,244) (8,721,658) (6,681,729) (5,385,962) (4,043,988) (3,374,192)

NET INCREASE (DECREASE) IN

NET ASSETS RESULTING
FROM CONTRACT OWNER
TRANSACTIONS . . . . . . . . . . . . . . . (37,963,671) 2,088,773 213,295,725 14,230,154 5,366,350 2,113,305

TOTAL INCREASE (DECREASE)

IN NET ASSETS . . . . . . . . . . . . . . . . (24,779,052) 21,862,708 223,826,485 20,040,812 12,680,939 1,119,705

NET ASSETS
Beginning of year . . . . . . . . . . . . . . . 374,618,135 352,755,427 128,928,942 90,690,233 78,009,294 76,889,589
End of year. . . . . . . . . . . . . . . . . . . . $349,839,083 $374,618,135 $352,755,427 $110,731,045 $ 90,690,233 $ 78,009,294

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A9
 SUBACCOUNTS (Continued)

Flexible Conservative
Equity Managed Balanced
Portfolio Portfolio Portfolio
2001 2000 1999 2001 2000 1999 2001 2000 1999

$ 2,401,320 $ 11,158,852 $ 9,985,627 $ 33,719,327 $ 35,791,815 $ (4,241,879) $ 15,907,355 $ 18,662,212 $ 22,005,649

39,313,409 133,707,648 101,838,960 14,435,412 15,770,519 13,493,901 5,530,731 4,283,674 3,418,854

(6,226,455) 12,759,291 30,562,177 (766,904) 9,064,141 8,687,128 25,993 3,922,178 4,164,171

(130,167,379) (137,457,632) (45,860,592) (110,624,014) (80,774,371) 66,161,585 (34,874,461) (31,790,718) 7,019,129

(94,679,105) 20,168,159 96,526,172 (63,236,179) (20,147,896) 84,100,735 (13,410,382) (4,922,654) 36,607,803

43,770,604 42,565,304 21,967,601 58,453,601 57,932,122 25,375,491 32,824,176 34,130,144 16,841,992

(19,253,604) (22,807,204) (25,270,787) (23,789,039) (30,334,158) (31,546,845) (10,623,760) (12,325,683) (13,483,060)

18,129,785 18,961,480 22,439,687 25,512,897 25,376,705 32,238,484 11,547,769 11,313,927 12,607,451

(40,359,889) (39,941,255) (35,567,708) (59,975,699) (57,164,266) (53,970,161) (32,447,245) (28,790,357) (25,211,828)

(3,591,944) (35,007,754) (31,481,752) (11,956,088) (49,024,693) (28,719,869) (6,415,659) (25,008,238) (11,980,279)

(25,330,797) (24,831,927) (25,189,715) (35,582,374) (36,333,319) (37,896,636) (20,090,769) (20,379,353) (20,727,360)

(26,635,845) (61,061,356) (73,102,674) (47,336,702) (89,547,609) (94,519,536) (25,205,488) (41,059,560) (41,953,084)

(121,314,950) (40,893,197) 23,423,498 (110,572,881) (109,695,505) (10,418,801) (38,615,870) (45,982,214) (5,345,281)

824,530,460 865,423,657 842,000,159 1,066,522,857 1,176,218,362 1,186,637,163 558,271,453 604,253,667 609,598,948

$703,215,510 $824,530,460 $865,423,657 $ 955,949,976 $1,066,522,857 $1,176,218,362 $519,655,583 $558,271,453 $604,253,667

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A10
 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

For the years ended December 31, 2001, 2000 and 1999
SUBACCOUNTS

High Yield Stock

Bond Index
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
OPERATIONS
Net investment income (loss) . . . . . . . . . . $ 8,953,886 $ 8,572,749 $ (259,465) $ 1,450,879 $ 1,046,603 $ 1,584,830
Capital gains distributions received . . . . . . 0 0 0 20,100,170 13,128,272 4,290,756
Realized gain (loss) on shares redeemed. . (1,309,365) (666,603) (829,891) (10,468,125) 10,510,388 15,770,959
Net change in unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . . (8,079,289) (14,601,384) 4,361,938 (59,008,116) (63,495,247) 36,090,405

NET INCREASE (DECREASE) IN

NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . (434,768) (6,695,238) 3,272,582 (47,925,192) (38,809,984) 57,736,950

CONTRACT OWNER TRANSACTIONS

Contract Owner Net Payments . . . . . . . . . 5,748,119 5,464,094 3,691,424 47,538,467 49,900,843 34,027,403
Policy Loans . . . . . . . . . . . . . . . . . . . . . . (1,104,797) (752,193) (901,124) (5,875,496) (8,469,839) (9,143,580)
Policy Loan Repayments and Interest . . . . 1,375,264 800,641 942,474 4,712,003 4,230,885 8,218,322
Surrenders, Withdrawals and Death
Benefits . . . . . . . . . . . . . . . . . . . . . . . . (2,936,697) (1,963,376) (1,587,661) (12,718,992) (12,956,007) (12,349,782)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Option . . . . . 50,092,008 (2,546,985) (1,433,615) 4,575,382 25,759,714 50,141,104
Administrative and Other Charges . . . . . . . (2,676,253) (2,336,359) (2,332,129) (18,772,036) (16,977,972) (12,115,753)

NET INCREASE (DECREASE) IN

NET ASSETS RESULTING
FROM CONTRACT OWNER
TRANSACTIONS . . . . . . . . . . . . . . . . . . 50,497,644 (1,334,178) (1,620,631) 19,459,328 41,487,624 58,777,714

TOTAL INCREASE (DECREASE)

IN NET ASSETS . . . . . . . . . . . . . . . . . . . 50,062,876 (8,029,416) 1,651,951 (28,465,864) 2,677,640 116,514,664

NET ASSETS
Beginning of year. . . . . . . . . . . . . . . . . . . 73,132,321 81,161,737 79,509,786 374,502,385 371,824,745 255,310,081
End of year . . . . . . . . . . . . . . . . . . . . . . . $123,195,197 $ 73,132,321 $ 81,161,737 $346,036,521 $374,502,385 $371,824,745

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A11
 SUBACCOUNTS (Continued)

Natural
Value Resources Global
Portfolio Portfolio Portfolio
2001 2000 1999 2001 2000 1999 2001 2000 1999

$ 1,183,334 $ 1,705,865 $ 1,741,822 $ 627,451 $ 220,682 $ 18,853 $ (393,371) $ 267,643 $ (212,332)

11,274,676 8,208,818 11,452,953 2,160,269 0 0 36,932,786 12,714,275 1,020,553
(2,902,326) 235,309 2,443,128 483,540 295,040 (463,855) (44,447,974) 14,596,534 14,965,295

(12,867,316) 5,167,691 (4,214,000) (7,078,448) 8,105,009 7,825,406 (24,049,939) (65,229,412) 45,405,939

(3,311,632) 15,317,683 11,423,903 (3,807,188) 8,620,731 7,380,404 (31,958,498) (37,650,960) 61,179,455

15,257,589 14,251,719 9,746,539 1,449,923 1,174,858 506,781 14,451,309 14,739,398 5,006,744

(3,022,720) (2,633,185) (2,784,001) (1,080,627) (828,971) (606,615) (1,522,307) (2,428,695) (1,079,045)
2,259,240 2,009,559 2,348,262 776,344 663,004 886,419 1,227,073 1,151,064 818,588

(7,485,893) (4,276,845) (4,314,358) (1,366,726) (1,054,810) (1,100,956) (3,702,751) (2,853,578) (1,254,030)

10,239,151 (2,866,084) (7,934,532) 1,723,480 2,895,531 (1,640,963) (1,547,184) 22,758,745 40,973,920

(7,116,533) (5,322,042) (4,541,664) (954,864) (771,337) (660,509) (5,943,139) (5,024,811) (2,371,271)

10,130,834 1,163,122 (7,479,754) 547,530 2,078,275 (2,615,843) 2,963,001 28,342,123 42,094,906

6,819,202 16,480,805 3,944,149 (3,259,658) 10,699,006 4,764,561 (28,995,497) (9,308,837) 103,274,361

119,441,930 102,961,125 99,016,976 33,337,056 22,638,050 17,873,489 178,248,937 187,557,774 84,283,413

$126,261,132 $119,441,930 $102,961,125 $ 30,077,398 $ 33,337,056 $ 22,638,050 $149,253,440 $178,248,937 $187,557,774

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A12
 FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT

STATEMENTS OF CHANGES IN NET ASSETS

For the years ended December 31, 2001, 2000 and 1999
SUBACCOUNTS

Prudential
Government Income Jennison
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
OPERATIONS
Net investment income (loss) . . . . . . . . . . $ 576,636 $ 616,911 $ (59,622) $ (825,997) $ (1,180,516) $ (453,900)
Capital gains distributions received . . . . . . 0 24,944 0 1,880,687 30,686,678 6,522,518
Realized gain (loss) on shares redeemed. . 36,599 44,983 35,517 (30,303,947) 2,706,746 6,738,415
Net change in unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . . 120,708 318,275 (311,189) (12,056,705) (81,921,624) 29,898,188

NET INCREASE (DECREASE) IN

NET ASSETS RESULTING
FROM OPERATIONS . . . . . . . . . . . . . . . 733,943 1,005,113 (335,294) (41,305,962) (49,708,716) 42,705,221

CONTRACT OWNER TRANSACTIONS

Contract Owner Net Payments . . . . . . . . . 558,383 441,505 192,491 47,964,876 48,284,668 30,287,545
Policy Loans . . . . . . . . . . . . . . . . . . . . . . (186,766) (156,555) (224,184) (4,866,256) (8,584,646) (4,044,172)
Policy Loan Repayments and Interest . . . . 338,014 338,722 370,007 3,595,600 3,292,236 1,878,823
Surrenders, Withdrawals and Death
Benefits . . . . . . . . . . . . . . . . . . . . . . . . (742,813) (531,108) (724,521) (11,086,810) (7,023,561) (3,757,076)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Option . . . . . 2,720,203 (948,550) 259,745 (6,839,104) 68,964,610 55,494,343
Administrative and Other Charges . . . . . . . (314,135) (265,413) (309,097) (17,276,404) (15,272,165) (7,124,250)

NET INCREASE (DECREASE) IN

NET ASSETS RESULTING FROM
CONTRACT OWNER TRANSACTIONS . . 2,372,886 (1,121,399) (435,559) 11,491,902 89,661,142 72,735,213

TOTAL INCREASE (DECREASE)

IN NET ASSETS . . . . . . . . . . . . . . . . . . . 3,106,829 (116,286) (770,853) (29,814,060) 39,952,426 115,440,434

NET ASSETS
Beginning of year . . . . . . . . . . . . . . . . . . 9,255,328 9,371,614 10,142,467 218,196,124 178,243,698 62,803,264
End of year . . . . . . . . . . . . . . . . . . . . . . . $ 12,362,157 $ 9,255,328 $ 9,371,614 $188,382,064 $218,196,124 $178,243,698

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A13
 SUBACCOUNTS (Continued)
Small
Capitalization
Stock
Portfolio
2001 2000 1999

$ (30,371) $ (23,354) $ (126,214)

4,837,912 1,528,426 389,215
(58,755) 68,742 (52,227)

(2,905,868) 1,740,263 2,341,904

1,842,918 3,314,077 2,552,678

1,597,491 1,252,614 835,244

(1,059,347) (1,036,683) (674,561)
832,602 506,755 553,386

(1,601,779) (975,233) (768,497)

3,868,699 9,233,573 1,166,090

(1,014,122) (715,373) (555,522)

2,623,544 8,265,653 556,140

4,466,462 11,579,730 3,108,818

35,475,606 23,895,876 20,787,058

$ 39,942,068 $ 35,475,606 $ 23,895,876

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A20

A14
 NOTES TO FINANCIAL STATEMENTS OF
THE VARIABLE APPRECIABLE LIFE SUBACCOUNTS OF
THE PRUCO LIFE VARIABLE APPRECIABLE ACCOUNT
December 31, 2001

Note 1: General

Pruco Life Variable Appreciable Account (the “Account”) was established on January 13, 1984 under Arizona
law as a separate investment account of Pruco Life Insurance Company (“Pruco Life”) which is a wholly-
owned subsidiary of The Prudential Insurance Company of America (“Prudential”). The assets of the
Account are segregated from Pruco Life’s other assets. Proceeds from sales of purchases of Pruco Life’s
Variable Appreciable Life (“VAL”) contracts and Pruco Life’s Variable Universal Life (“VUL”) contracts are
invested in the Account.

The Account is registered under the Investment Company Act of 1940, as amended, as a unit investment
trust. The Account is a funding vehicle for individual variable life contracts. Each contract offers the option
to invest in various subaccounts, each of which invests only in a corresponding portfolio of The Prudential
Series Fund, Inc. (the “Series Fund”). Options available to the VAL contracts which invest in a
corresponding portfolio of the Series Fund are: Money Market Portfolio, Diversified Bond Portfolio, Equity
Portfolio, Flexible Managed Portfolio, Conservative Balanced Portfolio, High Yield Bond Portfolio, Stock
Index Portfolio, Value Portfolio, Natural Resources Portfolio, Global Portfolio, Government Income Portfolio,
Prudential Jennison Portfolio, Small Capitalization Stock Portfolio.

The Series Fund is a diversified open-end management investment company, and is managed by Prudential.

New sales of the VAL product which invest in the Account were discontinued as of May 1, 1992. However,
premium payments made by current VAL contract owners will continue to be received by the Account.

Note 2: Significant Accounting Policies

The accompanying financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”). The preparation of the financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts and disclosures. Actual results could differ from those estimates.

Investments—The investments in shares of the Series Fund are stated at the net asset values of the
respective portfolios, which value their investment securities at fair value.

Security Transactions—Realized gains and losses on security transactions are reported on an average cost
basis. Purchase and sale transactions are recorded as of the trade date of the security being purchased or
sold.

Distributions Received—Dividend and capital gain distributions received are reinvested in additional shares
of the Series Fund and are recorded on the ex-dividend date.

A15
Note 3: Investment Information for Pruco Life Variable Appreciable Account

The net asset value per share for each portfolio of the Series Fund, the number of shares (rounded) of each
portfolio held by the subaccounts and the aggregate cost of investments in such shares at December 31,
2001 were as follows:

PORTFOLIOS

Money Diversified Flexible Conservative

Market Bond Equity Managed Balanced
Number of shares (rounded): 34,983,908 9,747,451 34,319,937 64,634,887 37,958,772
Net asset value per share: $ 10.00 $ 11.36 $ 20.49 $ 14.79 $ 13.69
Cost: $349,839,083 $107,641,586 $ 773,799,328 $1,013,860,757 $ 534,779,276

PORTFOLIOS (Continued)

High Yield Stock Natural

Bond Index Value Resources Global
Number of shares (rounded): 22,813,925 10,936,679 7,049,756 1,573,909 9,761,507
Net asset value per share: $ 5.40 $ 31.64 $ 17.91 $ 19.11 $ 15.29
Cost: $146,960,589 $336,065,149 $ 127,201,733 $ 26,930,543 $ 184,228,276

PORTFOLIOS (Continued)

Government Prudential Small

Income Jennison Capitalization
Number of shares (rounded): 1,008,333 10,144,430 2,580,237
Net asset value per share: $ 12.26 $ 18.57 $ 15.48
Cost: $ 11,798,095 $237,933,043 $ 38,512,763

A16
Note 4: Charges and Expenses

A. Mortality Risk and Expense Risk Charges

The mortality risk and expense risk charges, at an effective annual rate of up to 0.60% for VAL
contracts, and 0.90% for VUL contracts are applied daily against the net assets held in each
subaccount. Mortality risk is that contract owners may not live as long as estimated and expense risk
is that the cost of issuing and administering the policies may exceed related charges by Pruco Life.
Pruco Life intends to charge only 0.60% on VUL contracts but reserves the right to make the full
0.90% charge.

B. Deferred Sales Charge

A deferred sales charge is imposed upon the surrender of certain variable life insurance contracts to
compensate Pruco Life for sales and other marketing expenses. The amount of any sales charge will
depend on the number of years that have elapsed since the contract was issued. No sales charge will
be imposed after the tenth year of the contract. No sales charge will be imposed on death benefits.

C. Partial Withdrawal Charge

A charge is imposed by Pruco Life on partial withdrawals of the cash surrender value. A charge equal to
the lesser of $15 of 2% will be made in connection with each partial withdrawal of the cash surrender
value of a contract.

D. Expense Reimbursement

The Account is reimbursed by Pruco Life for expenses in excess of 0.40% of VAL’s average daily net
assets incurred by the Money Market, Diversified Bond, Equity, Flexible Managed, and the Conservative
Balanced Portfolios of the Series Fund.

E. Cost of Insurance and Other Related Charges

Contract owners contributions are subject to certain deductions prior to being invested in the Account.
The deductions are for (1) transaction costs which are deducted from each premium payment to cover
premium collection and processing costs; (2) state premium taxes; and (3) sales charges which are
deducted in order to compensate Pruco Life for the cost of selling the contract. Contracts are also
subject to monthly charges for the costs of administering the contract and to compensate Pruco Life
for the guaranteed minimum death benefit risk.

Note 5: Taxes

Pruco Life is taxed as a “life insurance company” as defined by the Internal Revenue Code. The results of
operations of the Account form a part of Prudential’s consolidated federal tax return. Under current federal
law, no federal income taxes are payable by the Account. As such, no provision for tax liability has been
recorded in these financial statements.

A17
Note 6: Unit Activity

Transactions in units (including transfers among subaccounts) for the years ended December 31, 2001, 2000
and 1999 were as follows:

SUBACCOUNTS
Money Market Diversified Bond
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
Contract Owner Contributions: 485,833,820 532,634,304 688,439,469 14,897,197 14,641,128 18,867,479
Contract Owner Redemptions: (517,434,307) (528,113,809) (501,235,815) (6,969,611) (6,060,817) (13,957,645)

SUBACCOUNTS (Continued)
Equity Flexible Managed
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
Contract Owner Contributions: 35,225,616 39,941,680 17,583,983 23,442,217 22,697,791 18,092,420
Contract Owner Redemptions: (34,231,350) (43,175,201) (21,980,273) (30,456,261) (37,766,563) (33,917,508)

SUBACCOUNTS (Continued)
Conservative Balanced High Yield Bond
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
Contract Owner Contributions: 15,894,495 16,329,684 14,980,379 55,489,870 6,512,392 11,122,173
Contract Owner Redemptions: (20,537,733) (23,390,485) (22,112,313) (5,708,106) (5,894,718) (9,085,397)

SUBACCOUNTS (Continued)
Stock Index Value
Portfolio Portfolio
2001 2000 1999 2001 2000 1999

Contract Owner Contributions: 105,881,794 98,826,586 108,072,695 115,148,472 38,487,390 10,044,553

Contract Owner Redemptions: (90,367,112) (80,470,275) (81,305,298) (109,597,263) (33,937,765) (8,957,622)

SUBACCOUNTS (Continued)
Natural Resources Global
Portfolio Portfolio
2001 2000 1999 2001 2000 1999
Contract Owner Contributions: 1,834,854 1,869,279 1,779,398 156,987,750 126,724,685 114,173,237
Contract Owner Redemptions: (1,761,616) (1,320,814) (2,829,650) (154,065,953) (113,761,479) (82,857,290)

SUBACCOUNTS (Continued)
Government Income Prudential Jennison
Portfolio Portfolio
2001 2000 1999 2001 2000 1999

Contract Owner Contributions: 1,795,167 567,772 1,010,008 108,569,967 118,181,750 204,117,698

Contract Owner Redemptions: (827,982) (1,104,642) (1,221,190) (99,973,501) (91,168,292) (175,266,138)

SUBACCOUNTS (Continued)
Small Capitalization
Portfolio
2001 2000 1999

Contract Owner Contributions: 3,954,336 6,447,396 4,136,996

Contract Owner Redemptions: (2,772,179) (2,490,570) (3,825,011)

A18
Note 7: Purchases and Sales of Investments

The aggregate costs of purchases and proceeds from sales of investments in the Series Fund for the year
ended December 31, 2001 were as follows:
PORTFOLIOS

Money Diversified Flexible Conservative

Market Bond Equity Managed Balanced
Purchases . . . . . . . . . . . . . . . $ 562,391,774 $ 17,527,358 $ 32,320,147 $ 6,516,721 $ 5,866,885
Sales . . . . . . . . . . . . . . . . . . . $(602,643,927) $ (3,880,528) $ (62,701,766) $ (57,379,484) $ (33,284,698)

PORTFOLIOS (Continued)

High Yield Stock Natural

Bond Index Value Resources Global
Purchases . . . . . . . . . . . . . . . $ 55,465,912 $ 136,488,957 $ 172,180,482 $ 3,236,605 $ 209,730,964
Sales . . . . . . . . . . . . . . . . . . $ (5,429,484) $(119,111,924) $(162,770,724) $ (2,876,724) $(207,724,902)

PORTFOLIOS (Continued)
Small
Government Prudential Capitalization
Income Jennison Stock
Purchases . . . . . . . . . . . . . . . $ 2,978,239 $ 141,354,823 $ 3,885,094
Sales . . . . . . . . . . . . . . . . . . . $ (668,700) $(131,016,930) $ (1,478,910)

Note 8: Related Party Transactions

Prudential and its affiliates perform various services on behalf of the mutual fund company that administers
the Series Fund in which the Account invests and may receive fees for the services performed. These
services include, among other things, shareholder communications, preparation, postage, fund transfer
agency and various other record keeping and customer service functions.

A19
Note 9: Financial Highlights

Pruco Life sells a number of variable life insurance products that are funded by the Account. These products
have unique combinations of features and fees that are charged against the contract owner’s account
balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns.

The following table was developed by determining which products offered by Pruco Life and funded by the
Account have the lowest and highest total return. Only product designs within each subaccount that had
units outstanding throughout the respective periods were considered when determining the lowest and
highest return. The summary may not reflect the minimum and maximum contract charges offered by the
Pruco Life as contract owners may not have selected all available and applicable contract options as
discussed in note 1.
At December 31, 2001 For the year ended December 31, 2001
Investment*
Units Unit Fair Value Net Assets Income Expense Ratio** Total Return***
(000s) Lowest to Highest (000s) Ratio Lowest to Highest Lowest to Highest

Money Market Portfolio . . . . . . . . . . . . 261,936 1.25552 To 2.19874 $349,839 4.02% 0.57% To 0.60% 3.48% To 3.51%
Diversified Bond Portfolio . . . . . . . . . . 46,789 1.31342 To 3.47473 $110,731 6.21% 0.56% To 0.60% 6.34% To 6.38%
Equity Portfolio . . . . . . . . . . . . . . . . . 116,535 1.37832 To 7.32260 $703,216 0.83% 0.50% To 0.60% –11.71% To –11.62%
Flexible Managed Portfolio. . . . . . . . . . 215,067 1.26663 To 4.71001 $955,950 3.75% 0.35% To 0.60% –6.24% To –6.01%
Conservative Balanced Portfolio . . . . . . 140,725 1.28828 To 4.00354 $519,656 3.40% 0.40% To 0.60% –2.60% To –2.41%
High Yield Bond Portfolio. . . . . . . . . . . 105,850 1.03945 To 2.24949 $123,195 12.19% 0.60% To 0.60% –1.04% To –1.03%
Stock Index Portfolio . . . . . . . . . . . . . 138,625 1.60022 To 4.90359 $346,037 1.02% 0.60% To 0.60% –12.57% To –12.57%
Value Portfolio . . . . . . . . . . . . . . . . . 38,853 1.68979 To 5.26628 $126,261 1.57% 0.60% To 0.60% –2.66% To –2.66%
Natural Resources Portfolio . . . . . . . . . 7,827 3.84290 To 3.84290 $ 30,077 2.59% 0.60% To 0.60% –10.62% To –10.62%
Global Portfolio . . . . . . . . . . . . . . . . . 104,124 1.33447 To 1.73500 $149,253 0.35% 0.60% To 0.60% –18.11% To –18.11%
Government Income Portfolio . . . . . . . . 4,941 2.50199 To 2.50199 $ 12,362 6.03% 0.60% To 0.60% 7.42% To 7.42%
Prudential Jennison Portfolio . . . . . . . . 91,199 1.66508 To 2.40452 $188,382 0.17% 0.60% To 0.60% –18.74% To –18.74%
Small Capitalization Portfolio . . . . . . . . 17,358 2.30107 To 2.30107 $ 39,942 0.51% 0.60% To 0.60% 4.92% To 4.92%

* These amounts represent the dividends, excluding distributions of capital gains, received by the subaccount from the underlying
mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. This ratio excludes
those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of
investment income by the subaccount is affected by the timing of the declaration of dividends by the underlying fund in which the
subaccounts invest.

** These ratios represent the annualized contract expenses of the separate account, net of reimbursement of excess expenses,
consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result
in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses
of the underlying fund are excluded.

*** These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and reflect
deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the
redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. The
total return is calculated for the year ended December 31, 2001.

A20
 REPORT OF INDEPENDENT ACCOUNTANTS

To the Contract Owners of the

Variable Appreciable Life Subaccounts of
Pruco Life Variable Appreciable Account
and the Board of Directors of the
Pruco Life Insurance Company

In our opinion, the accompanying statements of net assets and the related statements of operations
and of changes in net assets present fairly, in all material respects, the financial position of each of
the Variable Appreciable Life Subaccounts (as defined in Note 1) of Pruco Life Variable Appreciable
Account at December 31, 2001, and the results of each of their operations and the changes in each
of their net assets for each of the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the responsibility of the
management of the Pruco Life Insurance Company; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits, which included confirmation of
fund shares owned at December 31, 2001 with the transfer agents of the investee mutual funds,
provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
April 15, 2002

A21
Pruco Life Insurance Company and Subsidiary
Consolidated Statements of Financial Position
December 31, 2001 and 2000 (In Thousands)

2001 2000

ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 2001: $3,935,472; 2000:$3,552,244) $ 4,024,893 $ 3,561,521
Held to maturity, at amortized cost (fair value, 2000: $320,634) - 324,546
Equity securities - available for sale, at fair value (cost, 2001: $173; 2000: $13,446) 375 10,804
Commercial loans on real estate 8,190 9,327
Policy loans 874,065 855,374
Short-term investments 215,610 202,815
Other long-term investments 84,342 83,738
Total investments 5,207,475 5,048,125
Cash and cash equivalents 374,185 453,071
Deferred policy acquisition costs 1,159,830 1,132,653
Accrued investment income 77,433 82,297
Reinsurance recoverable 300,697 31,568
Receivables from affiliates 33,074 51,586
Other assets 20,134 29,445
Separate Account assets 14,920,584 16,230,264
TOTAL ASSETS $ 22,093,412 $ 23,059,009

LIABILITIES AND STOCKHOLDER’S EQUITY

Liabilities
Policyholders’ account balances $ 3,947,690 $ 3,646,668
Future policy benefits and other policyholder liabilities 808,230 702,862
Cash collateral for loaned securities 190,022 185,849
Securities sold under agreements to repurchase 80,715 104,098
Income taxes payable 266,096 235,795
Other liabilities 228,596 120,891
Separate Account liabilities 14,920,584 16,230,264
Total liabilities 20,441,933 21,226,427
Contingencies (See Footnote 12)
Stockholder’s Equity
Common stock, $10 par value;
1,000,000 shares, authorized;
250,000 shares, issued and outstanding 2,500 2,500
Paid-in-capital 466,748 466,748
Retained earnings 1,147,665 1,361,924

Accumulated other comprehensive income (loss):

Net unrealized investment gains 34,718 4,730
Foreign currency translation adjustments (152) (3,320)
Accumulated other comprehensive income 34,566 1,410
Total stockholder’s equity 1,651,479 1,832,582
TOTAL LIABILITIES AND
STOCKHOLDER’S EQUITY $ 22,093,412 $ 23,059,009

See Notes to Consolidated Financial Statements

B- 1
Pruco Life Insurance Company and Subsidiary
Consolidated Statements of Operations and Comprehensive Income
Years Ended December 31, 2001, 2000 and 1999 (In Thousands)

2001 2000 1999

REVENUES

Premiums $ 90,868 $ 121,921 $ 98,976

Policy charges and fee income 490,185 474,861 414,425
Net investment income 343,638 337,919 276,821
Realized investment losses, net (60,476) (20,679) (32,545)
Asset management fees 7,897 71,160 60,392
Other income 4,962 2,503 1,397

Total revenues 877,074 987,685 819,466

BENEFITS AND EXPENSES

Policyholders’ benefits 256,080 248,063 205,042

Interest credited to policyholders’ account balances 195,966 171,010 136,852
General, administrative and other expenses 382,701 410,684 392,041

Total benefits and expenses 834,747 829,757 733,935

Income from operations before income taxes 42,327 157,928 85,531

Income tax (benefit) provision (25,255) 54,432 29,936

NET INCOME 67,582 103,496 55,595

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on securities, net of

reclassification adjustment 29,988 33,094 (38,266)

Foreign currency translation adjustments 3,168 (993) (742)

Other comprehensive income (loss) 33,156 32,101 (39,008)

TOTAL COMPREHENSIVE INCOME $ 100,738 $ 135,597 $ 16,587

See Notes to Consolidated Financial Statements

B- 2
Pruco Life Insurance Company and Subsidiary
Consolidated Statements of Changes in Stockholder’s Equity
Years Ended December 31, 2001, 2000 and 1999 (In Thousands)
Accumulated
other Total
Common Paid-in- Retained comprehensive stockholder’s
stock capital earnings income (loss) equity

Balance, January 1, 1999 $ 2,500 $ 439,582 $ 1,202,833 $ 8,317 $ 1,653,232

Net income - - 55,595 - 55,595

Change in foreign currency

translation adjustments, net of taxes - - - (742) (742)

Change in net unrealized

investment losses, net of
reclassification adjustment and taxes - - - (38,266) (38,266)

Balance, December 31, 1999 2,500 439,582 1,258,428 (30,691) 1,669,819

Net income - - 103,496 - 103,496

Contribution from Parent - 27,166 - - 27,166

Change in foreign currency

translation adjustments, net of taxes - - - (993) (993)

Change in net unrealized

investment losses, net of
reclassification adjustment and taxes - - - 33,094 33,094

Balance, December 31, 2000 2,500 466,748 1,361,924 1,410 1,832,582

Net income - - 67,582 - 67,582

Policy credits issued to eligible

policyholders - - (128,025) - (128,025)

Dividends to Parent - - (153,816) - (153,816)

Change in foreign currency translation

adjustments, net of taxes - - - 3,168 3,168

Change in net unrealized investment

gains, net of reclassification adjustment
and taxes
- - - 29,988 29,988

Balance, December 31, 2001 $ 2,500 $ 466,748 $ 1,147,665 $ 34,566 $ 1,651,479

See Notes to Consolidated Financial Statements

B- 3
Pruco Life Insurance Company and Subsidiary
Consolidated Statements of Cash Flows
Years Ended December 31, 2001, 2000 and 1999 (In Thousands)
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 67,582 $ 103,496 $ 55,595
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Policy charges and fee income (54,970) (72,275) (83,961)
Interest credited to policyholders’ account balances 195,966 171,010 136,852
Realized investment losses, net 60,476 20,679 32,545
Amortization and other non-cash items (49,594) (48,141) 75,037
Change in:
Future policy benefits and other policyholders’ liabilities 105,368 73,340 100,743
Accrued investment income 4,864 (13,380) (7,803)
Receivable from/Payable to affiliate 18,512 (24,907) (66,081)
Policy loans (40,645) (63,022) (25,435)
Deferred policy acquisition costs (100,281) (69,868) (201,072)
Income taxes payable/receivable 38,839 90,195 (47,758)
Other, net (38,114) 51,011 18,974
Cash Flows From (Used in) Operating Activities 208,003 218,138 (12,364)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 2,653,798 2,273,789 3,076,848
Held to maturity - 64,245 45,841
Equity securities 482 1,198 5,209
Commercial loans on real estate 1,137 1,182 6,845
Other long-term investments - 15,039 385
Payments for the purchase of:
Fixed maturities:
Available for sale (2,961,861) (2,782,541) (3,452,289)
Held to maturity - - (24,170)
Equity securities (184) (11,134) (5,110)
Other long-term investments (130) (6,917) (39,094)
Cash collateral for loaned securities, net 4,174 98,513 14,000
Securities sold under agreement to repurchase, net (23,383) 82,947 (28,557)
Short-term investments, net (12,766) (118,418) 92,199
Cash Flows Used In Investing Activities (338,733) (382,097) (307,893)
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders’ account deposits 1,456,668 2,409,399 3,457,158
Policyholders’ account withdrawals (1,313,300) (1,991,363) (3,091,565)
Cash dividend to Parent (26,048) - -
Cash provided to affiliate (65,476) - -
Cash Flows (Used in) From Financing Activities 51,844 418,036 365,593
Net increase in Cash and cash equivalents (78,886) 254,077 45,336
Cash and cash equivalents, beginning of year 453,071 198,994 153,658
CASH AND CASH EQUIVALENTS, END OF YEAR $ 374,185 $ 453,071 $ 198,994

SUPPLEMENTAL CASH FLOW INFORMATION

Income taxes (received) paid $ (46,021) $ (14,832) $ 55,144
NON-CASH TRANSACTIONS DURING THE YEAR
Dividend paid with fixed maturities $ 81,952 $ - $ -
Taiwan branch dividend paid with net assets/liabilities $ 45,816 $ - $ -
Policy credits issued to eligible policyholders $ 128,025 $ - $ -
Contribution from Parent $ - $ 27,166 $ -

See Notes to Consolidated Financial Statements

B- 4
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

1. BUSINESS

Pruco Life Insurance Company (“the Company”) is a stock life insurance company, organized in 1971 under the laws of the
state of Arizona. The Company is licensed to sell individual life insurance, variable life insurance, term life insurance, variable
and fixed annuities, and a non-participating guaranteed interest contract (“GIC”) called Prudential Credit Enhanced GIC
(“PACE”) in the District of Columbia, Guam and in all states and territories except New York. The Company also had
marketed individual life insurance through its branch office in Taiwan. The branch office was transferred to an affiliated
Company on January 31, 2001, as described in Footnote 14.

The Company has one wholly owned subsidiary, Pruco Life Insurance Company of New Jersey (“PLNJ”). PLNJ is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey. It is licensed to sell individual life insurance,
variable life insurance, term life insurance, fixed and variable annuities only in the states of New Jersey and New York. Another
wholly owned subsidiary, The Prudential Life Insurance Company of Arizona (“PLICA”) was dissolved on September 30,
2000. All assets and liabilities were transferred to the Company. PLICA had no new business sales in 2000 or 1999.

The Company is a wholly owned subsidiary of The Prudential Insurance Company of America (“Prudential”), an insurance
company founded in 1875 under the laws of the state of New Jersey. On December 18, 2001 (“the date of demutualization”)
Prudential converted from a mutual life insurance company to a stock life insurance company and became an indirect wholly
owned subsidiary of Prudential Financial, Inc. (the “Holding Company”). The demutualization was completed in accordance
with Prudential’s Plan of Reorganization, which was approved by the Commissioner of the New Jersey Department of Banking
and Insurance in October 2001.

Prudential intends to make additional capital contributions to the Company, as needed, to enable it to comply with its reserve
requirements and fund expenses in connection with its business. Generally, Prudential is under no obligation to make such
contributions and its assets do not back the benefits payable under the Company’s policyholder contracts. During 2000, a
capital contribution of $27.2 million resulted from the forgiveness of an intercompany receivable.

The Company is engaged in a business that is highly competitive because of the large number of stock and mutual life insurance
companies and other entities engaged in marketing insurance products, and individual and group annuities.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). The Company has extensive transactions and relationships with Prudential and other
affiliates, as more fully described in Footnote 14. Due to these relationships, it is possible that the terms of these transactions
are not the same as those that would result from transactions among wholly unrelated parties.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, in particular deferred policy acquisition costs (“DAC”) and future policy
benefits, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those estimates.

Investments
Fixed maturities classified as “available for sale” are carried at estimated fair value. Fixed maturities that the Company has
both the intent and ability to hold to maturity are stated at amortized cost and classified as “held to maturity”. The amortized
cost of fixed maturities is written down to estimated fair value if a decline in value is considered to be other than temporary.
Unrealized gains and losses on fixed maturities “available for sale”, including the effect on deferred policy acquisition costs and
policyholders’ account balances that would result from the realization of unrealized gains and losses are included in a separate
component of equity, “Accumulated other comprehensive income (loss)”, net of income taxes.

Equity securities, available for sale, comprised of common and non-redeemable preferred stock, are carried at estimated fair
value. The associated unrealized gains and losses, the effects on deferred policy acquisition costs and on policyholders’ account
balances that would result from the realization of unrealized gains and losses, are included in a separate component of equity,
“Accumulated other comprehensive income (loss)”, net of income taxes.

B- 5
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Commercial loans on real estate are stated primarily at unpaid principal balances, net of unamortized discounts and an
allowance for losses. The allowance for losses includes a loan specific reserve for impaired loans and a portfolio reserve for
incurred but not specifically identified losses. Impaired loans include those loans for which it is probable that all amounts due
according to the contractual terms of the loan agreement will not be collected. Impaired loans are measured at the present value
of expected future cash flows discounted at the loan's effective interest rate, or at the fair value of the collateral if the loan is
collateral dependent. Interest received on impaired loans, including loans that were previously modified in a troubled debt
restructuring, is either applied against the principal or reported as revenue, according to management's judgment as to the
collectibility of principal. Management discontinues accruing interest on impaired loans after the loans are 90 days delinquent
as to principal or interest, or earlier when management has serious doubts about collectibility. When a loan is recognized as
impaired, any accrued but uncollectible interest is reversed against interest income of the current period. Generally, a loan is
restored to accrual status only after all delinquent interest and principal are brought current and, in the case of loans where the
payment of interest has been interrupted for a substantial period, a regular payment performance has been established. The
portfolio reserve for incurred but not specifically identified losses considers the Company's past loan loss experience, the
current credit composition of the portfolio, historical credit migration, property type diversification, default and loss severity
statistics and other relevant factors.

Policy loans are carried at unpaid principal balances.

Short-term investments, consisting of highly liquid debt instruments other than those held in “Cash and cash equivalents,”
with a maturity of twelve months or less when purchased, are carried at amortized cost, which approximates fair value.

Other long-term investments represent the Company’s investments in joint ventures and partnerships in which the Company
does not exercise control, derivatives held for purposes other than trading, and investments in the Company’s own Separate
Accounts. Joint ventures and partnerships are recorded using the equity method of accounting, reduced for other than
temporary declines in value. The Company’s investment in the Separate Accounts is carried at estimated fair value. The
Company’s net income from investments in joint ventures and partnerships is generally included in “Net investment income.”

Realized investment losses, net are computed using the specific identification method. Costs of fixed maturity and equity
securities are adjusted for impairments considered to be other than temporary. Impairment adjustments are included in
“Realized investment gains (losses), net.” Factors considered in evaluating whether a decline in value is other than temporary
are: 1) whether the decline is substantial; 2) the Company’s ability and intent to retain the investment for a period of time
sufficient to allow for an anticipated recovery in value; 3) the duration and extent to which the market value has been less than
cost; and 4) the financial condition and near-term prospects of the issuer.

Cash and cash equivalents include cash on hand, amounts due from banks, money market instruments, and other debt issues
with a maturity of three months or less when purchased.

Deferred policy acquisition costs

The costs that vary with and that are related primarily to the production of new insurance and annuity business are deferred to
the extent that they are deemed recoverable from future profits. Such costs include commissions, costs of policy issuance and
underwriting, and variable field office expenses. Deferred policy acquisition costs are subject to recognition testing at the time
of policy issue and recoverability and premium deficiency testing at the end of each accounting period. Deferred policy
acquisition costs, for certain products, are adjusted for the impact of unrealized gains or losses on investments as if these gains
or losses had been realized, with corresponding credits or charges included in “Accumulated other comprehensive income
(loss).”

Policy acquisition costs related to interest-sensitive and variable life products and certain investment-type products are deferred
and amortized over the expected life of the contracts (periods ranging from 25 to 30 years) in proportion to estimated gross
profits arising principally from investment results, mortality and expense margins, and surrender charges based on historical and
anticipated future experience, which is updated periodically. The effect of changes to estimated gross profits on unamortized
deferred acquisition costs is reflected in “General and administrative expenses” in the period such estimated gross profits are
revised.

B- 6
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Deferred policy acquisition costs related to non-participating term insurance are amortized over the expected life of the
contracts in proportion to premium income. For guaranteed investment contracts, acquisition costs are expensed as incurred.

Prudential and the Company have offered programs under which policyholders, for a selected product or group of products, can
exchange an existing policy or contract issued by Prudential or the Company for another form of policy or contract. These
transactions are known as internal replacements. If the new policies have terms that are substantially similar to those of the
earlier policies, the DAC is retained with respect to the new policies and amortized over the life of the new policies. If the terms
of the new policies are not substantially similar to those of the former policy, the unamortized DAC on the surrendered policies
is immediately charged to expense.

Securities loaned
Securities loaned are treated as financing arrangements and are recorded at the amount of cash received as collateral. The
Company obtains collateral in an amount equal to 102% and 105% of the fair value of the domestic and foreign securities,
respectively. The Company monitors the market value of securities loaned on a daily basis with additional collateral obtained as
necessary. Non-cash collateral received is not reflected in the consolidated statements of financial position because the debtor
typically has the right to redeem the collateral on short notice. Substantially all of the Company’s securities loaned are with
large brokerage firms.

Securities sold under agreements to repurchase

Securities sold under agreements to repurchase are treated as financing arrangements and are carried at the amounts at which the
securities will be subsequently reacquired, including accrued interest, as specified in the respective agreements. Assets to be
repurchased are the same, or substantially the same, as the assets transferred and the transferor, through right of substitution,
maintains the right and ability to redeem the collateral on short notice. The market value of securities to be repurchased is
monitored and additional collateral is obtained, where appropriate, to protect against credit exposure.

Securities lending and securities repurchase agreements are used to generate net investment income and facilitate trading
activity. These instruments are short-term in nature (usually 30 days or less). Securities loaned are collateralized principally by
U.S. Government and mortgage-backed securities. Securities sold under repurchase agreements are collateralized principally by
cash. The carrying amounts of these instruments approximate fair value because of the relatively short period of time between
the origination of the instruments and their expected realization.

Separate Account Assets and Liabilities

Separate Account assets and liabilities are reported at estimated fair value and represent segregated funds which are invested for
certain policyholders and other customers. The assets consist of common stocks, fixed maturities, real estate related securities,
and short-term investments. The assets of each account are legally segregated and are not subject to claims that arise out of any
other business of the Company. Investment risks associated with market value changes are borne by the customers, except to
the extent of minimum guarantees made by the Company with respect to certain accounts. The investment income and gains or
losses for Separate Accounts generally accrue to the policyholders and are not included in the Consolidated Statements of
Operations and Comprehensive Income. Mortality, policy administration and surrender charges on the accounts are included in
“Policy charges and fee income”.

Separate Accounts represent funds for which investment income and investment gains and losses accrue directly to, and
investment risk is borne by, the policyholders, with the exception of the Pruco Life Modified Guaranteed Annuity Account.
The Pruco Life Modified Guaranteed Annuity Account is a non-unitized Separate Account, which funds the Modified
Guaranteed Annuity Contract and the Market Value Adjustment Annuity Contract. Owners of the Pruco Life Modified
Guaranteed Annuity and the Market Value Adjustment Annuity Contracts do not participate in the investment gain or loss from
assets relating to such accounts. Such gain or loss is borne, in total, by the Company.

Contingencies
Amounts related to contingencies are accrued if it is probable that a liability has been incurred and an amount is reasonably
estimable. Management evaluates whether there are incremental legal or other costs directly associated with the ultimate
resolution of the matter that are reasonably estimable and, if so, they are included in the accrual.

B- 7
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Insurance Revenue and Expense Recognition

Premiums from insurance policies are generally recognized when due. Benefits are recorded as an expense when they are
incurred. For traditional life insurance contracts, a liability for future policy benefits is recorded using the net level premium
method. For individual annuities in payout status, a liability for future policy benefits is recorded for the present value of
expected future payments based on historical experience.

Amounts received as payment for interest-sensitive life, individual annuities and guaranteed investment contracts are reported as
deposits to “Policyholders’ account balances”. Revenues from these contracts reflected as “Policy charges and fee income”
consist primarily of fees assessed during the period against the policyholders’ account balances for mortality charges, policy
administration charges and surrender charges. Benefits and expenses for these products include claims in excess of related
account balances, expenses of contract administration, interest credited and amortization of deferred policy acquisition costs.

Premiums, benefits and expenses are stated net of reinsurance ceded to other companies. Estimated reinsurance recoverables
and the cost of reinsurance are recognized over the life of the reinsured policies using assumptions consistent with those used to
account for the underlying policies.

Foreign Currency Translation Adjustments

Assets and liabilities of the Taiwan branch are translated to U.S. dollars at the exchange rate in effect at the end of the period.
Revenues, benefits and other expenses are translated at the average rate prevailing during the period. Cumulative translation
adjustments arising from the use of differing exchange rates from period to period are charged or credited directly to “Other
comprehensive income (loss).” The cumulative effect of changes in foreign exchange rates are included in “Accumulated other
comprehensive income (loss)”.

Asset Management Fees

Through December 31, 2000, the Company received asset management fee income from policyholder account balances invested
in The Prudential Series Funds (“PSF”), which are a portfolio of mutual fund investments related to the Company’s Separate
Account products (refer to Note 14). In addition, the Company receives fees from policyholder account balances invested in
funds managed by companies other than Prudential. Asset management fees are recognized as income as earned.

Derivative Financial Instruments

Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, or
the value of securities or commodities. Derivative financial instruments used by the Company include swaps, futures, forwards
and option contracts and may be exchange-traded or contracted in the over-the-counter market. See Note 11 for a discussion of
the Company’s use of derivative financial instruments and the related accounting and reporting treatment for such instruments.

Income Taxes
The Company and its subsidiary are members of the consolidated federal income tax return of Prudential and file separate
company state and local tax returns. Pursuant to the tax allocation arrangement with Prudential, total federal income tax
expense is determined on a separate company basis. Members with losses record tax benefits to the extent such losses are
recognized in the consolidated federal tax provision. Deferred income taxes are generally recognized, based on enacted rates,
when assets and liabilities have different values for financial statement and tax reporting purposes. A valuation allowance is
recorded to reduce a deferred tax asset to that portion that is expected to be realized.

New Accounting Pronouncements

In September 2000, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards
(“SFAS”) No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a
replacement of FASB Statement No. 125.” The Company has adopted the provisions of SFAS No. 140 relating to transfers and
extinguishments of liabilities which are effective for periods occurring after March 31, 2001. The adoption did not have an
effect on the results of operations of the Company.

