AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997.
REGISTRATION NO. 333-18117
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO. 1 [ ]
POST-EFFECTIVE AMENDMENT NO. 1 [X]
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 1 [X]
(Check appropriate box or boxes)
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PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 445-4571
(Address and telephone number of principal executive offices)
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THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
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INDIVIDUAL VARIABLE ANNUITY CONTRACTS--The Registrant has registered an
indefinite amount of securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Rule 24f-2 notice for fiscal year 1996 was filed on
February 28, 1997.
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It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[x] on May 1, 1997 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
<TABLE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495(A) UNDER THE 1933 ACT)
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N-4 ITEM NUMBER AND CAPTION LOCATION
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<S> <C>
PART A
1. Cover Page .................................. Cover Page
2. Definitions ................................. Definitions of Special Terms Used in This Prospectus
3. Synopsis .................................... Brief Description of the Contract
4. Condensed Financial Information ............. N/A
5. General Description of Registrant,
Depositor, and Portfolio Companies .......... General Information About Pruco Life of New Jersey, The
Pruco Life of New Jersey Flexible Premium Variable Annuity
Account, and The Investment Options Available Under the
Contract; The Interest-Rate Investment Options and
Investments by Pruco Life of New Jersey
6. Deductions and Expenses ..................... Brief Description of the Contract; Charges, Fees, and
Deductions
7. General Description of Variable
Annuity Contracts ........................... Part A: Brief Description of the Contract; Allocation of
Purchase Payments; Transfers; Death Benefit; The
Interest-Rate Investment Options and Investments by Pruco
Life of New Jersey; Voting Rights; Ownership of the Contract;
State Regulation
8. Annuity Period .............................. Brief Description of the Contract; Payout Provisions
9. Death Benefit ............................... Death Benefit; Payout Provisions
10. Purchases and Contract Value ................ Brief Description of the Contract; Pruco Life Insurance
Company of New Jersey; Requirements for Issuance of a
Contract; Valuation of a Contract Owner's Contract Fund
11. Redemptions ................................. Brief Description of the Contract; Short-Term
Cancellation Right or "Free Look"; Withdrawals; Charges,
Fees and Deductions; Payout Provisions
12. Taxes ....................................... Premium Taxes and Taxes Attributable to Purchase
Payments; Federal Tax Status
13. Legal Proceedings ........................... Litigation
14. Table of Contents of the Statement of
Additional Information ...................... Additional Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-4 ITEM NUMBER AND CAPTION LOCATION
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<S> <C>
PART B
15. Cover Page .................................. Cover Page
16. Table of Contents ........................... Contents
17. General Information and History ............. Not Applicable
18. Services .................................... Part A: Experts
19. Purchase of Securities Being Offered ........ Part A: Brief Description of the Contract; Charges, Fees
and Deductions; Sale of the Contract and Sales Commissions
20. Underwriters ................................ Part A: Sale of the Contract and Sales Commissions
Part B: Principal Underwriters
21. Calculation of Performance Data ............. Performance Information
22. Annuity Payments ............................ Part A: Valuation of a Contract Owner's Contract Fund;
Effecting an Annuity
23. Financial Statements ........................ Part A: Financial Statements of Pruco Life Insurance Company
of New Jersey
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered in Part C to this Registration Statement.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
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MAY 1, 1997
PROFILE
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P R U C O L I F E I N S U R A N C E C O M P A N Y O F N E W J E R S E Y
DISCOVERY SELECT VARIABLE ANNUITY CONTRACT
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This Profile is a summary of some of the more important points that you should
consider and know before purchasing the Contract. The Contract is more fully
described in the full prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE DISCOVERY SELECT VARIABLE ANNUITY.
The Discovery Select Variable Annuity is a contract between you and Pruco Life
Insurance Company of New Jersey that uses investment portfolios which accumulate
cash value on a tax-deferred basis. This allows the variable annuity to combine
the advantages of a tax-deferred investment with the flexibility and versatility
of professionally managed portfolios to meet your long-term financial goals,
such as retirement. Tax deferral simply means that you do not pay taxes on your
investments' income, dividends and capital gains each year; instead, taxes are
due when you take withdrawals or otherwise receive funds from the annuity. The
results of tax-deferred compounding can grow your assets faster than it would in
a similar taxable investment. In addition, your family receives the added
protection of a guaranteed death benefit.