B- 8
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In June 2001, the FASB issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible
Assets.” SFAS No. 141 requires that the Company account for all business combinations in the scope of the statement using the
purchase method. SFAS No. 142 requires that an intangible asset acquired either individually or with a group of other assets
shall initially be recognized and measured based on fair value. An intangible asset with a finite life is amortized over its useful
life to the reporting entity; an intangible asset with an indefinite useful life, including goodwill, is not amortized. All intangible
assets shall be tested for impairment in accordance with the statement. SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001; however, goodwill and intangible assets acquired after June 30, 2001 are subject immediately to the
nonamortization and amortization provisions of this statement. As of December 31, 2001, The Company does not have any
goodwill or intangible assets.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS
No. 144 eliminated the requirement that discontinued operations be measured at net realizable value or that entities include
losses that have not yet occurred. SFAS No. 144 eliminated the exception to consolidation for a subsidiary for which control is
likely to be temporary. SFAS No. 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower
of book value or fair value less cost to sell. An impairment for assets that are not considered to be disposed of is recognized
only if the carrying amounts of long-lived assets are not recoverable and exceed their fair values. Additionally, SFAS No. 144
expands the scope of discontinued operations to include all components of an entity with operations and cash flows that (1) can
be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal
transaction. SFAS No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and,
generally, its provisions are to be applied prospectively.

Reclassifications
Certain amounts in the prior years have been reclassified to conform to the current year presentation.

B- 9
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

3. INVESTMENTS

Fixed Maturities and Equity Securities:

The following tables provide additional information relating to fixed maturities and equity securities as of December 31:

2001
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
(In Thousands)
Fixed Maturities Available For Sale
U.S. Treasury Securities and Obligations of
U.S. Government Corporations and Agencies $ 303,606 $ 1,496 $ 1,648 $ 303,454
Foreign Government Bonds 27,332 2,122 - 29,454
Corporate Securities 3,594,386 116,186 28,834 3,681,738
Mortgage-backed Securities 10,148 160 61 10,247
Total Fixed Maturities Available For Sale $ 3,935,472 $ 119,964 $ 30,543 $ 4,024,893

Equity Securities Available For Sale $ 173 $ 220 $ 18 $ 375

2000
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
(In Thousands)
Fixed Maturities Available For Sale
U.S. Treasury Securities and Obligations of
U.S. Government Corporations and Agencies $ 309,609 $ 7,888 $ 17 $ 317,480
Foreign Government Bonds 136,133 8,093 520 143,706
Corporate Securities 3,075,023 43,041 49,538 3,068,526
Mortgage-backed Securities 31,479 330 0 31,809
Total Fixed Maturities Available For Sale $ 3,552,244 $ 59,352 $ 50,075 $ 3,561,521

Fixed Maturities Held To Maturity

Corporate Securities $ 324,546 $ 1,500 $ 5,412 $ 320,634
Total Fixed Maturities Held To Maturity $ 324,546 $ 1,500 $ 5,412 $ 320,634

Equity Securities Available For Sale $ 13,446 $ 197 $ 2,839 $ 10,804

B-10
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

3. INVESTMENTS (continued)

The amortized cost and estimated fair value of fixed maturities, by contractual maturities at December 31, 2001 is shown below:
Available For Sale
Amortized Estimated Fair
Cost Value
(In Thousands)

Due in one year or less $ 802,235 $ 821,790

Due after one year through five years 1,841,097 1,885,535
Due after five years through ten years 1,026,709 1,045,693
Due after ten years 255,283 261,628
Mortgage-backed securities 10,148 10,247
Total $ 3,935,472 $ 4,024,893

Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations.

Proceeds from the sale of fixed maturities available for sale during 2001, 2000, and 1999, were $2,380.4 million, $2,103.6
million, and $2,950.4 million, respectively. Gross gains of $40.3 million, $15.3 million, $13.1 million, and gross losses of
$47.7 million, $33.9 million, and $31.1 million, were realized on those sales during 2001, 2000, and 1999, respectively.

Proceeds from the maturity of fixed maturities available for sale during 2001, 2000, and 1999, were $273.4 million, $170.2
million, and $126.5 million, respectively.

Writedowns for impairments which were deemed to be other than temporary for fixed maturities were $53.5 million, $12.3
million, and $11.2 million, for the years 2001, 2000 and 1999, respectively.

Due to the adoption of FAS 133, “Accounting for Derivative Instruments and Hedging Activities”, on January 1, 2001, the
entire portfolio of fixed maturities classified as held to maturity were transferred to the available for sale category. The
aggregate amortized cost of the securities was $324.5 million. Unrealized investment losses of $2.5 million, net of tax were
recorded in “Accumulated Other Comprehensive income (loss)”at the time of transfer.

During 2000, certain securities classified as held to maturity were transferred to the available for sale portfolio. These actions
were taken as a result of a significant deterioration in credit worthiness. The aggregate amortized cost of the securities
transferred was $6.6 million. Gross unrealized investment losses of $0.3 million were recorded in “Accumulated Other
Comprehensive income (loss)” at the time of transfer. Prior to transfer, impairments related to these securities, if any, were
included in “realized investment losses, net”. During the year ended December 31, 1999, there were no securities classified as
held to maturity that were transferred. During the years ended December 31, 2001, 2000, and 1999, there were no securities
classified as held to maturity that were sold.

Commercial Loans on Real Estate

The Company’s commercial loans on real estate were collateralized by the following property types at December 31:

2001 2000
(In Thousands)

Retail Stores $ 4,623 56.4% $ 5,615 60.2%

Industrial Buildings 3,567 43.6% 3,712 39.8%
Net Carrying Value $ 8,190 100.0% $ 9,327 100.0%

The concentration of commercial loans are in the states of Washington (47%), New Jersey (44%), and North Dakota (9%).

B-11
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

3. INVESTMENTS (continued)

Special Deposits and Restricted Assets

Fixed maturities of $2.9 million and $8.0 million at December 31, 2001 and 2000, respectively, were on deposit with
governmental authorities or trustees as required by certain insurance laws. Equity securities restricted as to sale were $.2
million at December 31, 2001 and 2000, respectively.

Other Long-Term Investments

The Company’s “Other long-term investments” of $84.3 million and $83.7 million as of December 31, 2001 and 2000,
respectively, are comprised of joint ventures and limited partnerships, the Company’s investment in the Separate Accounts and
certain derivatives for other than trading. Joint ventures and limited partnerships totaled $35.8 million and $34.3 million at
December 31, 2001 and 2000, respectively. The Company’s share of net income from the joint ventures was $1.6 million, $.9
million, and $.3 million, for the years ended December 31, 2001, 2000 and 1999, respectively, and is reported in “Net
investment income.” The Company’s investment in the Separate Accounts was $44.0 million and $46.9 million at December 31,
2001 and 2000, respectively.

Investment Income and Investment Gains and Losses

Net investment income arose from the following sources for the years ended December 31:

2001 2000 1999

(In Thousands)

Fixed Maturities - Available For Sale $ 279,477 $ 237,042 $ 188,236

Fixed Maturities - Held To Maturity - 26,283 29,245
Equity Securities – Available For Sale 71 18 -
Commercial Loans On Real Estate 905 1,010 2,825
Policy Loans 48,149 45,792 42,422
Short-Term Investments and Cash Equivalents 24,253 29,582 19,208
Other 6,021 16,539 4,432
Gross Investment Income 358,876 356,266 286,368
Less: Investment Expenses (15,238) (18,347) (9,547)
Net Investment Income $ 343,638 $ 337,919 $ 276,821

Realized investment losses, net including charges for other than temporary reductions in value, for the years ended December
31, were from the following sources:

2001 2000 1999

(In Thousands)

Fixed Maturities - Available For Sale $ (60,924) $ (34,600) $ (29,192)

Fixed Maturities - Held To Maturity - (212) 102
Equity Securities – Available For Sale (56) 271 392
Derivatives (1,396) 15,039 (1,557)
Other 1,900 (1,177) (2,290)

Realized Investment Losses, Net $ (60,476) $ (20,679) $ (32,545)

Securities Pledged to Creditors

The Company pledges investment securities it owns to unaffiliated parties through certain transactions including securities
lending, securities sold under agreements to repurchase, and futures contracts. At December 31, 2001 and 2000, the carrying
value of fixed maturities available for sale pledged to third parties as reported in the Consolidated Statements of Financial
Position were $265.2 million and $287.8 million, respectively.

B-12
 Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

3. INVESTMENTS (continued)

Net Unrealized Investment Gains (Losses)

Net unrealized investment gains (losses) on securities available for sale are included in the Consolidated Statements of Financial
Position as a component of “Accumulated other comprehensive income (loss).” Changes in these amounts include reclassification
adjustments to exclude from “Other Comprehensive income (loss),” those items that are included as part of “Net income” for a period
that also had been part of “Other Comprehensive income (loss)” in earlier periods. The amounts for the years ended December 31, net
of tax, are as follows:

Accumulated
Other
Comprehensive
Income (Loss)
Deferred Deferred Related To Net
Unrealized Policy Policyholders’ Income Tax Unrealized
Gains(Losses) Acquisition Account (Liability) Investment
On Investments Costs Balances Benefit Gains(Losses)
(In Thousands)

Balance, January 1, 1999 $ 25,169 $ (13,115) $ 2,680 $ (4,832) $ 9,902

Net investment gains(losses) on investments
arising during the period (138,268) - - 47,785 (90,483)
Reclassification adjustment for gains(losses)
included in net income 28,698 - - (9,970) 18,728
Impact of net unrealized investment
gains(losses) on deferred policy acquisition - 53,407 - (16,283) 37,124
costs
Impact of net unrealized investment
gains(losses) on policyholders’ account - - (5,712) 2,077 (3,635)
balances
Balance, December 31, 1999 (84,401) 40,292 (3,032) 18,777 (28,364)
Net investment gains(losses) on investments
arising during the period 56,707 - - (21,539) 35,168
Reclassification adjustment for gains(losses)
included in net income 34,329 - - (13,039) 21,290
Impact of net unrealized investment
gains(losses) on deferred policy acquisition - (39,382) - 14,177 (25,205)
costs
Impact of net unrealized investment
gains(losses) on policyholders’ account - - 2,877 (1,036) 1,841
balances
Balance, December 31, 2000 6,635 910 (155) (2,660) 4,730
Net investment gains(losses) on investments
arising during the period 22,007 - - (7,922) 14,085
Reclassification adjustment for gains(losses)
included in net income 60,980 - - (21,953) 39,027
Impact of net unrealized investment
gains(losses) on deferred policy acquisition - (41,223) - 14,840 (26,383)
costs
Impact of net unrealized investment
gains(losses) on policyholders’ account - - 5,092 (1,833) 3,259
balances
Balance, December 31, 2001 $ 89,622 $ (40,313) $ 4,937 $ (19,528) $ 34,718

B-13
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

4. DEFERRED POLICY ACQUISITION COSTS

The balances of and changes in deferred policy acquisition costs as of and for the years ended December 31, are as follows:

2001 2000 1999

(In Thousands)
Balance, Beginning of Year $ 1,132,653 $ 1,062,785 $ 861,713
Capitalization of Commissions, Sales and Issue Expenses 295,823 242,322 242,373
Amortization (156,092) (129,049) (96,451)
Change In Unrealized Investment (Gains) Losses (41,223) (39,382) 53,407
Foreign Currency Translation 1,773 (4,023) 1,743
Transfer of Taiwan branch balance to an affiliated company (73,104) - -
Balance, End of Year $ 1,159,830 $ 1,132,653 $ 1,062,785

5. POLICYHOLDERS’ LIABILITIES

Future policy benefits and other policyholder liabilities at December 31, are as follows:

2001 2000
(In Thousands)
Life Insurance – Domestic $ 500,974 $ 429,825
Life Insurance – Taiwan 260,632 226,272
Individual Annuities 32,423 31,817
Group Annuities 14,201 14,948
$ 808,230 $ 702,862

Life insurance liabilities include reserves for death benefits. Annuity liabilities include reserves for annuities that are in payout
status.

The following table highlights the key assumptions generally utilized in calculating these reserves:

Product Mortality Interest Rate Estimation Method

Life Insurance - Domestic Generally rates guaranteed in 2.5% to 11.25% Net level premium based
Variable and Interest-Sensitive calculating cash surrender on non-forfeiture interest
values rate

Life Insurance - Domestic Term Best estimate plus a provision 6.5% to 6.75% Net level premium plus a
Insurance for adverse deviation provision for adverse
deviation

Life Insurance - International Generally the Taiwan standard 6.25% to 7.5% Net level premium plus a
table plus a provision for provision for adverse
adverse deviation deviation.

Individual Annuities Mortality table varies based on 6.25% to 11.0% Present value of expected
the issue year of the contract. future payments based on
Current table (for 1998 & later historical experience
issues) is the Annuity 2000
Mortality Table with certain
modifications

Group Annuities 1950 & 1971 Group Annuity 14.75% Present value of expected
Mortality Table with certain future payments based on
modifications historical experience

B-14
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

Policyholders’ account balances at December 31, are as follows:

2001 2000
(In Thousands)

Interest-Sensitive Life Contracts $ 1,976,710 $ 1,886,714

Individual Annuities 976,237 859,996
Guaranteed Investment Contracts 994,743 899,958
$ 3,947,690 $ 3,646,668

Policyholders’ account balances for interest-sensitive life, individual annuities, and guaranteed investment contracts are equal to
policy account values plus unearned premiums. The policy account values represent an accumulation of gross premium
payments plus credited interest less withdrawals, expenses and mortality charges.

Certain contract provisions that determine the policyholder account balances are as follows:

Product Interest Rate Withdrawal / Surrender Charges

Interest Sensitive Life Contracts 3.0% to 6.75 % Various up to 10 years

Individual Annuities 3.0% to 16.0% 0% to 7% for up to 9 years

Guaranteed Investment Contracts 4.32% to 8.03% Subject to market value withdrawal

provisions for any funds withdrawn
other than for benefit responsive and
contractual payments

B-15
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

6. REINSURANCE

The Company participates in reinsurance, with Prudential and other companies, in order to provide greater diversification of
business, provide additional capacity for future growth and limit the maximum net loss potential arising from large risks.
Reinsurance ceded arrangements do not discharge the Company or the insurance subsidiary as the primary insurer. Ceded
balances would represent a liability of the Company in the event the reinsurers were unable to meet their obligations to the
Company under the terms of the reinsurance agreements. The likelihood of a material reinsurance liability reassumed by the
Company is considered to be remote. The affiliated reinsurance agreements, including the Company’s reinsurance of all its
Taiwanese business, are described further in Note 14.

Reinsurance amounts included in the Consolidated Statements of Operations and Comprehensive Income for the year ended
December 31, are as follows:

2001 2000 1999

(In Thousands)
Domestic:
Reinsurance premiums ceded – affiliated $ (9,890) $ (7,641) $ (5,630)
Reinsurance premiums ceded – unaffiliated (13,399) (2,475) -
Policyholders’ benefits ceded 10,803 3,558 3,140

Taiwan after the transfer:

Reinsurance premiums ceded -affiliated (82,433) - -
Policyholders’ benefits ceded-affiliated 12,859 - -

Taiwan before the transfer:

Reinsurance premiums ceded – affiliated (107) (1,573) (1,252)
Reinsurance premiums ceded -unaffiliated (167) (2,830) (1,745)
Policyholders’ benefits ceded 71 1,914 1,088
Reinsurance premiums assumed 162 1,671 1,778

Reinsurance recoverables, included in the Company’s Consolidated Statements of Financial Position at December 31, were as
follows:

2001 2000
(In Thousands)

Domestic Life Insurance - affiliated $ 11,014 $ 8,765

Domestic Life Insurance - unaffiliated 14,850 2,037
Other Reinsurance - affiliated 14,201 14,948

Taiwan Life Insurance-affiliated 260,632 -

Taiwan Life Insurance-unaffiliated - 5,818
$ 300,697 $ 31,568

The gross and net amounts of life insurance in force at December 31, were as follows:

2001 2000 1999

(In Thousands)

Life Insurance Face Amount In Force $ 84,317,628 $ 66,327,999 $ 54,954,680

Ceded To Other Companies (25,166,264) (7,544,363) (2,762,319)
Net Amount of Life Insurance In Force $ 59,151,364 $ 58,783,636 $ 52,192,361

B-16
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

7. EMPLOYEE BENEFIT PLANS

Pension and Other Postretirement Plans

The Company had a non-contributory defined benefit pension plan that covered substantially all of its Taiwanese employees.
The pension plan was transferred to an affiliate on January 31, 2001 as described in Note 14. This plan was established as of
September 30, 1998 and the projected benefit obligation and related expenses at December 31, 2000 were not material to the
Consolidated Statements of Financial Position or results of operations for the years presented. All other employee benefit costs
are allocated to the Company by Prudential in accordance with the service agreement described in Footnote 14.

8. INCOME TAXES

The components of income taxes for the years ended December 31, are as follows:

2001 2000 1999

(In Thousands)
Current Tax Expense (Benefit):
U.S. $ (100,946) $ 8,588 $ (14,093)
State and Local 1,866 38 378
Foreign 124 35 15
Total (98,956) 8,661 (13,700)

Deferred Tax Expense (Benefit):

U.S. 76,155 43,567 42,320
State and Local (2,454) 2,204 1,316
Total 73,701 45,771 43,636

Total Income Tax Expense $ (25,255) $ 54,432 $ 29,936

The income tax expense for the years ended December 31, differs from the amount computed by applying the expected federal
income tax rate of 35% to income from operations before income taxes for the following reasons:

2001 2000 1999

(In Thousands)

Expected Federal Income Tax Expense $ 14,814 $ 55,275 $ 29,936

State and Local Income Taxes (382) 1,457 1,101
Non taxable investment income (38,693) (6,443) (1,010)
Incorporation of Taiwan Branch (1,774) - -
Other 780 4,143 (91)
Total Income Tax Expense $ (25,255) $ 54,432 $ 29,936

B-17
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

8. INCOME TAXES (continued)

Deferred tax assets and liabilities at December 31, resulted from the items listed in the following table:

2001 2000
(In Thousands)
Deferred Tax Assets
Insurance Reserves $ 43,317 $ 100,502
State Net Operating Losses 5,642 1,400
Other 9,309 8,610
Deferred Tax Assets 58,268 110,512

Deferred Tax Liabilities

Deferred Acquisition Costs 324,082 324,023
Net Unrealized Gains on Securities 32,264 2,389
Investments 20,644 19,577
Deferred Tax Liabilities 376,990 345,989

Net Deferred Tax Liability $ 318,722 $ 235,477

Management believes that based on its historical pattern of taxable income, the Company and its subsidiary will produce
sufficient income in the future to realize its deferred tax assets. Adjustments to the valuation allowance will be made if there is a
change in management’s assessment of the amount of the deferred tax asset that is realizable. At December 31, 2001 and 2000,
the Company and its subsidiary had no federal operating loss carryforwards for tax purposes. At December 31, 2001 and
December 31, 2000, the Company had state operating loss carryforwards for tax purposes of $369 million and $91 million,
which expire by 2021 and 2020, respectively.

The Internal Revenue Service (the “Service”) has completed all examinations of the consolidated federal income tax returns
through 1992. The Service has examined the years 1993 through 1995. Discussions are being held with the Service with
respect to proposed adjustments. Management, however, believes there are adequate defenses against, or sufficient reserves to
provide for such adjustments. The Service has completed its examination of 1996 and has begun its examination of 1997
through 2000.

9. STATUTORY NET INCOME AND SURPLUS

The Company is required to prepare statutory financial statements in accordance with accounting practices prescribed or
permitted by the Arizona Department of Insurance and the New Jersey Department of Banking and Insurance. Statutory
accounting practices primarily differ from GAAP by charging policy acquisition costs to expense as incurred, establishing future
policy benefit liabilities using different actuarial assumptions and valuing investments, deferred taxes, and certain assets on a
different basis.

Statutory net income (loss) of the Company amounted to $71.5 million, $(50.5) million, and $(82.3) million for the years ended
December 31, 2001, 2000, and 1999, respectively. Statutory surplus of the Company amounted to $728.7 million and $849.6
million at December 31, 2001 and 2000, respectively.

In March 1998, the NAIC adopted the Codification of Statutory Accounting Principles guidance (“Codification”), which
replaces the current Accounting Practices and Procedures manual as the NAIC’s primary guidance on statutory accounting as of
January 1, 2001. Codification provides guidance for areas where statutory accounting has been silent and changes current
statutory accounting in certain areas. The Company has adopted the Codification guidance effective January 1, 2001. As a result
of these changes, the Company reported an increase to statutory surplus of $88 million, primarily relating to the recognition of
deferred tax assets.

B-18
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values presented below have been determined using available market information and by applying valuation
methodologies. Considerable judgment is applied in interpreting data to develop the estimates of fair value. Estimated fair
values may not be realized in a current market exchange. The use of different market assumptions and/or estimation
methodologies could have a material effect on the estimated fair values. The following methods and assumptions were used in
calculating the estimated fair values (for all other financial instruments presented in the table, the carrying value approximates
estimated fair value).

Fixed maturities and Equity securities

Estimated fair values for fixed maturities and equity securities, other than private placement securities, are based on quoted
market prices or estimates from independent pricing services. Generally, fair values for private placement securities are
estimated using a discounted cash flow model which considers the current market spreads between the U.S. Treasury yield
curve and corporate bond yield curve, adjusted for the type of issue, its current credit quality and its remaining average life. The
estimated fair value of certain non-performing private placement securities is based on amounts estimated by management.

Commercial loans on real estate

The estimated fair value of the portfolio of commercial loans on real estate is primarily based upon the present value of the
expected future cash flows discounted at the appropriate U.S. Treasury rate, adjusted for the current market spread for a similar
quality loan.

Policy loans
The estimated fair value of policy loans is calculated using a discounted cash flow model based upon current U.S. Treasury rates
and historical loan repayment patterns.

Investment contracts
For guaranteed investment contracts, estimated fair values are derived using discounted projected cash flows, based on interest
rates being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. For
individual deferred annuities and other deposit liabilities, fair value approximates carrying value.

Derivative financial instruments

Refer to Note 11 for the disclosure of fair values on these instruments.

B-19
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

10. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The following table discloses the carrying amounts and estimated fair values of the Company’s financial instruments at
December 31:

2001 2000
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
(In Thousands)
Financial Assets:

Fixed Maturities: Available For Sale $ 4,024,893 $ 4,024,893 $ 3,561,521 $ 3,561,521

Fixed Maturities: Held To Maturity - - 324,546 320,634
Equity Securities 375 375 10,804 10,804
Commercial Loans on Real Estate 8,190 10,272 9,327 10,863
Policy Loans 874,065 934,203 855,374 883,460
Short-Term Investments 215,610 215,610 202,815 202,815
Cash and Cash Equivalents 374,185 374,185 453,071 453,071
Separate Account Assets 14,920,584 14,920,584 16,230,264 16,230,264

Financial Liabilities:
Investment Contracts 2,003,265 2,053,259 1,762,794 1,784,767
Cash Collateral for Loaned Securities 190,022 190,022 185,849 185,849
Securities Sold Under Repurchase Agreements 80,715 80,715 104,098 104,098
Separate Account Liabilities 14,920,584 14,920,584 16,230,264 16,230,264

11. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS

Adoption of Statement of Financial Accounting Standards No. 133

The Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended, on January
1, 2001. The adoption of this statement did not have a material impact on the results of operations of the Company.

Accounting for Derivatives and Hedging Activities

Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices, or
the value of securities or commodities. Derivative financial instruments used by the Company include swaps, futures, forwards
and option contracts and may be exchange-traded or contracted in the over-the-counter market. Derivatives may be held for
trading purposes or held for purposes other than trading. All of the Company’s derivatives are held for purposes other than
trading.

Derivatives held for purposes other than trading are used to seek to reduce exposure to interest rates and foreign currency risks
associated with assets held or expected to be purchased or sold, and liabilities incurred or expected to be incurred. Other than
trading derivatives are also used to manage the characteristics of the Company’s asset/liability mix, and to manage the interest
rate and currency characteristics of invested assets.

Derivatives held for purposes other than trading are recognized on the Consolidated Statements of Financial Position at their
fair value. On the date the derivative contract is entered into, the Company designates the derivative as either (1) a hedge of the
fair value of a recognized asset or liability or unrecognized firm commitment (“fair value” hedge), (2) a hedge of a forecasted
transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge),
(3) a foreign currency or cash flow hedge (“foreign currency” hedge), (4) a hedge of a net investment in a foreign operation, or
(5) a derivative that does not qualify for hedge accounting. As of December 31, 2001, none of the Company’s derivatives
qualify for hedge accounting treatment.

B-20
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

11. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)

If a derivative does not qualify for hedge accounting, it is recorded at fair value in “Other long-term investments” or “Other
liabilities” in the Consolidated Statements of Financial Position, and changes in fair value are included in earnings without
considering changes in fair value of the hedged assets or liabilities. See “Types of Derivative Instruments” for further discussion
of the classification of derivative activity in current earnings.

Types of Derivative Instruments

Interest Rate Swaps

The Company uses interest rate swaps to reduce market risk from changes in interest rates and to manage interest rate exposures
arising from mismatches between assets and liabilities. Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to
an agreed notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are
made by either party. Cash is paid or received based on the terms of the swap. These transactions are entered into pursuant to
master agreements that provide for a single net payment to be made by one counterparty at each due date. The fair value of swap
agreements is estimated based on proprietary pricing models or market quotes.

If the criteria for hedge accounting are not met, the swap agreements are accounted for at fair value with changes in fair value
reported in “Realized investment losses, net” in the Consolidated Statement of Operations. During the period that interest rate
swaps are outstanding, net receipts or payments are include in” Net investment income” in the Consolidated Statement of
Operations.

Futures and Options

The Company uses exchange-traded Treasury futures and options to reduce market risk from changes in interest rates, and to
manage the duration of assets and the duration of liabilities supported by those assets. In exchange-traded futures transactions,
the Company agrees to purchase or sell a specified number of contracts, the value of which are determined by the value of
designated classes of Treasury securities, and to post variation margin on a daily basis in an amount equal to the difference in
the daily market values of those contracts. The Company enters into exchange-traded futures and options with regulated futures
commissions merchants who are members of a trading exchange. The fair value of futures and options is based on market
quotes.

Treasury futures move substantially in value as interest rates change and can be used to either modify or hedge existing interest
rate risk. This strategy protects against the risk that cash flow requirements may necessitate liquidation of investments at
unfavorable prices resulting from increases in interest rates. This strategy can be a more cost effective way of temporarily
reducing the Company’s exposure to a market decline than selling fixed income securities and purchasing a similar portfolio
when such a decline is believed to be over.

If futures meet hedge accounting criteria, changes in their fair value are deferred and recognized as an adjustment to the carrying
value of the hedged item. Deferred gains or losses from the hedges for interest-bearing financial instruments are amortized as a
yield adjustment over the remaining lives of the hedged item. Futures that do not qualify as hedges are carried at fair value with
changes in value reported in “Realized investment losses, net.”

When the Company anticipates a significant decline in the stock market which will correspondingly affect its diversified
portfolio, it may purchase put index options where the basket of securities in the index is appropriate to provide a hedge against
a decrease in the value of the equity portfolio or a portion thereof. This strategy effects an orderly sale of hedged securities.
When the Company has large cash flows which it has allocated for investment in equity securities, it may purchase call index
options as a temporary hedge against an increase in the price of the securities it intends to purchase. This hedge permits such
investment transactions to be executed with the least possible adverse market impact.

Option premium paid or received is reported as an asset or liability and amortized into income over the life of the option. If
options meet the criteria for hedge accounting, changes in their fair value are deferred and recognized as an adjustment to the
hedged item. Deferred gains or losses from the hedges for interest-bearing financial instruments are recognized as an
adjustment to interest income or expense of the hedged item. If the options do not meet the criteria for hedge accounting, they
are fair valued, with changes in fair value reported in current period earnings.

B-21
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

11. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)

Currency Derivatives
The Company uses currency swaps to reduce market risk from changes in currency values of investments denominated in
foreign currencies that the Company either holds or intends to acquire and to manage the currency exposures arising from
mismatches between such foreign currencies and the US Dollar.

Under currency swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between one
currency and another at a forward exchange rate and calculated by reference to an agreed principal amount. Generally, the
principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. These
transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one
counterparty for payments made in the same currency at each due date.

If currency swaps are effective as hedges of foreign currency translation and transaction exposures, gains or losses are recorded
in a manner similar to the hedged item. If currency swaps do not meet hedge accounting criteria, gains or losses from those
derivatives are recognized in “Realized investment (losses) gains, net.”

The table below summarizes the Company’s outstanding positions by derivative instrument types as of December 31, 2001 and
2000. All amounts presented have been classified as other than trading based on management’s intent at the time of contract and
throughout the life of the contract.

Other than Trading Derivatives

December 31, 2001 and 2000
(In Thousands)

2001 2000
Estimated Carrying Estimated Carrying
Notional Fair Value Value Notional Fair Value Value
Non-Hedge Accounting

Swap Instruments
Interest Rate
Asset $ 9,470 $ 638 $ 638 $ 9,470 $ 327 $ 327
Liability - - - - - -
Currency
Asset 24,785 3,858 3,858 - - -
Liability - - - - - -
Future Contracts
US Treasury Futures
Asset 76,800 394 394 139,800 3,530 3,530
Liability 64,500 238 238 61,900 1,067 1,067

Hedge Accounting

Swap Instruments
Currency
Asset - - - 28,326 1,633 2,155
Liability - - - - - -

B-22
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

11. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)

Credit Risk
The current credit exposure of the Company’s derivative contracts is limited to the fair value at the reporting date. Credit risk is
managed by entering into transactions with creditworthy counterparties and obtaining collateral where appropriate and
customary. The Company also attempts to minimize its exposure to credit risk through the use of various credit monitoring
techniques. All of the net credit exposure for the Company from derivative contracts are with investment grade counterparties.
As of December 31, 2001, 86% of notional consisted of interest rate derivatives, and 14% of notional consisted of foreign
currency derivatives.

12. CONTINGENCIES AND LITIGATION

Prudential and the Company are subject to legal and regulatory actions in the ordinary course of their businesses, including
class actions. Pending legal and regulatory actions include proceedings relating to aspects of the businesses and operations that
are specific to the Company and Prudential and that are typical of the businesses in which the Company and Prudential operate.
Some of these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters,
the plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages.

Beginning in 1995, regulatory authorities and customers brought significant regulatory actions and civil litigation against the
Company and Prudential involving individual life insurance sales practices. In 1996, Prudential, on behalf of itself and many of
its life insurance subsidiaries including the Company entered into settlement agreements with relevant insurance regulatory
authorities and plaintiffs in the principal life insurance sales practices class action lawsuit covering policyholders of individual
permanent life insurance policies issued in the United States from 1982 to 1995. Pursuant to the settlements, the companies
agreed to various changes to their sales and business practices controls, to a series of fines, and to provide specific forms of
relief to eligible class members. Virtually all claims by class members filed in connection with the settlements have been
resolved and virtually all aspects of the remediation program have been satisfied. While the approval of the class action
settlement is now final, Prudential and the Company remain subject to oversight and review by insurance regulators and other
regulatory authorities with respect to its sales practices and the conduct of the remediation program. The U.S. District Court has
also retained jurisdiction as to all matters relating to the administration, consummation, enforcement and interpretation of the
settlements.

As of December 31, 2001, Prudential and/or the Company remained a party to approximately 44 individual sales practices
actions filed by policyholders who “opted out” of the class action settlement relating to permanent life insurance policies issued
in the United States between 1982 and 1995. In addition, there were 19 sales practices actions pending that were filed by
policyholders who were members of the class and who failed to “opt out” of the class action settlement. Prudential and the
Company believe that those actions are governed by the class settlement release and expects them to be enjoined and/or
dismissed. Additional suits may be filed by class members who “opted out” of the class settlements or who failed to “opt out”
but nevertheless seek to proceed against Prudential and/or the Company. A number of the plaintiffs in these cases seek large
and/or indeterminate amounts, including punitive or exemplary damages. Some of these actions are brought on behalf of
multiple plaintiffs. It is possible that substantial punitive damages might be awarded in any of these actions and particularly in
an action involving multiple plaintiffs.

Prudential has indemnified the Company for any liabilities incurred in connection with sales practices litigation covering
policyholders of individual permanent life insurance policies issued in the United States from 1982 to 1995.

The Company’s litigation is subject to many uncertainties, and given the complexity and scope, the outcomes cannot be
predicted. It is possible that the results of operations or the cash flow of the Company in a particular quarterly or annual
period could be materially affected by an ultimate unfavorable resolution of pending litigation and regulatory matters.
Management believes, however, that the ultimate outcome of all pending litigation and regulatory matters should not have a
material adverse effect on the Company’s financial position.

B-23
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

13. DIVIDENDS

The Company is subject to Arizona law which limits the amount of dividends that insurance companies can pay to stockholders.
The maximum dividend which may be paid in any twelve month period without notification or approval is limited to the lesser
of 10% of statutory surplus as of December 31 of the preceding year or the net gain from operations of the preceding calendar
year. Cash dividends may only be paid out of surplus derived from realized net profits. Based on these limitations, the
Company would not be permitted a dividend distribution until December 29, 2002.

During 2001, the Company received approval from the Arizona Department of Insurance to pay an extraordinary dividend to
Prudential of $108 million.

14. RELATED PARTY TRANSACTIONS

The Company has extensive transactions and relationships with Prudential and other affiliates. It is possible that the terms of
these transactions are not the same as those that would result from transactions among wholly unrelated parties.

Expense Charges and Allocations

All of the Company’s expenses are allocations or charges from Prudential or other affiliates. These expenses can be grouped
into the following categories: general and administrative expenses, retail distribution expenses and asset management fees.

The Company’s general and administrative expenses are charged to the Company using allocation methodologies based on
business processes. Management believes that the methodology is reasonable and reflects costs incurred by Prudential to
process transactions on behalf of the Company. Prudential and the Company operate under service and lease agreements
whereby services of officers and employees (except for those agents employed directly by the Company in Taiwan), supplies,
use of equipment and office space are provided by Prudential. The Company is allocated estimated distribution expenses from
Prudential’s retail agency network for both its domestic life and annuity products. The Company has capitalized the majority of
these distribution expenses as deferred policy acquisition costs. Beginning April 1, 2000, Prudential and the Company agreed to
revise the estimate of allocated distribution expenses to reflect a market based pricing arrangement.

In accordance with a profit sharing agreement with Prudential that was in effect through December 31, 2000, the Company
received fee income from policyholder account balances invested in the Prudential Series Funds (“PSF”). These revenues were
recorded as “Asset management fees” in the Consolidated Statements of Operations and Comprehensive Income. The Company
was charged an asset management fee by Prudential Global Asset Management (“PGAM”) and Jennison Associates LLC
(“Jennison”) for managing the PSF portfolio. These fees are a component of “general, administrative and other expenses.”

On September 29, 2000, the Board of Directors for the Prudential Series Fund, Inc. (“PSFI”) adopted resolutions to terminate
the existing management agreement between PSFI and Prudential, and has appointed another subsidiary of Prudential as the
fund manager for the PSF. The change was approved by the shareholders of PSF during early 2001 and effective January 1,
2001. The Company no longer receives fees associated with the PSF. In addition, the Company will no longer incur the asset
management expense from PGAM and Jennison associated with the PSF.

Corporate Owned Life Insurance

The Company has sold three Corporate Owned Life Insurance (“COLI”) policies to Prudential. The cash surrender value
included in Separate Accounts was $647.2 million and $685.9 million at December 31, 2001 and December 31, 2000,
respectively. The fees received related to the COLI policies were $7.0 million and $9.6 million for the years ending December
31, 2001 and 2000.

B-24
Pruco Life Insurance Company and Subsidiary
Notes to Consolidated Financial Statements

14. RELATED PARTY TRANSACTIONS (continued)

Reinsurance
The Company currently has four reinsurance agreements in place with Prudential and affiliates. Specifically, the Company has a
reinsurance Group Annuity Contract, whereby the reinsurer, in consideration for a single premium payment by the Company,
provides reinsurance equal to 100% of all payments due under the contract. In addition, there are two yearly renewable term
agreements in which the Company may offer and the reinsurer may accept reinsurance on any life in excess of the Company’s
maximum limit of retention. The Company is not relieved of its primary obligation to the policyholder as a result of these
reinsurance transactions. These agreements had no material effect on net income for the periods ended December 31, 2001 or
2000. The fourth agreement, which is new for 2001, is described in the following paragraphs.

On January 31, 2001, the Company transferred all of its assets and liabilities associated with the Company’s Taiwan branch
including Taiwan’s insurance book of business to an affiliated Company, Prudential Life Insurance Company of Taiwan Inc.
(“Prudential of Taiwan”), a wholly owned subsidiary of the Holding Company.

The mechanism used to transfer this block of business in Taiwan is referred to as a “full acquisition and assumption”
transaction. Under this mechanism, the Company is jointly liable with Prudential of Taiwan for two years from the giving of
notice to all obligees for all matured obligations and for two years after the maturity date of not-yet-matured obligations.
Prudential of Taiwan is also contractually liable, under indemnification provisions of the transaction, for any liabilities that may
be asserted against the Company. The transfer of the insurance related assets and liabilities was accounted for as a long-
duration coinsurance transaction under accounting principles generally accepted in the United States. Under this accounting
treatment, the insurance related liabilities remain on the books of the Company and an offsetting reinsurance recoverable is
established.

As part of this transaction, the Company made a capital contribution to Prudential of Taiwan in the amount of the net equity of
the Company’s Taiwan branch as of the date of transfer. In July 2001, the Company dividended its interest in Prudential of
Taiwan to Prudential.

Premiums and benefits ceded for the period ending December 31, 2001 from the Taiwan coinsurance agreement were $82.4
million and $12.9 million, respectively.

Debt Agreements
In July 1998, the Company established a revolving line of credit facility of up to $500 million with Prudential Funding LLC, a
wholly owned subsidiary of Prudential. There is no outstanding debt relating to this credit facility as of December 31, 2001 or
December 31, 2000.

B-25
 Report of Independent Accountants

To the Board of Directors and Stockholder of

Pruco Life Insurance Company

In our opinion, the consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of Pruco Life Insurance Company (a
wholly-owned subsidiary of The Prudential Insurance Company of America) and its subsidiary
at December 31, 2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America. These financial statements are
the responsibility of the Company’s management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 21, 2002

B-26
 The Prudential Series Fund, Inc.
Supplement dated December 13, 2002 to
Prospectus dated May 1, 2002

Value Portfolio
The following amends the sections of the prospectus entitled ‘‘How the Portfolios Invest—Investment
Objectives and Policies, ’’How the Fund Is Managed—Investment Sub-Advisers,‘‘ and ’’How the Fund is
Managed—Portfolio Managers:‘‘
Effective as of the close of business on December 12, 2002, Jennison Associates LLC is responsible for
managing 100% of the Portfolio’s assets. The portfolio managers for the Portfolio are Tom Kolefas and
Bradley Goldberg. Bradley Goldberg has announced his intention to retire effective December 31, 2002.
Following Mr. Goldberg’s retirement, Mr. Kolefas will continue as the portfolio manager for the Portfolio.

Equity Portfolio
The following amends the section of the prospectus entitled ’’How the Fund is Managed—Portfolio
Managers:‘‘
Bradley Goldberg has announced his intention to retire effective December 31, 2002. Following Mr.
Goldberg’s retirement, the portion of the Portfolio managed by Jennison Associates LLC will continue to be
managed by Tom Kolefas.

PSFSUP6
 The Prudential Series Fund, Inc.
Supplement dated August 29, 2002 to
Prospectus, dated May 1, 2002

SP Alliance Large Cap Growth Portfolio

The following supplements the section of the prospectus entitled ‘‘How the Portfolios Invest—Investment
Objectives and Policies:’’
The Portfolio usually invests in about 40-60 companies, with the 25 most highly regarded of these
companies generally constituting approximately 70% of the Portfolio’s investable assets. Alliance seeks to gain
positive returns in good markets while providing some measure of protection in poor markets.

SP MFS Mid-Cap Growth Portfolio

The following supplements the section of the prospectus entitled ‘‘Portfolio Managers:’’
The Portfolio is managed by a team. MFS Senior Vice President Mark Regan, who had been a co-manager
for the Portfolio, retired effective June 30, 2002. David Sette-Ducati will continue as a member of the
management team.
Eric Fischman joined the management team during April 2002. Mr. Fischman is a Senior Vice President of
MFS. Mr. Fischman joined MFS as a research analyst during 2000 and was named a portfolio manager in
April 2002. He earned an M.B.A. degree from Columbia Business School in 1998, a law degree from Boston
University School of Law, and a bachelor’s degree from Cornell University. From 1998 to 2000, Mr. Fischman
served as an equity research analyst at State Street Research. Prior to that, he served as an equity research
analyst at Dreyfus Corporation. Mr. Fischman also holds the Chartered Financial Analyst (CFA) designation.

SP INVESCO Small Company Growth Portfolio

The following supplements the section of the Prospectus entitled ‘‘Portfolio Managers:’’
The following individuals are primarily responsible for the day-to-day management of the Portfolio’s
holdings:
Stacie L. Cowell, a senior vice president of INVESCO, is the lead portfolio manager of the Portfolio. Before
joining INVESCO in 1997, Stacie was senior equity analyst with Founders Asset Management and a capital
markets and trading analyst with Chase Manhattan Bank in New York. She is a CFA charterholder. Stacie
holds an M.S. in Finance from the University of Colorado and a B.A. in Economics from Colgate University.
Cameron Cooke is the co-portfolio manager of the Portfolio. Mr. Cooke joined the investment division of
INVESCO in 2000. Prior to joining INVESCO, Cameron was a senior equity analyst at Wells Capital Manage-
ment. Mr. Cooke holds a B.A. in economics from the University of North Carolina at Chapel Hill.

PSFSUP1
 SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
Diversified Conservative Growth Portfolio
The following supplements the section of the prospectus entitled ‘‘How the Portfolios Invest—Investment
Objectives and Policies:’’
Each Portfolio may invest in swap agreements, including interest rate, credit default, currency exchange
rate and total return swaps. Each Portfolio may also invest in preferred stock, and may invest in debt from
emerging markets. Each Portfolio may invest in event-linked bonds.

Jennison Portfolio
The following supplements the section of the Prospectus entitled ‘‘How the Portfolios Invest—Investment
Objectives and Policies:’’
The Portfolio may invest in equity swap agreements.

Diversified Conservative Growth Portfolio

The following supplements the section of the Prospectus entitled ‘‘How the Portfolios Invest—Investment
Objectives and Policies:’’
The Portfolio may enter into short sales of securities. No more than 25% of the Portfolio’s net assets may
be used as collateral or segregated for purposes of securing a short sale obligation.
The Prudential Series Fund, Inc.
Prospectus

May 1, 2002

Conservative Balanced Portfolio

Diversified Bond Portfolio
Equity Portfolio
Flexible Managed Portfolio
Global Portfolio
Government Income Portfolio
High Yield Bond Portfolio
Jennison Portfolio
Money Market Portfolio
Natural Resources Portfolio
Small Capitalization Stock Portfolio
Stock Index Portfolio
Value Portfolio
Zero Coupon Bond Portfolio 2005

As with all mutual funds, the Securities and Exchange Commission

has not approved or disapproved the Fund’s shares nor has the
SEC determined that this prospectus is complete or accurate. It is
a criminal offense to state otherwise.

A particular Portfolio may not be available under the variable life

insurance or variable annuity contract which you have chosen. The
prospectus of the specific contract which you have chosen will
indicate which Portfolios are available and should be read in
conjunction with this prospectus.
Table of Contents

1 RISK/RETURN SUMMARY

1 Investment Objectives and Principal Strategies

5 Principal Risks
8 Evaluating Performance

22 HOW THE PORTFOLIOS INVEST

22 Investment Objectives and Policies

22 Conservative Balanced Portfolio

23 Diversified Bond Portfolio
24 Equity Portfolio
25 Flexible Managed Portfolio
27 Global Portfolio
27 Government Income Portfolio
28 High Yield Bond Portfolio
29 Jennison Portfolio
30 Money Market Portfolio
31 Natural Resources Portfolio
32 Small Capitalization Stock Portfolio
33 Stock Index Portfolio
33 Value Portfolio
34 Zero Coupon Bond Portfolio 2005

35 OTHER INVESTMENTS AND STRATEGIES

35 ADRs
35 Convertible Debt and Convertible Preferred Stock
36 Derivatives
36 Dollar Rolls
36 Equity Swaps
36 Forward Foreign Currency Exchange Contracts
36 Futures Contracts
36 Interest Rate Swaps
36 Joint Repurchase Account
36 Loans and Assignments
37 Mortgage-related Securities
37 Options
37 Real Estate Investment Trusts
37 Repurchase Agreements
37 Reverse Repurchase Agreements
38 Short Sales
38 Short Sales Against-the-Box
38 When-Issued and Delayed Delivery Securities

38 HOW THE FUND IS MANAGED

38 Board of Directors
38 Investment Adviser
39 Investment Sub-Advisers
40 Portfolio Managers

44 HOW TO BUY AND SELL SHARES OF THE FUND

Table of Contents (continued)

44 Net Asset Value

46 Distributor

46 OTHER INFORMATION

46 Federal Income Taxes

46 Monitoring for Possible Conflicts

46 FINANCIAL HIGHLIGHTS

(For more information—see back cover)

2
RISK/RETURN SUMMARY
This prospectus provides information about The Prudential Series Fund, Inc. (the Fund), which consists of
36 separate portfolios (each, a Portfolio).

The Fund offers two classes of shares in each Portfolio: Class I and Class II. Class I shares are sold only to separate
accounts of The Prudential Insurance Company of America and its affiliates (Prudential) as investment options under
variable life insurance and variable annuity contracts (the Contracts). (A separate account keeps the assets supporting
certain insurance contracts separate from the general assets and liabilities of the insurance company.) Class II shares
are offered only to separate accounts of non-Prudential insurance companies for the same types of Contracts. Not
every Portfolio is available under every Contract. The prospectus for each Contract lists the Portfolios currently
available through that Contract.

This section highlights key information about each Portfolio available under your Contract. Additional information
follows this summary and is also provided in the Fund’s Statement of Additional Information (SAI).

INVESTMENT OBJECTIVES AND PRINCIPAL STRATEGIES

The following summarizes the investment objectives, principal strategies and principal risks for each of the Portfolios.
We describe the terms listed as principal risks on page 5. While we make every effort to achieve the investment
objective for each Portfolio, we can’t guarantee success and it is possible that you could lose money.

Conservative Balanced Portfolio

The Portfolio’s investment objective is total investment return consistent with a conservatively managed
diversified portfolio. This Portfolio may be appropriate for an investor who wants diversification with a relatively lower
risk of loss than that associated with the Flexible Managed Portfolio (see below). To achieve our objective, we invest in
a mix of equity securities, debt obligations and money market instruments. Up to 30% of the Portfolio’s total assets may
be invested in foreign securities. We may invest a portion of the Portfolio’s assets in high-yield/high-risk debt securities,
which are riskier than high-grade securities. While we make every effort to achieve our objective, we can’t guarantee
success and it is possible that you could lose money.

Principal Risks:
‰ company risk
‰ credit risk
‰ foreign investment risk
‰ high yield risk
‰ interest rate risk
‰ market risk
‰ management risk

Diversified Bond Portfolio

The Portfolio’s investment objective is a high level of income over a longer term while providing reasonable
safety of capital. This means we look for investments that we think will provide a high level of current income, but
which are not expected to involve a substantial risk of loss of capital through default. To achieve our objective, we
normally invest at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment
purposes) in high-grade debt obligations and high-quality money market investments. We may purchase securities that
are issued outside the U.S. by foreign or U.S. issuers. In addition, we may invest a portion of the Portfolio’s assets in
high-yield/high-risk debt securities, which are riskier than high-grade securities. While we make every effort to achieve
our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:
‰ credit risk
‰ foreign investment risk
‰ high yield risk
‰ interest rate risk
‰ management risk
Equity Portfolio
The Portfolio’s investment objective is long-term growth of capital. To achieve our objective, we normally invest at
least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in
common stocks of major established corporations as well as smaller companies that we believe offer attractive
prospects of appreciation. The Portfolio may invest up to 30% of its total assets in foreign securities. While we make
every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:
‰ company risk
‰ foreign investment risk
‰ market risk
‰ management risk

Flexible Managed Portfolio

The Portfolio’s investment objective is a high total return consistent with an aggressively managed diversified
portfolio. This Portfolio may be appropriate for an investor who wants diversification and is willing to accept a relatively
high level of loss in an effort to achieve greater appreciation. To achieve our objective, we invest in a mix of equity
securities, debt obligations and money market instruments. The Portfolio may invest in foreign securities. A portion of
the debt portion of the Portfolio may be invested in high-yield/high-risk debt securities, which are riskier than high-grade
securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that you
could lose money.

Principal Risks:
‰ company risk
‰ credit risk
‰ foreign investment risk
‰ high yield risk
‰ interest rate risk
‰ market risk
‰ management risk

Global Portfolio
The Portfolio’s investment objective is long-term growth of capital. To achieve this objective, we invest primarily in
common stocks (and their equivalents) of foreign and U.S. companies. Generally, we invest in at least three countries,
including the U.S., but we may invest up to 35% of the Portfolio’s assets in companies located in any one country other
than the U.S. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that
you could lose money.

Principal Risks:
‰ company risk
‰ foreign investment risk
‰ market risk
‰ management risk

Government Income Portfolio

The Portfolio’s investment objective is a high level of income over the long term consistent with the preservation
of capital. To achieve our objective, we normally invest at least 80% of the Portfolio’s investable assets (net assets
plus any borrowings made for investment purposes) in U.S. government securities, including intermediate and long-
term U.S. Treasury securities and debt obligations issued by agencies or instrumentalities established by the U.S.
government, mortgage-related securities and collateralized mortgage obligations. The Portfolio may invest up to 20% of
investable assets in other securities, including corporate debt securities. While we make every effort to achieve our
objective, we can’t guarantee success and it is possible that you could lose money.

2
 Principal Risks:
‰ credit risk
‰ interest rate risk
‰ management risk
‰ market risk
‰ mortgage risk
An investment in the Government Income Portfolio is not a bank deposit and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.

High Yield Bond Portfolio

The Portfolio’s investment objective is a high total return. In pursuing our objective, we normally invest at least 80% of
the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in high-yield/high-risk
debt securities. Such securities have speculative characteristics and are riskier than high-grade securities. The Portfolio
may invest up to 20% of its total assets in foreign debt obligations. While we make every effort to achieve our objective,
we can’t guarantee success and it is possible that you could lose money.

Principal Risks:
‰ credit risk
‰ foreign investment risk
‰ high yield risk
‰ interest rate risk
‰ market risk
‰ management risk

Jennison Portfolio (formerly, Prudential Jennison Portfolio)

The Portfolio’s investment objective is to achieve long-term growth of capital. To achieve this objective, we invest
primarily in equity securities of major, established corporations that we believe offer above-average growth prospects.
The Portfolio may invest up to 30% of its total assets in foreign securities. While we make every effort to achieve our
objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:
‰ company risk
‰ foreign investment risk
‰ management risk
‰ market risk

Money Market Portfolio

The Portfolio’s investment objective is maximum current income consistent with the stability of capital and the
maintenance of liquidity. To achieve our objective, we invest in high-quality short-term money market instruments
issued by the U.S. government or its agencies, as well as by corporations and banks, both domestic and foreign. The
Portfolio will invest only in instruments that mature in thirteen months or less, and which are denominated in U.S.
dollars. While we make every effort to achieve our objective, we can’t guarantee success.

Principal Risks:
‰ credit risk
‰ interest rate risk
‰ management risk

An investment in the Money Market Portfolio is not a bank deposit and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Portfolio seeks to maintain a net asset
value of $10 per share, it is possible to lose money by investing in the Portfolio.

3
Natural Resources Portfolio
The Portfolio’s investment objective is long-term growth of capital. To achieve our objective, we normally invest at
least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in
common stocks and convertible securities of natural resource companies and securities that are related to the market
value of some natural resource. The Portfolio is non-diversified. As a non-diversified Portfolio, the Natural Resources
Portfolio may hold larger positions in single issuers than a diversified Portfolio. As a result, the Portfolio’s performance
may be tied more closely to the success or failure of a smaller group of portfolio holdings. There are additional risks
associated with the Portfolio’s investment in the securities of natural resource companies. The market value of these
securities may be affected by numerous factors, including events occurring in nature, inflationary pressures, and
international politics. Up to 30% of the Portfolio’s total assets may be invested in foreign securities. While we make
every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:
‰ company risk
‰ credit risk
‰ derivatives risk
‰ foreign investment risk
‰ industry/sector risk
‰ interest rate risk
‰ management risk
‰ market risk

Small Capitalization Stock Portfolio

The Portfolio’s investment objective is to achieve long-term growth of capital. To achieve our objective, we invest
primarily in equity securities of publicly-traded companies with small market capitalizations. We attempt to duplicate the
price and yield performance of the Standard & Poor’s Small Capitalization 600 Stock Index (the S&P SmallCap 600
Index) by investing at least 80% of the Portfolio’s investable assets (net assets plus any borrowings made for investment
purposes) in all or a representative sample of the stocks in the S&P Small Cap 600 Index. The market capitalization of
the companies that make up the S&P SmallCap 600 Index may change from time to time. As of January 31, 2002, the
S&P SmallCap 600 Index stocks had market capitalizations of between $46 million and $3.3 billion.

The Portfolio is not “managed” in the traditional sense of using market and economic analyses to select stocks. Rather,
the portfolio manager purchases stocks to duplicate the stocks and their weighting in the S&P SmallCap 600 Index. While
we make every effort to achieve our objective, we can’t guarantee success and it is possible that you could lose money.

Principal Risks:
‰ company risk
‰ market risk

Stock Index Portfolio

The Portfolio’s investment objective is investment results that generally correspond to the performance of
publicly-traded common stocks. To achieve our objective, we attempt to duplicate the price and yield of the
Standard & Poor’s 500 Composite Stock Price Index (S&P 500) by investing at least 80% of the Portfolio’s investable
assets (net assets plus any borrowings made for investment purposes) in S&P 500 stocks. The S&P 500 represents
more than 70% of the total market value of all publicly-traded common stocks and is widely viewed as representative of
publicly-traded common stocks as a whole. The Portfolio is not “managed” in the traditional sense of using market and
economic analyses to select stocks. Rather, the portfolio manager purchases stocks in proportion to their weighting in
the S&P 500. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that
you could lose money.

Principal Risks:
‰ company risk
‰ market risk

4
Value Portfolio
The Portfolio’s investment objective is capital appreciation. To achieve our objective, we invest primarily in common
stocks that are undervalued — those stocks that are trading below their underlying asset value, cash generating ability and
overall earnings and earnings growth. We normally invest at least 65% of the Portfolio’s total assets in the common stock
and convertible securities of companies that we believe will provide investment returns above those of the Standard &
Poor’s 500 Composite Stock Price Index (S&P 500) or the New York Stock Exchange (NYSE) Composite Index. Most of
our investments will be securities of large capitalization companies. The Portfolio may invest up to 25% of its total assets in
real estate investment trusts (REITs) and up to 30% of its total assets in foreign securities. There is a risk that “value”
stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by
the markets for long periods of time. While we make every effort to achieve our objective, we can’t guarantee success and
it is possible that you could lose money.

Principal Risks:
‰ company risk
‰ credit risk
‰ foreign investment risk
‰ interest rate risk
‰ market risk

Zero Coupon Bond Portfolio 2005

The Portfolio’s investment objective is the highest predictable compound investment for a specific period of time,
consistent with safety of invested capital. We seek to achieve this objective by investing at least 80% of the
Portfolio’s investable assets (net assets plus any borrowings made for investment purposes) in debt obligations of the
United States Treasury and corporations that have been issued without interest coupons or have been stripped of their
interest coupons, or have interest coupons that have been stripped from the debt obligations. On the Portfolio’s
liquidation date, the Portfolio will redeem all investments. Please refer to your Contract prospectus for information on
your reallocation options and the Portfolio to which your investment will be transferred if you do not provide other
instructions. While we make every effort to achieve our objective, we can’t guarantee success and it is possible that
you could lose money.

Principal Risks:
‰ credit risk
‰ interest rate risk
‰ management risk
‰ market risk

PRINCIPAL RISKS
Although we try to invest wisely, all investments involve risk. Like any mutual fund, an investment in a Portfolio could
lose value, and you could lose money. The following summarizes the principal risks of investing in the Portfolios.

Company risk. The price of the stock of a particular company can vary based on a variety of factors, such as the
company’s financial performance, changes in management and product trends, and the potential for takeover and
acquisition. This is especially true with respect to equity securities of smaller companies, whose prices may go up and
down more than equity securities of larger, more established companies. Also, since equity securities of smaller
companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or
impossible for a Portfolio to sell securities at a desirable price. Foreign securities have additional risks, including
exchange rate changes, political and economic upheaval, the relative lack of information about these companies,
relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.

Credit risk. Debt obligations are generally subject to the risk that the issuer may be unable to make principal and
interest payments when they are due. There is also the risk that the securities could lose value because of a loss of
confidence in the ability of the borrower to pay back debt. Non-investment grade debt — also known as “high-yield
bonds” and “junk bonds” — have a higher risk of default and tend to be less liquid than higher-rated securities.

5
Derivatives risk. Derivatives are financial contracts whose value depends on, or is derived from, the value of an
underlying asset, interest rate or index. The Portfolios typically use derivatives as a substitute for taking a position in
the underlying asset and/or as part of a strategy designed to reduce exposure to other risks, such as interest rate or
currency risk. A Portfolio may also use derivatives for leverage, in which case their use would involve leveraging risk. A
Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with
investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described
elsewhere, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the
risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate
perfectly with the underlying asset, rate or index. A Portfolio investing in a derivative instrument could lose more than
the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances.

Foreign investment risk. Investing in foreign securities generally involves more risk than investing in securities of
U.S. issuers. Foreign investment risk includes the specific risks described below.
Currency risk. Changes in currency exchange rates may affect the value of foreign securities held by a Portfolio
and the amount of income available for distribution. If a foreign currency grows weaker relative to the U.S. dollar,
the value of securities denominated in that foreign currency generally decreases in terms of U.S. dollars. If a
Portfolio does not correctly anticipate changes in exchange rates, its share price could decline as a result. In
addition, certain hedging activities may cause the Portfolio to lose money and could reduce the amount of income
available for distribution.

Emerging market risk. To the extent that a Portfolio invests in emerging markets to enhance overall returns, it
may face higher political, information, and stock market risks. In addition, profound social changes and business
practices that depart from norms in developed countries’ economies have sometimes hindered the orderly growth
of emerging economies and their stock markets in the past. High levels of debt may make emerging economies
heavily reliant on foreign capital and vulnerable to capital flight.

Foreign market risk. Foreign markets, especially those in developing countries, tend to be more volatile than U.S.
markets and are generally not subject to regulatory requirements comparable to those in the U.S. Because of
differences in accounting standards and custody and settlement practices, investing in foreign securities generally
involves more risk than investing in securities of U.S. issuers.

Information risk. Financial reporting standards for companies based in foreign markets usually differ from those in
the United States. Since the “numbers” themselves sometimes mean different things, the sub-advisers devote
much of their research effort to understanding and assessing the impact of these differences upon a company’s
financial conditions and prospects.

Liquidity risk. Stocks that trade less can be more difficult or more costly to buy, or to sell, than more liquid or
active stocks. This liquidity risk is a factor of the trading volume of a particular stock, as well as the size and
liquidity of the entire local market. On the whole, foreign exchanges are smaller and less liquid than the U.S.
market. This can make buying and selling certain shares more difficult and costly. Relatively small transactions in
some instances can have a disproportionately large effect on the price and supply of shares. In certain situations, it
may become virtually impossible to sell a stock in an orderly fashion at a price that approaches an estimate of its
value.

Political developments. Political developments may adversely affect the value of a Portfolio’s foreign securities.

Political risk. Some foreign governments have limited the outflow of profits to investors abroad, extended
diplomatic disputes to include trade and financial relations, and imposed high taxes on corporate profits.

Regulatory risk. Some foreign governments regulate their exchanges less stringently, and the rights of
shareholders may not be as firmly established.

High yield risk. Portfolios that invest in high yield securities and unrated securities of similar credit quality (commonly
known as “junk bonds”) may be subject to greater levels of interest rate, credit and liquidity risk than Portfolios that do
not invest in such securities. High yield securities are considered predominantly speculative with respect to the issuer’s
continuing ability to make principal and interest payments. An economic downturn or period of rising interest rates could
adversely affect the market for high yield securities and reduce a Portfolio’s ability to sell its high yield securities
(liquidity risk).

6
Industry/sector risk. Portfolios that invest in a single market sector or industry can accumulate larger positions in
single issuers or an industry sector. As a result, the Portfolio’s performance may be tied more directly to the success or
failure of a smaller group of portfolio holdings.

Interest rate risk. Fixed income securities are subject to the risk that the securities could lose value because of
interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Debt obligations with longer
maturities sometimes offer higher yields, but are subject to greater price shifts as a result of interest rate changes than
debt obligations with shorter maturities.

Management risk. Actively managed investment portfolios are subject to management risk. Each sub-adviser will
apply investment techniques and risk analyses in making investment decisions for the Portfolios, but there can be no
guarantee that these will produce the desired results.

Market risk. Common stocks are subject to market risk stemming from factors independent of any particular security.
Investment markets fluctuate. All markets go through cycles and market risk involves being on the wrong side of a
cycle. Factors affecting market risk include political events, broad economic and social changes, and the mood of the
investing public. You can see market risk in action during large drops in the stock market. If investor sentiment turns
gloomy, the price of all stocks may decline. It may not matter that a particular company has great profits and its stock is
selling at a relatively low price. If the overall market is dropping, the values of all stocks are likely to drop. Generally, the
stock prices of large companies are more stable than the stock prices of smaller companies, but this is not always the
case. Smaller companies often offer a smaller range of products and services than large companies. They may also
have limited financial resources and may lack management depth. As a result, stocks issued by smaller companies
may fluctuate in value more than the stocks of larger, more established companies.

Mortgage risk. A Portfolio that purchases mortgage related securities is subject to certain additional risks. Rising
interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in
interest rates. As a result, in a period of rising interest rates, a Portfolio that holds mortgage-related securities may
exhibit additional volatility. This is known as extension risk. In addition, mortgage-related securities are subject to
prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can
reduce the returns of a Portfolio because the Portfolio will have to reinvest that money at the lower prevailing interest
rates.

* * *

For more information about the risks associated with the Portfolios, see “How the Portfolios Invest — Investment
Risks.”

* * *

7
EVALUATING PERFORMANCE

Conservative Balanced Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a stock index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares —2.02% 5.69% 7.55%
S&P 500** —11.88% 10.70% 12.93%
Conservative Balanced Custom Blended Index*** —2.22% 8.81% 9.81%
Lipper Average**** —2.87% 8.04% 9.19%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of any investment management expenses. These returns would have been lower if they included the effect of
these expenses. Source: Lipper, Inc.
*** The Conservative Balanced Custom Blended Index consists of the Standard & Poor’s 500 Composite Stock Price
Index (50%), the Lehman Aggregate Bond Index (40%) and the T-Bill 3 Month Blend (10%). These returns do not
include the effect of investment management expenses. These returns would have been lower if they included the
effect of these expenses. Source: Prudential Investments LLC.
**** The Lipper/Variable Insurance Products (VIP) Balanced Average is calculated by Lipper Analytical Services, Inc.
and reflects the investment return of certain portfolios underlying variable life and annuity products. The returns are
net of investment fees and fund expenses but not product charges. These returns would have been lower if they
included the effect of product charges. Source: Lipper, Inc.

8
Diversified Bond Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares 6.98% 6.27% 6.92%
Lehman Aggregate Bond Index** 8.44% 7.43% 7.23%
Lipper Average*** 7.57% 6.44% 7.07%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Lehman Aggregate Bond Index is comprised of more than 5,000 government and corporate bonds. These
returns do not include the effect of any investment management expenses. These returns would have been lower
if they included the effect of these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) Corporate Debt BBB Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of product charges. Source: Lipper, Inc.

9
Equity Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a stock index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

SINCE
CLASS II
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/3/99)
Class I shares —11.18% 7.06% 12.09% —
Class II shares —11.57% — — —3.75%
S&P 500** —11.88% 10.70% 12.93% —4.31%
Russell 1000® Index*** —20.42% 8.27% 10.79% —
Lipper Average**** —13.03% 7.94% 11.14% —
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of any investment management expenses. These returns would have been lower if they included the effect of
these expenses. Source: Lipper, Inc.
*** The Russell 1000® Index consists of the 1000 largest securities in the Russell 3000 Index. The Russell 3000 Index
consists of the 3000 largest companies, as determined by market capitalization. These returns do not include the
effect of any investment management expenses. These returns would have been lower if they included the effect
of these expenses. Source: Lipper, Inc.
**** The Lipper Variable Insurance Products (VIP) Large Cap Core Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. Source: Lipper, Inc.

10
Flexible Managed Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares —5.68% 5.43% 8.27%
S&P 500** —11.88% 10.70% 12.93%
Flexible Managed
Custom Blended Index*** —4.00% 9.26% 10.52%
Lipper Average**** —5.27% 7.95% 9.62%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of any investment management expenses. These returns would have been lower if they included the effect of
these expenses. Source: Lipper, Inc.
*** The Flexible Managed Custom Blended Index consists of the S&P 500 (60%), the Lehman Aggregate Bond Index
(35%) and the T-Bill 3-month Blend (5%). The returns do not include the effect of any investment management
expenses. These returns would have been lower if they included the effect of these expenses. Source Prudential
Investments LLC.
**** The Lipper Variable Insurance Products (VIP) Flexible Portfolio Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. Source: Lipper, Inc.

11
Global Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares —17.64% 6.11% 9.39%
MSCI World Index** —16.82% 5.37% 8.06%
Lipper Average*** —15.28% 6.38% 9.57%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Morgan Stanley Capital International World Index (MSCI World Index) is a weighted index comprised of
approximately 1,500 companies listed on the stock exchanges of the U.S.A., Europe, Canada, Australia, New
Zealand and the Far East. These returns do not include the effect of any investment management expenses.
These returns would have been lower if they included the effect of these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) Global Funds Average is calculated by Lipper Analytical Services,
Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products. The
returns are net of investment fees and fund expenses but not product charges. These returns would have been
lower if they included the effect of these charges. Source: Lipper, Inc.

12
Government Income Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares 8.06% 7.24% 6.95%
Lehman Govt. Bond Index** 7.23% 7.40% 7.14%
Lipper Average*** 6.68% 6.70% 6.55%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Lehman Government Bond Index is a weighted index comprised of securities issued or backed by the U.S.
government, its agencies and instrumentalities with a remaining maturity of one to 30 years. These returns do not
include the effect of any investment management expenses. These returns would have been lower if they included
the effect of these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) General U.S. Government Funds Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity
products. The returns are net of investment fees and fund expenses but not product charges. These returns would
have been lower if they included the effect of these charges. Source: Lipper, Inc.

13
High Yield Bond Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares —0.44% 1.28% 6.64%
Lehman High Yield Index** 5.28% 3.11% 7.58%
Lipper Average*** 1.13% 1.60% 6.59%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Lehman High Yield Index is made up of over 700 noninvestment grade bonds. The index is an unmanaged
index that includes the reinvestment of all interest but does not reflect the payment of transaction costs and
advisory fees associated with an investment in the Portfolio. These returns would have been lower if they included
the effect of these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) High Current Yield Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. Source: Lipper, Inc.

14
Jennison Portfolio (formerly, Prudential Jennison Portfolio)

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a stock index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

SINCECLASS I SINCECLASS II
INCEPTION INCEPTION
1 YEAR 5 YEARS (4/25/95) (2/10/00)
Class I shares —18.25% 11.70% 14.66% —
Class II shares —18.60% — — —21.45%
S&P 500** —11.88% 10.70% 14.66% —8.50%
Russell 1000® Growth Index*** —20.42% 8.27% 12.90% —
Lipper Average**** —21.88% 8.75% 12.70% —
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. Companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of any investment management expenses. These returns would have been lower if they included the effect of
these expenses. The “Since Inception” return reflects the closest calendar month-end return. Source: Lipper, Inc.
*** The Russell 1000® Growth Index consists of those securities included in the Russell 1000 Index that have a
greater-than-average growth orientation. These returns do not include the effect of any investment management
expenses. These returns would have been lower if they included the effect of these expenses. The “Since
Inception” return reflects the closest calendar month-end return. Source: Lipper, Inc.
**** The Lipper Variable Insurance Products (VIP) Large Cap Growth Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. The “Since Inception” return reflects the closest calendar
month-end return. Source: Lipper, Inc.

15
Money Market Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a group of similar mutual funds. Past performance does not
assure that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares 4.22% 5.24% 4.80%
Lipper Average** 3.73% 4.96% 4.54%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Lipper Variable Insurance Products (VIP) Money Market Average is calculated by Lipper Analytical Services,
Inc., and reflects the investment return of certain portfolios underlying variable life and annuity products. These
returns are net of investment fees and fund expenses but not product charges. These returns would have been
lower if they included the effect of these charges. Source: Lipper, Inc.

7-Day Yield* (as of 12/31/01)

Money Market Portfolio 1.89%

Average Money Market Fund** 1.45%
* The Portfolio’s yield is after deduction of expenses and does not include Contract charges.
** Source: iMoneyNet, Inc. As of 12/31/01, based on the iMoneyNet First and Second Tier General Purpose Retail
Universe.

16
Natural Resources Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares —10.08% 5.78% 10.95%
S&P 500** —11.88% 10.70% 12.93%
Lipper Average*** —11.50% 0.28% 5.10%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of any investment management expenses. These returns would have been lower if they included the effect of
these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) Natural Resources Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. Source: Lipper, Inc.

17
Small Capitalization Stock Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a stock index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

SINCE
INCEPTION
1 YEAR 5 YEARS (4/25/95)
Class I shares 5.53% 10.75% 13.94%
S&P SmallCap 600 Index** 6.51% 10.65% 14.34%
Lipper Average*** 2.85% 9.81% 13.00%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s SmallCap 600 Index (S&P SmallCap 600) is a capital-weighted index representing the
aggregate market value of the common equity of 600 small company stocks. The S&P SmallCap 600 Index is an
unmanaged index that includes the reinvestment of all dividends but does not reflect the payment of transaction
costs and advisory fees associated with an investment in the portfolio. These returns would have been lower if they
included the effect of these expenses. The “Since Inception” return reflects the closest month-end return. Source:
Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) Small Cap Core Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. The “Since Inception” return reflects the closest month-end
return. Source: Lipper, Inc.

18
Stock Index Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a stock index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares —12.05% 10.47% 12.61%
S&P 500** —11.88% 10.70% 12.93%
Lipper Average*** —12.22% 10.37% 12.53%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of any investment management expenses. These returns would have been lower if they included the effect of
these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) S&P 500 Index Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. Source: Lipper, Inc.

19
Value Portfolio

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a stock index and a group of similar mutual funds. Past
performance does not mean that the Portfolio will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I Shares —2.08% 11.18% 13.14%
S&P 500** —11.88% 10.70% 12.93%
Russell® 1000 Value Index*** —5.59% 11.13% 14.13%
Lipper Large Cap Value Funds
Average**** —5.98% 8.68% 12.38%
Lipper Multi Cap Value Funds Average**** —0.22% 9.81% 11.17%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges. Returns shown are
for Class I shares only. Returns are not shown for Class II shares, because Class II shares have not yet been in
existence for a full calendar year (Class II inception date: 5/14/01). Returns for Class II shares would have been
lower than for Class I due to higher expenses.
** The Standard & Poor’s 500 Composite Stock Price Index (S&P 500) — an unmanaged index of 500 stocks of large
U.S. companies — gives a broad look at howstock prices have performed. These returns do not include the effect
of investment management expenses. These returns would have been lower if they included the effect of these
expenses. Source: Lipper, Inc.
*** The Russell® 1000 Value Index consists of those securities included in the Russell 1000 Index that have a less-
than-average growth orientation. These returns do not include the effect of investment management expenses.
These returns would have been lower if they included the effect of these expenses. Source: Lipper, Inc.
**** The Lipper Variable Insurance Products (VIP) Large Cap Value Funds Average and Multi Cap Value Funds
Average are calculated by Lipper Analytical Services, Inc. and reflect the return of certain portfolios underlying
variable life and annuity products. The returns are net of investment fees and fund expenses but not product
charges. These returns would have been lower if they included the effect of these charges. Although Lipper
classifies the Portfolio within the Multi Cap Value Funds Average, the returns for the Large Cap Value Funds
Average is also shown, because the management of the portfolios included in the Large Cap Value Funds Average
are more consistent with the management of the Portfolio.

20
Zero Coupon Bond Portfolio — 2005

A number of factors — including risk — can affect how the Portfolio performs. The bar chart and table below
demonstrate the risk of investing in the Portfolio by showing how returns can change from year to year and by showing
how the Portfolio’s average annual returns compare with a market index and a group of similar mutual funds. Past
performance does not mean that the Portfolios will achieve similar results in the future.

* These annual returns do not include Contract charges. If Contract charges were included, the annual returns would
have been lower than those shown. See the accompanying Contract prospectus.

Average Annual Returns* (as of 12/31/01)

1 YEAR 5 YEARS 10 YEARS
Class I shares 8.11% 7.70% 8.62%
Lehman Govt. Bond Index** 7.23% 7.40% 7.14%
Lipper Average*** 6.33% 7.92% 9.16%
* The Portfolio’s returns are after deduction of expenses and do not include Contract charges.
** The Lehman Brothers Government Bond Index (LGI) is a weighted index made up of securities issued or backed
by the U.S. government, its agencies and instrumentalities with a remaining maturity of one to 30 years. The LGI is
an unmanaged index and includes the reinvestment of all interest but does not reflect the payment of transaction
costs and advisory fees associated with an investment in the Portfolio. These returns would have been lower if
they included the effect of these expenses. Source: Lipper, Inc.
*** The Lipper Variable Insurance Products (VIP) Target Maturity Funds Average is calculated by Lipper Analytical
Services, Inc. and reflects the investment return of certain portfolios underlying variable life and annuity products.
The returns are net of investment fees and fund expenses but not product charges. These returns would have
been lower if they included the effect of these charges. Source: Lipper, Inc.

21
HOW THEPORTFOLIOS INVEST

Investment Objectives and Policies

We describe each Portfolio’s investment objective and policies below. We describe certain investment instruments that
appear in bold lettering below in the section entitled Other Investments and Strategies. Although we make every effort
to achieve each Portfolio’s objective, we can’t guarantee success and it is possible that you could lose money. Unless
otherwise stated, each Portfolio’s investment objective is a fundamental policy that cannot be changed without
shareholder approval. The Board of Directors can change investment policies that are not fundamental.

An investment in a Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

Conservative Balanced Portfolio

The investment objective of this Portfolio is to seek a total investment return consistent with a conservatively
managed diversified portfolio.

Balanced Portfolio To achieve our objective, we invest in a mix of equity and

We invest in equity, debt and money market securities in
order to achieve diversification. We seek to maintain a
conservative blend of investments that will have strong
performance in a down market and solid, but not
necessarily outstanding, performance in up markets.
This Portfolio may be appropriate for an investor looking
for diversification with less risk than that of the Flexible
Managed Portfolio, while recognizing that this reduces
the chances of greater appreciation.
equity-related securities, debt obligations and money
market instruments. We adjust the percentage of Portfolio
assets in each category depending on our expectations
regarding the different markets. While we make every
effort to achieve our objective, we can’t guarantee
success and it is possible that you could lose money.
We will vary how much of the Portfolio’s assets are
invested in a particular type of security depending on
how we think the different markets will perform.

Under normal conditions, we will invest within the ranges shown below:

Asset Type Minimum Normal Maximum

Stocks 15% 50% 75%
Debt obligations and money 25% 50% 85%
market securities

The equity portion of the Portfolio is generally managed as an index fund, designed to mirror the holdings of the
Standard & Poor’s 500 Composite Stock Price Index. For more information about the index and index investing, see the
investment summary for Stock Index Portfolio included in this prospectus.

Debt securities in general are basically written promises to repay a debt. There are numerous types of debt securities
which vary as to the terms of repayment and the commitment of other parties to honor the obligations of the issuer.
Most of the securities in the debt portion of this Portfolio will be rated “investment grade.” This means major rating
services, like Standard & Poor’s Ratings Group (S&P) or Moody’s Investors Service, Inc. (Moody’s), have rated the
securities within one of their four highest rating categories. The Portfolio also invests in high quality money market
instruments.

The Portfolio may also invest in lower-rated securities, which are riskier and are considered speculative. These
securities are sometimes referred to as “junk bonds.” We may also invest in instruments that are not rated, but which
we believe are of comparable quality to the instruments described above. The Portfolio’s investment in debt securities
may include investments in mortgage-related securities.

The Portfolio may invest up to 30% of its total assets in foreign equity and debt securities that are not denominated in
the U.S. dollar. Up to 20% of the Portfolio’s total assets may be invested in debt securities that are issued outside the

22
U.S. by foreign or U.S. issuers, provided the securities are denominated in U.S. dollars. For these purposes, we do not
consider American Depositary Receipts (ADRs) as foreign securities.

In response to adverse market conditions or when restructuring the Portfolio, we may temporarily invest up to 100% of
the Portfolio’s total assets in money market instruments. Investing heavily in these securities limits our ability to achieve
our investment objective, but can help to preserve the value of the Portfolio’s assets when the markets are unstable.

We may also invest in fixed and floating rate loans (secured or unsecured) arranged through private negotiations
between a corporation which is the borrower and one or more financial institutions that are the lenders. Generally,
these types of investments are in the form of loans or assignments.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on equity securities, debt securities, stock indexes and foreign currencies;
purchase and sell exchange-traded fund shares; purchase and sell stock index, interest rate, interest rate swap and
foreign currency futures contracts and options on those contracts; enter into forward foreign currency exchange
contracts; and purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales. No more than 25% of the Portfolio’s net assets may be used as collateral
or segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-
the-box.

We may also use interest rate swaps in the management of the fixed-income portion of the Portfolio.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund and other affiliated funds in a joint repurchase account under an order obtained from the SEC. The Portfolio
may invest in equity and/or debt securities issued by Real Estate Investment Trusts (REITs).

We may also invest in reverse repurchase agreements and dollar rolls in the management of the fixed-income
portion of the Portfolio. The Portfolio will not use more than 30% of its net assets in connection with reverse repurchase
transactions and dollar rolls.

Diversified Bond Portfolio

The investment objective of this Portfolio is a high level of income over a longer term while providing reasonable
safety of capital. This means we look for investments that we think will provide a high level of current income, but
which are not expected to involve a substantial risk of loss of capital through default. To achieve our objective, we
normally invest at least 80% of the Portfolio’s investable assets in intermediate and long term debt obligations that are
rated investment grade and high-quality money market investments. While we make every effort to achieve our
objective, we can’t guarantee success and it is possible that you could lose money.

Our Strategy Debt obligations, in general, are basically written

In general, the value of debt obligations moves in the
opposite direction as interest rates — if a bond is
purchased and then interest rates go up, newer bonds
will be worth more relative to existing bonds because
they will have a higher rate of interest. We will adjust the
mix of the Portfolio’s short-term, intermediate and long
term debt obligations in an attempt to benefit from price
appreciation when interest rates go down and to incur
smaller declines when rates go up.
promises to repay a debt. The terms of repayment vary
among the different types of debt obligations, as do the
commitments of other parties to honor the obligations of
the issuer of the security. The types of debt obligations
in which we can invest include U.S. government
securities, mortgage-related securities and corporate
bonds.

Usually, at least 80% of the Portfolio’s investable assets will be invested in debt securities that are investment grade.
This means major rating services, like Standard and Poor’s Ratings Group (S&P) or Moody’s Investor Service, Inc.-

23
(Moody’s), have rated the securities within one of their four highest rating categories. The Portfolio may continue to
hold a debt obligation if it is downgraded below investment grade after it is purchased or if it is no longer rated by a
major rating service. We may also invest up to 20% of the Portfolio’s investable assets in lower rated securities which
are riskier and considered speculative. These securities are sometimes referred to as “junk bonds.” We may also invest
in instruments that are not rated, but which we believe are of comparable quality to the instruments described above.

The Portfolio may invest without limit in debt obligations issued or guaranteed by the U.S. government and
government-related entities. An example of a debt security that is backed by the full faith and credit of the U.S.
government is an obligation of the Government National Mortgage Association (Ginnie Mae). In addition, we may invest
in U.S. government securities issued by other government entities, like the Federal National Mortgage Association
(Fannie Mae) and the Student Loan Marketing Association (Sallie Mae) which are not backed by the full faith and credit
of the U.S. government. Instead, these issuers have the right to borrow from the U.S. Treasury to meet their
obligations. The Portfolio may also invest in the debt securities of other government-related entities, like the Farm
Credit System, which depend entirely upon their own resources to repay their debt.

We may invest up to 20% of the Portfolio’s total assets in debt securities issued outside the U.S. by U.S. or foreign
issuers whether or not such securities are denominated in the U.S. dollar.

The Portfolio may also invest in convertible debt and convertible and preferred stocks and non-convertible
preferred stock of any rating. The Portfolio will not acquire any common stock except by converting a convertible
security or exercising a warrant. No more than 10% of the Portfolio’s total assets will be held in common stocks, and
those will usually be sold as soon as a favorable opportunity arises. The Portfolio may lend its portfolio securities to
brokers, dealers and other financial institutions to earn income.

We may also invest in loans or assignments arranged through private negotiations between a corporation which is the
borrower and one or more financial institutions that are the lenders.

Under normal conditions, the Portfolio may invest a portion of its assets in high-quality money market instruments. In
response to adverse market conditions or when restructuring the Portfolio, we may temporarily invest up to 100% of the
Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to achieve our
investment objective, but can help to preserve the value of the Portfolio’s assets when the markets are unstable.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on debt securities; purchase and sell interest rate and interest rate swap futures
contracts and options on those contracts; invest in forward foreign currency exchange contracts; and purchase
securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales. No more than 25% of the Portfolio’s net assets may be used as collateral or
segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-the-box.

We may also use interest rate swaps in the management of the Portfolio.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

The Portfolio may also invest up to 30% of its net assets in reverse repurchase agreements and dollar rolls. The
Portfolio will not use more than 30% of its net assets in connection with reverse repurchase transactions and dollar rolls.

Equity Portfolio

The investment objective of this Portfolio is capital appreciation. This means we seek investments that we believe will
provide investment returns above broadly based market indexes. While we make every effort to achieve our objective,
we can’t guarantee success and it is possible that you could lose money.

24
Blend Approach
In deciding which stocks to buy, our portfolio managers
use a blend of investment styles. That is, we invest in
stocks that may be undervalued given the company’s
earnings, assets, cash flow and dividends and also
invest in companies experiencing some or all of the
following: a price/earnings ratio lower than earnings per
share growth, strong market position, improving
profitability and distinctive attributes such as unique
marketing ability, strong research and development, new
product flow, and financial strength.
To achieve our investment objective, we normally invest
at least 80% of the Portfolio’s investable assets in
common stocks of major established corporations as
well as smaller companies.
20% of the Portfolio’s investable assets may be invested
in short, intermediate or long-term debt obligations,
convertible and nonconvertible preferred stock and other
equity-related securities. Up to 5% of these investable
assets may be rated below investment grade. These
securities are considered speculative and are sometimes
referred to as “junk bonds.”

Up to 30% of the Portfolio’s total assets may be invested in foreign securities, including money market instruments,
equity securities and debt obligations. For these purposes, we do not consider American Depositary Receipts (ADRs)
as foreign securities.

Under normal circumstances, the Portfolio may invest a portion of its assets in money market instruments. In addition,
we may temporarily invest up to 100% of the Portfolio’s assets in money market instruments in response to adverse
market conditions or when we are restructuring the portfolio. Investing heavily in these securities limits our ability to
achieve our investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on equity securities, stock indexes and foreign currencies; purchase and sell stock
index and foreign currency futures contracts and options on these futures contracts; enter into forward foreign
currency exchange contracts; and purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales against-the-box.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC. The Portfolio may invest in equity and/
or debt securities of Real Estate Investment Trusts (REITs).

Jennison Associates LLC is responsible for managing approximately 50% of the Portfolio’s assets. GE Asset
Management Inc. and Salomon Brothers Asset Management Inc. are each responsible for managing approximately
25% of the Portfolio’s assets.

Flexible Managed Portfolio

The investment objective of this Portfolio is to seek a high total return consistent with an aggressively managed
diversified portfolio.

Balanced Portfolio To achieve our objective, we invest in a mix of equity

We invest in equity, debt and money market
securities — in order to achieve diversification in a single
Portfolio. We seek to maintain a more aggressive mix of
investments than the Conservative Balanced Portfolio.
This Portfolio may be appropriate for an investor looking
for diversification who is willing to accept a relatively high
level of loss in an effort to achieve greater appreciation.
and equity-related securities, debt obligations and
money market instruments. We adjust the percentage of
Portfolio assets in each category depending on our
expectations regarding the different markets. While we
make every effort to achieve our objective, we can’t
guarantee success and it is possible that you could lose
money.

25
Generally, we will invest within the ranges shown below:

Asset Type Minimum Normal Maximum

Stocks 25% 60% 100%
Fixed income securities 0% 40% 75%

The equity portion of the Fund is generally managed under an “enhanced index style.” Under this style, the portfolio
managers utilize a quantitative approach in seeking to out-perform the Standard & Poor’s 500 Composite Stock Price
Index and to limit the possibility of significantly under-performing that index.

The stock portion of the Portfolio will be invested in a broadly diversified portfolio of stocks generally consisting of large
and mid-size companies, although it may also hold stocks of smaller companies. We will invest in companies and
industries that, in our judgment, will provide either attractive long-term returns, or are desirable to hold in the Portfolio to
manage risk.

Most of the securities in the fixed income portion of this Portfolio will be investment grade. However, we may also
invest up to 25% of this portion of the Portfolio in debt securities rated as low as BB, Ba or lower by a major rating
service at the time they are purchased. These high-yield or “junk bonds” are riskier and considered speculative. We
may also invest in instruments that are not rated, but which we believe are of comparable quality to the instruments
described above. The fixed income portion of the Portfolio may also include loans or assignments in the form of loan
participations and mortgage-related securities.

The Portfolio may also invest up to 30% of its total assets in foreign equity and debt securities that are not denominated
in the U.S. dollar. In addition, up to 20% of the Portfolio’s total assets may be invested in debt securities that are issued
outside of the U.S. by foreign or U.S. issuers provided the securities are denominated in U.S. dollars. For these
purposes, we do not consider American Depositary Receipts (ADRs) as foreign securities.

In response to adverse market conditions or when we are restructuring the Portfolio, we may temporarily invest up to
100% of the Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to
achieve our investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

The Portfolio may also invest in Real Estate Investment Trusts (REITs).

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on equity securities, debt securities, stock indexes, and foreign currencies;
purchase and sell exchange-traded fund shares; purchase and sell stock index, interest rate, interest rate swap and
foreign currency futures contracts and options on those contracts; enter into forward foreign currency exchange
contracts; and purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales. No more than 25% of the Portfolio’s net assets may be used as collateral
or segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-
the-box.

The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

We may also use interest rate swaps in the management of the fixed income portion of the Portfolio.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

We may also invest in reverse repurchase agreements and dollar rolls in the management of the fixed-income
portion of the Portfolio. The Portfolio will not use more than 30% of its net assets in connection with reverse repurchase
transactions and dollar rolls.

26
Global Portfolio

The investment objective of this Portfolio is long-term growth of capital. To achieve this objective, we invest primarily
in equity and equity-related securities of foreign and U.S. companies. While we make every effort to achieve our
objective, we can’t guarantee success and it is possible that you could lose money.

Global Investing When selecting stocks, we use a growth approach which

This Portfolio is intended to provide investors with the
opportunity to invest in companies located throughout
the world. Although we are not required to invest in a
minimum number of countries, we intend generally to
invest in at least three countries, including the U.S.
However, in response to market conditions, we can
invest up to 35% of the Portfolio’s total assets in any one
country other than the U.S. (The 35% limitation does not
apply to U.S. investments).
means we look for companies that have above-average
growth prospects. In making our stock picks, we look for
companies that have had growth in earnings and sales,
high returns on equity and assets or other strong
financial characteristics. Often, the companies we
choose have superior management, a unique market
niche or a strong new product.

The Portfolio may invest up to 100% of its assets in money market instruments in response to adverse market
conditions or when we are restructuring the Portfolio. Investing heavily in these securities limits our ability to achieve
our investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on equity securities, stock indexes and foreign currencies; purchase and sell
futures contracts on stock indexes, debt securities, interest rate indexes and foreign currencies and options on these
futures contracts; enter into forward foreign currency exchange contracts; and purchase securities on a when-
issued or delayed delivery basis.

The Portfolio may invest in equity swaps. The Portfolio may also lend its portfolio securities to brokers, dealers and
other financial institutions to earn income.

The Portfolio may also enter into short sales against-the-box.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC. The portfolio may invest in equity and/
or debt securities issued by Real Estate Investment Trusts (REITs).

Government Income Portfolio

The investment objective of this Portfolio is a high level of income over the longer term consistent with the
preservation of capital. In pursuing our objective, we invest primarily in intermediate and long-term U.S. Treasury
securities and debt obligations issued by agencies or instrumentalities established, sponsored or guaranteed by the
U.S. government, including mortgage-backed securities issued by government agencies. While we make every effort to
achieve our objective, we can’t guarantee success and it is possible that you could lose money.

U.S. Government Securities
U.S. government securities are considered among the
most creditworthy of debt securities. Because they are
generally considered less risky, their yields tend to be
lower than the yields from corporate debt. Like all debt
securities, the values of U.S. government securities will
change as interest rates change.
Normally, we will invest at least 80% of the Portfolio’s
investable assets in U.S. government securities, which
include Treasury securities, obligations issued or
guaranteed by U.S. government agencies and
instrumentalities and mortgage-related securities
issued by U.S. government instrumentalities or non-
governmental corporations.

27
The Portfolio may normally invest up to 20% of its investable assets in money market instruments, foreign government
securities (including those issued by supranational organizations) denominated in U.S. dollars, asset-backed securities
rated at least single A by Moody’s or S&P (or if unrated, of comparable quality in our judgment) and securities of
issuers (including foreign governments and non-governmental foreign issuers) other than the U.S. government and
related entities rated at least single A by Moody’s or S&P (or if unrated, of comparable quality in our judgment.) The
Portfolio may invest up to 15% of its net assets in zero coupon bonds.

The Portfolio may invest up to 100% of its assets in money market instruments in response to adverse market
conditions or when restructuring the Portfolio. Investing heavily in these securities limits our ability to achieve capital
appreciation, but can help to preserve the Portfolio’s assets when the markets are unstable. The Portfolio may lend its
portfolio securities to brokers, dealers and other financial institutions to earn income.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on debt securities; purchase and sell interest rate and interest rate swap futures
contracts and options on these futures contracts; and purchase securities on a when-issued or delayed delivery
basis.

The Portfolio may also enter into short sales. No more than 25% of the Portfolio’s net assets may be used as collateral
or segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-
the-box.

We may also use interest rate swaps in the management of the Portfolio.

The Portfolio may enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of the
Fund in a joint repurchase account under an order obtained from the SEC.

The Portfolio may use up to 30% of its net assets in connection with reverse repurchase agreements and dollar
rolls.

High Yield Bond Portfolio

The investment objective of this Portfolio is a high total return. In pursuing our objective, we invest in high yield/high
risk debt securities. While we make every effort to achieve our objective, we can’t guarantee success and it is possible
that you could lose money.

High Yield/High Risk

Lower rated and comparable unrated securities tend to
offer better yields than higher rated securities with the
same maturities because the issuer’s financial condition
may not have been as strong as that of higher rated
issuers. Changes in the perception of the
creditworthiness of the issuers of lower rated securities
tend to occur more frequently and in a more pronounced
manner than for issuers of higher rated securities.
Normally, we will invest at least 80% of the Portfolio’s
investable assets in medium to lower rated debt
securities. These high-yield or “junk bonds” are riskier
than higher rated bonds and are considered speculative.
The Portfolio may invest up to 20% of its total assets in
U.S. dollar denominated debt securities issued outside
the U.S. by foreign and U.S. issuers.

The Portfolio may also acquire common and preferred stock, debt securities and convertible debt and preferred
stock.

We may also invest in loans or assignments arranged through private negotiations between a corporation which is the
borrower and one or more financial institutions that are the lenders.

Under normal circumstances, the Portfolio may invest in money market instruments. In response to adverse market
conditions or when we are restructuring the Portfolio, we may temporarily invest up to 100% of the Portfolio’s assets in
money market instruments. Investing heavily in these securities limits our ability to achieve our investment objective,
but can help to preserve the Portfolio’s assets when the markets are unstable.

28
We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on debt securities; purchase and sell interest rate and interest rate swap futures
contracts and options on these futures contracts; and purchase securities on a when-issued or delayed delivery
basis. The Portfolio may invest in PIK bonds.

The Portfolio may also enter into short sales. No more than 25% of the Portfolio’s net assets may be used as collateral
or segregated for purposes of securing a short sale obligation. The Portfolio may also enter into short sales against-
the-box.

We may also use interest rate swaps in the management of the Portfolio.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

The Portfolio may use up to 30% of its net assets in connection with reverse repurchase agreements and dollar
rolls.

Jennison Portfolio (formerly, Prudential Jennison Portfolio)

The investment objective of this Portfolio is to achieve long-term growth of capital. This means we seek investments
whose price will increase over several years. While we make every effort to achieve our objective, we can’t guarantee
success and it is possible that you could lose money.

Investment Strategy In pursuing our objective, we normally invest 65% of the

We seek to invest in equity securities of established
companies with above-average growth prospects. We
select stocks on a company-by-company basis using
fundamental analysis. In making our stock picks, we look
for companies that have had growth in earnings and
sales, high returns on equity and assets or other strong
financial characteristics. Often, the companies we
choose have superior management, a unique market
niche or a strong new product.
Portfolio’s total assets in common stocks and preferred
stocks of companies with capitalization in excess of $1
billion.
For the balance of the Portfolio, we may invest in
common stocks, preferred stocks and other equity-
related securities of companies that are undergoing
changes in management, product and/or marketing
dynamics which we believe have not yet been reflected
in reported earnings or recognized by investors.

In addition, we may invest in debt securities and mortgage-related securities. These securities may be rated as low
as Baa by Moody’s or BBB by S&P (or if unrated, of comparable quality in our judgment).

The Portfolio may also invest in obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities. Up to 30% of the Portfolio’s assets may be invested in foreign equity and equity-related securities.
For these purposes, we do not consider American Depositary Receipts (ADRs) as foreign securities.

In response to adverse market conditions or when restructuring the Portfolio, we may invest up to 100% of the
Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to achieve our
investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on equity securities, stock indexes and foreign currencies; purchase and sell stock
index and foreign currency futures contracts and options on those futures contracts; enter into forward foreign
currency exchange contracts; and purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

29
The Portfolio may also enter into short sales against-the-box.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC. The Portfolio may invest in equity and/
or debt securities issued by Real Estate Investment Trusts (REITs).

Money Market Portfolio

The investment objective of this Portfolio is to seek the maximum current income that is consistent with stability
of capital and maintenance of liquidity. This means we seek investments that we think will provide a high level of
current income. While we make every effort to achieve our objective, we can’t guarantee success.

Steady Net Asset Value We invest in a diversified portfolio of short-term debt

The net asset value for the Portfolio will ordinarily remain
issued at $10 per share because dividends are declared
and reinvested daily. The price of each share remains
the same, but when dividends are declared the value of
your investment grows.
obligations of the U.S. government, its agencies and
instrumentalities, as well as commercial paper, asset
backed securities, funding agreements, certificates of
deposit, floating and variable rate demand notes, notes
and other obligations issued by banks, corporations and
other companies (including trust structures), and
obligations issued by foreign banks, companies or
foreign governments.

We make investments that meet the requirements of specific rules for money market mutual funds, such as Investment
Company Act Rule 2a-7. As such, we will not acquire any security with a remaining maturity exceeding thirteen months,
and we will maintain a dollar-weighted average portfolio maturity of 90 days or less. In addition, we will comply with the
diversification, quality and other requirements of Rule 2a-7. This means, generally, that the instruments that we
purchase present “minimal credit risk” and are of “eligible quality.” “Eligible quality” for this purpose means a security is:
(i) rated in one of the two highest short-term rating categories by at least two major rating services (or if only one major
rating service has rated the security, as rated by that service); or (ii) if unrated, of comparable quality in our judgment.
All securities that we purchase will be denominated in U.S. dollars.

Commercial paper is short-term debt obligations of banks, corporations and other borrowers. The obligations are
usually issued by financially strong businesses and often include a line of credit to protect purchasers of the obligations.
An asset-backed security is a loan or note that pays interest based upon the cash flow of a pool of assets, such as
mortgages, loans and credit card receivables. Funding agreements are contracts issued by insurance companies that
guarantee a return of principal, plus some amount of interest. When purchased by money market funds, funding
agreements will typically be short-term and will provide an adjustable rate of interest.

Certificates of deposit, time deposits and bankers’ acceptances are obligations issued by or through a bank. These
instruments depend upon the strength of the bank involved in the borrowing to give investors comfort that the
borrowing will be repaid when promised.

We may purchase debt securities that include demand features, which allow us to demand repayment of a debt
obligation before the obligation is due or “matures.” This means that longer term securities can be purchased because
of our expectation that we can demand repayment of the obligation at a set price within a relatively short period of time,
in compliance with the rules applicable to money market mutual funds.

The Portfolio may also purchase floating rate and variable rate securities. These securities pay interest at rates that
change periodically to reflect changes in market interest rates. Because these securities adjust the interest they pay,
they may be beneficial when interest rates are rising because of the additional return the Portfolio will receive, and they
may be detrimental when interest rates are falling because of the reduction in interest payments to the Portfolio.

The securities that we may purchase may change over time as new types of money market instruments are developed.
We will purchase these new instruments, however, only if their characteristics and features follow the rules governing
money market mutual funds.

30
We may also use alternative investment strategies to try to improve the Portfolio’s returns, protect its assets or for
short-term cash management. There is no guarantee that these strategies will work, that the instruments necessary to
implement these strategies will be available or that the Portfolio will not lose money.

We may purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

The Portfolio may use up to 10% of its net assets in connection with reverse repurchase agreements.

An investment in the Portfolio is not a bank deposit and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Portfolio seeks to preserve the value of an
investment at $10 per share, it is possible to lose money by investing in the Portfolio.

Natural Resources Portfolio

The investment objective of this Portfolio is long-term growth of capital. This means we seek investments whose
price will increase over several years. While we make every effort to achieve our objective, we can’t guarantee success
and it is possible that you could lose money.

Natural Resource Companies are companies that
primarily own, explore, mine, process or otherwise
develop natural resources, or supply goods and services
to such companies. Natural resources generally include
precious metals, such as gold, silver and platinum,
ferrous and nonferrous metals, such as iron, aluminum
and copper, strategic metals such as uranium and
titanium, hydrocarbons such as coal and oil, timberland,
undeveloped real property and agricultural commodities.
In pursuing our objective, we normally invest at least
80% of the Portfolio’s investable assets in common
stocks and convertible securities of natural resource
companies and in securities which are related to the
market value of some natural resource (asset-indexed
securities).
We seek securities that are attractively priced as
compared to the intrinsic value of the underlying natural
resource or securities of companies in a position to
benefit from current or expected economic conditions.

Depending on prevailing trends, we may shift the Portfolio’s focus from one natural resource to another, however, we
will not invest more than 25% of the Portfolio’s total assets in a single natural resource industry.

The Portfolio is a non-diversified mutual fund portfolio. This means that the Portfolio may invest a relatively high
percentage of its assets in a small number of issuers. As a result, the Portfolio’s performance may be more clearly tied
to the success or failure of a smaller group of Portfolio holdings. There are additional risks associated with the
Portfolio’s investment in the securities of natural resource companies. The market value of the securities may be
affected by numerous factors, including events occurring in nature, inflationary pressures, and international politics.

When acquiring asset-indexed securities, we usually will invest in obligations rated at least BBB by Moody’s or Baa by
S&P (or, if unrated, of comparable quality in our judgment). However, we may invest in asset-indexed securities rated
as low as CC by Moody’s or Ca by S&P or in unrated securities of comparable quality. These high-risk or “junk bonds”
are considered speculative.

The Portfolio may also acquire asset-indexed securities issued in the form of commercial paper provided they are rated
at least A-2 by S&P or P-2 by Moody’s (or, if unrated, of comparable quality in our judgment).

The Portfolio may invest up to 20% of its investable assets in securities that are not asset-indexed or natural resource
related. These holdings may include common stocks, convertible stock, debt securities and money market instruments.
When acquiring debt securities, we usually will invest in obligations rated A or better by S&P or Moody’s (or, if unrated,
of comparable quality in our judgment). However, we may invest in debt securities rated as low as CC by Moody’s or
Ca by S&P or in unrated securities of comparable quality.

31
Under normal circumstances, the Portfolio may invest up to 20% of its investable assets in money market instruments.
In response to adverse market conditions or when restructuring the Portfolio, we may invest up to 100% of the
Portfolio’s assets in money market instruments. Investing heavily in these securities limits our ability to achieve our
investment objective, but can help to preserve the Portfolio’s assets when the markets are unstable.

Up to 30% of the Portfolio’s total assets may be invested in foreign equity and equity-related securities. For these
purposes, we do not consider American Depositary Receipts (ADRs) as foreign securities.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management.

We may: purchase and sell options on equity securities, stock indexes and foreign currencies; purchase and sell stock
index and foreign currency futures contracts and options on these futures contracts; enter into forward foreign
currency exchange contracts; and purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales against-the-box.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

Small Capitalization Stock Portfolio

The investment objective of this Portfolio is long-term growth of capital. This means we seek investments whose
price will increase over several years. While we make every effort to achieve our objective, we can’t guarantee success
and it is possible that you could lose money.

S&P SmallCap index To achieve this objective, we attempt to duplicate the

We attempt to duplicate the performance of the Standard
& Poor’s Small Capitalization 600 Stock Index (S&P
SmallCap 600 Index), a market-weighted index which
consists of 600 smaller capitalization U.S. stocks. The
market capitalization of the companies that make up the
S&P SmallCap 600 Index may change from time to
time — as of January 31, 2002, the S&P SmallCap 600
Index stocks had market capitalizations of between
$46 million and $3.3 billion. They are selected for
market size, liquidity and industry group. The S&P
SmallCap 600 Index has above-average risk and may
fluctuate more than the S&P 500.
performance of the S&P SmallCap 600 Index. Normally
we do this by investing at least 80% of the Portfolio’s
investable assets in all or a representative sample of the
stocks in the S&P SmallCap 600 Index. Thus, the
Portfolio is not “managed” in the traditional sense of
using market and economic analyses to select stocks.
The Portfolio may also hold cash or cash equivalents, in
which case its performance will differ from that of the
Index.

We attempt to minimize these differences by using stock index futures contracts, options on stock indexes and
options on stock index futures contracts. The Portfolio will not use these derivative securities for speculative purposes
or to hedge against a decline in the value of the Portfolio’s holdings.

We may also use alternative investment strategies to try to improve the Portfolio’s returns or for short-term cash
management. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn
income. There is no guarantee that these strategies will work, that the instruments necessary to implement these
strategies will be available or that the Portfolio will not lose money.

We may: purchase and sell options on equity securities and stock indexes; purchase and sell stock index futures
contracts and options on those futures contracts; purchase and sell exchange-traded fund shares; and purchase
securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales and short sales against-the-box. No more than 5% of the Portfolio’s
total assets may be used as collateral or segregated for purposes of securing a short sale obligation.

32
The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

A stock’s inclusion in the S&P SmallCap 600 Index in no way implies S&P’s opinion as to the stock’s attractiveness
as an investment. The Portfolio is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representations regarding the advisability of investing in the Portfolio. “Standard & Poor’s,” “Standard & Poor’s Small
Capitalization Stock Index” and “Standard & Poor’s SmallCap 600” are trademarks of McGraw Hill.

Stock Index Portfolio

The investment objective of this Portfolio is to achieve investment results that generally correspond to the
performance of publicly-traded common stocks. To achieve this goal, we attempt to duplicate the performance of
the Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index). While we make every effort to achieve our
objective, we can’t guarantee success and it is possible that you could lose money.

S&P 500 Index
We attempt to duplicate the performance of the S&P 500
Index, a market-weighted index which represents more
than 70% of the market value of all publicly-traded
common stocks.
Under normal conditions, we attempt to invest in all 500
stocks represented in the S&P 500 Index in proportion to
their weighting in the S&P 500 Index. We will normally
invest at least 80% of the Portfolio’s investable assets in
S&P 500 Index stocks, but we will attempt to remain as
fully invested in the S&P 500 Index stocks as possible in
light of cash flow into and out of the Portfolio.

To manage investments and redemptions in the Portfolio, we may temporarily hold cash or invest in high-quality money
market instruments. To the extent we do so, the Portfolio’s performance will differ from that of the S&P 500 Index. We
attempt to minimize differences in the performance of the Portfolio and the S&P 500 Index by using stock index futures
contracts, options on stock indexes and options on stock index futures contracts. The Portfolio will not use these
derivative securities for speculative purposes or to hedge against a decline in the value of the Portfolio’s holdings.

We may also use alternative investment strategies to try to improve the Portfolio’s returns or for short-term cash
management. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn
income. There is no guarantee that these strategies will work, that the instruments necessary to implement these
strategies will be available or that the Portfolio will not lose money.

We may: purchase and sell options on stock indexes; purchase and sell stock futures contracts and options on those
futures contracts; and purchase and sell exchange-traded fund shares.

The Portfolio may also enter into short sales and short sales against-the-box. No more than 5% of the Portfolio’s
total assets may be used as collateral or segregated for purposes of securing a short sale obligation.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC. The Portfolio may invest in equity and/
or debt securities issued by Real Estate Investment Trusts (REITs).

A stock’s inclusion in the S&P 500 Index in no way implies S&P’s opinion as to the stock’s attractiveness as an
investment. The portfolio is not sponsored, endorsed, sold or promoted by S&P. S&P makes no representations
regarding the advisability of investing in the portfolio. “Standard & Poor’s,” “Standard & Poor’s 500” and “500” are
trademarks of McGraw Hill.

Value Portfolio

The investment objective of this Portfolio is to seek capital appreciation. This means we focus on stocks that are
undervalued — those stocks that are trading below their underlying asset value, cash generating ability, and overall
earnings and earnings growth. While we make every effort to achieve our objective, we can’t guarantee success and it
is possible that you could lose money.

33
Contrarian Approach
To achieve our value investment strategy, we generally
take a strong contrarian approach to investing. In other
words, we usually buy stocks that are out of favor and
that many other investors are selling, and we attempt to
invest in companies and industries before other
investors recognize their true value. Using these
guidelines, we focus on long-term performance, not
short-term gain.
We will normally invest at least 65% of the Portfolio’s
total assets in equity and equity-related securities. Most
of our investments will be securities of large
capitalization companies. When deciding which stocks to
buy, we look at a company’s earnings, balance sheet
and cash flow and then at how these factors impact the
stock’s price and return. We also buy equity-related
securities — like bonds, corporate notes and preferred
stock — that can be converted into a company’s
common stock or other equity security.

Up to 35% of the Portfolio’s total assets may be invested in other debt obligations including non-convertible preferred
stock. When acquiring these types of securities, we usually invest in obligations rated A or better by Moody’s or S&P.
We may also invest in obligations rated as low as CC by Moody’s or Ca by S&P. These securities are considered
speculative and are sometimes referred to as “junk bonds.” We may also invest in instruments that are not rated, but
which we believe are of comparable quality to the instruments described above.

Up to 30% of the Portfolio’s total assets may be invested in foreign securities, including money market instruments,
equity securities and debt obligations. For these purposes, we do not consider American Depositary Receipts (ADRs)
as foreign securities.

Under normal circumstances, the Portfolio may invest up to 35% of its total assets in high-quality money market
instruments. In response to adverse market conditions or when we are restructuring the Portfolio, we may temporarily
invest up to 100% of the Portfolio’s assets in money market instruments. Investing heavily in these securities limits our
ability to achieve our investment objective, but can help to preserve the Portfolio’s assets when the markets are
unstable.

We may also use alternative investment strategies — including derivatives — to try to improve the Portfolio’s returns,
protect its assets or for short-term cash management. The Portfolio may lend its portfolio securities to brokers, dealers
and other financial institutions to earn income.

We may: purchase and sell options on equity securities, stock indexes and foreign currencies; purchase and sell stock
index and foreign currency futures contracts and options on these futures contracts; enter into forward foreign
currency exchange contracts; and purchase securities on a when-issued or delayed delivery basis.

The Portfolio may also enter into short sales against-the-box.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC. The Portfolio may invest in equity and/
or debt securities issued by Real Estate Investment Trusts (REITs).

Jennison Associates LLC is responsible for managing approximately 50% of the Portfolio’s assets. Victory Capital
Management Inc. (formerly, Key Asset Management Inc.) and Deutsche Asset Management, Inc. (DAMI) are each
responsible for managing approximately 25% of the Portfolio’s assets.

Zero Coupon Bond Portfolio 2005

The investment objective of this Portfolio is the highest predictable compound investment for a specific period of
time, consistent with the safety of invested capital. We seek to achieve this objective by investing at least 80% of
the Portfolio’s investable assets in debt securities of the U.S. Treasury and corporations that have been issued without
interest coupons or that have been stripped of their interest coupons, or have interest coupons that have been stripped
from the debt obligation (stripped securities). On the liquidation date all of the securities held by the Portfolio will be
sold and all outstanding shares of the Portfolio will be redeemed. Please refer to your variable contract prospectus for
information on your reallocation options and the Portfolio to which your investment will be transferred if you do not
provide other instructions. While we make every effort to achieve our objective, we can’t guarantee success and it is
possible that you could lose money.

34
Active Management
The Portfolio seeks a higher yield than would be realized
by just holding the Portfolio’s initial investments. We
actively manage the Portfolio to take advantage of
trading opportunities that may arise from supply and
demand dynamics or perceived differences in the quality
or liquidity of securities.
Of course, by pursuing this strategy, the Portfolio has the
risk that it will not realize the yield of its initial
investments.
In pursuing its objective, the Portfolio invests only in debt
securities that do not involve substantial risk of loss of
capital through default and that can be readily sold.
Although these securities are not high-risk, their value
does vary because of changes in interest rates.
In order to lessen the impact of interest rate changes, we
will keep the duration of the Portfolio within one year of
the Portfolio’s liquidation date. (Duration is a measure of
a “length” of a bond, or in this case, a portfolio of bonds.
It is a mathematical calculation that takes into account
the maturities of the bonds, coupon rates and prevailing
interest rates.)

Generally, we invest at least 70% of the Portfolio’s total assets in stripped securities that are obligations of the U.S.
government and which mature within two years of the Portfolio’s liquidation date. Up to 30% of the Portfolio’s total
assets may be invested in either stripped securities of corporations or interest bearing corporate debt securities rated
no lower than Baa by a major rating service (or, if unrated, of comparable quality in our judgment).

Under normal conditions, no more than 20% of the Portfolio’s investable assets may be invested in interest-bearing
securities. However, as the liquidation date of the Portfolio draws near, we may invest more than 20% in interest
bearing securities as a defensive measure.

Under normal circumstances, the Portfolio may invest in money market instruments for cash management purposes.
As the Portfolio’s liquidation date nears, we may increase our investment in money market instruments. In addition, in
response to adverse market conditions, we may temporarily invest up to 100% of the Portfolio’s assets in money
market instruments. Investing heavily in these securities limits our ability to achieve our investment objective, but can
help to preserve the Portfolio’s assets when the markets are unstable.

The Portfolio may also enter into repurchase agreements. The Portfolio may participate with certain other Portfolios of
the Fund in a joint repurchase account under an order obtained from the SEC.

* * *

The Statement of Additional Information — which we refer to as the SAI — contains additional information about the
Portfolios. To obtain a copy, see the back cover page of this prospectus.

* * *

OTHER INVESTMENTS AND STRATEGIES

As indicated in the description of the Portfolios above, we may use the following investment strategies to increase a
Portfolio’s return or protect its assets if market conditions warrant.

ADRs are certificates representing the right to receive foreign securities that have been deposited with a U.S. bank or a
foreign branch of a U.S. bank.

Convertible Debt and Convertible Preferred Stock — A convertible security is a security — for example, a bond or
preferred stock — that may be converted into common stock of the same or different issuer. The convertible security
sets the price, quantity of shares and time period in which it may be so converted. Convertible stock is senior to a
company’s common stock but is usually subordinated to debt obligations of the company. Convertible securities provide
a steady stream of income which is generally at a higher rate than the income on the company’s common stock but
lower than the rate on the company’s debt obligations. At the same time, they offer — through their conversion
mechanism — the chance to participate in the capital appreciation of the underlying common stock. The price of a
convertible security tends to increase and decrease with the market value of the underlying common stock.

35
Derivatives — A derivative is an investment instrument that derives its price, performance, value, or cash flow from
one or more underlying securities or other interests. Derivatives involve costs and can be volatile. With derivatives, the
investment adviser tries to predict whether the underlying investment — a security, market index, currency, interest rate
or some other benchmark — will go up or down at some future date. We may use derivatives to try to reduce risk or to
increase return consistent with a Portfolio’s overall investment objective. The investment adviser will consider other
factors (such as cost) in deciding whether to employ any particular strategy, or use any particular instrument. Any
derivatives we use may not fully offset a Portfolio’s underlying positions and this could result in losses to the Portfolio
that would not otherwise have occurred.

Dollar Rolls — Dollar rolls involve the sale by the Portfolio of a security for delivery in the current month with a promise
to repurchase from the buyer a substantially similar — but not necessarily the same — security at a set price and date
in the future. During the “roll period,” the Portfolio does not receive any principal or interest on the security. Instead, it is
compensated by the difference between the current sales price and the price of the future purchase, as well as any
interest earned on the cash proceeds from the original sale.

Equity Swaps — In an equity swap, the Portfolio and another party agree to exchange cash flow payments that are
based on the performance of equities or an equity index.

Forward Foreign Currency Exchange Contracts — A foreign currency forward contract is an obligation to buy or sell
a given currency on a future date at a set price. When a Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, or when a Portfolio anticipates the receipt in a foreign currency of dividends
or interest payments on a security which it holds, the Portfolio may desire to “lock-in” the U.S. dollar price of the
security or the U.S. dollar equivalent of such dividend or interest payment, as the case may be. By entering into a
forward contract for a fixed amount of dollars, for the purchase or sale of the amount of foreign currency involved in the
underlying transactions, the Portfolio will be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the foreign currency during the period between the date on
which the security is purchased or sold, or on which the dividend or interest payment is declared, and the date on which
such payments are made or received. At the maturity of a forward contract, a Portfolio may either sell the security and
make delivery of the foreign currency or it may retain the security and terminate its contractual obligation to deliver the
foreign currency by purchasing an “offsetting” contract with the same currency trader obligating it to purchase, on the
same maturity date, the same amount of the foreign currency.

Futures Contracts — A futures contract is an agreement to buy or sell a set quantity of an underlying product at a
future date, or to make or receive a cash payment based on the value of a securities index. When a futures contract is
entered into, each party deposits with a futures commission merchant (or in a segregated account) approximately 5%
of the contract amount. This is known as the “initial margin.” Every day during the futures contract, either the buyer or
the futures commission merchant will make payments of “variation margin.” In other words, if the value of the
underlying security, index or interest rate increases, then the buyer will have to add to the margin account so that the
account balance equals approximately 5% of the value of the contract on that day. The next day, the value of the
underlying security, index or interest rate may decrease, in which case the borrower would receive money from the
account equal to the amount by which the account balance exceeds 5% of the value of the contract on that day. A
stock index futures contract is an agreement between the buyer and the seller of the contract to transfer an amount of
cash equal to the daily variation margin of the contract. No physical delivery of the underlying stocks in the index is
made.

Interest Rate Swaps — In an interest rate swap, the Portfolio and another party agree to exchange interest payments.
For example, the Portfolio may wish to exchange a floating rate of interest for a fixed rate. We would enter into that
type of a swap if we think interest rates are going down.

Joint Repurchase Account — In a joint repurchase transaction, uninvested cash balances of various Portfolios are
added together and invested in one or more repurchase agreements. Each of the participating Portfolios receives a
portion of the income earned in the joint account based on the percentage of its investment.

Loans and Assignments — Loans are privately negotiated between a corporate borrower and one or more financial
institutions. The Portfolio acquires interests in loans directly (by way of assignment from the selling institution) or
indirectly (by way of the purchase of a participation interest from the selling institution. Purchasers of loans depend

36
primarily upon the creditworthiness of the borrower for payment of interest and repayment of principal. If scheduled
interest or principal payments are not made, the value of the instrument may be adversely affected. Interests in loans
are also subject to additional liquidity risks. Loans are not generally traded in organized exchange markets but are
traded by banks and other institutional investors engaged in loan syndications. Consequently, the liquidity of a loan will
depend on the liquidity of these trading markets at the time that the Portfolio sells the loan.

In assignments, the Portfolio will have no recourse against the selling institution, and the selling institution generally
makes no representations about the underlying loan, the borrowers, the documentation or the collateral. In addition, the
rights against the borrower that are acquired by the Portfolio may be more limited than those held by the assigning
lender.

Mortgage-related Securities are usually pass-through instruments that pay investors a share of all interest and
principal payments from an underlying pool of fixed or adjustable rate mortgages. We may invest in mortgage-related
securities issued and guaranteed by the U.S. government or its agencies like the Federal National Mortgage
Association (Fannie Maes) and the Government National Mortgage Association (Ginnie Maes) and debt securities
issued (but not guaranteed) by the Federal Home Loan Mortgage Company (Freddie Macs). Private mortgage-related
securities that are not guaranteed by U.S. governmental entities generally have one or more types of credit
enhancement to ensure timely receipt of payments and to protect against default.

Mortgage-related securities include collateralized mortgage obligations, multi-class pass through securities and
stripped mortgage-backed securities. A collateralized mortgage-backed obligation (CMO) is a security backed by an
underlying portfolio of mortgages or mortgage-backed securities that may be issued or guaranteed by entities such as
banks, U.S. governmental entities or broker-dealers. A multi-class pass-through security is an equity interest in a trust
composed of underlying mortgage assets. Payments of principal and interest on the mortgage assets and any
reinvestment income provide the money to pay debt service on the CMO or to make scheduled distributions on the
multi-class pass-through security. A stripped mortgage-backed security (MBS strip) may be issued by U.S.
governmental entities or by private institutions. MBS strips take the pieces of a debt security (principal and interest) and
break them apart. The resulting securities may be sold separately and may perform differently. MBS strips are highly
sensitive to changes in prepayment and interest rates.

Options — A call option on stock is a short-term contract that gives the option purchaser or “holder” the right to acquire
a particular equity security for a specified price at any time during a specified period. For this right, the option purchaser
pays the option seller a certain amount of money or “premium” which is set before the option contract is entered into.
The seller or “writer” of the option is obligated to deliver the particular security if the option purchaser exercises the
option. A put option on stock is a similar contract. In a put option, the option purchaser has the right to sell a particular
security to the option seller for a specified price at any time during a specified period. In exchange for this right, the
option purchaser pays the option seller a premium. Options on debt securities are similar to stock options except that
the option holder has the right to acquire or sell a debt security rather than an equity security. Options on stock indexes
are similar to options on stocks, except that instead of giving the option holder the right to receive or sell a stock, it
gives the holder the right to receive an amount of cash if the closing level of the stock index is greater than (in the case
of a call) or less than (in the case of a put) the exercise price of the option. The amount of cash the holder will receive
is determined by multiplying the difference between the index’s closing price and the option’s exercise price, expressed
in dollars, by a specified “multiplier”. Unlike stock options, stock index options are always settled in cash, and gain or
loss depends on price movements in the stock market generally (or a particular market segment, depending on the
index) rather than the price movement of an individual stock.

Real Estate Investment Trusts (REITs) — A REIT is a company that manages a portfolio of real estate to earn profits
for its shareholders. Some REITs acquire equity interests in real estate and then receive income from rents and capital
gains when the buildings are sold. Other REITs lend money to real estate developers and receive interest income from
the mortgages. Some REITs invest in both types of interests.

Repurchase Agreements — In a repurchase transaction, the Portfolio agrees to purchase certain securities and the
seller agrees to repurchase the same securities at an agreed upon price on a specified date. This creates a fixed return
for the Portfolio.

Reverse Repurchase Agreements — In a reverse repurchase transaction, the Portfolio sells a security it owns and
agrees to buy it back at a set price and date. During the period the security is held by the other party, the Portfolio may
continue to receive principal and interest payments on the security.

37
Short Sales — In a short sale, we sell a security we do not own to take advantage of an anticipated decline in the
stock’s price. The Portfolio borrows the stock for delivery and if it can buy the stock later at a lower price, a profit
results.

Short Sales Against-the-Box — A short sale against-the-box means the Portfolio owns securities identical to those
sold short.

When-Issued and Delayed Delivery Securities — With when-issued or delayed delivery securities, the delivery and
payment can take place a month or more after the date of the transaction. A Portfolio will make commitments for when-
98 issued transactions only with the intention of actually acquiring the securities. A Portfolio’s custodian will maintain in
a segregated account, liquid assets having a value equal to or greater than such commitments. If the Portfolio chooses
to dispose of the right to acquire a when-issued security prior to its acquisition, it could, as with the disposition of any
other security, incur a gain or loss.

* * *

Except for the Money Market Portfolio and the Zero Coupon Bond Portfolio 2005, each Portfolio also follows certain
policies when it borrows money (each Portfolio may borrow up to 5% of the value of its total assets); lends its
securities; and holds illiquid securities (a Portfolio may hold up to 15% of its net assets in illiquid securities, including
securities with legal or contractual restrictions on resale, those without a readily available market and repurchase
agreements with maturities longer than seven days). If the Portfolio were to exceed this limit, the investment adviser
would take prompt action to reduce a Portfolio’s holdings in illiquid securities to no more than 15% of its net assets, as
required by applicable law. A Portfolio is subject to certain investment restrictions that are fundamental policies, which
means they cannot be changed without shareholder approval. For more information about these restrictions, see the
SAI.

The Money Market Portfolio also follows certain policies when it borrows money (the Portfolio may borrow up to 5% of
the value of its total assets) and holds illiquid securities (the Portfolio may hold up to 10% of its net assets in illiquid
securities, including securities with legal or contractual restrictions on resale, those without a readily available market
and repurchase agreements with maturities longer than seven days). If the Portfolio were to exceed this limit, the
investment adviser would take prompt action to reduce the Portfolio’s holdings in illiquid securities to no more than 10%
of its net assets, as required by applicable law. The Portfolio is subject to certain investment restrictions that are
fundamental policies, which means they cannot be changed without shareholder approval. For more information about
these restrictions, see the SAI.

We will consider other factors (such as cost) in deciding whether to employ any particular strategy or use any particular
instrument. For more information about these strategies, see the SAI, “Investment Objectives and Policies of the
Portfolios.”

HOW THEFUND IS MANAGED

Board Of Directors

The Board of Directors oversees the actions of the Investment Adviser, the sub-advisers and the Distributor and
decides on general policies. The Board also oversees the Fund’s officers who conduct and supervise the daily business
operations of the Fund.

Investment Adviser

Prudential Investments LLC (“PI”), a wholly-owned subsidiary of Prudential Financial, Inc., serves as the overall
investment adviser for the Fund. PI is located at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey
07102-4077. PI and its predecessors have served as manager and administrator to investment companies since 1987.
As of December 31, 2001, PI served as the investment manager to all of the Prudential U.S. and offshore investment
companies, and as manager or administrator to closed-end investment companies, with aggregate assets of
approximately $100.8 billion.

38
The Fund uses a “manager-of-managers” structure. Under this structure, PI is authorized to select (with approval of the
Fund’s independent directors) one or more sub-advisers to handle the actual day-to-day investment management of
each Portfolio. PI monitors each sub-adviser’s performance through quantitative and qualitative analysis, and
periodically reports to the Fund’s board of directors as to whether each sub-adviser’s agreement should be renewed,
terminated or modified. PI also is responsible for allocating assets among the sub-advisers if a Portfolio has more than
one sub-adviser. In those circumstances, the allocation for each sub-adviser can range from 0% to 100% of a
Portfolio’s assets, and PI can change the allocations without board or shareholder approval. The Fund will notify
shareholders of any new sub-adviser or any material changes to any existing sub-advisory agreement.

The following chart lists the total annualized investment advisory fees paid in 2001 with respect to each of the Fund’s
Portfolios.

Total advisory fees as %

Portfolio of average net assets
Conservative Balanced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.55
Diversified Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40
Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.45
Flexible Managed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.60
Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.75
Government Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40
High Yield Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.55
Jennison (formerly, Prudential Jennison) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.60
Money Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40
Natural Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.45
Small Capitalization Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40
Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40
Zero Coupon Bond 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.40

Investment Sub-Advisers

Each Portfolio has one or more sub-advisers providing the day-to-day investment management. PI pays each sub-
adviser out of the fee that PI receives from the Fund.

Jennison Associates LLC (Jennison) serves as the sole sub-adviser for the Global Portfolio, the Natural Resources
Portfolio and the Jennison Portfolio. Jennison serves as a sub-adviser for a portion of the assets of the Equity Portfolio
and the Value Portfolio. Jennison’s address is 466 Lexington Avenue, New York, New York 10017. Jennison is a wholly
owned subsidiary of Prudential Financial, Inc. As of December 31, 2001, Jennison had over $62 billion in assets under
management for institutional and mutual fund clients.

Prudential Investment Management, Inc. (PIM) serves as the sub-adviser for the Conservative Balanced Portfolio,
the Diversified Bond Portfolio, the Flexible Managed Portfolio, the Government Income Portfolio, the High Yield Bond
Portfolio, the Money Market Portfolio, the Small Capitalization Stock Portfolio, the Stock Index Portfolio and the Zero
Coupon Bond Portfolio 2005. PIM is a wholly owned subsidiary of Prudential Financial, Inc. PIM’s address is Gateway
Center Two, 100 Mulberry Street, Newark, New Jersey 07102.

Deutsche Asset Management, Inc. (DAMI) serves as subadviser for approximately 25% of the assets of the Value
Portfolio. DAMI is a wholly-owned subsidiary of Deutsche Bank AG. As of December 31, 2001 DAMI’s total assets
under management exceeded $96.1 billion. DAMI’s address is 280 Park Avenue, New York, New York 10017.

GE Asset Management, Incorporated (GEAM) serves as a sub-adviser to approximately 25% of the Equity Portfolio.
GEAM’s ultimate parent is General Electric Company. Its address is 3003 Summer Street, Stamford, Connecticut
06904. As of December 31, 2001, GEAM oversees in excess of $112.2 billion under management.

39
Salomon Brothers Asset Management Inc. (Salomon) serves as sub-adviser for a portion of the assets of the Equity
Portfolio. Salomon is part of the global asset management arm of Citigroup Inc., which was formed in 1998 as a result
of the merger of Travelers Group and Citicorp Inc. As of December 31, 2001, Salomon managed more than $30 billion
in total assets. Salomon’s address is 125Broad Street, New York, New York 10004.

Victory Capital Management Inc. (Victory) (formerly, Key Asset Management Inc.) serves as a sub-adviser for a
portion of the assets of the Value Portfolio. Victory is a wholly-owned subsidiary of KeyCorp, Inc. As of December 31,
2001, Victory’s total assets under management exceeded $72 billion. Victory’s address is 127 Public Square,
Cleveland, Ohio 44114.

Portfolio Managers

An Introductory Note About Prudential Investment Management’s Fixed Income Group

PIM’s Fixed Income Group, which provides portfolio management services to the Conservative Balanced, Diversified
Bond, Flexible Managed, Government Income, High Yield Bond, Money Market, and Zero Coupon Bond 2005
Portfolios, manages more than $135billion for Prudential’s retail investors, institutional investors, and policyholders.
Senior Managing Director James J. Sullivan heads the Group, which is organized into teams specializing in different
market sectors. Top-down, broad investment decisions are made by the Fixed Income Policy Committee, whereas
bottom-up security selection is made by the sector teams.

Prior to joining PIM in 1998, Mr. Sullivan was a Managing Director in Prudential’s Capital Management Group, where
he oversaw portfolio management and credit research for Prudential’s General Account and subsidiary fixed-income
portfolios. He has more than 18 years of experience in risk management, arbitrage trading and corporate bond
investing.

The Fixed Income Investment Policy Committee is comprised of key senior investment managers, including Fixed
Income’s Chief Investment Officer and the head of risk management. The Committee uses a top-down approach to
investment strategy, asset allocation and general risk management, identifying sectors in which to invest.

Conservative Balanced Portfolio and Flexible Managed Portfolio

These Portfolios are managed by a team of portfolio managers. M. Stumpp, Ph.D., Senior Managing Director of PIM,
has been the lead portfolio manager of the Portfolios since 1994 and is responsible for the overall asset allocation
decisions.

The Fixed Income segments are managed by the Fixed Income Group of PIM. This Group uses a bottom-up approach,
which focuses on individual securities, while staying within the guidelines of the Investment Policy Committee and the
Portfolios’ investment restrictions and policies. In addition, the Credit Research team of analysts supports the sector
teams using bottom-up fundamentals, as well as economic and industry trends. Other sector teams may contribute to
securities selection when appropriate.

The equity portion of the Conservative Balanced Portfolio is managed by M. Stumpp, John Moschberger, and Michael
Lenarcic. M. Stumpp’s background is discussed above. Mr. Lenarcic is a Managing Director within PIM’s Quantitative
Management team. Prior to joining the Quantitative Management team in 1985, Mr. Lenarcic was a Vice President at
Wilshire Associates, where he was head of the Asset Allocation Division. Mr. Lenarcic holds a B.A. degree from Kent
State University and A.M. and Ph.D. degrees in Business Economics from Harvard University. John Moschberger,
CFA, is a Vice President of Prudential Investments. Mr. Moschberger joined Prudential in 1980 and has been a portfolio
manager since 1986.

The equity portion of the Flexible Managed Portfolio is managed by M. Stumpp, and James Scott. The background of
M. Stumpp is discussed above. James Scott is a Senior Managing Director of PIM’s Quantitative Management Group.
Mr. Scott has managed balanced and equity portfolios for Prudential’s pension plans and several institutional clients
since 1987. Mr. Scott received a B.A. from Rice University and an M.S. and a Ph.D. from Carnegie Mellon University.

40
Government Income Portfolio and Zero Coupon Bond Portfolio 2005

The U.S. Liquidity Team of PIM, headed by Peter Cordrey, is primarily responsible for overseeing the day-to-day
management of the Portfolios. This Team uses a bottom-up approach, which focuses on individual securities, while
staying within the guidelines of the Investment Policy Committee and the Portfolios’ investment restrictions and policies.
In addition, the Credit Research team of analysts supports the sector teams using bottom-up fundamentals, as well as
economic and industry trends. Other sector teams may contribute to securities selection when appropriate.

U.S. Liquidity Team

Assets Under Management (as of December 31, 2001): $27 billion.

Team Leader: Peter Cordrey. General Investment Experience: 20 years.

Portfolio Managers: 7. Average General Investment Experience: 12 years, which includes team members with
significant mutual fund experience.

Sector: U.S. Treasuries, agencies and mortgages.

Investment Strategy: Focus is on high quality, liquidity and controlled risk.

Diversified Bond Portfolio

The Corporate Team of PIM, headed by Steven Kellner, is primarily responsible for overseeing the day-to-day
management of the Portfolio. This team uses a bottom-up approach, which focuses on individual securities, while
staying within the guidelines of the Investment Policy Committee and the Portfolios’ investment restrictions and policies.
In addition, the Credit Research team of analysts supports the sector teams using bottom-up fundamentals, as well as
economic and industry trends. Other sector teams may contribute to securities selection when appropriate.

Corporate Team

Assets Under Management (as of December 31, 2001): $42 billion.

Team Leader: Steven Kellner, CFA. General Investment Experience: 16 years.

Portfolio Managers: 7. Average General Investment Experience: 12 years, which includes team members with
significant mutual fund experience.

Sector: U.S. investment-grade corporate securities.

Investment Strategy: Focus is on identifying spread, credit quality and liquidity trends to capitalize on changing
opportunities in the market. Ultimately, they seek the highest expected return with the least risk.

Equity Portfolio

Jeffrey Siegel, Bradley Goldberg and David Kiefer are co-managers of the portion of the Portfolio assigned to Jennison.
Mr. Siegel has been an Executive Vice President of Jennison since June 1999. Previously he was at TIAA-CREF from
1988-1999, where he held positions as a portfolio manager and analyst. Prior to joining TIAA-CREF, Mr. Siegel was an
analyst for Equitable Capital Management and held positions at Chase Manhattan Bank and First Fidelity Bank. Mr.
Siegel earned a B.A. from Rutgers University. Mr. Goldberg is an Executive Vice President of Jennison, where he also
serves as Chairman of the Asset Allocation Committee. Prior to joining Jennison in 1974 he served as Vice President
and Group Head in the Investment Research Division of Bankers Trust Company. He earned a B.S. from the University
of Illinois and an M.B.A. from New York University. Mr. Goldberg holds a Chartered Financial Analyst (C.F.A.)
designation. Mr. Kiefer has been a Senior Vice President of Jennison since September 2000. Previously, he was a

41
Managing Director of Prudential Global Asset Management and has been with Prudential since 1986. Mr. Kiefer earned
a B.S. from Princeton University and an M.B.A. from Harvard Business School. He holds a Chartered Financial Analyst
(C.F.A.) designation.

Richard Sanderson, Senior Vice President and Director of Investment Research, Domestic Equities, for GEAM,
manages the portion of the Equity Portfolio assigned to GEAM. Mr. Sanderson, a Chartered Financial Analyst, has 29
years of asset management experience and has been employed with GEAM for over 5 years, and holds B.A. and
M.B.A. degrees from the University of Michigan.

Michael Kagan, a Director of Salomon, manages the portion of the Equity Portfolio assigned to Salomon. Mr. Kagan
has over 15 years of asset management experience, including experience as an analyst covering the consumer
products, aerospace, chemicals, and housing industries. Mr. Kagan received his B.A. from Harvard College and
attended the MIT Sloan School of Management.

Global Portfolio

Daniel Duane and Michelle Picker manage this Portfolio. Mr. Duane has been an Executive Vice President of Jennison
since October 2000 and was previously a Managing Director of Prudential Global Asset Management. He has been
managing the Portfolio since 1991. Prior to joining Prudential, he was with First Investors Asset Management where he
was in charge of all global equity investments. He earned a B.A. from Boston College, a Ph.D. from Yale University and
an M.B.A. from New York University. He holds a Chartered Financial Analyst (C.F.A.) designation. Michelle Picker has
been a Vice President of Jennison since October 2000 and was previously a Vice President of Prudential Investment
Management, Inc. Ms. Picker joined Prudential in 1992 and has co-managed the Portfolio since October 1997.
Ms. Picker earned a B.A. from the University of Pennsylvania and an M.B.A. from New York University. She holds a
Chartered Financial Analyst (C.F.A.) designation.

High Yield Bond Portfolio

The High Yield Team of PIM, headed by Paul Appleby, is primarily responsible for overseeing the day-to-day
management of the fixed income portfolio of the Portfolio. This Team uses a bottom-up approach, which focuses on
individual securities, while staying within the guidelines of the Investment Policy Committee and the Portfolio’s
investment restrictions and policies. In addition, the Credit Research team of analysts supports the sector teams using
bottom-up fundamentals, as well as economic and industry trends. Other sector teams may contribute to securities
selection when appropriate.

High Yield Team

Assets Under Management (as of December 31, 2001): $8 billion.

Team Leader: Paul Appleby. General Investment Experience: 15 years.

Portfolio Managers: 6. Average General Investment Experience: 18 years, which includes team members with
significant mutual fund experience.

Sector: Below-investment-grade corporate securities.

Investment Strategy: The High Yield Team of PIM, headed by Paul Appleby, is primarily responsible for
overseeing the day-to-day management of the fixed income portion of the Portfolio assigned to Prudential
Investment Management. Focus is generally on bonds with high total return potential, given existing risk
parameters. They also seek securities with high current income, as appropriate. The Team uses a relative value
approach while staying within the guidelines of the Investment Policy Committee and the Portfolio’s investment
restrictions and policies. In addition, the Credit Research team of analysts supports the sector teams using bottom-
up fundamentals, as well as economic and industry trends. Other sector trends may contribute to securities
selection when appropriate.

42
Jennison Portfolio

This Portfolio has been managed by Spiros Segalas, Michael Del Balso and Kathleen McCarragher of Jennison since
1999. Mr. Segalas is a founding member and a Director, President and Chief Investment Officer of Jennison. He has
been in the investment business for over 41 years. Mr. Del Balso, a Director and Executive Vice President of Jennison,
is also Jennison’s Director of Equity Research. He has been part of the Jennison team since 1972 when he joined the
firm from White, Weld & Company. Mr. Del Balso is a member of the New York Society of Security Analysts. Ms.
McCarragher, Director and Executive Vice President of Jennison, is also Jennison’s Domestic Equity Investment
Strategist. Prior to joining Jennison in 1998, she was a Managing Director and Director of Large Cap Growth Equities at
Weiss, Peck & Greer L.L.C. Prior to 1992, Ms. McCarragher served as an analyst, portfolio manager and member of
the Investment Committee for State Street Research & Management Company.

Money Market Portfolio

The Money Market Team of PIM, headed by Joseph Tully, is primarily responsible for overseeing the day-to-day
management of the Portfolio. This team uses a bottom-up approach, which focuses on individual securities, while
staying within the guidelines of the Investment Policy Committee and the Portfolio’s investment restrictions and policies.

Money Market Team

Assets Under Management (as of December 31, 2001): $52 billion.

Team Leader: Joseph Tully. General Investment Experience: 18 years.

Portfolio Managers: 8. Average General Investment Experience: 12 years, which includes team members with
significant mutual fund experience.

Sector: High-quality short-term debt securities, including both taxable and tax-exempt instruments.

Investment Strategy: Focus is on safety of principal, liquidity and controlled risk.

Natural Resources Portfolio

Leigh Goehring and Mark DeFranco manage this Portfolio. Mr. Goehring, a Vice President of Jennison since
September 2000, has been managing this Portfolio since 1991. Prior to joining Jennison, he was a Vice President of
Prudential Investment Management, Inc. Prior to joining Prudential in 1986, Mr. Goehring managed general equity
accounts in the Trust Department at The Bank of New York. He earned a B.A. from Hamilton College. Mr. DeFranco, a
Vice President of Jennison, joined Jennison in 1998 with over 12 years of experience in the investment industry. Prior
to joining Jennison he was a precious metals equity analyst and portfolio manager at Pomboy Capital and an equity
analyst at Comstock Partners. Mr. DeFranco received a B.A. from Bates College and an M.B.A. from Columbia
University Graduate School of Business.

Small Capitalization Stock Portfolio

Wai Chiang, Vice President of PIM, has managed this Portfolio since its inception in 1995. Mr. Chiang has been
employed by Prudential as a portfolio manager since 1986.

Stock Index Portfolio

John Moschberger, CFA, Vice President of PIM, has managed this Portfolio since 1990. Mr. Moschberger joined
Prudential in 1980 and has been a portfolio manager since 1986.

Value Portfolio

Tom Kolefas and Bradley Goldberg are the co-portfolio managers of the portion of the Portfolio assigned to Jennison.
Mr. Kolefas has been a Senior Vice President of Jennison since September 2000. Previously, he was a Managing

43
Director and Senior Portfolio Manager of Prudential Global Asset Management. He joined Prudential in May 2000 from
Loomis Sayles and Company, L.P., where he headed the Large/Mid-Cap Value Team. Prior to 1996, Mr. Kolefas was
employed by Mackay Shields Financial as a portfolio manager for five years. Mr. Kolefas earned a B.S. from the
Cooper Union School of Engineering and an M.B.A. from New York University and holds the Chartered Financial
Analyst (C.F.A.) designation. Mr. Goldberg is an Executive Vice President of Jennison, and also serves as Chairman of
the Asset Allocation Committee. He joined Jennison in 1974. Prior to joining Jennison, he served as Vice President and
Group Head in the Investment Research Division of Bankers Trust Company. He earned a B.S. from the University of
Illinois and an M.B.A from the New York University. Mr. Goldberg holds the Chartered Financial Analyst (C.F.A.)
designation.

James Giblin, a Chartered Financial Analyst, manages the portion of the Portfolio assigned to DAMI. Mr. Giblin joined
DAMI in 1995with 22 years of investment experience, including 15years as a portfolio manager for Cigna Equity
Advisors. He received his B.S. from Pennsylvania State University and an M.B.A. from the Wharton School, University
of Pennsylvania.

Neil A. Kilbane manages the portion of the Portfolio assigned to Victory. Mr. Kilbane is a Senior Portfolio and Managing
Director for Victory, and is a Chartered Financial Analyst. Mr. Kilbane began his investment career with Victory in 1995,
and prior to that was employed by Duff & Phelps Investment Management Company and National City Bank. Mr.
Kilbane holds a B.S. from Cleveland State University, an M.S. from Kansas State University, and an M.B.A. from Tulsa
University.

HOW TO BUY AND SELL SHARES OF THE FUND

The Fund offers two classes of shares in each Portfolio — Class I and Class II. Each Class participates in the same
investments within a given Portfolio, but the Classes differ as far as their charges. Class I shares are sold only to
separate accounts of Prudential Insurance Company of America and its affiliates as investment options under certain
Contracts. Class II is offered only to separate accounts of non-Prudential insurance companies as investment options
under certain of their Contracts. Please refer to the accompanying Contract prospectus to see which Portfolios are
available through your Contract.

The Fund sells its shares to separate accounts issuing variable annuity contracts and variable life insurance policies.
To the extent dictated by its agreement with a separate account, the Fund will cooperate with the separate account in
monitoring for transactions that are indicative of market timing. In addition, to the extent permitted by applicable laws and
agreements, the Fund may cease selling its shares to a separate account to prevent market timing transactions.

The way to invest in the Portfolios is through certain variable life insurance and variable annuity contracts. Together
with this prospectus, you should have received a prospectus for such a Contract. You should refer to that prospectus
for further information on investing in the Portfolios.

Both Class I and Class II shares of a Portfolio are sold without any sales charge at the net asset value of the Portfolio.
Class II shares, however, are subject to an annual distribution or “12b-1” fee of 0.25% and an administration fee of
0.15% of the average daily net assets of Class II. Class I shares do not have a distribution or administration fee.

Shares are redeemed for cash within seven days of receipt of a proper notice of redemption or sooner if required by
law. There is no redemption charge. We may suspend the right to redeem shares or receive payment when the New
York Stock Exchange is closed (other than weekends or holidays), when trading on the New York Stock Exchange is
restricted, or as permitted by the SEC.

Net Asset Value

Any purchase or sale of Portfolio shares is made at the net asset value, or NAV, of such shares. The price at which a
purchase or redemption is made is based on the next calculation of the NAV after the order is received in good order.
The NAV of each share class of each Portfolio is determined on each day the New York Stock Exchange is open for
trading as of the close of the exchange’s regular trading session (which is generally 4:00 p.m. New York time). The
NYSE is closed on most national holidays and Good Friday. The Fund does not price, and shareholders will not be able

44
to purchase or redeem, the Fund’s shares on days when the NYSE is closed but the primary markets for the Fund’s
foreign securities are open, even though the value of these securities may have changed. Conversely, the Fund will
ordinarily price its shares, and shareholders may purchase and redeem shares, on days that the NYSE is open but
foreign securities markets are closed.

The NAV for each of the Portfolios other than the Money Market Portfolio is determined by a simple calculation. It’s the
total value of a Portfolio (assets minus liabilities) divided by the total number of shares outstanding. The NAV for the
Money Market Portfolio will ordinarily remain at $10 per share. (The price of each share remains the same but you will
have more shares when dividends are declared.)

To determine a Portfolio’s NAV, its holdings are valued as follows:

Equity Securities are generally valued at the last sale price on an exchange or NASDAQ, or if there is not a sale on
that day, at the mean between the most recent bid and asked prices on that day. If there is no asked price, the security
will be valued at the bid price. Equity securities that are not sold on an exchange or NASDAQ are generally valued by
an independent pricing agent or principal market maker.

A Portfolio may own securities that are primarily listed on foreign exchanges that trade on weekends or other days
when the Portfolios do not price their shares. Therefore, the value of a Portfolio’s assets may change on days when
shareholders cannot purchase or redeem Portfolio shares.

All Short-term Debt Securities held by the Money Market Portfolio are valued at amortized cost. Short-term debt
securities with remaining maturities of 12 months or less held by the Conservative Balanced and Flexible Managed
Portfolios are valued on an amortized cost basis. The amortized cost valuation method is widely used by mutual funds.
It means that the security is valued initially at its purchase price and then decreases in value by equal amounts each
day until the security matures. It almost always results in a value that is extremely close to the actual market value. The
Fund’s Board of Directors has established procedures to monitor whether any material deviation between valuation and
market value occurs and if so, will promptly consider what action, if any, should be taken to prevent unfair results to
Contract owners.

For each Portfolio other than the Money Market Portfolio, and except as discussed above for the Conservative
Balanced and Flexible Managed Portfolios, short-term debt securities, including bonds, notes, debentures and other
debt securities, and money market instruments such as certificates of deposit, commercial paper, bankers’
acceptances and obligations of domestic and foreign banks, with remaining maturities of more than 60 days, for which
market quotations are readily available, are valued by an independent pricing agent or principal market maker (if
available, otherwise a primary market dealer).

Short-term Debt Securities with remaining maturities of 60 days or less are valued at cost with interest accrued or
discount amortized to the date of maturity, unless such valuation, in the judgment of Prudential or a sub-adviser, does
not represent fair value.

Convertible debt securities that are traded in the over-the-counter market, including listed convertible debt securities
for which the primary market is believed by PI or a sub-adviser to be over-the-counter, are valued at the mean between
the last bid and asked prices provided by a principal market maker (if available, otherwise a primary market dealer).

Other debt securities — those that are not valued on an amortized cost basis — are valued using an independent
pricing service.

Options on stock and stock indexes that are traded on a national securities exchange are valued at the last sale
price on such exchange on the day of valuation or, if there was no such sale on such day, at the mean between the
most recently quoted bid and asked prices on such exchange.

Futures contracts and options on futures contracts are valued at the last sale price at the close of the commodities
exchange or board of trade on which they are traded. If there has been no sale that day, the securities will be valued at
the mean between the most recently quoted bid and asked prices on that exchange or board of trade.

45
Forward currency exchange contracts are valued at the cost of covering or offsetting such contracts calculated on
the day of valuation. Securities which are valued in accordance herewith in a currency other than U.S. dollars shall be
converted to U.S. dollar equivalents at a rate obtained from a recognized bank, dealer or independent service on the
day of valuation.
Over-the-counter (OTC) options are valued at the mean between bid and asked prices provided by a dealer (which
may be the counterparty). A sub-adviser will monitor the market prices of the securities underlying the OTC options
with a view to determining the necessity of obtaining additional bid and ask quotations from other dealers to assess the
validity of the prices received from the primary pricing dealer.
Securities for which no market quotations are available will be valued at fair value by PI under the direction of the
Fund’s Board of Directors. The Fund also may use fair value pricing if it determines that a market quotation is not
reliable based among other things, on events that occur after the quotation is derived or after the close of the primary
market on which the security is traded, but before the time that the Fund’s NAV is determined. This use of fair value
pricing most commonly occurs with securities that are primarily traded outside the U.S., but also may occur with U.S.-
traded securities. The fair value of a portfolio security that the Fund uses to determine its NAV may differ from the
security’s quoted or published price. For purposes of computing the Fund’s NAV, we will value the Fund’s futures
contracts 15 minutes after the close of regular trading on the New York Stock Exchange (NYSE). Except when we fair
value securities, we normally value each foreign security held by the Fund as of the close of the security’s primary
market.

Distributor
Prudential Investment Management Services LLC (PIMS) distributes the Fund’s shares under a Distribution Agreement
with the Fund. PIMS’ principal business address is Gateway Center Three, 100 Mulberry Street, Newark, New Jersey
07102-3777. The Fund has adopted a distribution plan under Rule 12b-1 of the Investment Company Act of 1940
covering Class II shares. Under that plan, Class II of each Portfolio pays to PIMS a distribution or “12b-1” fee at the
annual rate of 0.25% of the average daily net assets of Class II. This fee pays for distribution services for Class II
shares. Because these fees are paid out of the Portfolio’s assets on an on-going basis, over time these fees will
increase the cost of your investment in Class II shares and may cost you more than paying other types of sales
charges. These 12b-1 fees do not apply to Class I.

OTHER INFORMATION
Federal Income Taxes
If you own or are considering purchasing a variable contract, you should consult the prospectus for the variable
contract for tax information about that variable contract. You should also consult with a qualified tax adviser for
information and advice.
The SAI provides information about certain tax laws applicable to the Fund.

Monitoring For Possible Conflicts

The Fund sells its shares to fund variable life insurance contracts and variable annuity contracts and is authorized to
offer its shares to qualified retirement plans. Because of differences in tax treatment and other considerations, it is
possible that the interest of variable life insurance contract owners, variable annuity contract owners and participants in
qualified retirement plans could conflict. The Fund will monitor the situation and in the event that a material conflict did
develop, the Fund would determine what action, if any, to take in response.

Financial Highlights
The financial highlights which follow will help you evaluate the financial performance of each Portfolio available under
your Contract. The total return in each chart represents the rate that a shareholder earned on an investment in that
share class of the Portfolio, assuming reinvestment of all dividends and other distributions. The charts do not reflect
any charges under any variable contract. The information is for Class I shares for the periods indicated, unless
otherwise indicated.
The information has been audited by PricewaterhouseCoopers LLP, whose unqualified report, along with the
financial statements, appears in the annual report, which is available upon request.

46
Financial Highlights
Conservative Balanced Portfolio
Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ............................................. $ 14.63 $ 15.36 $ 15.08 $ 14.97 $ 15.52
Income From Investment Operations:
Net investment income ....................................................... 0.44 0.59 0.62 0.66 0.76
Net realized and unrealized gains (losses) on investments ......................... (0.75) (0.65) 0.37 1.05 1.26
Total from investment operations .......................................... (0.31) (0.06) 0.99 1.71 2.02
Less Distributions:
Dividends from net investment income .......................................... (0.48) (0.56) (0.62) (0.66) (0.76)
Distributions from net realized gains ............................................ (0.15) (0.11) (0.06) (0.94) (1.81)
Distributions in excess of net realized gains ..................................... — — (0.03) — —
Total distributions ....................................................... (0.63) (0.67) (0.71) (1.60) (2.57)
Net Asset Value, end of year .................................................. $ 13.69 $ 14.63 $ 15.36 $ 15.08 $ 14.97
Total Investment Return:(a) ................................................. (2.02)% (0.48)% 6.69% 11.74% 13.45%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................................ Ratios to average net $3,259.7 $3,714.3 $4,387.1 $4,796.0 $4,744.2
assets:
Expenses ................................................................ 0.58% 0.60% 0.57% 0.57% 0.56%
Net investment income ..................................................... 3.05% 3.79% 4.02% 4.19% 4.48%
Portfolio turnover rate ........................................................ 239% 85% 109% 167% 295%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

Diversified Bond Portfolio

Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11.28 $ 10.95 $ 11.06 $ 11.02 $11.07
Income From Investment Operations:
Net investment income ....................................................... 0.67 0.77 0.67 0.69 0.80
Net realized and unrealized gains (losses) on investments ......................... 0.12 0.26 (0.75) 0.08 0.11
Total from investment operations .......................................... 0.79 1.03 (0.08) 0.77 0.91
Less Distributions:
Dividends from net investment income .......................................... (0.71) (0.70) — (0.69) (0.83)
Distributions from net realized gains ............................................ — —(b) (0.03) (0.04) (0.13)
Total distributions ....................................................... (0.71) (0.70) (0.03) (0.73) (0.96)
Net Asset Value, end of year .................................................. $ 11.36 $ 11.28 $ 10.95 $ 11.06 $11.02
Total Investment Return(a) .................................................. 6.98% 9.72% (0.74)% 7.15% 8.57%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................................ $1,400.7 $1,269.8 $1,253.8 $1,122.6 $816.7
Ratios to average net assets:
Expenses ................................................................ 0.44% 0.45% 0.43% 0.42% 0.43%
Net investment income ..................................................... 6.35% 6.83% 6.25% 6.40% 7.18%
Portfolio turnover rate ........................................................ 257% 139% 171% 199% 224%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported includes
reinvestment of dividends and distributions.

(b) Less than $0.005per share.

F1
Financial Highlights
Equity Portfolio
Class I Class II
May 3, 1999(c)
Year Ended Year Ended through
December 31, December 31, December 31,
2001 2000 1999 1998 1997 2001 2000 1999
Per Share Operating Performance:
Net Asset Value, beginning of period ........... $ 24.50 $ 28.90 $ 29.64 $ 31.07 $ 26.96 $24.51 $28.92 $32.79
Income from Investment Operations:
Net investment income ....................... 0.18 0.51 0.54 0.60 0.69 0.09 0.39 0.28
Net realized and unrealized gains (losses) on
investments .............................. (2.83) 0.26 3.02 2.21 5.88 (2.83) 0.26 (0.60)
Total from investment operations ........... (2.65) 0.77 3.56 2.81 6.57 (2.74) 0.65 (0.32)
Less Distributions:
Dividends from net investment income .......... (0.18) (0.51) (0.53) (0.60) (0.70) (0.10) (0.40) (0.34)
Distributions in excess of net investment
income .................................. — (0.02) — — — — (0.02) —
Distributions from net realized gains ............ (1.18) (4.64) (3.77) (3.64) (1.76) (1.18) (4.64) (3.21)
Total distributions ....................... (1.36) (5.17) (4.30) (4.24) (2.46) (1.28) (5.06) (3.55)
Net Asset Value, end of period ................ $ 20.49 $ 24.50 $ 28.90 $ 29.64 $ 31.07 $20.49 $24.51 $28.92
Total Investment Return(a) . . . . . . . . . . . . . . . . . . (11.18)% 3.28% 12.49% 9.34% 24.66% (11.57)% 2.83% (0.68)%
Ratios/Supplemental Data:
Net assets, end of period (in millions) . . . . . . . . . . . $4,615.9 $5,652.7 $6,235.0 $6,247.0 $6,024.0 $ 1.1 $ 1.8 $ 0.3
Ratios to average net assets:
Expenses ................................ 0.49% 0.49% 0.47% 0.47% 0.46% 0.89% 0.91% 0.87%(b)
Net investment income ..................... 0.84% 1.75% 1.72% 1.81% 2.27% 0.45% 1.26% 1.33%(b)
Portfolio turnover rate ........................ 153% 78% 9% 25% 13% 153% 78% 9%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and
includes reinvestment of dividends and distributions. Total investment returns for less than a full year are not annualized.

(b) Annualized.

(c) Commencement of offering of Class II shares.

Flexible Managed Portfolio

Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16.53 $ 17.64 $ 16.56 $ 17.28 $ 17.79
Income From Investment Operations:
Net investment income ........................................ 0.42 0.61 0.58 0.58 0.59
Net realized and unrealized gains (losses) on investments .......... (1.35) (0.86) 0.69 1.14 2.52
Total from investment operations ............................ (0.93) (0.25) 1.27 1.72 3.11
Less Distributions:
Dividends from net investment income ........................... (0.58) (0.62) — (0.59) (0.58)
Distributions from net realized gains ............................. (0.23) (0.24) (0.19) (1.85) (3.04)
Total distributions ........................................ (0.81) (0.86) (0.19) (2.44) (3.62)
Net Asset Value, end of year ................................... $ 14.79 $ 16.53 $ 17.64 $ 16.56 $ 17.28
Total Investment Return(a) ................................... (5.68)% (1.44)% 7.78% 10.24% 17.96%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................. $3,896.6 $4,463.8 $5,125.3 $5,410.0 $5,490.1
Ratios to average net assets:
Expenses ................................................. 0.64% 0.64% 0.62% 0.61% 0.62%
Net investment income ...................................... 2.61% 3.22% 3.20% 3.21% 3.02%
Portfolio turnover rate ......................................... 236% 132% 76% 138% 227%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

F2
Financial Highlights
Global Portfolio
Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ............................... $ 23.61 $ 30.98 $ 21.16 $17.92 $17.85
Income from Investment Operations:
Net investment income ......................................... 0.09 0.07 0.06 0.07 0.09
Net realized and unrealized gains (losses) on investments ........... (3.58) (5.30) 10.04 4.38 1.11
Total from investment operations ............................ (3.49) (5.23) 10.10 4.45 1.20
Less Distributions:
Dividends from net investment income ............................ (0.06) (0.07) — (0.16) (0.13)
Distributions in excess of net investment income ................... — (0.13) (0.10) (0.12) (0.10)
Distributions from net realized gains .............................. (4.77) (1.94) (0.18) (0.93) (0.90)
Total distributions ......................................... (4.83) (2.14) (0.28) (1.21) (1.13)
Net Asset Value, end of year .................................... $ 15.29 $ 23.61 $ 30.98 $21.16 $17.92
Total Investment Return(a) .................................... (17.64)% (17.68)% 48.27% 25.08% 6.98%
Ratios/Supplemental Data:
Net assets, end of year (in millions) .............................. $ 885.0 $1,182.1 $1,298.3 $844.5 $638.4
Ratios to average net assets: ...................................
Expenses .................................................. 0.84% 0.85% 0.84% 0.86% 0.85%
Net investment income ....................................... 0.58% 0.25% 0.21% 0.29% 0.47%
Portfolio turnover rate .......................................... 67% 95% 76% 73% 70%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

Government Income Portfolio

Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ............................... $12.02 $11.55 $11.87 $11.52 $11.22
Income From Investment Operations:
Net investment income ......................................... 0.65 0.89 0.76 0.67 0.75
Net realized and unrealized gains (losses) on investments ............ 0.31 0.52 (1.08) 0.36 0.30
Total from investment operations ............................. 0.96 1.41 (0.32) 1.03 1.05
Less Distributions:
Dividends from net investment income ............................ (0.72) (0.91) — (0.68) (0.75)
Distribution from net realized gains ............................... — (0.03) — — —
Total distributions .......................................... (0.72) (0.94) — (0.68) (0.75)
Net Asset Value, end of year .................................... $12.26 $12.02 $11.55 $11.87 $11.52

Total Investment Return(a) .................................... 8.06% 12.78% (2.70)% 9.09% 9.67%

Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................... $311.0 $291.5 $335.5 $443.2 $429.6
Ratios to average net assets: ....................................
Expenses .................................................. 0.47% 0.47% 0.44% 0.43% 0.44%
Net investment income ....................................... 5.53% 6.03% 5.72% 5.71% 6.40%
Portfolio turnover rate .......................................... 361% 184% 106% 109% 88%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

F3
Financial Highlights
High Yield Bond Portfolio
Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ............................... $ 6.14 $ 7.52 $ 7.21 $ 8.14 $ 7.87
Income From Investment Operations:
Net investment income ......................................... 0.58 0.74 0.79 0.77 0.78
Net realized and unrealized gains (losses) on investments ............ (0.62) (1.30) (0.46) (0.94) 0.26
Total from Investment operations ............................. (0.04) (0.56) 0.33 (0.17) 1.04
Less Distributions:
Dividends from net investment income ............................ (0.70) (0.82) (0.02) (0.76) (0.77)
Net Asset Value, end of year .................................... $ 5.40 $ 6.14 $ 7.52 $ 7.21 $ 8.14

Total Investment Return(a) .................................... (0.44)% (7.91)% 4.61% (2.36)% 13.78%

Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................... $655.8 $661.3 $802.2 $789.3 $568.7
Ratios to average net assets:
Expenses .................................................. 0.60% 0.60% 0.60% 0.58% 0.57%
Net investment income ....................................... 10.93% 10.47% 10.48% 10.31% 9.78%
Portfolio turnover rate .......................................... 84% 76% 58% 63% 106%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

Jennison Portfolio (formerly, Prudential Jennison Portfolio)

Class I Class II
Year Ended Year Ended February 10, 2000(a)
December 31, 2001
December 31, through
2001 2000 1999 1998 1997 2001 December 31, 2000
Per Share Operating Performance:
Net Asset Value, beginning of period . . . . . . . . . . . $ 22.97 $ 32.39 $ 23.91 $ 17.73 $14.32 $22.88 $34.25
Income From Investment Operations:
Net investment income (loss) .................. 0.04 0.01 0.05 0.04 0.04 0.01 (0.03)
Net realized and unrealized gains (losses) on
investments .............................. (4.22) (5.61) 9.88 6.56 4.48 (4.25) (7.54)
Total from investment operations ........... (4.18) (5.60) 9.93 6.60 4.52 (4.24) (7.57)
Less Distributions:
Dividends from net investment income .......... (0.03) —(d) (0.05) (0.04) (0.04) —(d) —(d)
Distributions from net realized gains ............ (0.19) (3.82) (1.40) (0.38) (1.07) (0.19) (3.80)
Total distributions ........................ (0.22) (3.82) (1.45) (0.42) (1.11) (0.19) (3.80)
Net Asset Value, end of period ................. $ 18.57 $ 22.97 $ 32.39 $ 23.91 $17.73 $18.45 $22.88
Total Investment Return(b) . . . . . . . . . . . . . . . . . . (18.25)% (17.38)% 41.76% 37.46% 31.71% (18.60)% (22.19)%
Ratios/Supplemental Data:
Net assets, end of period (in millions) . . . . . . . . . . . $2,186.9 $2,892.7 $2,770.7 $1,198.7 $495.9 $ 59.6 $ 13.3
Ratios to average net assets:
Expenses ................................ 0.64% 0.64% 0.63% 0.63% 0.64% 1.04% 1.04%(c)
Net investment income (loss) ................ 0.18% 0.02% 0.17% 0.20% 0.25% (0.19)% (0.39)%(c)
Portfolio turnover rate ........................ 86% 89% 58% 54% 60% 86% 89%(e)

(a) Commencement of offering of Class II shares.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each period reported and
includes reinvestment of dividends and distributions. Total investment returns for less than a full year are not annualized.

(c) Annualized.

(d) Less than $0.01 per share.

(e) Not annualized.

F4
Financial Highlights
Money Market Portfolio
Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ............................. $ 10.00 $ 10.00 $ 10.00 $10.00 $10.00
Income From Investment Operations:
Net investment income and realized and unrealized gains .......... 0.41 0.60 0.49 0.52 0.54
Dividend and distributions .................................... (0.41) (0.60) (0.49) (0.52) (0.54)
Net Asset Value, end of year .................................. $ 10.00 $ 10.00 $ 10.00 $10.00 $10.00
Total Investment Return(a) .................................. 4.22% 6.20% 4.97% 5.39% 5.41%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................ $1,501.9 $1,238.2 $1,335.5 $920.2 $657.5
Ratios to average net assets:
Expenses ................................................ 0.43% 0.44% 0.42% 0.41% 0.43%
Net investment income ..................................... 3.86% 6.03% 4.90% 5.20% 5.28%

(a) Total investment return is calculated assuming a purchase on the first day and a sale on the last day of each year reported and includes
reinvestment of dividends and distributions.

Natural Resources Portfolio

Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ................................ $ 23.59 $17.38 $11.98 $ 15.24 $ 19.77
Income From Investment Operations:
Net investment income .......................................... 0.43 0.13 0.10 0.09 0.12
Net realized and unrealized gains (losses) on investments ............ (2.89) 6.36 5.40 (2.48) (2.43)
Total from investment operations ............................. (2.46) 6.49 5.50 (2.39) (2.31)
Less Distributions:
Dividends from net investment income ............................. (0.55) (0.16) (0.10) (0.11) (0.10)
Distributions in excess of net investment income .................... — (0.09) — — —
Distributions from net realized gains ............................... (1.47) (0.03) — (0.75) (2.12)
Tax return of capital distributions ................................. — — — (0.01) —
Total distributions .......................................... (2.02) (0.28) (0.10) (0.87) (2.22)
Net Asset Value, end of year ..................................... $ 19.11 $23.59 $17.38 $ 11.98 $ 15.24
Total Investment Return(a) ..................................... (10.08)% 37.66% 45.99% (17.10)% (11.59)%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ............................... $ 336.1 $393.2 $289.5 $ 236.9 $ 358.0
Ratios to average net assets:
Expenses ................................................... 0.52% 0.58% 0.57% 0.61% 0.54%
Net investment income ........................................ 1.94% 0.67% 0.70% 0.63% 0.60%
Portfolio turnover rate ........................................... 23% 30% 26% 12% 32%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

F5
Financial Highlights
Small Capitalization Stock Portfolio
Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year .................................... $17.11 $16.25 $14.71 $15.93 $13.79
Income From Investment Operations:
Net investment income .............................................. 0.06 0.07 0.10 0.09 0.10
Net realized and unrealized gains (losses) on investments ................ 0.67 1.81 1.71 (0.25) 3.32
Total from investment operations .................................. 0.73 1.88 1.81 (0.16) 3.42
Less Distributions:
Dividends from net investment income ................................. (0.08) (0.08) — (0.09) (0.10)
Distributions from net realized gains ................................... (2.28) (0.94) (0.27) (0.97) (1.18)
Total distributions .............................................. (2.36) (1.02) (0.27) (1.06) (1.28)
Net Asset Value, end of year ......................................... $15.48 $17.11 $16.25 $14.71 $15.93

Total Investment Return(a) ......................................... 5.53% 12.81% 12.68% (0.76)% 25.17%

Ratios/Supplemental Data:
Net assets, end of year (in millions) ................................... $611.1 $568.3 $437.5 $360.4 $290.3
Ratios to average net assets:
Expenses ....................................................... 0.48% 0.48% 0.45% 0.47% 0.50%
Net investment income ............................................ 0.52% 0.59% 0.70% 0.57% 0.69%
Portfolio turnover rate ............................................... 23% 29% 31% 26% 31%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

Stock Index Portfolio

Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year ........................................ $ 38.66 $ 44.45 $ 37.74 $ 30.22 $ 23.74
Income from Investment Operations:
Net investment income .................................................. 0.36 0.36 0.44 0.42 0.43
Net realized and unrealized gains (losses) on investments .................... (5.05) (4.37) 7.23 8.11 7.34
Total from investment operations ...................................... (4.69) (4.01) 7.67 8.53 7.77
Less Distributions:
Dividends from net investment income ..................................... (0.35) (0.37) (0.43) (0.42) (0.42)
Distributions from net realized gains ....................................... (1.98) (1.41) (0.53) (0.59) (0.87)
Total distributions .................................................. (2.33) (1.78) (0.96) (1.01) (1.29)
Net Asset Value, end of year ............................................. $ 31.64 $ 38.66 $ 44.45 $ 37.74 $ 30.22
Total Investment Return(a) ............................................. (12.05)% (9.03)% 20.54% 28.42% 32.83%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ....................................... $3,394.1 $4,186.0 $4,655.0 $3,548.1 $2,448.2
Ratios to average net assets:
Expenses ........................................................... 0.39% 0.39% 0.39% 0.37% 0.37%
Net investment income ................................................ 1.02% 0.83% 1.09% 1.25% 1.55%
Portfolio turnover rate ................................................... 3% 7% 2% 3% 5%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

F6
Financial Highlights
Value Portfolio
Class I Class II
May 14, 2001(a)
Year Ended through
December 31, December 31,
2001 2000 1999 1998 1997 2001
Per Share Operating Performance:
Net Asset Value, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20.46 $ 19.52 $ 20.03 $ 22.39 $ 18.51 $19.79
Income From Investment Operations:
Net investment income ......................................... 0.25 0.46 0.51 0.56 0.61 0.12
Net realized and unrealized gains (losses) on investments ........... (0.69) 2.45 1.89 (1.03) 6.06 (1.01)
Total from investment operations ............................ (0.44) 2.91 2.40 (0.47) 6.67 (0.89)
Less Distributions:
Dividends from net investment income ............................ (0.30) (0.44) (0.50) (0.59) (0.57) (0.14)
Distributions from net realized gains .............................. (1.81) (1.53) (2.41) (1.30) (2.22) (0.85)
Total distributions ......................................... (2.11) (1.97) (2.91) (1.89) (2.79) (0.99)
Net Asset Value, end of period .................................. $ 17.91 $ 20.46 $ 19.52 $ 20.03 $ 22.39 $17.91
Total Investment Return(b) .................................... (2.08)% 15.59% 2.52% (2.38)% 36.61% (4.34)%
Ratios/Supplemental Data:
Net assets, end of period (in millions) ............................. Ratios to $1,801.4 $1,975.3 $2,024.0 $2,142.3 $2,029.8 $ 1.1
average net assets:
Expenses .................................................. 0.44% 0.45% 0.42% 0.42% 0.41% 0.84%(c)
Net investment income ....................................... 1.32% 2.31% 2.34% 2.54% 2.90% 0.94%(c)
Portfolio turnover rate .......................................... 175% 85% 16% 20% 38% 175%

(a) Commencement of offering of Class II shares.

(b) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions. Total investment returns for periods of less than one full year are not annualized.

(c) Annualized.

Zero Coupon Bond Portfolio 2005

Year Ended
December 31,
2001 2000 1999 1998 1997
Per Share Operating Performance:
Net Asset Value, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.38 $12.68 $13.44 $12.60 $12.25
Income From Investment Operations:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.65 0.65 0.67 0.66 0.68
Net realized and unrealized gains (losses) on investments . . . . . . . . . . . . . . 0.42 1.02 (1.43) 0.87 0.66
Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.07 1.67 (0.76) 1.53 1.34
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.64) (0.67) — (0.67) (0.71)
Distributions from net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.04) (0.30) — (0.02) (0.28)
Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.68) (0.97) — (0.69) (0.99)
Net Asset Value, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.77 $13.38 $12.68 $13.44 $12.60
Total Investment Return(a) ...................................... 8.11% 13.76% (5.66)% 12.35% 11.18%
Ratios/Supplemental Data:
Net assets, end of year (in millions) ................................. $ 55.0 $ 49.8 $ 45.4 $ 45.5 $ 30.8
Ratios to average net assets:
Expenses ..................................................... 0.63% 0.65% 0.59% 0.61% 0.74%
Net investment income .......................................... 5.05% 5.26% 5.31% 5.35% 5.71%
Portfolio turnover rate ............................................ 10% 67% 15% —% 35%

(a) Total investment return is calculated assuming a purchase of shares on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.

F7
PROSPECTUS

May 1, 2002

ÆÆU¢0 LlFE
FAÆlABLE ¢0HTÆA¢T
ÆEAL ÆÆ0ÆEÆTY A¢¢0UHT
This prospectus is attached to two other prospectuses. The first describes either a variable annuity contract or a
variable life insurance contract (the "Contract") issued by Pruco Life Insurance Company ("Pruco Life," "us," "we," or
"our"), a stock life insurance company that is a wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"). The second prospectus describes several investment options available under that variable
contract through The Prudential Series Fund, Inc. (the "Series Fund"). The Series Fund is registered under the
Investment Company Act of 1940 as an open-end, diversified management investment company. The Series Fund
consists of separate investment portfolios that are mutual funds, each with a different investment policy and objective.

This prospectus describes the Pruco Life Variable Contract Real Property Account (the "Real Property Account"), an
additional available investment option. Although it is not a mutual fund, in many ways it is like a mutual fund. Instead
of holding a diversified portfolio of securities, such as stocks or bonds, it consists mainly of a portfolio of commercial
and residential real properties.

Pruco Life determines the price of a "share" or, as we call it, a "participating interest" in this portfolio of properties, just
as it does for the other investment options. It is based upon our best estimate of the fair market value of the properties
and other assets held in this portfolio. The portion of your "Contract Fund" (the total amount invested under the
Contract) that you allocate to this investment option will change daily in value, up or down, as the fair market value of
these real properties and other assets change.

The risks of investing in real property are different from the risks of investing in mutual funds. See RISK FACTORS,
page 10. Also, your ability to withdraw or transfer your investment in this option is not as freely available as it is for the
other investment options. See RESTRICTIONS ON WITHDRAWALS, page 17.

Please read this prospectus and keep it for future reference.

The Securities and Exchange Commission ("SEC") maintains a Web site (http://www.sec.gov) that contains
material incorporated by reference and other information regarding registrants that file electronically with the
SEC.

Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.

Pruco Life Insurance Company

213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 778-2255

PRPA-1 Ed 5-2002
 ÆÆOSÆESTUS SOHTEHTS
Page
PER SHARE INVESTMENT INCOME, CAPITAL CHANGES AND SELECTED RATIOS ............................................. 1

SUMMARY ....................................................................................................................................................................... 2
Investment of The Real Property Account Assets ................................................................................................... 2
Investment Objectives ................................................................................................................................................ 2
Risk Factors ................................................................................................................................................................. 2
Charges ........................................................................................................................................................................ 3
Availability to Pruco Life Contracts .......................................................................................................................... 3

GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY, PRUCO LIFE VARIABLE CONTRACT
REAL PROPERTY ACCOUNT, THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP,
AND THE INVESTMENT MANAGER .............................................................................................................................. 3
Pruco Life Insurance Company ................................................................................................................................. 3
Pruco Life Variable Contract Real Property Account .............................................................................................. 4
The Prudential Variable Contract Real Property Partnership ................................................................................. 4
The Investment Manager ............................................................................................................................................ 5

INVESTMENT POLICIES ................................................................................................................................................. 5

Overview ...................................................................................................................................................................... 5
Investment in Direct Ownership Interests in Real Estate ........................................................................................ 5
Investments in Mortgage Loans ................................................................................................................................ 7
Investments in Sale-Leasebacks ............................................................................................................................... 8
General Investment and Operating Policies ............................................................................................................. 8

CURRENT REAL ESTATE-RELATED INVESTMENTS ................................................................................................. 9

Properties..................................................................................................................................................................... 9

RISK FACTORS ............................................................................................................................................................. 10

Liquidity of Investments ........................................................................................................................................... 10
General Risks of Real Property Investments ......................................................................................................... 10
Reliance on The Partners and The Investment Manager ...................................................................................... 12

INVESTMENT RESTRICTIONS ..................................................................................................................................... 12

CONFLICTS OF INTEREST........................................................................................................................................... 13

THE REAL PROPERTY ACCOUNT’S UNAVAILABILITY TO CERTAIN CONTRACTS ............................................. 15

VALUATION OF CONTRACT OWNERS’ PARTICIPATING INTERESTS ................................................................... 15

BORROWING BY THE PARTNERSHIP ........................................................................................................................ 16

CHARGES ...................................................................................................................................................................... 16

RESTRICTIONS ON WITHDRAWALS .......................................................................................................................... 17

RESTRICTIONS ON CONTRACT OWNERS’ INVESTMENT IN THE REAL PROPERTY ACCOUNT........................ 18

FEDERAL INCOME TAX CONSIDERATIONS .............................................................................................................. 18

DISTRIBUTION OF THE CONTRACTS ........................................................................................................................ 18

STATE REGULATION ................................................................................................................................................... 18

ADDITIONAL INFORMATION ....................................................................................................................................... 18

EXPERTS ....................................................................................................................................................................... 19
LITIGATION.................................................................................................................................................................... 19

REPORTS TO CONTRACT OWNERS .......................................................................................................................... 19

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS ........................................................................................................................................ 19

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ........................................................ 29

FINANCIAL STATEMENTS ........................................................................................................................................... 29

FINANCIAL STATEMENTS OF PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT…….......….A1

FINANCIAL STATEMENTS OF THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY

PARTNERSHIP…………………………………………………………………………………………………………………...B1
 ÆEÆ SHAÆE IHVESTMEHT IHSOME, SAÆITAL SHAHGES AHD
SELESTED ÆATIOS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following information on per share investment income, capital changes and selected ratios has been provided for your information.
This page should be read in conjunction with the financial statements and notes thereto of The Prudential Variable Contract Real Property
Partnership included in this prospectus.

01/01/2001 01/01/2000 01/01/1999 01/01/1998 01/01/1997

to to to to to
12/31/2001 12/31/2000 12/31/1999 12/31/1998 12/31/1997

Revenue from real estate and improvements $ 2.71 $ 2.32 $ 2.08 $ 2.07 $ 1.82
Equity in income of real estate partnership $ 0.08 $ 0.08 $ 0.01 $ 0.00 * $ 0.04
Dividend income from real estate investment trusts $ 0.24 $ 0.18 $ 0.12 $ 0.06 $ 0.01
Interest on short-term investments $ 0.03 $ 0.13 $ 0.16 $ 0.16 $ 0.20

TOTAL INVESTMENT INCOME $ 3.06 $ 2.71 $ 2.37 $ 2.29 $ 2.07

Investment Management fee $ 0.30 $ 0.28 $ 0.26 $ 0.25 $ 0.22

Real Estate Taxes $ 0.30 $ 0.25 $ 0.25 $ 0.20 $ 0.19
Administrative expense $ 0.28 $ 0.25 $ 0.21 $ 0.17 $ 0.20
Operation expense $ 0.60 $ 0.44 $ 0.37 $ 0.34 $ 0.28
Interest expense $ 0.20 $ 0.07 $ 0.01 $ 0.00 $ 0.02
Minority interest in consolidated partnership $ 0.02 $ 0.00 * $ 0.00 * $ 0.00 $ 0.00

TOTAL INVESTMENT EXPENSES $ 1.70 $ 1.29 $ 1.10 $ 0.96 $ 0.91

NET INVESTMENT INCOME $ 1.36 $ 1.42 $ 1.27 $ 1.33 $ 1.16

Net realized gain (loss) on real estate investments sold

or converted ($ 0.02) $ 0.27 ($ 0.00) * $ 0.26 $ 0.03

Change in unrealized gain (loss) on real estate investments ($ 0.26) $ 0.23 ($ 0.68) $ 0.15 $ 0.69
Minority interest in unrealized gain (loss) on investments $ 0.00 * ($ 0.04) ($ 0.00) * $ 0.00 $ 0.00

Net unrealized gain (loss) on real estate investments ($ 0.26) $ 0.19 ($ 0.68) $ 0.15 $ 0.69

NET REALIZED AND UNREALIZED

GAIN (LOSS) ON INVESTMENTS ($ 0.28) $ 0.46 ($ 0.68) $ 0.41 $ 0.72

Net change in share value $ 1.08 $ 1.88 $ 0.59 $ 1.74 $ 1.88

Share value at beginning of period $ 22.74 $ 20.86 $ 20.27 $ 8.53 $ 16.65

Share value at end of period $ 23.82 $ 22.74 $ 20.86 $ 20.27 $ 18.53

Ratio of expenses to average net assets (1) 7.26% 6.07% 5.33% 4.99% 5.16%

Ratio of net investment income to average net assets (1) 5.93% 6.49% 6.12% 6.97% 6.66%

Number of shares outstanding at

end of period (000’s) 8,922 9,831 10,472 11,848 11,848

All calculations are based on average month-end shares outstanding where applicable.
Per share information presented herein is shown on a basis consistent with the financial statements as discussed in Note 2J on page B10.
(1) Average net assets are calculated based on an average of ending monthly net assets.
* Per Share amount less than $0.01 (rounded)

1 - Real Property
 SUMMAÆY

This Summary provides a brief overview of the more significant aspects of the Real Property Account. We provide
further detail in the subsequent sections of this prospectus.

The Real Property Account is a separate account of Pruco Life Insurance Company (“Pruco Life”) created pursuant to
Arizona insurance law. Under that law, the assets of the Real Property Account are not chargeable with liabilities
arising out of any other business of Pruco Life. Owners of certain variable life insurance and variable annuity contracts
issued by Pruco Life may allocate a portion of their net premiums or purchase payments, or transfer a portion of their
Contract Fund, to the Real Property Account. Values and benefits under the Contracts will thereafter reflect the
investment experience of the Real Property Account. Contract owners, not Pruco Life, bear the risks and rewards of
the investment performance of the Real Property Account to the extent of the Contract owner's Contract Fund invested
in the Real Property Account. This prospectus is attached to and should be read in conjunction with the prospectus for
the Contract you selected.

Inv#stn#nt of Th# Æ#&I ÆLop#Lty A◆◆ount Ass#ts

The Real Property Account assets are invested primarily in income-producing real estate through The Prudential
Variable Contract Real Property Partnership (the "Partnership") which is a general partnership that was established by
Prudential and two of its wholly-owned subsidiaries, Pruco Life Insurance Company ("Pruco Life") and Pruco Life
Insurance Company of New Jersey (“Pruco Life of New Jersey”). See The Prudential Variable Contract Real
Property Partnership, page 4. Currently Prudential serves as the investment manager of the Partnership. Prudential
acts through Prudential Investment Management, Inc. See The Investment Manager, page 5. The Partnership
invests at least 65% of its assets in direct ownership interests in:

1. income-producing real estate;

2. participating mortgage loans (mortgages providing for participation in the revenues generated by, or the
appreciation of, the underlying property, or both) originated for the Partnership; and
3. real property sale-leasebacks negotiated on behalf of the Partnership.

The large majority of these real estate investments will be in direct ownership interests in income producing real estate,
such as office buildings, shopping centers, apartments, industrial properties or hotels. The Partnership may also invest
up to 5% of its assets in direct ownership interests in agricultural land. Approximately 10% of the Partnership's assets
will be held in cash or invested in liquid instruments and securities. The remainder of the Partnership's assets may be
invested in other types of real estate related investments, including non-participating mortgage loans and real estate
investment trusts.

Inv#stn#nt Obj#◆tiv#s

The investment objectives of the Partnership are to:

1. preserve and protect the Partnership's capital;

2. compound income by reinvesting investment cash flow; and
3. over time, increase the income amount through appreciation in the value of permitted investments and, to
a lesser extent, through mortgage loans and sale-leaseback transactions.

There is no assurance that the Partnership's objectives will be attained. See INVESTMENT POLICIES, page 5.

Æisk F&◆toLs

Investment in the Real Property Account, and thereby, participation in the investment experience of the Partnership,
involves significant risks. See RISK FACTORS, page 10. These include the risk of fluctuating real estate values and
the risk that the appraised or estimated values of the Partnership's real property investments will not be realized upon
their disposition. Many of the Partnership's real estate investments will not be quickly convertible into cash. Therefore,
the Real Property Account should be viewed as a long-term investment. See RESTRICTIONS ON WITHDRAWALS,
page 17.

Pruco Life and the investment manager have taken steps to ensure that the Real Property Account and Partnership
will be sufficiently liquid to satisfy all withdrawal or loan requests promptly (within seven days), see Liquidity of

2 - Real Property
Investments, page 10. Prudential’s management of the Partnership is subject to certain conflicts of interest, including
the possible acquisition of properties from Prudential Financial affiliates. See CONFLICTS OF INTEREST, page 13.

Sh&Lg#s

The Partnership pays a daily investment management fee which amounts to 1.25% per year of the average daily gross
assets of the Partnership. The Partnership also compensates the investment manager for providing certain accounting
and administrative services. See CHARGES, page 16. The portion of your Contract Fund allocated to the Real
Property Account is subject to the same Contract charges as the portion of your Contract Fund allocated to The
Prudential Series Fund, Inc. (the "Series Fund"). The Series Fund is the underlying funding vehicle for the other
variable investment options available to Contract owners. You should read the Contract prospectus for a description of
those charges.

Av&iI&biIity to ÆLu◆o Lif# SontL&◆ts

The Real Property Account is currently available to purchasers of Pruco Life's Variable Appreciable Life Insurance
Contracts, Variable Life Insurance Contracts, Discovery Life Plus Contracts, and Discovery Plus Contracts. It is
not available on Contracts that are purchased in connection with IRAs, Section 403(b) annuities, and other tax-
qualified plans, that are subject to the Employee Retirement Income Security Act of 1974 ("ERISA") or to the
prohibited transaction excise tax provisions of the Internal Revenue Code. See THE REAL PROPERTY ACCOUNT’S
UNAVAILABILITY TO CERTAIN CONTRACTS, page 15. For example, a Variable Appreciable Life Contract owner
who elects to invest part of his or her net premiums in the Pruco Life Variable Appreciable Account, a separate
account of Pruco Life registered as a unit investment trust under the Investment Company Act of 1940, and part in the
Real Property Account, will be subject to the same: (1) monthly sales charges; (2) risk charges; (3) administrative
charges; (4) insurance charges; and (5) contingent deferred sales charges without regard to what portion is invested in
the Pruco Life Variable Appreciable Account and what portion is invested in the Real Property Account. The Real
Property Account has established different subaccounts, relating to the different types of variable Contracts that may
participate in the Real Property Account. These subaccounts provide the mechanism and maintain the records
whereby these different Contract charges are made.

This prospectus may only be offered in jurisdictions in which the offering is lawful. No person is authorized
to make any representations in connection with this offering other than those contained in this prospectus.

GEHEÆAL IHFOÆMATIOH ABOUT ÆÆUSO LIFE IHSUÆAHSE

SOMÆAHY, ÆÆUSO LIFE VAÆIABLE SOHTÆAST ÆEAL
ÆÆOÆEÆTY ASSOUHT, THE ÆÆUDEHTIAL VAÆIABLE
SOHTÆAST ÆEAL ÆÆOÆEÆTY ÆAÆTHEÆSHIÆ, AHD THE
IHVESTMEHT MAHAGEÆ

ÆLu◆o Lif# InsuL&n◆# Sonp&ny

Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company, organized in 1971 under the laws of the
State of Arizona. It is licensed to sell life insurance and annuities in the District of Columbia, Guam, and in all states
except New York. These Contracts are not offered in any state in which the necessary approvals have not been
obtained.

Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of America (“Prudential”), a New Jersey
stock life insurance company that has been doing business since 1875. Prudential is an indirect wholly-owned
subsidiary of Prudential Financial, Inc. (“Prudential Financial”), a New Jersey insurance holding company. As Pruco
Life’s ultimate parent, Prudential Financial exercises significant influence over the operations and capital structure of
Pruco Life and Prudential. However, neither Prudential Financial, Prudential, nor any other related company has any
legal responsibility to pay amounts that Pruco Life may owe under the contract or policy.

Pruco Life’s consolidated financial statements appear in either the attached Contract prospectus or in the
statement of additional information for the Contract prospectus, which is available upon request.

3 - Real Property
ÆLu◆o Lif# V&Li&bI# SontL&◆t Æ#&I ÆLop#Lty A◆◆ount

The Pruco Life Variable Contract Real Property Account (the "Real Property Account") was established on August 27,
1986 under Arizona law as a separate investment account. The Real Property Account meets the definition of a
"separate account" under the federal securities laws. The Real Property Account holds assets that are separated from
all of Pruco Life’s other assets. The Real Property Account is used only to support the variable benefits payable under
the Contracts that are funded by the real estate investment option.

The Contract obligations to Contract owners and beneficiaries are general corporate obligations of Pruco Life. Pruco
Life is also the legal owner of the Real Property Account assets. Pruco Life will maintain assets in the Real Property
Account with a total market value at least equal to the amounts credited under the real estate option to all the Contracts
participating in the Real Property Account. These assets may not be charged with liabilities which arise from any other
business that Pruco Life conducts. In addition to these assets, the Real Property Account’s assets may include funds
contributed by Pruco Life, and reflect any accumulations of the charges Pruco Life makes against the Real Property
Account. See VALUATION OF CONTRACT OWNER’S PARTICIPATING INTERESTS, page 15.

Pruco Life will bear the risks and rewards of the Real Property Account’s investment experience to the extent of its
investment in the Real Property Account. Pruco Life may withdraw or redeem its investment in the Real Property
Account at any time. We will not make any such redemption if it will have a materially adverse impact on the Real
Property Account. Accumulations of charges will be withdrawn on a regular basis.

Unlike the other separate accounts funding the Contracts, the Real Property Account is not registered with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 as an investment company.
For state law purposes, the Real Property Account is treated as a part or division of Pruco Life. Contract owners have
no voting rights with respect to the Real Property Account. The Real Property Account is under the control and
management of Pruco Life. The Board of Directors and officers of Pruco Life are responsible for the management of
the Real Property Account. No salaries of Pruco Life personnel are paid by the Real Property Account. Information
regarding the directors and officers of Pruco Life is contained in the attached prospectus for the Contract. The financial
statements of the Real Property Account begin on page A1.

Th# ÆLud#nti&I V&Li&bI# SontL&◆t Æ#&I ÆLop#Lty Æ&Ltn#Lship

All amounts allocated to the Real Property Account are invested through The Prudential Variable Contract Real
Property Partnership (the "Partnership"), a general partnership organized under New Jersey law on April 29, 1988. The
only partners in the Partnership (collectively, the "Partners") are Prudential and two of its wholly-owned subsidiaries,
Pruco Life and Pruco Life of New Jersey. The Partnership was established so the assets allocated to the real estate
investment options under certain variable life insurance and variable annuity contracts issued by these three companies
could be invested in a commingled pool. This was done to provide greater diversification of investments and lower
transaction costs than would be possible if the assets were separately invested by each company. All amounts
allocated to the Real Property Account are contributed by Pruco Life to the Partnership. Pruco Life’s general
partnership interest in the Partnership is held in the Real Property Account.

The initial contributions to the Partnership were made on April 29, 1988. Prudential contributed $100,000 in cash to the
Partnership; Pruco Life of New Jersey contributed $100,000 in cash to the Partnership; and Pruco Life contributed the
real estate and other assets held in its real estate separate account, which had been actively investing in real estate for
more than a year. Those assets had an estimated market value of $91,538,737 on that date. Each Partner is entitled
to its respective proportionate share of all income, gains, and losses of the Partnership.

The Partnership assets are valued on each business day. The value of each Partner’s interest will fluctuate with the
investment performance of the Partnership. In addition, the Partners’ interests are proportionately readjusted, at the
current value, on each day when a Partner makes a contribution to, or withdrawal from, the Partnership. When you
choose to allocate a portion of your net premiums or purchase payments, or transfer a portion of your Contract Fund, to
the Real Property Account, Pruco Life will contribute that amount to the Partnership as a capital contribution. It will
correspondingly increase the Real Property Account's interest in the Partnership. Values and benefits under the
Contract will thereafter vary with the performance of the Partnership's investments. For more information on how the
value of your interest in the Real Property Account and the value of the Partnership's investments are calculated, see
VALUATION OF CONTRACT OWNERS’ PARTICIPATING INTERESTS, page 15.

Contract owners have no voting rights with respect to the Partnership operations. The financial statements of the
Partnership begin on page B1.

4 - Real Property
Th# Inv#stn#nt M&n&g#L

Currently, Prudential acts as investment manager of the Partnership. Prudential acts through Prudential Investment
Management, Inc. (“PIM”), which invests in and manages real estate equities and mortgages for the general account
and separate accounts of Prudential Financial affiliates, and other third party accounts.

PIM, on behalf of the general account, and separate accounts of Prudential Financial affiliates, and other third party
accounts, is one of the largest real estate investors in North America. PIM and Prudential Financial affiliates participate
in real estate ventures through public and private partnerships. As of December 31, 2001, PIM managed $31.2 billion
of net domestic real estate mortgages and equities of which $17.0 billion is in Prudential’s general account and $14.2
billion is in separate accounts and other third party accounts. Statement value for general account assets is recorded
at depreciated cost and for assets in separate accounts and other third party accounts at market value. For a
discussion of how the Partnership's real estate-related investments are valued, see VALUATION OF CONTRACT
OWNERS’ PARTICIPATING INTERESTS, page 15.

Pending regulatory approval, the Partnership will terminate its investment management agreement with Prudential and
enter into a new agreement with PIM. The terms of the new agreement are substantially identical to those in the
existing agreement with Prudential.

PIM has organized its real estate activities into separate business units within Prudential's Global Asset Management
Group. Prudential Real Estate Investors (PREI) is the unit responsible for the investments of the Real Property
Partnership. PREI's investment staff is responsible for both general account and third party account real estate
investment management activities.

PREI provides investment management services on a domestic basis and also acts as part of a global team providing
these services to institutional investors worldwide. PREI is headquartered in Parsippany, New Jersey and has 4 field
offices across the United States. As of December 31, 2001, PREI had under management approximately 29.7 million
net rentable square feet of office real estate, 24.5 million net rentable square feet of industrial real estate, 15.0 million
net rentable square feet of retail real estate, 4,856 hotel rooms, and 31,673 multifamily residential units.

Various divisions of Prudential Financial may provide PREI with services that may be required in connection with the
Partnership’s investment management agreement. The mortgage operation currently manages and administers a
portfolio of mortgage loans totaling approximately $34.2 billion.

IHVESTMEHT ÆOLISIES
Ov#Lvi#w

The Partnership has an investment policy of investing at least 65% of its assets in direct ownership interests in
income-producing real estate, participating mortgage loans originated for the Partnership, and real property sale-
leasebacks negotiated on behalf of the Partnership. It is expected that the largest portion of these real estate
investments will be in direct ownership interests (including fee interests, leasehold interests, and interests in entities
holding such interests) in income-producing real estate. The Partnership may also invest up to 5% of its assets in
direct ownership interests in agricultural land. Approximately 10% of the Partnership's assets will ordinarily be held in
cash or invested in liquid instruments and securities, although the Partners reserve discretion to increase this amount
to meet partnership liquidity requirements, for example. The remainder of the partnership assets may be invested in
other types of real estate-related investments, including non-participating mortgage loans, real estate limited
partnerships, limited liability companies, real estate investment trusts, and other vehicles whose underlying investment
is in real estate.

Inv#stn#nt in DiL#◆t Own#Lship Int#L#sts in Æ#&I Est&t#

Acquisition. The Partnership's principal investment policy involves acquiring direct ownership interests in existing
(including newly constructed) income-producing real estate, including office buildings, shopping centers, apartment
buildings, industrial properties, and hotels. The Partnership may also invest up to 5% of its assets in direct ownership
interests in agricultural land. Property acquisitions will generally be carried out by the real estate acquisition offices in
PREI's network of field offices located in Parsippany, New Jersey, Atlanta, Georgia, Chicago, Illinois and Los Angeles,
California. A field office or an affiliate of Prudential Financial supervises the management of properties in all of PIM's
accounts.

5 - Real Property
Proposals to acquire properties for the Partnership are usually originated by a field office. They are reviewed and
approved by the Investment Management Committee of PREI. Depending upon the size of the acquisition and other
factors, a proposed real estate investment may also be submitted for review to the Investment Committee of the Board
of Directors of Prudential.

Although percentage limitations on the type and location of properties that may be acquired by the Partnership have not
been established, the Partnership plans to diversify its investments through the type of property acquired and its
geographic location. The Partnership’s investments will be maintained to meet the Internal Revenue Code
diversification requirements. See General Investment and Operating Policies, page 8.

In order for the Partnership to meet its stated objectives, it will have to acquire properties that generate more cash than
needed to pay its gross operating expenses. To do this, a substantial portion of the Partnership’s assets will be
invested in properties with operating histories that include established rent and expense schedules. However, the
Partnership may also acquire recently constructed properties that may be subject to agreements with sellers providing
for certain minimum levels of income. Upon the expiration of or default under these agreements, there is no assurance
that the Partnership will maintain the level of operating income necessary to produce the return it was previously
experiencing. The Partnership may purchase real property from Prudential Financial or its affiliates under certain
conditions. See CONFLICTS OF INTEREST, page 13.

The property acquired by the Partnership is usually real estate which is ready for use. Accordingly, the Partnership is
not usually subject to the development or construction risks inherent in the purchase of unimproved real estate. From
time to time, however, the Partnership may invest in a developmental real estate project that is consistent with the
Partnership’s objectives. The Partnership will then be subject to those risks.

The Partnership will often own the entire fee interest in an acquired property, but it may also hold other direct ownership
interests. These include, but are not limited to, partnership interests, limited liability company interests, leaseholds, and
tenancies in common.

Property Management and Leasing Services. The Partnership usually retains a management company operating in
the area of a property to perform local property management services. A field office or other affiliate of Prudential
Financial will usually: (1) supervise and monitor the performance of the local management company; (2) determine and
establish the required accounting information to be supplied; (3) periodically inspect the property; (4) review and
approve property operating budgets; and (5) review actual operations to ensure compliance with budgets. In addition to
day-to-day management of the property, the local management company will have responsibility for: (1) supervision of
any on-site personnel; (2) negotiation of maintenance and service contracts; (3) major repair advice; (4) replacements
and capital improvements; (5) the review of market conditions to recommend rent schedule changes; and (6) creation
of marketing and advertising programs to obtain and maintain good occupancy rates by responsible tenants. The local
management company fees will reduce the cash flow from the property to the Partnership.

The Partnership usually retains a leasing company to perform leasing services on any property with actual or projected
vacancies. The leasing company will coordinate with the property management company to provide marketing and
leasing services for the property. When the property management company is qualified to handle leasing, it may also
be hired to provide leasing services. Leasing commissions and expenses will reduce the cash flow from the property to
the Partnership.

PREI may, on behalf of the Partnership, hire a Prudential Financial affiliate to perform property management or leasing
services. The affiliate’s services must be provided on terms competitive with unaffiliated entities performing similar
services in the same geographic area. See CONFLICTS OF INTEREST, page 13.

Annually, the field office which oversees the management of each property owned by the Partnership will, together with
the local property management firm, develop a business plan and budget for each property. It will consider, among
other things, the projected rollover of individual leases, necessary capital expenditures and any expansion or
modification of the use of the property. The approval of an officer of PREI is required. The field office will also
periodically report the operating performance of the property to PREI.

6 - Real Property
Inv#stn#nts in MoLtg&g# Lo&ns

Types of Mortgage Loans

The Partnership is authorized to invest in mortgage loans, including conventional mortgage loans that may pay fixed or
variable rates of interest and mortgage loans that have a "participation" (as defined below). The Partnership will not
make mortgage loans to Prudential Financial affiliates.

The Partnership intends to give mortgage loans on: (1) commercial properties (such as office buildings, shopping
centers, hotels, industrial properties, and office showrooms); (2) agricultural properties; and (3) residential properties
(such as garden apartment complexes and high-rise apartment buildings). These loans are usually secured by
properties with income-producing potential based on historical or projected data. Usually, they are not personal
obligations of the borrower and are not insured or guaranteed.

1. First Mortgage Loans. The Partnership will primarily make first mortgage loans secured by mortgages on existing
income-producing property. These loans may provide for interest-only payments and a balloon payment at maturity.

2. Wraparound Mortgage Loans. The Partnership also may make wraparound mortgage loans on income-producing
properties which are already mortgaged to unaffiliated entities. A wraparound mortgage loan is a mortgage with a
principal amount equal to the outstanding balance of the prior existing mortgage plus the amount to be advanced by
the lender under the wraparound mortgage loan, thereby providing the property owner with additional funds without
disturbing the existing loan. The terms of wraparound mortgage loans made by the Partnership require the borrower to
make all principal and interest payments on the underlying loan to the Partnership, which will then pay the holder of the
prior loan. Because the existing first mortgage loan is preserved, the lien of the wraparound mortgage loan is junior to
it. The Partnership will make wraparound mortgage loans only in states where local applicable foreclosure laws permit
a lender, in the event of the borrower’s default, to obtain possession of the property which secures the loan.

3. Junior Mortgage Loans. The Partnership may also invest in other junior mortgage loans. Junior mortgage loans
will be secured by mortgages which are subordinate to one or more prior liens on the real property. They will generally,
but not in all cases, provide for repayment in full prior to the end of the amortization period of the senior mortgages.
Recourse on such loans will include the real property encumbered by the Partnership’s mortgage and may also include
other collateral or personal guarantees by the borrower.

The Partnership will generally make junior or wraparound mortgage loans only if the senior mortgage, when combined
with the amount of the Partnership’s mortgage loan, would not exceed the maximum amount which the Partnership
would be willing to commit to a first mortgage loan and only under such circumstances and on such property as to
which the Partnership would otherwise make a first mortgage loan.

4. Participations. The Partnership may make mortgage loans which, in addition to charging a base rate of interest, will
include provisions permitting the Partnership to participate (a "participation") in the economic benefits of the underlying
property. The Partnership would receive a percentage of: (1) the gross or net revenues from the property operations;
and/or (2) the increase in the property value realized by the borrower, such as through sale or refinancing of the
property. These arrangements may also grant the Partnership an option to acquire the property or an undivided
interest in the property securing the loan. When the Partnership negotiates the right to receive additional interest in the
form of a percentage of the gross revenues or otherwise, the fixed cash return to the Partnership from that investment
will generally be less than would otherwise be the case. It is expected that the Partnership will be entitled to
percentage participations when the gross or net revenues from the property operations exceed a certain base amount.
This base amount may be adjusted if real estate taxes or similar charges are increased. The form and extent of the
additional interest that the Partnership receives will vary with each transaction depending on: (1) the equity investment
of the owner or developer of the property; (2) other financing or credit obtained by the owner or developer; (3) the fixed
base interest rate on the mortgage loan by the Partnership; (4) any other security arrangement; (5) the cash flow and
pro forma cash flow from the property; and (6) market conditions.

The Partnership intends to use this additional interest as a hedge against inflation. It assumes that as prices increase in
the economy, the rental prices on properties, such as shopping centers or office buildings, will increase and there
should be a corresponding increase in the property value. There is no assurance that additional interest or increased
property values will be received. In that event, the Partnership will be entitled to receive only the fixed portion of its
return.

7 - Real Property
Standards for Mortgage Loan Investments

In making mortgage loans, the investment manager will consider relevant real property and financial factors, including:
(1) the location, condition, and use of the underlying property; (2) its operating history; (3) its future income-producing
capacity; and (4) the quality, experience, and creditworthiness of the unaffiliated borrower.

Before the Partnership makes a mortgage loan, the investment manager analyzes the fair market value of the
underlying real estate. In general, the amount of each mortgage loan made by the Partnership will not exceed, when
added to the amount of any existing indebtedness, 80% of the estimated or appraised value of the property mortgaged.

Dealing With Outstanding Loans

The Partnership may sell its mortgage loans prior to maturity if it is deemed advisable by the investment manager and
consistent with the Partnership’s investment objectives. The investment manager may also: (1) extend the maturity of
any mortgage loan made by the Partnership; (2) consent to a sale of the property subject to a mortgage loan or finance
the purchase of a property by making a new mortgage loan in connection with the sale of a property (either with or
without requiring the repayment of the mortgage loan); (3) renegotiate the terms of a mortgage loan; and (4) otherwise
deal with the mortgage loans of the Partnership.

Inv#stn#nts in S&I#-L#&s#b&◆ks

A portion of the Partnership’s investments may consist of real property sale-leaseback transactions ("leasebacks"). In
this type of transaction, the Partnership will purchase land and income-producing improvements on the land and
simultaneously lease the land and improvements, generally to the seller, under a long-term lease. Leasebacks may be
for very long periods and may provide for increasing payments from the lessee.

Under the terms of the leaseback, the tenant will operate, or provide for the operation of, the property and generally be
responsible for the payment of all costs, including: (1) taxes; (2) mortgage debt service; (3) maintenance and repair of
the improvements; and (4) insurance. In some cases, the Partnership may also grant the lessee an option to acquire
the land and improvements from the Partnership after a period of years. The option exercise price would be based on
the fair market value of the property, as encumbered by the lease, the increase in the gross revenues from the property
or other objective criteria reflecting the increased value of the property.

In some leaseback transactions, the Partnership may only purchase the land under an income-producing building and
lease the land to the building owner. In such cases, the Partnership may seek, in addition to base rents in its
leasebacks, participations in the gross revenues from the building in a form such as a percentage of the gross revenues
of the lessee above a base amount (which may be adjusted if real property taxes increase or for other events). The
Partnership may invest in leasebacks which are subordinate to other interests in the land, buildings, and improvements,
such as a first mortgage, other mortgage, or lien. In those situations, the Partnership’s leaseback interest will be
subject to greater risks.

The Partnership will only acquire a property for a leaseback transaction if the purchase price is equal to not more than
100% of the estimated or appraised property value. The Partnership may dispose of its leasebacks when deemed
advisable by the investment manager and consistent with the Partnership’s investment objectives.

G#n#L&I Inv#stn#nt &nd Op#L&ting ÆoIi◆i#s

The Partnership does not intend to invest in any direct ownership interests in properties, mortgage loans or leasebacks
in order to make short-term profits from their sale, although in exceptional cases, the investment manager may decide
to do so in the best interests of the Partnership. The Partnership may dispose of its investments whenever necessary
to meet its cash requirements or when it is deemed to be desirable by the investment manager because of market
conditions or otherwise. The Partnership will reinvest any proceeds from the disposition of assets (and any cash flow
from operations) which are not necessary for the Partnership’s operations and which are not withdrawn by the Partners
in order to make distributions to investors pursuant to the variable contracts issued by the Partners, or to Prudential to
return its equity interests pursuant to this prospectus. The proceeds will be reinvested in investments consistent with
the Partnership’s investment objectives and policies.

In making investments in properties, mortgage loans, leasebacks or other real estate investments, the Partnership will
rely on the investment manager’s analysis of the investment and will not receive an independent appraisal prior to
acquisition. The Partnership expects, however, that all the properties it owns, and most mortgage loans it holds, will be
appraised or valued annually by an independent appraiser who is a member of a nationally recognized society of

8 - Real Property
appraisers. Each appraisal will be maintained in the Partnership records for at least five years. It should be noted that
appraised values are opinions and, as such, may not represent the true worth or realizable value of the property being
appraised.

The Partnership usually purchases properties on an unleveraged basis. The properties acquired will typically be free
and clear of mortgage debt immediately after their acquisition. The Partnership may, however, acquire properties
subject to existing mortgage loans. In addition, the Partnership may mortgage or acquire properties partly with the
proceeds of purchase money mortgage loans, up to 80% of the property value. Although this is not usually done, the
Partnership may do so if the investment manager decides that it is consistent with its investment objectives. When the
Partnership mortgages its properties, it bears the expense of mortgage payments. See BORROWING BY THE
PARTNERSHIP, page 16.

The Partnership may also invest a portion of its assets in non-participating mortgage loans, real estate limited
partnerships, limited liability companies, real estate investment trusts, and other vehicles whose underlying investment
is in real estate.

The Partnership’s investments will be maintained in order to meet the diversification requirements set forth in
regulations under the Internal Revenue Code (the "Code") relating to the investments of variable life insurance and
variable annuity separate accounts. In order to meet the diversification requirements under the regulations, the
Partnership will meet the following test: (1) no more than 55% of the assets will be invested in any one investment; (2)
no more than 70% of the assets will be invested in any two investments; (3) no more than 80% of the assets will be
invested in any three investments; and (4) no more than 90% of the assets will be invested in any four investments. All
interests in the same real property project are treated as a single investment. The Partnership must meet the above
test within 30 days of the end of each calendar quarter. To comply with the diversification requirements of the State of
Arizona, the Partnership will limit additional investments in any one parcel or related parcels to an amount not
exceeding 10% of Partnership’s gross assets, as of the prior fiscal year end.

In managing the assets of the Partnership, the investment manager will use its discretion in determining whether to
foreclose on defaulting borrowers or to evict defaulting tenants. The investment manager will decide which course of
action is in the best interests of the Partnership in maintaining the value of the investment.

Property management services are usually required for the Partnership’s investments in properties which are owned
and operated by the Partnership, but usually will not be needed for mortgage loans owned by the Partnership, except
for mortgage servicing. It is possible, however, that these services will be necessary or desirable in exercising default
remedies under a foreclosure on a mortgage loan. The investment manager may engage, on behalf of the Partnership,
Prudential Financial affiliated or unaffiliated entities to provide these additional services to the Partnership. The
investment manager may engage Prudential Financial affiliates to provide property management, property development
services, loan servicing or other services if and only if the fees paid to an affiliate do not exceed the amount that would
be paid to an independent party for similar services rendered in the same geographic area. See CONFLICTS OF
INTEREST, page 13.

The investment manager will manage the Partnership so that the Real Property Account will not be subject to
registration under the Investment Company Act of 1940. This requires monitoring the proportion of the Partnership’s
assets to be placed in various investments.

SUÆÆEHT ÆEAL ESTATE-ÆELATED IHVESTMEHTS

The current principal real estate-related investments held by the Partnership are described below. Many of these
investments were originated by, and previously held in, The Prudential Real Property Account of Pruco Life Insurance
Company (the “Pruco Life Account”), a separate account established to fund the real estate investment option under
variable contracts issued by Pruco Life. Prior to the formation of the Partnership, the Pruco Life Account followed the
same investment policies as those followed by the Partnership. Pruco Life contributed the assets held in the Pruco Life
Account to the Partnership as its initial capital contribution to the Partnership.

ÆLop#Lti#s

The Partnership owns the following properties as of December 31, 2001.

1. Office Properties
The Partnership owns office properties in Lisle and Oakbrook Terrace, Illinois; Brentwood, Tennessee; and
Beaverton, Oregon. Total square footage owned is approximately 482,000 of which 89% or 431,000 square feet

9 - Real Property
 are leased between 1 and 10 years. The Partnership’s Morristown, New Jersey property, which had
approximately 85,000 square feet, was sold on October 26, 2000.

2. Apartment Complexes
The Partnership owns apartment complexes in Atlanta, Georgia and Raleigh, North Carolina. There are a total of
490 apartment units available of which 82% or 403 units are leased. Leases range from month-to-month to one
year. In addition, on September 17, 1999, the Partnership invested in an apartment complex located in
Jacksonville, FL. This joint venture investment has a total of 458 units available of which 402 units or 88% are
occupied. Leases range from month-to-month to one year. Also, on February 15, 2001, the Partnership invested
in four apartment complexes located in Gresham/Salem, OR. This joint venture investment has a total of 492 units
available of which 458 units or 93% are occupied. Leases range from month-to-month to one year.

3. Retail Property
The Partnership owns a shopping center in Roswell, Georgia. The property is located approximately 22 miles
north of downtown Atlanta on a 30 acre site. The square footage is approximately 316,000 of which 92% or
293,000 square feet is leased between 1 and 10 years. On September 30, 1999 the Partnership invested in a
retail portfolio located in the Kansas City, MO and KS areas. This joint venture investment has approximately
488,000 of net rentable square feet of which 90% or 440,000 square feet is leased between 1 and 20 years. In
addition, on May 17, 2001, the Partnership invested in a retail center located in the Hampton, VA. This joint
venture investment has approximately 155,000 of net rentable square feet of which 100% or 155,000 square feet
is leased between 1 and 20 years.

4. Industrial Properties
The Partnership owns warehouses and distribution centers in Bolingbrook, Illinois; Aurora, Colorado; and Salt
Lake City, Utah. Total square footage owned is approximately 685,000 of which 83% or 569,000 square feet are
leased between 1 and 10 years.

5. Investment in Real Estate Trust

The Partnership liquidated its entire investment in REIT shares during December 2001.

ÆISK FASTOÆS

There are certain risk factors that you should consider before allocating a portion of your net premiums or purchase
payments, or transferring a portion of your Contract Fund, to the Real Property Account. These include valuation risks,
(see VALUATION OF CONTRACT OWNERS’ PARTICIPATING INTERESTS, page 15), certain conflicts of interest,
(see CONFLICTS OF INTEREST, page 13), as well as the following risks:

Liquidity of Inv#stn#nts

Because the Real Property Account will, through the Partnership, invest primarily in real estate, its assets will not be as
liquid as the investments generally made by separate accounts of life insurance companies funding variable life
insurance and variable annuity contracts. The Partnership will, however, hold approximately 10% of its assets in cash
and invested in liquid securities. The primary purposes for such investments are to meet the expenses involved in the
operation of the Partnership and to allow it to have sufficient liquid assets to meet any requests for withdrawals from the
Real Property Account. Such withdrawals would be made in order to meet requested or required payments under the
Contracts. The Partnership may also borrow funds to meet liquidity needs. See BORROWING BY THE
PARTNERSHIP, page 16.

We have taken steps to ensure that the Partnership will be liquid enough to meet all anticipated withdrawals by the
Partners to meet the separate accounts' liquidity requirements. It is possible that the Partnership may need to dispose
of a real property or mortgage loan investment promptly in order to meet such withdrawal requests.

G#n#L&I Æisks of Æ#&I ÆLop#Lty Inv#stn#nts

By participating in the Real Property Account and thereby in the investment performance of the Partnership, you will be
subject to many of the risks of real property investments. These include:

1. Risks of Ownership of Real Properties. The Partnership will be subject to the risks inherent in the ownership of
real property such as fluctuations in occupancy rates and operating expenses and variations in rental schedules. It may

10 - Real Property
be adversely affected by general and local economic conditions, the supply of and demand for properties of the type in
which the Partnership invests, zoning laws, and real property tax rates. Operation of property in which the Partnership
invests will primarily involve rental of that property to tenants. The financial failure of a tenant resulting in the
termination of their lease might cause a reduction in the cash flow to the Partnership. If a lease is terminated, there is
no assurance that the Partnership will be able to find a new tenant for the property on terms as favorable to the
Partnership as those from the prior tenant. Investments in hotels are subject to additional risk from the daily turnover
and fluctuating occupancy rates of hotel rooms and the absence of long-term tenants.

The Partnership’s properties will also be subject to the risk of loss due to certain types of property damage (such as
from nuclear power plant accidents and wars) which are either uninsurable or not economically insurable.

2. Risks of Mortgage Loan Investments. The Partnership’s mortgage loan investments will be subject to the risk of
default by the borrowers. In this event the Partnership would have the added responsibility of foreclosing on or
pursuing other remedies on the underlying properties to protect the value of its mortgage loans. A borrower’s ability to
meet its mortgage loan payments will be dependent upon the risks generally inherent to the ownership of real property.
Mortgage loans made by the Partnership will generally not be personal obligations of the borrowers. The Partnership
will only rely on the value of the underlying property for its security. Mechanics’, materialmen’s, government, and other
liens may have or obtain priority over the Partnership’s security interest in the property.

In addition, the Partnership’s mortgage loan investments will be subject to prepayment risks. If the terms of the
mortgage loans permit, mortgagors may prepay the loans, thus possibly changing the Partnership’s return.

Junior mortgage loans (including wraparound mortgage loans) will be subject to greater risk than first mortgage loans,
since they will be subordinate to liens of senior mortgagees. In the event a default occurs on a senior mortgage, the
Partnership may be required to make payments or take other actions to cure the default (if it has the right to do so) in
order to prevent foreclosure on the senior mortgage and possible loss of all or portions of the Partnership’s investment.
"Due on sale" clauses included in some senior mortgages, accelerating the amount due under the senior mortgage in
the case of sale of the property, may be applied to the sale of the property upon foreclosure by the Partnership of its
junior mortgage loan.

The risk of lending on real estate increases as the proportion which the amount of the mortgage loan bears to the fair
market value of the real estate increases. The Partnership usually does not make mortgage loans of over 80% of the
estimated or appraised value of the property that secures the loan. There can be no assurance, that in the event of a
default, the Partnership will realize an amount equal to the estimated or appraised value of the property on which a
mortgage loan was made.

Mortgage loans made by the Partnership may be subject to state usury laws. These laws impose limits on interest
charges and possible penalties for violation of those limits, including restitution of excess interest, unenforceability of
debt, and treble damages. The Partnership does not intend to make mortgage loans at usurious rates of interest.
Uncertainties in determining the legality of interest rates and other borrowing charges under some statutes could result
in inadvertent violations, in which case the Partnership could incur the penalties mentioned above.

3. Risks with Participations. The Partnership may seek to invest in mortgage loans and leasebacks with
participations, which will provide the Partnership with both fixed interest and additional interest based upon gross
revenues, sale proceeds, and/or other variable amounts. If the interest income received by the Partnership is based, in
part, on a percentage of the gross revenues or sale proceeds of the underlying property, the Partnership’s income will
depend on the success in the leasing of the underlying property, the management and operation of such property by
the borrower or lessee and upon the market value of the property upon ultimate disposition. If the Partnership
negotiates a mortgage loan with a lower fixed interest rate and an additional percentage of the gross revenues or
eventual sale proceeds of the underlying property, and the underlying property fails to generate increased revenues or
to appreciate, the Partnership will have foregone a potentially greater fixed return without receiving the benefit of
appreciation. State laws may limit participations. In the event of the borrower’s bankruptcy, it is possible that as a
result of the Partnership's interest in the gross revenues or sale proceeds, a court could treat the Partnership as a
partner or joint venturer with the borrower, and the Partnership could lose the priority its security interest would have
been given, or be liable for the borrower’s debts. The Partnership will structure its participations to avoid being
characterized as a partner or joint venturer with the borrower.

4. Risks with Sale-Leaseback Transactions. Leaseback transactions typically involve the acquisition of land and
improvements thereon and the leaseback of such land and improvements to the seller or another party. The value of
the land and improvements will depend, in large part, on the performance and financial stability of the lessee and its
tenants, if any. The tenants’ leases may have shorter terms than the leaseback. Therefore, the lessee's future ability

11 - Real Property
to meet payment obligations to the Partnership will depend on its ability to obtain renewals of such leases or new
leases upon satisfactory terms and the ability of the tenants to meet their rental payments to the lessee.

PREI investigates the stability and creditworthiness of lessees in all commercial properties it may acquire, including
leaseback transactions. However, a lessee in a leaseback transaction may have few, if any, assets. The Partnership
will therefore rely for its security on the value of the land and improvements. When the Partnership’s leaseback interest
is subordinate to other interests in the land or improvements, such as a first mortgage or other lien, the Partnership’s
leaseback will be subject to greater risk. A default by a lessee or other premature termination of the leaseback may
result in the Partnership being unable to recover its investment unless the property is sold or leased on favorable terms.
The ability of the lessee to meet its obligations under the leaseback, and the value of a property, may be affected by a
number of factors inherent in the ownership of real property which are described above. Furthermore, the long-term
nature of a leaseback may, in the future, result in the Partnership receiving lower average annual rentals. However, this
risk may be lessened if the Partnership obtains participations in connection with its leasebacks.

Æ#Ii&n◆# on Th# Æ&Ltn#Ls &nd Th# Inv#stn#nt M&n&g#L

You do not have a vote in determining the policies of the Partnership or the Real Property Account. You also have no
right or power to take part in the management of the Partnership or the Real Property Account. The investment
manager alone, subject to the supervision of the Partners, will make all decisions with respect to the management of
the Partnership, including the determination as to what properties to acquire, subject to the investment policies and
restrictions. Although the Partners have the right to replace the investment manager, it should be noted that Prudential,
Pruco Life, Pruco Life of New Jersey, and the investment manager are wholly-owned subsidiaries of Prudential
Financial.

The Partnership will compete in the acquisition of its investments with many other individuals and entities engaged in
real estate activities, including the investment manager and its affiliates. See CONFLICTS OF INTEREST, page 13.
There may be intense competition in obtaining properties or mortgages in which the Partnership intends to invest.
Competition may result in increased costs of suitable investments.

Since the Partnership will continuously look for new investments, you will not be able to evaluate the economic merit of
many of the investments which may be acquired by the Partnership. You must depend upon the ability of the
investment manager to select investments.

IHVESTMEHT ÆESTÆISTIOHS

The Partnership has adopted certain restrictions relating to its investment activities. These restrictions may be
changed, if the law permits, by the Partners. Pursuant to these restrictions, the Partnership will not:

1. Make any investments not related to real estate, other than liquid instruments and securities.

2. Engage in underwriting of securities issued by others.

3. Invest in securities issued by any investment company.

4. Sell securities short.

5. Purchase or sell oil, gas, or other mineral exploration or development programs.

6. Make loans to the Partners, any of their affiliates, or any investment program sponsored by such parties.

7. Enter into leaseback transactions in which the lessee is Prudential, Pruco Life, Pruco Life of New Jersey, their
affiliates, or any investment program sponsored by such parties.

8. Borrow more than 33½% (pursuant to California state requirements) of the value of the assets of the Partnership
(based upon periodic valuations and appraisals). See VALUATION OF CONTRACT OWNERS’
PARTICIPATING INTERESTS, page 15.

12 - Real Property
 SOHFLISTS OF IHTEÆEST

The investment manager, will be subject to various conflicts of interest in managing the Partnership. PIM invests in real
estate equities and mortgages for the general account of Prudential Financial affiliates and for third parties, including
through separate accounts established for the benefit of qualified pension and profit-sharing plans. PIM also manages,
or advises in the management of, real estate equities and mortgages owned by other persons. In addition, affiliates of
Prudential Financial are general partners in publicly offered limited partnerships that invest in real estate equities and
mortgage loans. Prudential Financial and its affiliates may engage in business activities which will be competitive with
the Partnership. Moreover, the Partnership may purchase properties from Prudential Financial or its affiliates.

The conflicts involved in managing the Partnership include:

1. Lack of Independent Negotiations between the Partnership and The Investment Manager. All agreements and
arrangements relating to compensation between the Partnership and the investment manager, or any affiliate of
Prudential Financial will not be the result of arm’s-length negotiations.

2. Competition by the Partnership with Prudential Financial’s Affiliates for Acquisition and Disposition of
Investments. Prudential Financial affiliates are involved in numerous real estate investment activities for their general
account, their separate accounts, and other entities. They may involve investment policies comparable to the
Partnership’s and may compete with the Partnership for the acquisition and disposition of investments. Moreover,
additional accounts or affiliated entities may be formed in the future with investment objectives similar to those of the
Partnership. In short, existing or future real estate investment accounts or entities managed or advised by Prudential
Financial affiliates may have the same management as the Partnership and may be in competition with the Partnership
regarding real property investments, mortgage loan investments, leasebacks, and the management and sale of such
investments. Prudential Financial affiliates are not obligated to present to the Partnership any particular investment
opportunity, regardless of whether the opportunity would be suitable for investment by the Partnership.

Prudential Financial affiliates have, however, adopted procedures to distinguish between equity investments available
for the Partnership as opposed to the other programs and entities described above. If investment accounts or entities
managed by Prudential Financial affiliates have investment objectives and policies similar to the Partnership and are in
the market to acquire properties or make investments at the same time as the Partnership, the following procedures will
be followed to resolve any conflict of interest. The Investment Allocation Procedure (“IAP”) has been established to
provide a reasonable and fair procedure for allocating real estate investments among the several accounts managed by
Prudential Real Estate Investors (“PREI”). The IAP is administered by an Allocation Committee composed of the
Managing Directors, Portfolio Management. Allocation decisions are made by vote of the Allocation Committee, and
are approved by the Chief Executive Officer of PREI (“CEO”). Sufficient information on each investment opportunity is
distributed to all portfolio managers, who each indicate to the Allocation Committee their account’s interest in the
opportunity. Based on such expressions of interest, the Allocation Committee allocates the investment opportunity to
an account (and may also determine a back-up account or accounts to receive the allocation in the event the account,
which is first allocated the opportunity, fails to pursue the investment for any reason) after giving appropriate
consideration to the following factors and with the goal of providing each account a fair allotment of investment
opportunities: (1) the investment opportunity’s conformity with an account’s investment criteria and objectives (including
property type, size and location, diversification, anticipated returns, investment structure, etc.); (2) the amount of funds
available for investment (in total and by property type) by an account; (3) the length of time such funds (in total and by
property type) have been available for investment; (4) any limitations or restrictions upon the availability of funds for
investment; (5) the absolute and relative (to amount of funds available) amount of funds invested and committed for the
account; (6) whether funds available for investment are discretionary or non-discretionary, particularly in relation to the
timing of the investment opportunity; (7) an account’s prior dealings or investments with the seller, developer, lender or
other counterparty; and (8) other factors which the Allocation Committee feel should be considered in fairness to all
accounts participating in the IAP.

If an account which has been allocated an investment opportunity does not proceed with the acquisition, and either (i)
no back-up account has been determined by the Allocation Committee, or (ii) all accounts which were deemed back-up
accounts do not proceed with the acquisition, the opportunity may be reallocated to another account by the Allocation
Committee. If an investment opportunity is appropriate for more than one account, the Allocation Committee may
(subject to the CEO’s approval) permit the sharing of the investment among accounts which permit such sharing. Such
division of the investment opportunity may be accomplished by separating properties (in a multi-property investment),
by co-investment, or otherwise.

13 - Real Property
3. Competition with the Partnership from Affiliates for the Time and Services of Common Officers, Directors,
and Management Personnel. As noted above, PIM and Prudential Financial affiliates are involved in numerous real
estate investment activities. Accordingly, many of the personnel of PIM and Prudential Financial affiliates who will be
involved in performing services for the Partnership have competing demands on their time. Conflicts of interest may
arise with respect to allocating time among such entities and the Partnership. The directors and officers of Prudential
Financial and affiliates will determine how much time will be devoted to the Partnership affairs. Prudential Financial
believes it has sufficient personnel to meet its responsibilities to all entities to which it is affiliated.

4. Competitive Properties. Some properties of affiliates may be competitive with Partnership properties. Among other
things, the properties could be in competition with the Partnership’s properties for prospective tenants.

5. Lessee Position. It is possible that Prudential Financial or its affiliates may be a lessee in one or more of the
properties owned by the Partnership. The terms of such a lease will be competitive with leases with non-affiliated third
parties. The Partnership limits the amount of space that an affiliate of Prudential may rent in a property owned by the
Partnership.

6. Use of Affiliates to Perform Additional Services for the Partnership. The Partnership may engage Prudential
Financial affiliates to provide additional services to the Partnership, such as real estate brokerage, mortgage servicing,
property management, leasing, property development, and other real estate-related services. The Partnership may
utilize the services of such affiliates and pay their fees, as long as the fees paid to an affiliate do not exceed the amount
that would be paid to an independent party for similar services rendered in the same geographic area.

7. Joint Ventures with Affiliates. The Partnership may enter into investments through joint ventures with Prudential
Financial, its affiliates, or investment programs they sponsor. The Partnership may enter into such a joint venture
investment with an affiliate only if the following conditions are met: (1) the affiliate must have investment objectives
substantially identical to those of the Partnership; (2) there must be no duplicative property management fee, mortgage
servicing fee or other fees; (3) the compensation payable to the sponsor of the affiliate must be no greater than that
payable to the Partnership’s investment manager; (4) the Partnership must have a right of first refusal to buy if such
affiliate wishes to sell the property held in the joint venture; and (5) the investment of the Partnership and the affiliate in
the joint venture must be made on the same terms and conditions (although not the same percentage). In connection
with such an investment, both affiliated parties would be required to approve any decision concerning the investment.
Thus, an impasse may result in the event the affiliated joint venture partners disagree. However, in the event of a
disagreement regarding a proposed sale or other disposition of the investment, the party not desiring to sell would have
a right of first refusal to purchase the affiliated joint venture partner’s interest in the investment. If this happens, it is
possible that in the future the joint venture partners would no longer be affiliated. In the event of a proposed sale
initiated by the joint venture partner, the Partnership would also have a right of first refusal to purchase the joint venture
partner’s interest in the investment. The exercise of a right of first refusal would be subject to the Partnership’s having
the financial resources to effectuate such a purchase.

If the Partnership invests in joint venture partnerships which own properties, instead of investing directly in the
properties themselves, they may be subject to risks not otherwise present. These risks include risks associated with
the possible bankruptcy of the Partnership’s co-venturer or such co-venturer at any time having economic or business
interests or goals which are inconsistent with those of the Partnership.

8. Purchase of Real Property From Prudential Financial or Affiliates. The Partnership may acquire properties
owned by Prudential Financial or its affiliates, subject to compliance with special conditions designed to minimize the
conflicts of interests. The Partnership may purchase property satisfying the Partnership’s investment objectives and
policies from an affiliate only if: (1) the applicable insurance regulators approve the Partnership’s acquisition of real
property from Prudential Financial or affiliates to the extent such approval is required under applicable insurance
regulations; (2) the Partnership acquires the property at a price not greater than the appraised value, with the appraisal
being conducted by a qualified, unaffiliated appraiser; (3) a qualified and independent real estate adviser (other than the
appraiser) reviews the proposed acquisition and provides a letter of opinion that the transaction is fair to the
Partnership; and (4) the affiliate has owned the property at least two years, the cost paid by the affiliate is established,
and any increase in the proposed purchase price over the cost to the affiliate is, in the opinion of the independent real
estate adviser, explicable by material factors (including the passage of time) that have increased the value of the
property.

14 - Real Property
 THE ÆEAL ÆÆOÆEÆTY ASSOUHT'S UHAVAILABILITY TO
SEÆTAIH SOHTÆASTS

Pruco Life has determined that it is in the best interest of Contract owners participating in the Real Property Account to
provide the Real Property Account with the flexibility to engage in transactions that may be prohibited if the Real
Property Account accepts funds under Contracts subject to ERISA or the prohibited transaction excise tax provisions of
the Internal Revenue Code. Accordingly, owners of Pruco Life Contracts that are purchased in connection with: (1)
IRAs; (2) tax deferred annuities subject to Section 403(b) of the Code; (3) other employee benefit plans which are
subject to ERISA; or (4) prohibited transaction excise tax provisions of the Code, may not select the Real Property
Account as one of the investment options under their Contract. By not offering the Real Property Account as an
investment option under such contracts, Pruco Life is able to comply with state insurance law requirements that policy
loans be made available to Contract owners.

VALUATIOH OF SOHTÆAST OWHEÆS' ÆAÆTISIÆATIHG

IHTEÆESTS

A Contract owner’s interest in the Real Property Account will initially be the amount they allocated to the Real Property
Account. Thereafter, that value will change daily. The value of a Contract owner’s interest in the Real Property
Account at the close of any day is equal to its amount at the close of the preceding day, multiplied by the "net
investment factor" for that day arising from the Real Property Account’s participation in the Partnership, plus any
additional amounts allocated to the Real Property Account by the Contract owner, and reduced by any withdrawals by
the Contract owner from the Real Property Account and by the applicable Contract charges recorded in that Contract’s
subaccount. Some of the charges will be made: (1) daily; (2) on the Contract’s monthly anniversary date; (3) at the end
of each Contract year; and (4) upon withdrawal or annuitization. Periodically Pruco Life will withdraw from the Real
Property Account an amount equal to the aggregate charges recorded in the subaccounts.

The "net investment factor" is calculated on each business day by dividing the value of the net assets of the Partnership
at the end of that day (ignoring, for this purpose, changes resulting from new contributions to or withdrawals from the
Partnership) by the value of the net assets of the Partnership at the end of the preceding business day. The value of
the net assets of the Partnership at the end of any business day is equal to the sum of all cash held by the Partnership
plus the aggregate value of the Partnership’s liquid securities and instruments, the individual real properties and the
other real estate-related investments owned by the Partnership, determined in the manner described below, and an
estimate of the accrued net operating income earned by the Partnership from properties and other real estate-related
investments, reduced by the liabilities of the Partnership, including the daily investment management fee and certain
other expenses attributable to the operation of the Partnership. See CHARGES, page 16.

The Partnership may invest in various liquid securities and instruments. These investments will generally be carried at
their market value as determine by a valuation method which the Partners deem appropriate for the particular type of
liquid security or instrument.

The value of the individual real properties and other real estate-related investments, including mortgages, acquired by
the Partnership will be determined as follows. Each property or other real estate-related investment acquired by the
Partnership will initially be valued at its purchase price. In acquiring a property or other real estate-related investment,
PIM will not obtain an independent appraisal but will instead rely on its own analysis of the investment’s fair market
value. Thereafter, all properties and most real estate-related investments will ordinarily be appraised by an
independent appraiser at least annually. At least every three months, PIM will review each property or other real
estate-related investments and adjust its valuation if it concludes there has been a change in the value of the property
or other real estate-related investment since the last valuation. The revised value will remain in effect and will be used
in each day’s calculation of the value of the Partnership’s assets until the next review or appraisal. It should be noted
that appraisals are only estimates and do not necessarily reflect the realizable value of an investment.

The estimated amount of the net operating income of the Partnership from properties and other real estate-related
investments will be based on estimates of revenues and expenses for each property and other real estate-related
investments. Annually, PIM will prepare a month-by-month estimate of the revenues and expenses ("estimated net
operating income") for each property and other real estate-related investments owned by the Partnership. Each day
PIM will add to the value of the assets, as determined above, a proportionate part of the estimated net operating
income for the month. In effect, PIM will establish a daily accrued receivable of the estimated net operating income
from each property and other real estate-related investments owned by the Partnership (the "daily accrued
receivable"). On a monthly basis, the Partnership will receive a report of actual operating results for each property and
other real estate-related investments ("actual net operating income"). Such actual net operating income will be

15 - Real Property
recognized on the books of the Partnership and the amount of the then-outstanding daily accrued receivable will be
correspondingly adjusted. In addition, as cash from a property or other real estate-related investment is actually
received by the Partnership, receivables and other accounts will be appropriately adjusted. Periodically, but at least
every three months, PIM will review its prospective estimates of net operating income in light of actual experience and
make an adjustment to such estimates if circumstances indicate that such an adjustment is warranted. PIM follows this
practice of accruing estimated net operating income from properties and other real estate-related investments because
net operating income from such investments is generally received on an intermittent rather than daily basis, and the
Partners believe it is more equitable to participating Contract owners if such net operating income is estimated and a
proportionate amount is recognized daily. Because the daily accrual of estimated net operating income is based on
estimates that may not turn out to reflect actual revenue and expenses, Contract owners will bear the risk that this
practice will result in the undervaluing or overvaluing of the Partnership’s assets.

PIM may adjust the value of any asset held by the Partnership based on events that have increased or decreased the
realizable value of a property or other real estate-related investment. For example, adjustments may be made for
events indicating an impairment of a borrower’s or a lessee’s ability to pay any amounts due or events which affect the
property values of the surrounding area. There can be no assurance that the factors for which an adjustment may be
made will immediately come to the attention of PIM. Additionally, because the evaluation of such factors may be
subjective, there can be no assurance that such adjustments will be timely made in all cases where the value of the
Partnership’s investments may be affected. All adjustments made to the valuation of the Partnership’s investments,
including adjustments to estimated net operating income, the daily accrued receivable, and adjustments to the valuation
of properties and other real estate-related investments, will be on a prospective basis only.

The above method of valuation of the Partnership’s assets may be changed, without the consent of Contract owners,
should the Partners determine that another method would more accurately reflect the value of the Partnership’s
investments. Changes in the method of valuation could result in a change in the Contract Fund values which may have
either an adverse or beneficial effect on Contract owners. Information concerning any material change in the valuation
method will be given to all Contract owners in the annual report of the operations of the Real Property Account.

Although the above-described valuation methods have been adopted because the Partners believe they will provide a
reasonable way to determine the fair market value of the Partnership's investments, there may well be variations
between the amount realizable upon disposition and the Partnership's valuation of such assets. Contract owners may
be either favorably or adversely affected if the valuation method results in either overvaluing or undervaluing the
Partnership's investments. If a Contract owner invests in the Real Property Account at a time in which the Partnership's
investments are overvalued, the Contract owner will be credited with less of an interest than if the value had been
correctly stated. A Contract owner withdrawing from the Real Property Account during such time will receive more than
he or she would if the value had been correctly stated, to the detriment of other Contract owners. The converse
situation will exist if the Partnership's assets are undervalued.

BOÆÆOWIHG BY THE ÆAÆTHEÆSHIÆ

The Partnership may borrow for Partnership purposes, including to meet its liquidity requirements and the leveraging of
currently-owned property to buy new property, subject to a maximum debt to value ratio of 33½% (pursuant to
California state requirements) based on the aggregate value of all Partnership assets. The Partnership will bear the
cost of all such borrowings. The Real Property Account, and Contract owners participating in it, will bear a portion of
any borrowing costs equal to their percentage interest in the Partnership. Moreover, although the Partnership will
generally make unleveraged investments, it reserves the right to borrow up to 80% of the value of a property (with the
value of a property determined as explained under VALUATION OF CONTRACT OWNERS’ PARTICIPATING
INTERESTS, page 15). Increasing the Partnership's assets through leveraged investments would increase the
compensation paid to PIM since its investment management fee is a percentage of the Partnership's gross assets. Any
borrowing by the Partnership would increase the Partnership's risk of loss. It could also inhibit the Partnership from
achieving its investment objectives because the Partnership's payments on any loans would have to be made
regardless of the profitability of its investments.

SHAÆGES

Pursuant to the investment management agreement, the Partnership pays a daily investment management fee which is
equal to an effective annual rate of 1.25% of the average daily gross assets of the Partnership. Certain other expenses
and charges attributable to the operation of the Partnership are also charged against the Partnership. In acquiring an
investment, the Partnership may incur various types of expenses paid to third parties, including but not limited to,
brokerage fees, attorneys' fees, architects' fees, engineers' fees, and accounting fees. After acquisition of an

16 - Real Property
investment, the Partnership will incur recurring expenses for the preparation of annual reports, periodic appraisal costs,
mortgage servicing fees, annual audit charges, accounting and legal fees, and various administrative expenses. These
expenses will be charged against the Partnership’s assets. Some of these operating expenses represent
reimbursement of the investment manager for the cost of providing certain services necessary to the operation of the
Partnership, such as daily accounting services, preparation of annual reports, and various administrative services. The
investment manager charges the Partnership mortgage loan servicing fees pursuant to the standards outlined in item 6
under CONFLICTS OF INTEREST, page 13. In addition to the various expenses charged against the Partnership’s
assets, other expenses such as insurance costs, taxes, and property management fees will ordinarily be deducted from
rental income, thereby reducing the gross income of the Partnership.

As explained earlier, charges to the Contracts will be recorded in the corresponding subaccounts of the Real Property
Account. From time to time, Pruco Life will withdraw from the Real Property Account an amount equal to the aggregate
amount of these charges. Aside from the charges to the Contracts, Pruco Life does not charge the Real Property
Account for the expenses involved in the Real Property Account’s operation. The Real Property Account will, however,
bear its proportionate share of the charges made to the Partnership as described above.

The Partnership is not a taxable entity under the provisions of the Internal Revenue Code. The income, gains, and
losses of the Partnership are attributed, for federal income tax purposes, to the Partners in the Partnership. The
earnings of the Real Property Account are, in turn, taxed as part of the operations of Pruco Life. Pruco Life is currently
not charging the Real Property Account for company federal income taxes. Pruco Life may make such a charge in the
future.

Under current laws Pruco Life may incur state and local taxes (in addition to premium taxes) in several states. At
present, Pruco Life does not charge these taxes against the Contracts or the Real Property Account, but Pruco Life
may decide to charge the Real Property Account for such taxes in the future.

ÆESTÆISTIOHS OH WITHDÆAWALS

Before allocating any portion of your net premium or purchase payments, or transferring any portion of your Contract
Fund, to the Real Property Account, you should be aware that withdrawals from the Real Property Account may have
greater restrictions than the other variable investment options available under the Contracts. Pruco Life reserves the
right to restrict transfers into or out of the Real Property Account. Apart from the limitations on transfers out of the Real
Property Account described below, Pruco Life will only restrict transfers out of the Real Property Account if there is
insufficient cash available to meet Contract owners' requests and prompt disposition of the Partnership's investments to
meet such requests could not be made on commercially reasonable terms.

Pruco Life will pay any death benefit, cash surrender value, withdrawal or loan proceeds within seven days after receipt
at a Pruco Life Service Office of all the documents required for such a payment. Other than the death benefit, which is
determined as of the date of death for life insurance products, the amount will be determined as of the date of receipt of
the request.

The funds necessary to pay any death benefit, cash surrender value, withdrawal or loan proceeds funded by the Real
Property Account will normally be obtained, first, from any cash flows into the Real Property Account on the day the
funds are required. If, on the day the funds are required, cash flows into the Real Property Account are less than the
amount of funds required, Pruco Life will seek to obtain such funds by withdrawing a portion of its interest in the
Partnership. The Partnership will normally obtain funds to meet such a withdrawal request from its net operating
income and from the liquid securities and instruments it holds. If the Partners determine that these sources are
insufficient to meet anticipated withdrawals from the Partnership, the Partnership may use a line of credit or otherwise
borrow up to 33½% (pursuant to California state requirements) of the value of the Partnership's assets. See
BORROWING BY THE PARTNERSHIP, page 16. If the Partners determine that such a borrowing by the Partnership
would not serve the best interests of Contract owners, Pruco Life may, in the event of a Contract loan or withdrawal,
rather than take the amount of any loan or withdrawal request proportionately from all investment options under the
Contract (including the Real Property Account), take any such loan or withdrawal first from the other investment options
under the Contract.

Transfers from the Real Property Account to the other investment options available under the Contract are currently
permitted only during the 30-day period beginning on the Contract anniversary. The maximum amount that may be
transferred out of the Real Property Account each year is the greater of: (a) 50% of the amount invested in the Real
Property Account or (b) $10,000. Such transfer requests received prior to the Contract anniversary will be effected on
the Contract anniversary. Transfer requests received within the 30-day period beginning on the Contract anniversary
will be effected as of the end of the valuation period in which a proper written request or authorized telephone request

17 - Real Property
is received. The "valuation period" means the period of time from one determination of the value of the amount
invested in the Real Property Account to the next. Such determinations are made when the value of the assets and
liabilities of the Partnership is calculated, which is generally at 4:00 p.m. Eastern time on each day during which the
New York Stock Exchange is open. Transfers into or out of the Real Property Account are also subject to the general
limits under the Contracts.

ÆESTÆISTIOHS OH SOHTÆAST OWHEÆS' IHVESTMEHT IH THE

ÆEAL ÆÆOÆEÆTY ASSOUHT

As explained earlier, identification and acquisition of real estate investments meeting the Partnership’s investment
objectives is a time-consuming process. Because the Real Property Account and the Partnership are managed so
they will not become investment companies subject to the Investment Company Act of 1940, the portion of the
Partnership’s assets that may be invested in securities, as opposed to non-securities real estate investments, is strictly
limited. For these reasons, Pruco Life reserves the right to restrict or limit Contract owners’ allocation of funds to the
Real Property Account. Any such restrictions are likely to take the form of restricting the timing, amount and/or
frequency of transfers into the Real Property Account and/or precluding Contract owners who have not previously
selected the Real Property Account from allocating a portion of their net premiums or purchase payments to the Real
Property Account.

FEDEÆAL IHSOME TAX SOHSIDEÆATIOHS

The federal income tax treatment of Contract benefits is described briefly in the attached prospectus for the particular
Contract you selected. Pruco Life believes that the same principles will apply with respect to Contracts funded in
whole or part by the Real Property Account. The Partnership’s conformity with the diversification standards for the
investments of variable life insurance and variable annuity separate accounts is essential to ensure that treatment. See
General Investment and Operating Policies, page 8. Pruco Life urges you to consult a qualified tax adviser.

Under the Internal Revenue Code, the Partnership is not a taxable entity and any income, gains or losses of the
Partnership are passed through to the Partners, including Pruco Life, with respect to the Real Property Account. The
Real Property Account is not a separate taxpayer for purposes of the Internal Revenue Code. The earnings of the
Real Property Account are taxed as part of the operations of Pruco Life. No charge is currently being made to the Real
Property Account for company federal income taxes. We may make such a charge in the future, see CHARGES, page
16.

DISTÆIBUTIOH OF THE SOHTÆASTS

As explained in the attached prospectus for the Contracts, Pruco Securities Corporation, a wholly-owned subsidiary of
Prudential Financial, acts as the principal underwriter of the Contracts. Consult that prospectus for information about
commission scales and other facts relating to sale of the Contracts.

STATE ÆEGULATIOH

Pruco Life is subject to regulation and supervision by the Department of Insurance of the State of Arizona, which
periodically examines its operations and financial condition. It is also subject to the insurance laws and regulations of
all jurisdictions in which it is authorized to do business.

Pruco Life is required to submit annual statements of its operations, including financial statements, to the insurance
departments of the various jurisdictions in which it does business to determine solvency and compliance with local
insurance laws and regulations.

In addition to the annual statements referred to above, Pruco Life is required to file with Arizona and other jurisdictions
a separate statement with respect to the operations of all its variable contract accounts, in a form promulgated by the
National Association of Insurance Commissioners.

ADDITIOHAL IHFOÆMATIOH

Pruco Life has filed a registration statement with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, relating to the offering described in this prospectus. This prospectus does not include all of the
information set forth in the registration statement. Certain portions have been omitted pursuant to the rules and

18 - Real Property
regulations of the SEC. All reports and information filed by Pruco Life can be inspected and copied at the Public
Reference Section of the Commission at 450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549, and at certain
of its regional offices: Midwestern Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, IL 60604;
Northeastern Regional Office SEC, 233 Broadway, New York, NY 10279, or by telephoning (800) SEC-0330.

The SEC maintains a Web site (http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.

Further information may also be obtained from Pruco Life. The address and telephone number are on the cover of this
prospectus.

EXÆEÆTS

The financial statements of the Partnership as of December 31, 2001 and 2000 and for each of the three years in the
period ended December 31, 2001, the financial statement schedules of the Partnership as of December 31, 2001 and
the financial statements of the Real Property Account as of December 31, 2001 and 2000 and for each of the three
years in the period ended December 31, 2001 included in this prospectus have been so included in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting. PricewaterhouseCoopers LLP’s principal business address is 1177 Avenue of the Americas,
New York, New York 10036.

LITIGATIOH

No litigation is pending, and no litigation is known to be contemplated by governmental authorities, that would have an
adverse material effect upon the Real Property Account or the Partnership.

ÆEÆOÆTS TO SOHTÆAST OWHEÆS

If you allocate a portion of your Contract Fund to the Real Property Account, Pruco Life will mail you an annual report
containing audited financial statements for the Partnership and an annual statement showing the status of your
Contract Fund and any other information that may be required by applicable regulation or law.

MAHAGEMEHT'S DISSUSSIOH AHD AHALYSIS OF FIHAHSIAL

SOHDITIOH AHD ÆESULTS OF OÆEÆATIOHS

All of the assets of the Real Property Account (the “Account”) are invested in the Prudential Variable Contract Real
Property Partnership (the “Partnership”). Correspondingly, the liquidity, capital resources and results of operations for
the Real Property Account are contingent upon the Partnership. Therefore, all of management’s discussion of these
items is at the Partnership level. The partners in the Partnership are The Prudential Insurance Company of America,
Pruco Life Insurance Company, and Pruco Life Insurance Company of New Jersey (collectively, the “Partners”).

The following analysis of the liquidity and capital resources and results of operations of the Partnership should be read
in conjunction with the Financial Statements and the related Notes to the Financial Statements included elsewhere
herein.

Liquidity and Capital Resources

As of December 31, 2001, the Partnership’s liquid assets consisting of cash, cash equivalents, and marketable
securities were $26.6 million, an increase of $11.2 million from December 31, 2000. This increase was due primarily
to the liquidation of the VAL REIT Fund during the fourth quarter, offset by distributions to partners and the acquisition
of real estate investments as described below. Sources of liquidity include net cash flow from property operations,
interest from short-term investments, and dividends from REIT shares.

The Partnership’s investment policy allows up to 30% investment in cash and short-term obligations, although the
Partnership generally holds approximately 10% of its assets in cash and short-term obligations. At December 31,
2001, 11.3% of the Partnership’s assets consisted of cash and cash equivalents.

In 1986, Prudential committed to fund up to $100 million to enable the Partnership to acquire real estate investments.
Contributions to the Partnership under this commitment have been utilized for property acquisitions, and returned to

19 - Real Property
Prudential on an ongoing basis from contract owners’ net contributions and other available cash. The amount of the
commitment is reduced by $10 million for every $100 million in current value net assets of the Partnership. Thus with
$198 million in net assets, the commitment has been automatically reduced to $90 million. As of December 31, 2001,
Prudential’s equity interest in the Partnership, on a cost basis, under this commitment (held through the Real Property
Accounts) was $44 million. Prudential does not intend to make contributions during the 2002 fiscal year and will begin
to phase out this commitment over the next several years.

The Partnership made $22 million in distributions to the Partners during 2000, and on October 22, 2001, the
Partnership made an $18 million distribution to the partners. Distributions made to the Partners during 2001 were
based upon the percentage of assets invested in short-term obligations, taking into consideration anticipated cash
needs of the Partnership including potential property acquisitions, property dispositions and capital expenditures.
Management anticipates that its current liquid assets and ongoing cash flow from operations will satisfy the
Partnership’s needs over the next twelve months and the foreseeable future.

The Partnership has completed two real estate acquisitions during the year. A controlling interest in a portfolio of four
apartment complexes based in Gresham and Salem, OR, was acquired in February 2001. This portfolio consists of
492 units containing a total of 419,487 rentable square feet. The acquisition was financed by contributions of $8.6
million from the Partnership, $0.5 million from the joint venture partner, and the assumption of a $9.0 million mortgage
loan by the joint venture partnership. Also, in May, the Partnership acquired a controlling interest in a 154,540 square
foot retail center based in Hampton, VA. The acquisition was financed by contributions of $4.0 million from the
Partnership, $0.4 million from the joint venture partner, and the assumption of a $10.3 million mortgage loan. During
the twelve months of 2001, the Partnership also spent approximately $4.4 million in capital expenditures.
Approximately $0.6 million was associated with renovation costs pertaining to the apartment complex located in
Jacksonville, FL. The balance was associated with leasing activity at the office properties located in Oakbrook
Terrace, IL; Beaverton, OR; Brentwood, TN; Lisle, IL; and the industrial property located in Salt Lake City, UT. In
addition, improvements were done to the retail center located in Roswell, GA.

Results of Operations

The following is a brief year-to-date comparison of the Partnership’s results of operations for the years ended
December 31, 2001, 2000, and 1999.

2001 vs. 2000

The following table presents a year-to-date comparison of the Partnership’s sources of net investment income and
realized and unrealized gains or losses by investment type.

Twelve Months Ended

December 31,
2001 2000

Net Investment Income:

Office properties $4,766,035 $ 5,356,934

Apartment complexes 3,735,912 3,446,245
Retail property 2,950,333 2,772,438
Industrial properties 545,003 1,257,146
Equity in income of real estate 686,801 791,596
partnership
Dividend income from real
estate investment trust 2,157,647 1,744,611
Other (including interest income,
Investment management fee, etc.) (2,491,425) (1,730,853)

Total Net Investment Income $12,350,306 $ 13,638,117

20 - Real Property
 Twelve Months Ended
December 31,
2001 2000
Net Unrealized (Loss) Gain on
Real Estate Investments:

Office properties ($777,380) ($2,434,245)

Apartment complexes 415,417 2,717,915
Retail property (94,504) (264,300)
Industrial properties (2,105,641) (935,721)
Interest in real estate properties 226,024 140,614
Real estate investment trust - 2,618,815
(2,336,084) 1,843,078

Net Realized (Loss) Gain on

Real Estate Investments:

Office properties - $186,920

Apartment complexes - -
Industrial properties - -
Interest in real estate properties - -
Real estate investment trust (211,665) 2,457,024
(211,665) 2,643,944

Net Realized and Unrealized (Loss)

Gain on Real Estate Investments ($2,547,749) $4,487,022

The Partnership’s net investment income for the twelve months ended December 31, 2001 was $12.4 million, a
decrease of $1.3 million from the corresponding period in the prior year. This decrease was primarily due to the sale
of an office property located in Morristown, NJ in the fourth quarter of 2000.

Equity in income of real estate partnership was $0.7 million for the twelve months of 2001, a decrease of $0.1 million,
or 13.2%, from $0.8 million in the corresponding period in 2000. The decrease is primarily due to a temporary
decrease in rental rates at the retail portfolio located in Kansas City, KS and MO when compared to the prior year.

Dividend income from real estate investment trusts amounted to approximately $2.2 million for the twelve months
ended December 31, 2001, an increase of approximately $0.5 million, or 23.7%, from approximately $1.7 million in the
corresponding period in 2000. This increase was primarily due to an increase in the amount invested in REIT stocks
subsequent to the 3rd quarter 2000.

Interest on short-term investments decreased approximately $1.0 million or 76.9% for the twelve months ended
December 31, 2001 due primarily to a significantly lower average cash balance compared to the corresponding period
in 2000. Cash, cash equivalents, and marketable securities maintained during the twelve months ended December
31, 2001 averaged approximately $13.0 million when compared to the twelve months ended December 31, 2000 when
the average was approximately $19.1 million.

Operating expenses increased $0.9 million, or 21.4%, in the twelve months of 2001 compared to the corresponding
period in 2000. These increases were primarily due to the Partnership’s acquisition of a controlling interest in the two
investments discussed previously.

Interest expense increased $1.0 million, or 142.4%, in the twelve months of 2001 compared to the corresponding
period in 2000. These increases were primarily due to the Partnership’s assumption of a $9.0 million and a $10.3
million mortgage loan in conjunction with the acquisition of a controlling interest in the two investments discussed
previously.

Minority interest in consolidated partnerships increased $0.1 million, or 1,256.4%, for the twelve months ended
December 31, 2001. These increases were due to the Partnership’s acquisition of a controlling interest in the two
investments discussed previously.

21 - Real Property
Office Properties

Net investment income from property operations for the office sector decreased approximately $0.6 million, or 11.0%,
for the twelve months ended December 31, 2001 when compared to the corresponding period in 2000. This was
primarily due to the sale of the Morristown, NJ office center in October 2000.

The five office properties owned by the Partnership experienced a net unrealized loss of approximately $0.8 million
during the twelve months of 2001. One of the Brentwood, TN properties experienced a net unrealized loss of
approximately $0.7 million primarily due to the near-term expiration and expected move-out of the single tenant at the
property in July 2002. The Beaverton, OR and the Lisle, IL office properties experienced a net unrealized loss of
approximately $0.4 million and $0.2 million, respectively, primarily due to softening market conditions. Offsetting these
unrealized losses was an unrealized gain of approximately $0.6 million at the office property located in Oakbrook
Terrace, IL. This unrealized gain was attributable to the signing of two new leases, which brought the leased area
from 55% to 79%.

The office properties owned by the Partnership experienced a net unrealized loss of approximately $2.4 million during
2000. During 2000, the Oakbrook Terrace, IL property decreased $1.6 million in value due to a lease termination
associated with 45% of the space and weaker market conditions. One of the Brentwood, TN office properties also
experienced a net unrealized loss of approximately $0.8 million primarily due to capital expenditures on the property
that were not reflected as an increase in market value.

Occupancy at one of the Brentwood, TN office properties decreased from 95% at December 31, 2000 to 74% at
December 31, 2001, while occupancy at the other Brentwood, TN location remained unchanged at 100%. Occupancy
at the Lisle, IL office property increased from 88% at December 31, 2000 to 100% at December 31, 2001. Occupancy
at the Beaverton, OR property remained unchanged at 100%. Occupancy at the Oakbrook Terrace, IL property
decreased from 100% at December 31, 2000 to 79% at December 31, 2001. As of December 31, 2001 all vacant
spaces were being marketed.

Apartment Complexes

Net investment income from property operations for the apartment sector was $3.7 million for the twelve months ended
December 31, 2001, an increase of $0.3 million, or 8.4%, when compared to the corresponding period in 2000. This
increase was primarily due to the acquisition of the controlling interest in the apartment complex portfolio located in
Gresham and Salem, OR.

The apartment complexes owned by the Partnership experienced a net unrealized gain of $0.4 million for the twelve
months ended December 31, 2001 compared to a net unrealized gain of $2.7 million for the twelve months ended
December 31, 2000. The majority of the unrealized gain experienced in 2001 was primarily due to the Atlanta, GA
apartment complex that experienced an increase in value of $0.9 million due to sub-metering of the apartments for
water usage and lower real estate taxes than previously estimated. The apartment complex portfolio located in
Gresham and Salem, OR also experienced an increase in value of $0.4 million due to the completion of capital
improvements and the reduction of administrative expense estimates. Offsetting these unrealized gains was the
apartment complex located in Raleigh, NC, which experienced a net unrealized loss of $0.5 million due to a decrease
in occupancy. The apartment complex in Jacksonville, FL also experienced a decrease in value of $0.4 million due to
higher replacement reserve expenses, higher operating expense projections, and slightly lower market rent estimates.

The apartment complexes owned by the Partnership experienced a net unrealized gain of $2.7 million in 2000. The
largest share of the unrealized gain for 2000 or $1.7 million was experienced by the apartment complex located in
Atlanta, GA primarily due to increases in rental rates, stabilized occupancy, and lower operating expense estimates.
The apartment complex located in Raleigh, NC also experienced a net unrealized gain of $0.2 million due to increases
in rental rates.

The occupancy at the Raleigh, NC complex decreased from 92% at December 31, 2000 to 82% at December 31,
2001. Occupancy at the Atlanta, GA complex decreased from 98% at December 31, 2000 to 83% at December 31,
2001. Occupancy at the apartment complex in Jacksonville, FL decreased from 91% at December 31, 2000 to 88% at
December 31, 2001. Occupancy at the Gresham and Salem, OR apartment complexes averaged approximately 93%
at December 31, 2001. As of December 31, 2001, all available vacant spaces were being marketed.

22 - Real Property
Retail Properties

Net investment income for the Partnership’s retail properties located in Roswell, GA and Hampton, VA was
approximately $3.0 million for the twelve months ended December 31, 2001 and approximately $2.8 million for the
twelve months ended December 31, 2000. The increase is primarily due to the acquisition of the controlling interest in
the 154,540 square foot retail center based in Hampton, VA.

The retail properties experienced a net unrealized loss of $0.1 million and a net unrealized loss of $0.3 million for the
twelve months ended December 31, 2001 and 2000, respectively. The retail center located in Roswell, GA
experienced a loss of $0.6 million for 2001 due to increased capital expenditures and a slight drop in occupancy.
Offsetting this unrealized loss was an unrealized gain of $0.5 million resulting from the market value appraisal received
on the newly acquired retail center located in Hampton, VA.

The unrealized loss experienced in 2000 was due to the Roswell, GA property due to lower income projections,
coupled with capital expenditures that did not increase the market value of the property.

Occupancy at the shopping center located in Roswell, GA decreased from 97% at December 31, 2000 to 92% at
December 31, 2001. The newly acquired retail center in Hampton, VA had an occupancy of 99% at December 31,
2001. As of December 31, 2001, all vacant spaces were being marketed.

Industrial Properties

Net investment income from property operations for the industrial properties decreased from $1.3 million for the twelve
months ended December 31, 2000 to $0.5 million for the corresponding period ended December 31, 2001. The
majority of these decreases were due to decreased occupancy at the properties located in Bolingbrook, IL and Salt
Lake City, UT. Even though the Salt Lake City, UT location increased occupancy for the year, the new tenants did not
move in until the end of the third quarter and there was significant vacancy at the Bolingbrook, IL facility for a portion of
2001.

The three industrial properties owned by the Partnership experienced a net unrealized loss of approximately $2.1
million for the twelve months ended December 31, 2001 compared to a net unrealized loss of approximately $0.9
million in 2000. The majority of the unrealized loss in 2001 was attributable to the Salt Lake City, UT industrial
property. This loss of approximately $1.3 million was due to a decrease in market rents. The Bolingbrook, IL facility
experienced a loss of $0.9 million due to a decrease in rental rates and softening market conditions.

The three industrial properties owned by the Partnership experienced a net unrealized loss of approximately $0.9
million in 2000. The majority of the decrease for 2000 was attributable to the Aurora, CO industrial property, which had
a loss of approximately $0.7 million due to more conservative assumptions regarding rental rates, lease-up time and
terminal capitalization rates used by the appraiser. In addition, capital expenditures were incurred at the property that
were not reflected as an increase in market value. The industrial property located in Bolingbrook, IL experienced an
unrealized loss of $0.4 million in 2000. This loss was due to the expiration of the single tenant lease with no
replacement tenant being signed as of yet. The space was leased during the fourth quarter of 2000 on a temporary
basis, and partially leased at the end of 2001 to a different temporary tenant.

The occupancy at the Bolingbrook, IL property decreased from 100% at December 31, 2000 to 98% at December 31,
2001. The occupancy at the Salt Lake City, Utah property increased from 34% at December 31, 2000 to 77% at
December 30, 2001. The Aurora, CO property’s occupancy rate remained unchanged at 75% at December 31, 2000
and 2001. As of December 31, 2001, all vacant spaces were being marketed.

Equity in Income of Real Estate Partnership

During the twelve months ended December 31, 2001, income from the investment located in Kansas City, KS and MO
amounted to $0.7 million, a decrease of 13.2% from $0.8 million at December 31, 2000. The decrease is primarily due
to a temporary decrease in rental rates.

The equity investment experienced a net unrealized gain of $0.2 million and $0.1 million for the twelve months ended
December 31, 2001 and 2000, respectively. The unrealized gain of $0.2 million for the twelve months ended
December 31, 2001 was primarily due to the addition of a tenant that will provide a substantial amount of income to the
center in rent and the addition of new space to house this tenant.

23 - Real Property
The retail portfolio located in Kansas City, KS and MO had an average occupancy of 90% at December 31, 2001,
which remained unchanged from December 31, 2000. As of December 31, 2001, all vacant spaces were being
marketed.

Real Estate Investment Trusts

During the twelve months ended December 31, 2001, the Partnership’s remaining investment in REITS recognized a
realized loss of $0.2 million due to the sale of the Partnership’s remaining investment in REITs. The Partnership
recognized a net realized gain of $2.5 million in 2000 primarily due to the sale of the Partnership’s remaining
investment in Prologis REIT shares and sales of other REIT investments.

The Partnership recognized an unrealized gain of $2.6 million on investments in REITs for the twelve months ended
December 31, 2000, which reflects changes in the market value of REIT shares held by the Partnership.

Other

Other net investment income decreased approximately $0.8 million during the twelve months ended December 31,
2001 when compared to the corresponding period in 2000. Other net investment income includes interest income from
short-term investments, investment management fees, and expenses not related to property activities. The decreases
discussed above were primarily due to interest income on short-term investments, which decreased primarily as a
result of the Partnership maintaining a significantly lower cash balance when compared to the corresponding periods
last year coupled with a decrease in interest rates.

2000 vs. 1999

The following table presents a comparison of the Partnership’s sources of net investment income, and realized and
unrealized gains or losses by investment type, for the twelve months ended December 31, 2000 and December 31,
1999.

Twelve Months Ended

December 31,
2000 1999

Net Investment Income:

Office properties $ 5,356,934 $ 7,133,356

Apartment complexes 3,446,245 2,556,743
Retail property 2,772,438 2,676,387
Industrial properties 1,257,146 894,258
Equity in income of real estate 791,596 98,375
partnership
Dividend income from real
estate investment trust 1,744,611 1,221,843
Other (including interest income,
Investment management fee, etc.) (1,730,853) (1,301,373)

Total Net Investment Income $ 13,638,117 $ 13,279,589

24 - Real Property
 Twelve Months Ended
December 31,
2000 1999
Unrealized Gain (Loss) on
Real Estate Investments:

Office properties ($2,434,245) ($3,267,264)

Apartment complexes 2,717,915 607,234
Retail property (264,300) (1,770,462)
Industrial properties (935,721) 209,503
Interest in real estate properties 140,614 (680,870)
Real estate investment trust 2,618,815 (2,282,044)
1,843,078 (7,183,903)

Realized Gain (Loss) on

Real Estate Investments:

Office properties $186,920 -

Apartment complexes - -
Industrial properties - (1,485)
Interest in real estate properties - 45,126
Real estate investment trust 2,457,024 (76,784)
2,643,944 (33,143)

Total Realized and Unrealized Gain

(Loss) on Real Estate Investments $4,487,022 ($7,217,046)

The Partnership’s net investment income for 2000 was $13.6 million, an increase of $0.3 million from net investment
income of $13.3 million in 1999.

Equity in income of real estate partnership increased $0.7 million, or 704.7%, in 2000 due to the acquisition of an
equity investment interest in the retail portfolio located in the Kansas City, MO area. This interest was not acquired
until September 30, 1999. Therefore, equity in income of real estate partnerships for the period ended December 31,
1999 represents only three months of activity, while activity for the period ended December 31, 2000 represents a full
year of activity.

Dividend income from real estate investment trusts was $1.7 million for the year ended December 31, 2000, an
increase of $0.5 million or 42.8% from the corresponding period in 1999. This increase was primarily due to higher
amounts invested in real estate investment trusts. Amounts invested in REIT shares averaged approximately $28.6
million during 2000 compared to approximately $22.4 million during 1999.

Interest on short-term investments decreased approximately $0.4 million or 25.0% for the twelve months ended
December 31, 2000 due primarily to a significantly lower average cash balance. Cash and cash equivalents during
2000 averaged approximately $16.6 million compared to approximately $32.0 million during 1999.

Operating expenses increased $0.6 million or 15.7% to $4.4 million during the period ended December 31, 2000 when
compared to the corresponding period in 1999. This increase was primarily a result of the Partnership’s acquisition of
a controlling interest in the apartment complex located in Jacksonville, FL.

Interest expense increased $0.6 million, or 404.1%, in 2000 when compared to the corresponding periods in 1999.
This increase was due to the Partnership’s acquisition on September 30, 1999 of a controlling interest in the apartment
complex located in Jacksonville, FL, which was acquired subject to $10.2 million in debt.

25 - Real Property
Office Properties

Net investment income from property operations for the office sector decreased approximately $1.8 million, or 24.9%,
in 2000 when compared to 1999. This decrease was primarily due to lower revenue levels experienced by the
Oakbrook Terrace, IL office complex during 2000 as a result of the lease termination fee received during 1999 coupled
with a corresponding decrease in occupancy. A 36% decrease in occupancy at one of the Brentwood, TN office
properties also contributed to the decrease.

The office properties owned by the Partnership experienced a net unrealized loss of approximately $2.4 million during
2000 compared to a net unrealized loss of $3.3 million in 1999.

During 2000, the Oakbrook Terrace, IL property decreased $1.6 million in value due to a lease termination associated
with 45% of the space and weaker market conditions. One of the Brentwood, TN office properties also experienced a
net unrealized loss of approximately $0.8 million primarily due to capital expenditures on the property that were not
reflected as an increase in market value.

Approximately half of the $3.3 million net unrealized loss in 1999 was attributable to the office building located in
Oakbrook Terrace, IL, which experienced costs associated with re-leasing and expected vacancy resulting from the
lease termination exercised by a tenant. The Beaverton, OR office property also experienced a net unrealized loss of
approximately $0.8 million. This decline in value was partially attributable to an anticipated reduction in investor
demand for suburban office properties. The Lisle, IL office property also experienced a net unrealized loss of
approximately $0.7 million primarily due to capital expenditures on the property that were not reflected as an increase
in market value.

The Morristown, NJ office property was sold on October 26, 2000 and resulted in a realized gain of approximately $0.2
million.

Occupancy at the Lisle, IL office property increased from 88% at December 31, 1999 to 94% at December 31, 2000.
Occupancy at one of the Brentwood, TN office complexes decreased from 95% to 59% from December 31, 1999 to
December 31, 2000, while occupancy at the other Brentwood, TN office property remained unchanged at 100%.
Occupancy at the Oakbrook Terrace, IL office complex decreased from 100% at December 31, 1999 to 52% at
December 31, 2000, while occupancy at the Beaverton, OR office complex decreased from 100% at December 31,
1999 to 95% at December 31, 2000. As of December 31, 2000 all vacant spaces were being marketed.

Apartment Complexes

Net investment income from property operations for the apartment sector was $3.4 million in 2000, an increase of $0.9
million or 34.8% compared with 1999. This increase was primarily due to the acquisition of the controlling interest in
the apartment complex located in Jacksonville, FL.

The apartment complexes owned by the Partnership experienced a net unrealized gain of $2.7 million and $0.6 million
in 2000 and 1999, respectively. The largest share of the unrealized gain for 2000 or $1.7 million was experienced by
the apartment complex located in Atlanta, GA primarily due to increases in rental rates, stabilized occupancy, and
lower operating expense estimates. The apartment complex located in Raleigh, NC also experienced a net unrealized
gain of $0.2 million due to increases in rental rates.

The net unrealized gain of $0.6 million during 1999 was primarily experienced by the Atlanta, GA apartment complex
which increased in value due to improved market conditions which resulted in higher rent levels.

The occupancy at the Atlanta, GA complex remained unchanged at 98% as of December 31, 1999 and December 31,
2000. Occupancy at the apartment complex in Raleigh, NC also remained unchanged at 92% as of December 31,
1999 and December 31, 2000. Occupancy at the Jacksonville, FL apartment complex increased from 89% as of
December 31, 1999 to 91% as of December 31, 2000. This increase is largely a result of renovations completed at the
project. As of December 31, 2000, all available vacant units were being marketed.

Retail Property

Net investment income for the twelve months ended December 31, 2000 and 1999 for the Partnership’s retail property
located in Roswell, GA was approximately $2.7 million for both periods.

26 - Real Property
The retail property experienced a net unrealized loss of $0.3 million and $1.8 million in 2000 and 1999, respectively.
The unrealized loss experienced by the property in 2000 was due to lower projected income growth, coupled with
capital expenditures which did not increase the market value of the property. The decrease in value in 1999 was
attributable to a declining position of the property in the market.

Occupancy at the shopping center located in Roswell, GA decreased from 97% as of December 31, 1999 to 96% as
of December 31, 2000. As of December 31, 2000, all vacant space was being marketed.

Industrial Properties

Net investment income from property operations for the industrial properties increased from $0.9 million in 1999 to
$1.3 million in 2000. The majority of the increase was a result of increased occupancy throughout 2000 at the property
located in Aurora, CO.

The three industrial properties owned by the Partnership experienced a net unrealized loss of approximately $0.9
million and a net unrealized gain of $0.2 million in 2000 and 1999, respectively. The majority of the decrease for 2000
was attributable to the Aurora, CO industrial property, which had a loss of approximately $0.7 million due to more
conservative assumptions regarding rental rates, lease-up time and terminal capitalization rates used by the appraiser.
In addition, capital expenditures were incurred at the property which were not reflected as an increase in market
value. The industrial property located in Bolingbrook, IL experienced an unrealized loss of $0.4 million in 2000. This
loss was due to the expiration of the single tenant lease with no replacement tenant being signed as of yet. A portion of
the space was temporarily leased during the fourth quarter of 2000.

The occupancy at the Bolingbrook, IL property decreased from 100% at December 31, 1999 to 45% at December 31,
2000. As of December 31, 2000, the Salt Lake City, Utah property was 50% leased with two tenants. However, one
tenant for approximately 33% of the space was bankrupt and had moved out of the space by year-end. The Salt Lake
City, Utah property had an occupancy rate of 34% at December 31, 1999. The Aurora, CO property’s occupancy rate
remained unchanged at 75% from December 31, 1999 to December 31, 2000. As of December 31, 2000, all vacant
spaces were being marketed.

Equity in Income of Real Estate Partnership

On September 30, 1999, the Partnership invested in an equity joint venture of retail centers located in the Kansas City,
MO area. During the twelve months ended December 31, 2000, income from this investment amounted to $0.8 million
compared to $0.1 million for the corresponding period in 1999. The increase in income was attributable to the
Partnership holding the investment for a full year during 2000 as opposed to only three months during 1999. This
investment experienced a net unrealized gain in 2000 of $0.1 million. During 1999, the investment experienced a net
unrealized loss of $0.7 million, primarily due to capital expenditures on the properties that were not reflected as an
increase in market value.

The retail portfolio located in the Kansas City, MO area had an average occupancy of 91% as of December 31, 2000
compared to an average occupancy of 90% as of December 31, 1999. As of December 31, 2000, all vacant spaces
were being marketed.

Real Estate Investment Trust

The Partnership recognized a net realized gain from real estate investment trusts of $2.5 million in 2000 primarily due
to the sale of the Partnership’s remaining investment in ProLogis REIT shares and sales of other REIT investments.

The Partnership’s investment in REIT shares experienced an unrealized gain of $2.6 million and an unrealized loss of
$2.3 million for the twelve months ended December 31, 2000 and 1999, respectively. These changes in unrealized
gain and loss reflect changes in the market value of REIT shares held by the Partnership.

Other

Other net investment income decreased $0.5 million during 2000 compared to the corresponding period last year.
Other net investment income includes interest income from short-term investments, investment management fees, and
expenses not related to property activities. The decrease in 2000 was primarily due to lower interest income on short-
term investments primarily as a result of the Partnership maintaining a significantly lower cash balance as noted
previously.

27 - Real Property
Information Concerning Forward-Looking Statements

Certain statements contained in Management’s Discussion and Analysis may be considered forward-looking
statements. Words such as “expects,” “believes,” “anticipates,” “intends,” “plans,” or variations of such words are
generally part of forward-looking statements. Forward-looking statements are made based upon management’s
current expectations and beliefs concerning future developments and their potential effects upon the Partnership.
There can be no assurance that future developments affecting the Partnership will be those anticipated by
management. There are certain important factors that could cause actual results to differ materially from estimates or
expectations reflected in such forward-looking statements including without limitation, changes in general economic
conditions, including the performance of financial markets and interest rates; market acceptance of new products and
distribution channels; competitive, regulatory or tax changes that affect the cost or demand for the Partnership’s
products; and adverse litigation results. While the Partnership reassesses material trends and uncertainties affecting
its financial position and results of operations, it does not intend to review or revise any particular forward-looking
statement referenced in this Management’s Discussion and Analysis in light of future events. Readers should consider
the information referred to above when reviewing any forward-looking statements contained in this Management’s
Discussion and Analysis.

Inflation

The Partnership’s leases with a majority of its commercial tenants provide for recoveries of expenses based upon the
tenant’s proportionate share of, and/or increases in, real estate taxes and certain operating costs, which may reduce
the Partnership’s exposure to increases in operating costs resulting from inflation.

Critical Accounting Policies

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”)
requires the application of accounting policies that often involve a significant degree of judgment. Management, on an
ongoing basis, reviews critical estimates and assumptions. If management determines, as a result of its consideration
of facts and circumstances that modifications in assumptions and estimates are appropriate, results of operations and
financial position as reported in the Consolidated Financial Statements may change significantly.

The following sections discuss critical accounting policies applied in preparing our financial statements that are most
dependent on the application of estimates and assumptions.

Valuation of Investments

Real Estate Investments - The Partnership's investments in real estate are initially valued at their purchase price.
Thereafter, real estate investments are reported at their estimated market values based upon appraisal reports
prepared by independent real estate appraisers (members of the Appraisal Institute or an equivalent organization)
within a reasonable amount of time following acquisition of the real estate and no less frequently than annually
thereafter. The Chief Real Estate Appraiser of PIM’s Risk Management Unit is responsible to assure that the valuation
process provides objective and accurate market value estimates.

The purpose of an appraisal is to estimate the market value of real estate as of a specific date. Market value has been
defined as the most probable price for which the appraised real estate will sell in a competitive market under all
conditions requisite for a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self interest,
and assuming that neither is under undue duress.

Real estate partnerships are valued at the Partnership’s equity in net assets as reflected in the partnership’s financial
statements with properties valued as described above.

As described above, the estimated market value of real estate and real estate related assets is determined through an
appraisal process. These estimated market values may vary significantly from the prices at which the real estate
investments would sell since market prices of real estate investments can only be determined by negotiation between
a willing buyer and seller. Although the estimated market values represent subjective estimates, management
believes these estimated market values are reasonable approximations of market prices and the aggregate value of
investments in real estate is fairly presented as of December 31, 2001 and 2000. Further discussion surrounding our
policies and procedures for valuing Real Estate Investments can be found in Footnote 2 to the Consolidated Financial
Statements.

28 - Real Property
Investment in Real Estate Investment Trusts - Shares of real estate investment trusts (REITs) are generally valued at
their quoted market price. These values may be adjusted for discounts relating to restrictions, if any, on the future
sale of these shares, such as lockout periods or limitations on the number of shares which may be sold in a given time
period. Any such discounts are determined by the Chief Real Estate Appraiser.

Other Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

QUAHTITATIVE AHD QUALITATIVE DISSLOSUÆES ABOUT

MAÆKET ÆISK

Interest Rate Risk. The Partnership’s exposure to market rate risk for changes in interest rates relates to about
28.06% of its investment portfolio consisting primarily of short-term fixed rate commercial paper and fixed and variable
interest rate debt. The Partnership does not use derivative financial instruments. By policy, the Partnership places its
investments with high quality debt security issuers, limits the amount of credit exposure to any one issuer, limits
duration by restricting the term, and holds investments to maturity except under rare circumstances.

The table below presents the amounts and related weighted interest rates of the Partnership’s cash equivalents and
short-term investments at December 31, 2001:

Estimated Market Average

Maturity Value Interest Rate
(in $ millions)

Cash equivalents 0-3 months $25.3 1.51%

Short-term 3-12 months $0 0%

investments

The table below discloses the Partnership’s fixed and variable rate debt as of December 31, 2001. Approximately
$19.0 million of the Partnership’s long-term debt bears interest at fixed rates and therefore the fair value of these
instruments are affected by changes in market interest rates. The following table presents principal cash flows (in
thousands) based upon maturity dates of the debt obligations and the related weighted-average interest rates by
expected maturity dates for the fixed rate debt. The interest rate on the variable rate debt is equal to the 6-month
Treasury rate plus 1.565%. It is subject to a maximum of 11.345% and a minimum of 2.345%. The interest rate on the
variable rate debt as of December 31, 2001 was 5.735%.

Debt (in $ thousands), Estimated

including current portion 2002 2003 2004 2005 2006 Thereafter Total Fair Value
Fixed Rate $536 $577 $619 $665 $8,361 $8,240 $18,998 $18,583
Average Fixed Interest Rate 7.437% 7.449% 7.471% 7.491% 7.491% 6.750% 6.950%
Variable Rate $142 $159 $168 $178 $9,350 $0 $9,997 $10,038

The Partnership is exposed to market risk from tenants. While the Partnership has not experienced any significant
credit losses, in the event of a significant rising interest rate environment and/or economic downturn, defaults could
increase and result in losses to the Partnership, which would adversely affect its operating results and liquidity.

FIHAHSIAL STATEMEHTS

Following are financial statements and independent accountant's reports of the Real Property Account, as well as
financial statements and independent accountant's reports of the Partnership.

29 - Real Property
 FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT

STATEMENTS OF NET ASSETS

December 31, 2001 and 2000
2001 2000
ASSETS
Investment in The Prudential Variable Contract
Real Property Partnership (Note 3) $ 108,557,379 $ 112,527,164
Net Assets $ 108,557,379 $ 112,527,164

NET ASSETS, representing:

Equity of contract owners (Note 4) $ 78,352,169 $ 78,534,051
Equity of Pruco Life Insurance Company (Note 2D) 30,205,210 33,993,113
$ 108,557,379 $ 112,527,164

Units outstanding 50,243,768 54,268,486

STATEMENTS OF OPERATIONS
For the years ended December 31, 2001, 2000 and 1999
2001 2000 1999
INVESTMENT INCOME
Net investment income from Partnership operations $ 6,766,150 $ 7,521,480 $ 7,491,106

EXPENSES
Charges to contract owners for assuming mortality risk and
expense risk and for administration (Note 5) 486,471 481,819 514,519
NET INVESTMENT INCOME 6,279,679 7,039,661 6,976,587

NET REALIZED AND UNREALIZED GAIN

(LOSS) ON INVESTMENTS
Net change in unrealized gain (loss) on investments in Partnership (1,302,684) 978,929 (3,986,964)
Realized gain (loss) on sale of investments in Partnership (115,961) 1,458,147 (18,696)
NET GAIN (LOSS) ON INVESTMENTS (1,418,645) 2,437,076 (4,005,660)

NET INCREASE IN NET ASSETS

RESULTING FROM OPERATIONS $ 4,861,034 $ 9,476,737 $ 2,970,927

STATEMENTS OF CHANGES IN NET ASSETS

For the years ended December 31, 2001, 2000 and 1999
2001 2000 1999
OPERATIONS
Net investment income $ 6,279,679 $ 7,039,661 $ 6,976,587
Net change in unrealized gain (loss) on investments in Partnership (1,302,684) 978,929 (3,986,964)
Net realized gain (loss) on sale of investments in Partnership (115,961) 1,458,147 (18,696)

NET INCREASE IN NET ASSETS

RESULTING FROM OPERATIONS 4,861,034 9,476,737 2,970,927

CAPITAL TRANSACTIONS
Net withdrawals by contract owners (Note 7) (3,384,921) (7,012,328) (9,241,552)
Net contributions (withdrawals) by Pruco Life Insurance Company (5,445,898) (7,662,472) 4,211,673

NET DECREASE IN NET ASSETS

RESULTING FROM CAPITAL TRANSACTIONS (8,830,819) (14,674,800) (5,029,879)

TOTAL DECREASE IN NET ASSETS (3,969,785) (5,198,063) (2,058,952)

NET ASSETS
Beginning of year 112,527,164 117,725,227 119,784,179
End of year $ 108,557,379 $ 112,527,164 $ 117,725,227

SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A2 THROUGH A6

A1-Real Property
 NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
December 31, 2001

Note 1: General

Pruco Life Variable Contract Real Property Account (the “Real Property Account”) was established on August 27, 1986 and
commenced business September 5, 1986. Pursuant to Arizona law, the Real Property Account was established as a separate
investment account of Pruco Life Insurance Company (“Pruco Life”), a wholly-owned subsidiary of The Prudential Insurance
Company of America (“Prudential”). The assets of the Real Property Account are segregated from Pruco Life’s other assets. The
Real Property account is used to fund benefits under certain variable life insurance and variable annuity contracts issued by
Pruco Life. These products are Appreciable Life (“VAL”), Variable Life (“VLI”), Discovery Plus (“SPVA”), and Discovery Life
Plus (“SPVL”).

The assets of the Real Property Account are invested in The Prudential Variable Contract Real Property Partnership (the
“Partnership”). The Partnership is organized under New Jersey law and is registered under the Securities Act of 1933. The
Partnership is the investment vehicle for assets allocated to the real estate investment option under certain variable life insurance
and annuity contracts. The Real Property Account, along with The Prudential Variable Contract Real Property Account and the
Pruco Life of New Jersey Variable Contract Real Property Account, are the sole investors in the Partnership. These financial
statements should be read in conjunction with the financial statements of the Partnership.

The Partnership has a policy of investing at least 65% of its assets in direct ownership interests in income-producing real estate
and participating mortgage loans.

Note 2: Summary of Significant Accounting Policies

A. Basis of Accounting

The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United
States of America (“GAAP”). The preparation of the financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those
estimates.

B. Investment in Partnership Interest

The investment in the Partnership is based on the Real Property Account’s proportionate interest of the Partnership’s market
value. At December 31, 2001 and 2000 the Real Property Account’s interest in the Partnership was 54.8% or 4,556,749 shares
and 54.5% or 4,949,340 shares respectively.

C. Income Recognition

Net investment income and realized and unrealized gains and losses are recognized daily. Amounts are based upon the Real
Property Account’s proportionate interest in the Partnership.

D. Equity of Pruco Life Insurance Company

Pruco Life maintains a position in the Real Property Account for property acquisitions and capital expenditure funding needs.
The position is also utilized for liquidity purposes including unit purchases and redemptions, Partnership share transactions, and
expense processing. The position does not have an effect on the contract owner’s account or the related unit value.

A2 - Real Property
Note 3: Investment Information for The Prudential Variable Contract Real Property Partnership

The number of shares (rounded) held by the Real Property Account in the Partnership and the Partnership net asset value per
share (rounded) at December 31, 2001 and December 31, 2000 were as follows:

December 31, 2001 December 31, 2000

Number of Shares (rounded): 4,556,749 4,949,340

Net Asset Value per Share (rounded): $23.82 $22.74

Note 4: Contract Owner Unit Information

Outstanding contract owner units, unit values and total value of contract owner equity at December 31, 2001 and December 31,
2000 by product, were as follows:

2001:
VAL VLI SPVA SPVL TOTAL

Contract Owner Units Outstanding: 31,552,373 2,322,759 233,556 2,010,295

Unit Value: $ 2.17654 $ 2.26011 $ 1.97316 $ 1.97316
Total Contract Owner Equity: $68,675,002 $5,249,690 $ 460,843 $3,966,634 $78,352,169

2000:
VAL VLI SPVA SPVL TOTAL

Contract Owner Units Outstanding: 32,946,644 2,381,202 260,656 2,121,822

Unit Value: $ 2.08939 $ 2.16437 $ 1.90636 $ 1.90636
Total Contract Owner Equity: $68,838,388 $5,153,802 $ 496,904 $4,044,957 $78,534,051

Note 5: Charges and Expenses

A. Mortality Risk and Expense Risk Charges

Mortality risk and expense risk charges are determined daily using an effective annual rate of 0.6%, 0.35%, 0.9% and 0.9% for
VAL, VLI, SPVA, SPVL, respectively. Mortality risk is that life insurance contract owners may not live as long as estimated or
annuitants may live longer than estimated and expense risk is that the cost of issuing and administering the policies may exceed
related charges by Pruco Life.

B. Administrative Charges

Administrative charges are determined daily using an effective annual rate of 0.35% applied daily against the net assets
representing equity of contract owners held in each subaccount for SPVA and SPVL. Administrative charges include costs
associated with issuing the contract, establishing and maintaining records, and providing reports to contract owners.

C. Cost of Insurance and Other Related Charges

Contract owner contributions are subject to certain deductions prior to being invested in the Real Property Account. The
deductions for VAL and VLI are (1) state premium taxes; (2) sales charges which are deducted in order to compensate Pruco Life
for the cost of selling the contract and (3) transaction costs, applicable to VAL, are deducted from each premium payment to
cover premium collection and processing costs. Contracts are also subject to monthly charges for the costs of administering the
contract to compensate Pruco Life the guaranteed minimum death benefit risk.

A3 - Real Property
D. Deferred Sales Charge

A deferred sales charge is imposed upon the surrender of certain variable life insurance contracts to compensate Pruco Life for
sales and other marketing expenses. The amount of any sales charge will depend on the number of years that have elapsed since
the contract was issued. No sales charge will be imposed after the sixth and tenth year of the contract for SPVL and VAL,
respectively. No sales charge will be imposed on death benefits.

E. Partial Withdrawal Charge

A charge is imposed by Pruco Life on partial withdrawals of the cash surrender value for VAL. A charge equal to the lesser of
$15 or 2% will be made in connection with each partial withdrawal of the cash surrender value of a contract.

Note 6: Taxes

Pruco Life is taxed as a “life insurance company” as defined by the Internal Revenue Code. The results of operations of the Real
Property Account form a part of Prudential’s consolidated federal tax return. Under current federal law, no federal income taxes
are payable by the Real Property Account. As such, no provision for the tax liability has been recorded in these financial
statements.

Note 7: Net Withdrawals by Contract Owners

Contract owner activity for the real estate investment option in Pruco Life’s variable insurance and variable annuity products for
the years ended December 31, 2001, 2000 and 1999 were as follows:

2001:
VAL VLI SPVA SPVL TOTAL

Contract Owner Net Payments: $ 4,273,765 $ 380,615 $ (13) $ (1,874) $ 4,652,493

Policy Loans: (1,856,054) (86,464) 0 (78,500) (2,021,018)
Policy Loan Repayments and Interest: 1,881,095 63,019 0 176,382 2,120,496
Surrenders, Withdrawals, and Death Benefits: (3,953,623) (285,065) (34,082) (341,668) (4,614,438)
Net Transfers To Other Subaccounts
or Fixed Rate Option: (492,261) (17,950) (19,027) 56,745 (472,493)
Administrative and Other Charges: (2,837,147) (183,877) 0 (28,937) (3,049,961)
Net Withdrawals by Contract Owners $(2,984,225) $ (129,722) $ (53,122) $ (217,852) $(3,384,921)

2000:
VAL VLI SPVA SPVL TOTAL

Contract Owner Net Payments: $ 4,470,287 $ 397,335 $ 0 $ (61) $ 4,867,561

Policy Loans: (2,018,495) (73,712) 0 (77,275) (2,169,482)
Policy Loan Repayments and Interest: 1,849,555 72,675 0 152,141 2,074,371
Surrenders, Withdrawals, and Death Benefits: (4,314,085) (266,353) (70,733) (401,369) (5,052,540)
Net Transfers To Other Subaccounts
or Fixed Rate Option: (3,377,546) (145,822) (7,622) (171,284) (3,702,274)
Administrative and Other Charges: (2,823,304) (176,525) (65) (30,070) (3,029,964)
Net Withdrawals by Contract Owners $(6,213,588) $ (192,402) $ (78,420) $ (527,918) $(7,012,328)

A4 - Real Property
1999:
VAL VLI SPVA SPVL TOTAL

Contract Owner Net Payments: $ 1,995,536 $ 219,516 $ 0 $ (191,413) $ 2,023,639

Policy Loans: (2,274,300) (57,385) 0 (173,486) (2,505,171)
Policy Loan Repayments and Interest: 2,233,905 112,386 0 125,962 2,472,253
Surrenders, Withdrawals, and Death Benefits: (4,042,390) (360,063) (391,563) (360,393) (5,154,409)
Net Transfers From(To) Other Subaccounts
or Fixed Rate Option: (2,391,648) (88,091) (13,158) (260,510) (2,753,407)
Administrative and Other Charges: (3,107,932) (181,336) (631) (34,558) (3,324,457)
Net Withdrawals by Contract Owners $(7,586,829) $ (354,973) $ (405,352) $ (894,398) $(9,241,552)

Note 8: Contract Owner Unit Activity

Transactions in units for the years ended December 31, 2001, 2000 and 1999 were as follows:

2001:
VAL VLI SPVA SPVL

Contract Owner Contributions: 2,853,710 202,651 0 121,966

Contract Owner Redemptions: (4,247,981) (261,094) (27,100) (233,493)

2000:
VAL VLI SPVA SPVL

Contract Owner Contributions: 2,890,088 216,712 13 72,083

Contract Owner Redemptions: (6,033,092) (309,042) (43,494) (362,852)

1999:
VAL VLI SPVA SPVL

Contract Owner Contributions: 2,204,016 176,055 127 (35,621)

Contract Owner Redemptions: (6,191,501) (356,390) (230,588) (475,343)

Note 9: Purchases and Sales of Investments

The aggregate costs of purchases and proceeds from sales of investments in the Partnership for the year ended December 31, 2001
were as follows:

Purchases: $ 0
Sales: $ (9,317,290)

A5 - Real Property
Note 10: Financial Highlights

Pruco Life Insurance Company (the "Company") sells a number of variable annuity and variable life insurance
products, both of which have unique combinations of features and fees that are charged against the contract
owner’s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and
total returns.

The following table was developed by determining which products offered by the Company have the lowest and
highest total return. Only product designs within the Account that had units outstanding during December 31, 2001,
were considered when determining the lowest and highest total return. The summary may not reflect the minimum
and maximum contract charges offered by the Company as contract owners may not have selected all available and
applicable contract options as discussed in note 1.

At December 31, 2001 For the year ended December 31, 2001
Contract Holder Contract Holder Expense Total
Units Unit Fair Value Net Assets Investment Ratio** Return***
(000’s) Lowest - Highest (000’s) Income Ratio* Lowest - Highest Lowest - Highest 36,119

$1.97316 to $2.26011 $78,352 5.95% 0.35% to 1.25% 3.50% to 4.42%

*This amount represents the proportionate share of the net investment income from the underlying Partnership
divided by the total average assets of the Account. This ratio excludes those expenses, such as mortality and
expense charges, that result in direct reductions in the unit values.

** These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality
and expense charges, for each period indicated. The ratios include only those expenses that result in a direct
reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and
expenses of the underlying Partnership are excluded.

*** These amounts represent the total return for the periods indicated, including changes in the value of the underlying
Partnership, and reflect deductions for all items included in the expense ratio. The total return does not include
any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result
in a reduction in the total return presented.

Note 11: Related Party Footnote

Prudential and its affiliates perform various services on behalf of the Partnership in which the Account invests and may receive
fees for the services performed. These services include, among other things, shareholder communications, preparation,
postage, fund transfer agency and various other record keeping and customer service functions.

A6 - Real Property
 Report of Independent Accountants

To the Contract Owners of

The Prudential Variable Contract Real Property Account
and the Board of Directors of
The Prudential Insurance Company of America

In our opinion, the accompanying statements of net assets and the related
statements of operations and changes in net assets present fairly, in all material
respects, the financial position of The Prudential Variable Contract Real Property
Account at December 31, 2001 and 2000, and the results of its operations and the
changes in its net assets for the three years in the period ended December 31, 2001,
in conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the management of
The Prudential Insurance Company of America; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of shares at December 31,
2001 with The Prudential Variable Contract Real Property Partnership, provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
March 29, 2002

A7 - Real Property
 INDEX

THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

FINANCIAL STATEMENTS

Consolidated Statements of Assets and Liabilities - December 31, 2001 and 2000 B1

Consolidated Statements of Operations - Years Ended December 31, 2001, 2000 and 1999 B2

Consolidated Statements of Changes in Net Assets - Years Ended December 31, 2001, 2000 and 1999 B3

Consolidated Statements of Cash Flows - Years Ended December 31, 2001, 2000 and 1999 B4

Schedule of Investments - December 31, 2001 and 2000 B5

Notes to Financial Statements B9

Report of Independent Accountants B17

INDEX - Real Property

 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

December 31, 2001 December 31, 2000

ASSETS

REAL ESTATE INVESTMENTS - At estimated market value:

Real estate and improvements
(cost: 12/31/2001 -- $212,044,159; 12/31/2000 -- $173,748,950) $197,970,877 $162,213,095
Real estate partnership (cost: 12/31/2001 -- $7,026,540;
12/31/2000 -- $5,985,783) 6,712,308 5,445,528
Real estate investment trusts (cost: 12/31/2001 -- $0;
12/31/2000 -- $31,896,908) - 35,224,737

Total real estate investments 204,683,185 202,883,360

MARKETABLE SECURITIES - At estimated market value

(cost: 12/31/2001 -- $0; 12/31/2000 -- $4,916,327) - 4,916,494

CASH AND CASH EQUIVALENTS 26,615,645 10,543,821

DIVIDEND RECEIVABLE 28,455 242,341

OTHER ASSETS (net of allowance for uncollectible

accounts: 12/31/2001 -- $107,000; 12/31/2000 -- $91,000) 3,267,367 2,926,280

Total assets $234,594,652 $221,512,296

LIABILITIES

MORTGAGE LOANS PAYABLE 28,994,521 10,092,355

ACCOUNTS PAYABLE AND ACCRUED EXPENSES 3,469,242 2,517,818

DUE TO AFFILIATES 896,134 887,434

OTHER LIABILITIES 972,410 669,209

MINORITY INTEREST 2,111,709 997,401

Total liabilities 36,444,016 15,164,217

COMMITMENTS AND CONTINGENCIES

PARTNERS’ EQUITY 198,150,636 206,348,079

Total liabilities and partners’ equity $234,594,652 $221,512,296

NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 8,317,470 9,075,913

SHARE VALUE AT END OF PERIOD $23.82 $22.74

The accompanying notes are an integral part of these consolidated financial statements.

B1 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

2001 2000 1999
INVESTMENT INCOME:
Revenue from real estate and improvements $24,339,631 $22,570,851 $21,807,346
Equity in income of real estate partnership 686,801 791,596 98,375
Dividend income 2,157,647 1,744,611 1,221,843
Interest on short-term investments 296,514 1,280,880 1,707,485

Total investment income 27,480,593 26,387,938 24,835,049

INVESTMENT EXPENSES:
Operating 5,328,004 4,390,001 3,794,081
Investment management fee 2,694,130 2,705,589 2,730,713
Real estate taxes 2,652,956 2,498,065 2,616,553
Administrative 2,518,644 2,411,390 2,234,949
Interest expense 1,776,701 732,991 145,418
Minority interest 159,852 11,785 33,746

Total investment expenses 15,130,287 12,749,821 11,555,460

NET INVESTMENT INCOME 12,350,306 13,638,117 13,279,589

REALIZED AND UNREALIZED (LOSS) GAIN ON REAL ESTATE

INVESTMENTS:
Net proceeds from real estate investments
sold or converted 53,417,000 46,617,017 21,649,562
Less: Cost of real estate investments sold or converted 50,300,836 55,269,357 19,602,032
Realization of prior years’ unrealized
gain (loss) on real estate investments sold or converted 3,327,829 (11,296,284) 2,080,673

Net (loss) gain realized on real estate

investments sold or converted (211,665) 2,643,944 (33,143)

Change in unrealized (loss) gain on real estate investments (2,311,404) 2,297,429 (7,145,372)
Less: Minority interest in unrealized gain on real estate investments 24,680 454,351 38,531

Net unrealized (loss) gain on real estate investments (2,336,084) 1,843,078 (7,183,903)

NET REALIZED AND UNREALIZED (LOSS) GAIN

ON REAL ESTATE INVESTMENTS (2,547,749) 4,487,022 (7,217,046)

NET INCREASE IN NET ASSETS RESULTING

FROM OPERATIONS $9,802,557 $18,125,139 $6,062,543

The accompanying notes are an integral part of these consolidated financial statements.

B2 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

Year Ended December 31,

2001 2000 1999

NET INCREASE IN NET ASSETS RESULTING

FROM OPERATIONS:
Net investment income $12,350,306 $13,638,117 $13,279,589
Net (loss) gain realized on real estate
investments sold (211,665) 2,643,944 (33,143)
Net unrealized (loss) gain from real estate
investments (2,336,084) 1,843,078 (7,183,903)

Net increase in net assets resulting from

operations 9,802,557 18,125,139 6,062,543

NET DECREASE IN NET ASSETS RESULTING

FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
(2001 -- 758,443; 2000 -- 1,003,008; and
1999 -- 1,769,354 shares, respectively) (18,000,000) (22,000,000) (36,000,000)

Net decrease in net assets resulting from

capital transactions (18,000,000) (22,000,000) (36,000,000)

NET DECREASE IN NET ASSETS (8,197,443) (3,874,861) (29,937,457)

NET ASSETS - Beginning of year 206,348,079 210,222,940 240,160,397

NET ASSETS - End of year $198,150,636 $206,348,079 $210,222,940

The accompanying notes are an integral part of these consolidated financial statements.

B3 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

2001 2000 1999

CASH FLOWS FROM OPERATING ACTIVITIES:

Net increase in net assets resulting from operations $9,802,557 $18,125,139 $6,062,543
Adjustments to reconcile net increase in net assets
resulting from operations to net cash provided by
operating activities:
Net realized and unrealized loss (gain) on
real estate investments 2,547,749 (4,487,022) 7,217,046
Equity in income of real estate partnership’s
operations in excess of distributions (686,801) (791,596) (98,376)
Minority interest in operating activities 159,852 11,785 33,746
Bad debt expense 108,358 96,785 124,059
Decrease (increase) in:
Dividend receivable 213,886 (110,799) 35,733
Other assets (449,444) (169,489) 645,878
Increase (decrease) in:
Accounts payable and accrued expenses 951,424 (449,796) 982,214
Due to affiliates 8,700 17,957 (729,058)
Other liabilities 303,201 143,316 20,952

Net cash flows from operating activities 12,959,482 12,386,280 14,294,737

CASH FLOWS FROM INVESTING ACTIVITIES:

Net proceeds from real estate investments sold 53,417,000 46,617,017 10,706,996
Acquisition of real estate (14,582,383) - (7,200,743)
Acquisition of real estate partnership - - (5,088,750)
Acquisition of real estate investment trust (18,403,928) (34,157,332) (31,239,744)
Improvements and additional costs on prior purchases:
Additions to real estate (4,373,073) (4,215,157) (2,516,645)
Additions to real estate partnership (353,956) (7,060) -
Sale (purchase) of marketable securities, net 4,916,494 (2,119,486) 12,153,517

Net cash flows from investing activities 20,620,154 6,117,982 (23,185,369)

CASH FLOWS FROM FINANCING ACTIVITIES:

Withdrawals by partners (18,000,000) (22,000,000) (36,000,000)
Principal payments on mortgage loans payable (437,588) (92,307) (15,338)
Distributions to minority interest partners - - (93,425)
Contributions from minority interest partners 929,776 159,197 393,216

Net cash flows from financing activities (17,507,812) (21,933,110) (35,715,547)

NET CHANGE IN CASH AND CASH

EQUIVALENTS 16,071,824 (3,428,848) (44,606,179)

CASH AND CASH EQUIVALENTS - Beginning of year 10,543,821 13,972,669 58,578,848

CASH AND CASH EQUIVALENTS - End of year $26,615,645 $10,543,821 $13,972,669

The accompanying notes are an integral part of these consolidated financial statements.

B4 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SCHEDULE OF INVESTMENTS

December 31, 2001 December 31, 2000

Estimated Estimated
Market Market
Cost Value Cost Value
REAL ESTATE AND IMPROVEMENTS - Percent of Net Assets 99.9% 78.6%
Location Description
Lisle, IL Office Building $22,561,428 $14,193,539 $22,267,422 $14,134,722
Atlanta, GA Garden Apartments 15,696,606 18,752,139 15,667,354 17,800,002
Roswell, GA Retail Shopping Center 32,878,304 26,625,833 32,533,052 26,874,838
Bolingbrook, IL Warehouse 9,039,620 5,826,782 9,012,838 6,664,810
Raleigh, NC Garden Apartments 15,940,839 16,808,160 15,847,460 17,200,000
Nashville, TN Office Building 9,977,669 10,629,012 9,657,787 10,396,565
Oakbrook Terrace, IL Office Complex 14,015,481 14,359,009 13,021,251 12,716,910
Beaverton, OR Office Complex 11,989,204 10,988,123 11,225,040 10,623,809
Salt Lake City, UT Industrial Building 6,568,107 5,487,490 5,640,709 5,900,050
Aurora, CO Industrial Building 10,131,517 9,900,000 10,131,358 9,800,714
Brentwood, TN Office Complex 9,612,024 8,900,790 9,609,133 9,600,675
* Jacksonville, FL Garden Apartments 19,711,225 20,400,000 19,135,546 20,500,000
* Gresham/Salem, OR Garden Apartments 18,815,082 19,100,000 - -
* Hampton, VA Retail Shopping Center 15,107,053 16,000,000 - -
$212,044,159 $197,970,877 $173,748,950 $162,213,095

REAL ESTATE PARTNERSHIP - Percent of Net Assets 3.4% 2.6%

Location Description

Kansas City, KS; MO Retail Shopping Center $7,026,540 $6,712,308 $5,985,783 $5,445,528

* Real estate partnerships accounted for by the consolidation method.

The accompanying notes are an integral part of these consolidated financial statements.

B5 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SCHEDULE OF INVESTMENTS

December 31, 2000

Estimated
Market
Cost Value

REAL ESTATE INVESTMENT TRUSTS (Percent of Net Assets) 17.1%

Alexandria Real Est Equities (5,000 shares) $181,188 $185,938

AMB Property Corporation (30,000 shares) 706,770 774,375
AMLI Residential Properties (30,000 shares) 706,800 740,625
Apartment Inv & Mgmt Co, Class A (28,900 shares) 1,218,828 1,443,194
Archstone Communities Trust (25,000 shares) 592,188 643,750
Avalonbay Communities Inc (15,000 shares) 683,900 751,875
Boston Properties Inc (25,000 shares) 995,339 1,087,500
Brandywine Realty Trust (15,000 shares) 321,338 310,313
CBL & Associates Prop (30,800 shares) 741,988 779,625
Cabot Industrial Trust (40,000 shares) 820,726 767,500
Centerpoint Properties Corp. (18,600 shares) 632,302 878,850
Cousins Properties (20,000 shares) 551,200 558,750
Crescent Real Estate Eqt Co (25,000 Shares) 565,563 556,250
Duke - Weeks Realty Corporation (47,000 shares) 1,070,320 1,157,375
Equity Office Properties Trust (77,400 shares) 2,215,533 2,525,175
Equity Residential Property Trust (30,000 shares) 1,450,732 1,659,375
Essex Property Trust, Inc (15,000 shares) 593,700 821,250
First Industrial Realty Trust (25,000 shares) 781,100 850,000
Franchise Finance Cp Amer (51,300 shares) 1,228,281 1,195,931
Gables Residential Trust (25,000 shares) 632,750 700,000
General Growth Properties (22,000 shares) 714,894 796,125
Highwoods Properties Inc (30,000 shares) 758,832 746,250
Host Marriot Corp (105,000 shares) 1,114,575 1,358,438
Innkeepers USA Trust (50,000 shares) 512,375 553,125
IRT Property (45,000 shares) 406,395 365,625
Kilroy Realty Corp. (30,000 shares) 746,886 856,875
Kimco Realty (15,000 shares) 612,612 662,813
Liberty Property LP (35,000 shares) 899,563 999,688
Macerich Co (30,000 shares) 670,490 575,625
MeriStar Hospitality Corp (37,500 shares) 636,151 738,281
Mission West Properties (88,200 shares) 697,122 1,223,775
Parkway Properties Inc (25,000 shares) 782,750 742,188
Public Storage Inc (5,000 shares) 113,763 121,563
Reckson Assoc Realty Corp. (32,500 shares) 805,150 814,531
Regency Realty Corp (25,000 shares) 576,600 592,188
Saul Centers Inc (1,700 shares) 29,085 31,663
Shurgard Storage Centers (20,000 shares) 478,500 488,750
Simon Property Group Inc (45,000 shares) 1,032,357 1,080,000
Spieker Properties (27,000 shares) 1,197,078 1,353,375
Summit Properties Inc (12,000 shares) 292,832 312,000
Vornado Realty Trust (29,800 shares) 1,028,569 1,141,713
Washington Reit (40,000 shares) 759,220 945,000
Public Storage Inc, Preferred Stock (15,000 shares) 340,569 337,500
Total Real Estate Investment Trusts $31,896,908 $35,224,737

The accompanying notes are an integral part of these consolidated financial statements.

B6 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SCHEDULE OF INVESTMENTS

December 31, 2001

Estimated
Face Amount Cost Market Value
CASH AND CASH EQUIVALENTS (Percent of Net Assets) 13.4%

Federal Home Loan Mortgage 1.51%, January 2, 2002 $25,334,000 $25,331,875 $25,331,875

Total Cash Equivalents 25,334,000 25,331,875 25,331,875

Cash 1,283,770 1,283,770 1,283,770

Total Cash and Cash Equivalents $26,617,770 $26,615,645 $26,615,645

The accompanying notes are an integral part of these consolidated financial statements.

B7 - Real Property
 THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP

SCHEDULE OF INVESTMENTS

December 31, 2000

Estimated
Face Amount Cost Market Value
MARKETABLE SECURITIES (Percent of Net Assets) 2.4%

Associates First Capital B.V., 6.55%, January 29, 2001 699,000 687,681 687,681
New Center Asset Trust, 6.52%, January 30, 2001 1,614,000 1,587,692 1,587,692
Lasalle National Bank, 6.71%, February 1, 2001 969,000 968,792 968,959
B-One Australia Ltd., 6.55%, February 13, 2001 1,700,000 1,672,162 1,672,162

Total Marketable Securities $ 4,982,000 $ 4,916,327 $ 4,916,494

CASH AND CASH EQUIVALENTS (Percent of Net Assets) 5.1%

J.P. Morgan & Co, 6.55%, January 2, 2001 $ 546,000 $ 545,603 $ 545,603
Alcoa Inc., 6.55%, January 4, 2001 634,000 633,193 633,193
Merrill Lynch & Co., 6.53%, Inc., January 10, 2001 300,000 299,347 299,347
Bankamerica Corp., 6.55%, January 11, 2001 680,000 678,020 678,020
General Motors Acceptance Corp., Inc., 6.60%, January 17, 2001 600,000 597,910 597,910
Paccar Financial Corp., 6.67%, January 18, 2001 661,000 657,693 657,693
General Electric Capital Corp., 6.55%, January 22, 2001 700,000 691,085 691,085
Countrywide Home Loans, 6.60%, January 25, 2001 560,000 556,201 556,201
Duke Energy Corp., 6.50%, January 25, 2001 682,000 678,552 678,552
Caterpillar Financial Svcs Corp., 6.50%, January 26, 2001 625,000 621,727 621,727
Verizon Global Funding Corp., 6.55%, January 26, 2001 500,000 496,179 496,179
Ciesco L.P., 6.54%, January 30, 2001 1,675,000 1,652,178 1,652,178
Eastman Kodak Co., 6.53%, February 9, 2001 800,000 787,230 787,230

Total Cash Equivalents 8,963,000 8,894,919 8,894,919

Cash 1,648,902 1,648,902 1,648,902

Total Cash and Cash Equivalents $10,611,902 $10,543,821 $10,543,821

The accompanying notes are an integral part of these consolidated financial statements.

B8 - Real Property
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

Note 1: Organization

On April 29, 1988, The Prudential Variable Contract Real Property Partnership (the "Partnership"), a general
partnership organized under New Jersey law, was formed through an agreement among The Prudential Insurance
Company of America ("Prudential"), Pruco Life Insurance Company ("Pruco Life"), and Pruco Life Insurance
Company of New Jersey ("Pruco Life of New Jersey"). The Partnership was established as a means by which assets
allocated to the real estate investment option under certain variable life insurance and variable annuity contracts
issued by the respective companies could be invested in a commingled pool. The Partners in the Partnership are
Prudential, Pruco Life and Pruco Life of New Jersey.

The Partnership’s policy is to invest at least 65% of its assets in direct ownership interests in income-producing real
estate and participating mortgage loans.

The estimated market value of the Partnership's shares is determined daily, consistent with the Partnership
Agreement. On each day during which the New York Stock Exchange is open for business, the net asset value of
the Partnership is estimated using the estimated market value of its assets, principally as described in Notes 2A and
2B below, reduced by any liabilities of the Partnership. The periodic adjustments to property values described in
Notes 2A and 2B below and other adjustments to previous estimates are made on a prospective basis. There can be
no assurance that all such adjustments to estimates will be made timely.

Shares of the Partnership are held by The Prudential Variable Contract Real Property Account, Pruco Life Variable
Contract Real Property Account and Pruco Life of New Jersey Variable Contract Real Property Account (the "Real
Property Accounts") and may be purchased and sold at the then current share value of the Partnership's net assets.
Share value is calculated by dividing the estimated market value of net assets of the Partnership as determined above
by the number of shares outstanding. A contract owner participates in the Partnership through interests in the Real
Property Accounts.

Prudential Real Estate Investors (“PREI”) is part of the Prudential Investment Management unit (“PIM”) and is a
division of Prudential Investment Management, Inc., a subsidiary of Prudential. PREI provides investment advisory
services to the Partnership’s Partners pursuant to the terms of the Advisory Agreement as described in Note 9.

Note 2: Summary Of Significant Accounting Policies

A: Basis of Presentation – The accompanying consolidated financial statements are presented on the
accrual basis of accounting. It is the Partnership’s policy to consolidate those real estate
partnerships in which it has a controlling financial interest. All significant intercompany balances
and transactions have been eliminated in the consolidation.

B: Real Estate Investments - The Partnership's investments in real estate are initially valued at their
purchase price. Thereafter, real estate investments are reported at their estimated market values
based upon appraisal reports prepared by independent real estate appraisers (members of the
Appraisal Institute or an equivalent organization) within a reasonable amount of time following
acquisition of the real estate and no less frequently than annually thereafter. The Chief Real Estate
Appraiser of PIM’s Risk Management Unit is responsible to assure that the valuation process

B9 - Real Property
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

provides objective and accurate market value estimates. American Appraisal Associates (the
“Appraisal Management Firm”), an entity not affiliated with Prudential, has been appointed by
PIM to assist the Chief Real Estate Appraiser in maintaining and monitoring the objectivity and
accuracy of the appraisal process. The Appraisal Management Firm, under the supervision of the
Chief Real Estate Appraiser, approves the selection and scheduling of external appraisals; engages
all external appraisers; reviews and provides comments on all external appraisals; prepares all
quarterly update appraisals; assists in developing policies and procedures; and assists in the
evaluation of the performance and competency of external appraisers, among other responsibilities.

The purpose of an appraisal is to estimate the market value of real estate as of a specific date.
Market value has been defined as the most probable price for which the appraised real estate will
sell in a competitive market under all conditions requisite for a fair sale, with the buyer and seller
each acting prudently, knowledgeably, and for self interest, and assuming that neither is under
undue duress.

The estimate of market value generally is a correlation of three approaches, all of which require the
exercise of subjective judgment. The three approaches are: (1) current cost of reproducing the real
estate less deterioration and functional and economic obsolescence; (2) discounting of a series of
income streams and reversion at a specified yield or by directly capitalizing a single year income
estimate by an appropriate factor; and (3) value indicated by recent sales of comparable
properties in the market. In the reconciliation of these three approaches, the one most heavily
relied upon is the one then recognized as the most appropriate by the independent appraiser for the
type of real estate in the market.

Real estate partnerships are valued at the Partnership’s equity in net assets as reflected in the
partnership’s financial statements with properties valued as described above.

As described above, the estimated market value of real estate and real estate related assets is
determined through an appraisal process. These estimated market values may vary significantly
from the prices at which the real estate investments would sell since market prices of real estate
investments can only be determined by negotiation between a willing buyer and seller. Although
the estimated market values represent subjective estimates, management believes these estimated
market values are reasonable approximations of market prices and the aggregate value of
investments in real estate is fairly presented as of December 31, 2001 and 2000.

C: Investment in Real Estate Investment Trusts - Shares of real estate investment trusts (REITs) are
generally valued at their quoted market price. These values may be adjusted for discounts relating
to restrictions, if any, on the future sale of these shares, such as lockout periods or limitations on
the number of shares which may be sold in a given time period. Any such discounts are
determined by the Chief Real Estate Appraiser. On March 30, 1999, the Partnership converted
506,894 shares of Meridian REIT to 557,583 shares of ProLogis REIT, with a fair value of $10.9
million, and cash of $1.0 million (or total fair value of $11.9 million) as a result of ProLogis’
acquisition of Meridian Industrial Trust. Management continued applying a 3% discount to the
market value of the ProLogis REIT shares through June 29, 1999 because of the restriction which
limits the number of shares that can be publicly traded during any six month period to 30% of the

B10 - Real Property

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

total shares originally acquired. The application of the 3% discount was discontinued on June 30,
1999 because this restriction no longer applied.

D: Revenue Recognition - Revenue from real estate is earned in accordance with the terms of the
respective leases. Revenue from certain real estate investments is net of all or a portion of related
real estate expenses and taxes, as lease arrangements vary as to responsibility for payment of these
expenses between tenants and the Partnership. Since real estate is stated at estimated market value,
net income is not reduced by depreciation or amortization expense. Dividend income is accrued at
the ex-dividend date.

E: Equity in Income of Real Estate Partnership - Equity in income from real estate partnership
operations represents the Partnership’s share of the current year’s partnership income as provided
for under the terms of the partnership agreements. As is the case with wholly-owned real estate,
partnership net income is not reduced by depreciation or amortization expense. Frequency of
distribution of income is determined by formal agreements or by the executive committee of the
partnership.

F: Mortgage Loans Payable - Mortgage loans payable are stated at the principal amount of the
obligation outstanding.

G: Cash and Cash Equivalents - For purposes of the Consolidated Statements of Cash Flows, all short-
term investments with an original maturity of three months or less are considered to be cash
equivalents. Cash equivalents consist of investments in the Prudential Investment Liquidity Pool
offered and managed by an affiliate of Prudential and are accounted for at market value.

Cash of $160,635 and $79,300 at December 31, 2001 and 2000, respectively, was maintained by
the properties for tenant security deposits and is included in Other Assets on the Consolidated
Statements of Assets and Liabilities.

H: Marketable Securities - Marketable securities are highly liquid investments with maturities of more
than three months when purchased and are carried at estimated market value.

I: Federal Income Taxes - The Partnership is not a taxable entity under the provisions of the Internal
Revenue Code. The income and capital gains and losses of the Partnership are attributed, for
federal income tax purposes, to the Partners in the Partnership. The Partnership may be subject to
state and local taxes in jurisdictions in which it operates.

J: Management’s Use of Estimates in the Financial Statements - The preparation of financial

statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates.

B11 - Real Property

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

Note 3: Disclosure of Supplemental Cash Flow Information and Non-Cash Investing and Financing Activity

Cash paid for interest during the years ended December 31, 2001, 2000, and 1999 was $1,776,701, $732,991, and
$145,418, respectively.

During the first and second quarters of 2001, in conjunction with the acquisition of two real estate investments, the
consolidated partnerships assumed mortgage loan financing of $9.0 million and $10.3 million, respectively.

During 1999, in conjunction with the acquisition of a real estate investment of one property, a consolidated
partnership assumed mortgage loan financing of approximately $10.2 million.

Note 4: Real Estate Partnership

Real estate partnership is valued at the Partnership’s equity in net assets as reflected by the partnership’s financial
statements with properties valued as indicated in Note 2B above. The partnership’s combined financial position at
December 31, 2001 and 2000, and results of operations for the years ended December 31, 2001, 2000, and 1999 are
summarized as follows:

December 31,
2001 2000
Partnership Assets and Liabilities
Real Estate at estimated market value $28,300,000 $27,080,000
Other Assets 1,877,122 1,470,801
Total Assets 30,177,122 28,550,801

Mortgage loans payable 20,648,892 20,669,422

Other Liabilities 918,664 665,365
Total Liabilities 21,567,556 21,334,787

Net Assets $8,609,566 $7,216,014

Partnership’s Share of Net Assets $6,712,308 $5,445,528

Year Ended December 31,

2001 2000 1999
Partnership Operations
Rental Revenue $4,497,459 $4,223,801 $926,283
Real Estate Expens es and Taxes 3,536,948 3,292,500 795,115
Net Investment Income $960,511 $931,301 $131,168

Partnership’s Share of Net Investment Income $686,801 $791,596 $98,375

B12 - Real Property

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

Note 5: Mortgage Loans Payable:

Debt includes mortgage loans payable as summarized below:

Partnership Debt as of 12/31/01 Partnership Debt as of 12/31/00 As of 12/31/01

Partnership’s Partnership’s
100% Loan Share of 100% Loan Share of Interest Maturity
Balance Loan Balance * Balance Loan Balance * Rate** Date

Mortgages of Wholly Ow ned Properties & Consolidated Partnerships

Riverbend Apartments 9,996,863 9,293,084 10,092,355 9,208,265 5.74% *** 2006
SIMA Apartment Portfolio 8,863,334 8,493,733 - - 7.97% 2006
Hampton Tow ne Center 10,134,324 8,709,438 - - 6.75% 2018
- - -
Total 28,994,521 26,496,255 10,092,355 9,208,265

Mortgage Loans on Equity Partnership

KCP - Ten Quiviria 6,946,631 5,121,057 6,953,113 5,246,819 8.16% 2007
KCP - Ten Quiviria Parcel 999,306 736,688 1,000,238 754,780 8.16% 2007
KCP - Cherokee Hill 3,212,174 2,368,015 3,215,341 2,426,296 7.79% 2007
KCP - Devonshire 2,226,609 1,641,456 2,228,686 1,681,767 8.16% 2007
KCP - Willow Creek 1,336,251 985,084 1,338,590 1,010,100 8.63% 2005
KCP - Bryw ood Center 5,927,921 4,370,064 5,933,453 4,477,383 8.16% 2007

Total 20,648,892 15,222,363 20,669,422 15,597,146

Total Mortgage Loans Payable $41,718,618 $24,805,410 7.28%

* R epres ents the P artners hip’s interes t in the loan bas ed upon the es timated percentage of net as s ets which would be dis trib uted to
the P artners hipif the partners hip were li quidated at December 31, 2001or 2000. It does not repres ent the P artners hip’s legal o bligation.
** T he P artners hip’s weighted average interes t rate at December 31, 2001and 2000 were 7.28% and 8.05%, res pectively.
T he weighted average interes t rates were calculated us ing the P artners hip’s annualizedinteres t expens e for each loan
(derived us ing the s ame percentage as that in (*) above) divided by the P artners hip’s s hare of total debt.
***Variable R ate Debt.

The interest rate on the variable rate debt is adjusted annually. The rate is equal to the 6-month Treasury rate plus
1.565%. It is subject to a maximum of 11.345% and a minimum of 2.345%. The change from year to year may not
be more than 2%. At December 31, 2001 and 2000, the rate was 5.735% and 7.735%, respectively.

B13 - Real Property

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

As of December 31, 2001, the mortgage loans payable were payable as follows:

Year Ending December 31, (000’s)

2002 $678
2003 736
2004 787
2005 843
2006 17,711
Thereafter 8,240

Total $28,995

The mortgages payable are secured by real estate investments with an estimated market value of $55,500,000.

Based on borrowing rates available to the Partnership at December 31, 2001 for loans with similar terms and average
maturities, the carrying value of the Partnership’s mortgages on the consolidated partnerships approximates its
estimated fair value. Different assumptions or changes in future market conditions could significantly affect
estimated market value.

NOTE 6: Concentration Risk of Real Estate Investments

At December 31, 2001, the Partnership had real estate investments located throughout the United States. The
diversification of the account’s holdings based on the estimated market values and established NCREIF regions is as
follows:

Es timated
Market Value
Region Region % (000’s)

Southeast 42% $85,308

East North Central 17% 34,379
Mideast 16% 32,808
Pacific 15% 30,088
Mountain 7% 15,388
West North Central 3% $6,712

Total $204,683

B14 - Real Property

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

Note 7: Leasing Activity

The Partnership leases space to tenants under various operating lease agreements. These agreements, without giving
effect to renewal options, have expiration dates ranging from 2002 to 2018. At December 31, 2001, the aggregate
future minimum base rental payments under non-cancelable operating leases by year and in the aggregate are as
follows:

Year Ending December 31, (000’s)

2002 $11,725
2003 9,149
2004 7,208
2005 6,716
2006 5,990
Thereafter 21,295

Total $62,083

The above future minimum base rental payments exclude residential lease agreements, which accounted for 24% of
the Partnership’s 2001 annual rental income.

Note 8: Commitments and Contingencies

In 1986, Prudential committed to fund up to $100 million to enable the Partnership to acquire real estate investments.
Contributions to the Partnership under this commitment are utilized for property acquisitions, and returned to
Prudential on an ongoing basis from contract owners’ net contributions and other available cash. The amount of the
commitment is reduced by $10 million for every $100 million in current value net assets of the Partnership. Thus,
with $198 million in net assets, the commitment has been automatically reduced to $90 million. As of December 31,
2001, the cost basis of Prudential’s equity interest in the Partnership under this commitment (held through the Real
Property Accounts) was $44 million. Prudential intends to terminate this commitment at the end of the 2002 fiscal
year.

The Partnership is subject to various legal proceedings and claims arising in the ordinary course of business. These
matters are generally covered by insurance. In the opinion of Prudential's management, the outcome of such matters
will not have a significant effect on the Partnership.

Note 9: Related Party Transactions

Pursuant to an investment management agreement, Prudential charges the Partnership a daily investment
management fee at an annual rate of 1.25% of the average daily gross asset valuation of the Partnership. For the
years ended December 31, 2001, 2000 and 1999 management fees incurred by the Partnership were $2.7 million for
each of the three years.

B15 - Real Property

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
For Years Ended December 31, 2001, 2000, and 1999

The Partnership also reimburses Prudential for certain administrative services rendered by Prudential. The amounts
incurred for the years ended December 31, 2001, 2000 and 1999 were $118,972; $116,630; and $116,463,
respectively, and are classified as administrative expenses in the Consolidated Statements of Operations.

During the years ended December 31, 2001, 2000 and 1999, the Partnership made the following distributions to the
Partners:

Year Ending December 31, (000’s)

2001 $18,000
2000 22,000
1999 36,000

B16 - Real Property

 Report of Independent Accountants

To the Partners of The Prudential

Variable Contract Real Property Partnership:

In our opinion, the accompanying consolidated statements of assets and liabilities, including the
schedule of investments, and the related consolidated statements of operations, of changes in net
assets and of cash flows present fairly, in all material respects, the financial position of The
Prudential Variable Contract Real Property Partnership (the "Partnership") at December 31, 2001
and 2000, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility of the
management of The Prudential Insurance Company of America; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 15, 2002

B17 - Real Property

For more information
Additional information about the Fund and each Portfolio can be obtained upon request without charge and can be
found in the following documents:

Statement of Additional Information (SAI)

(incorporated by reference into this prospectus)

Annual Report
(including a discussion of market conditions and strategies that significantly affected the Portfolios’ performance during
the previous year)

Semi-Annual Report
To obtain these documents or to ask any questions about the Fund:

Call toll-free (800) 778-2255

Write to The Prudential Series Fund, Inc., Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102

You can also obtain copies of Fund documents from the Securities and Exchange Commission as follows:

By Mail: In Person:

Securities and Exchange Commission Public Reference Room

Public Reference Section in Washington, DC
Washington, DC 20549-0102 (For hours of operation, call 1-202-942-8090)

By Electronic Request: Via the Internet:

on the EDGAR Database at
publicinfo@sec.gov
http://www.sec.gov
(The SEC charges a fee to copy documents.)
SEC File No. 811-03623

PSF1
Variable
Appreciable LIFE®
Insurance
Variable Appreciable Life was issued by Pruco Life Insurance
Company in all states except New Jersey and New York, where
it was issued by Pruco Life Insurance Company of New Jersey,
213 Washington Street, Newark, NJ 07102-2992, and offered through
Pruco Securities Corporation, 751 Broad Street Newark, NJ 07102-
3777. All are Prudential companies.
Appreciable Life is a registered trademark of Prudential.
Prudential Financial is a service mark of The Prudential Insurance
Company of America, Newark, NJ, and its affiliates.
For online access to your policy information, visit
www.prudential.com

Pruco Life Insurance Company

213 Washington Street, Newark, NJ 07102-2992
Telephone: 800 778-2255

VAL1 ED 5/2002