The Discovery Select Variable Annuity offers a diverse selection of money
managers and variable investment options. Amounts that you allocate to a
variable investment option will fluctuate in response to market forces. You can
also select a fixed-rate option with a stipulated rate of interest for one year
or a market-value adjustment option which guarantees a stipulated rate of
interest if held for a seven year period. If you make a withdrawal or transfer
prior to the maturity date of a market-value adjustment option, the value will
be adjusted up or down or not at all, depending upon the difference in interest
rates between the date when funds were allocated to the option and the date of
the withdrawal or transfer.
The Discovery Select Contract, like all deferred annuity contracts, has two
phases: the accumulation phase and the income phase. During the accumulation
phase, you invest money in your Contract and earnings accumulate on a
tax-deferred basis. Your earnings are based on the investment performance of the
variable investment options and/or the interest rate earned on the fixed
investment options to which your money is allocated. During the income phase you
receive regular payments from your Contract. Among other factors, the growth of
your Contract during the accumulation phase will determine the amount or
duration of your payments during the income phase.
The automated withdrawal feature enables you to set up a regular income schedule
on a monthly, quarterly, semiannual or annual basis without annuitizing your
Contract. Of course, withdrawals are subject to tax and a 10% federal tax
penalty may apply if you are under age 59 1/2.
2. PAYOUT PROVISIONS.
If you want to receive regular income from your Contract, you can choose one of
these options:(1) equal installments for a fixed period; (2) monthly payments
for your life with 120 payments certain; (3) certain other annuity options; or
(4) we will hold an amount at a stated interest rate and
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PROFILE
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P R U C O L I F E I N S U R A N C E C O M P A N Y O F N E W J E R S E Y
DISCOVERY SELECT VARIABLE ANNUITY CONTRACT
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pay the interest annually, semi-annually, quarterly or monthly. The interest
payment option is not available for Contracts sold in connection with individual
retirement annuities ("IRAs").
During the income phase you can only choose the above options to be payable on a
fixed basis. Once you begin receiving regular payments, you cannot change your
payment plan.
3. PURCHASING A DISCOVERY SELECT ANNUITY.
You can buy a Contract through your financial representative who can also help
you complete the proper forms. You can buy a Contract with $10,000 or more.
Additional payments of $1,000 or more may also be made during the accumulation
phase. Restrictions apply to IRA Contracts.
4. INVESTMENT OPTIONS.
You can put your money in any or all of the investment options listed below:
<TABLE>
<CAPTION>
<S> <C>
THE PRUDENTIAL SERIES FUND, INC.
Advised by: Prudential Investment Corporation
Money Market Portfolio Equity Income Portfolio
Diversified Bond Portfolio Equity Portfolio
High Yield Bond Portfolio Global Portfolio
Stock Index Portfolio Prudential Jennison Portfolio (a growth portfolio)
AIM VARIABLE INSURANCE FUNDS, INC. JANUS ASPEN SERIES
Advised by: Aim Advisors, Inc. Advised by: Janus Capital Corporation
AIM V.I. Growth and Income Fund Growth Portfolio
AIM V.I. Value Fund International Growth Portfolio
MFS VARIABLE INSURANCE TRUST OCC ACCUMULATION TRUST
Advised by: Massachusetts Financial Advised by: OpCap Advisors
Services Company Small Cap Portfolio
Emerging Growth Series Managed Portfolio (a balanced portfolio)
Research Series (a growth portfolio)
T. ROWE PRICE EQUITY SERIES, INC. T. ROWE PRICE INTERNATIONAL SERIES, INC.
Advised by: T. Rowe Price Associates, Inc. Advised by: Rowe Price-Fleming International, Inc.
Equity Income Portfolio International Stock Portfolio
WARBURG PINCUS TRUST
Advised by: Warburg, Pincus Counsellors, Inc.
Post-Venture Capital Portfolio
(an aggressive growth portfolio)
</TABLE>
Depending upon market fluctuations, you can make or lose money in any of these
portfolios.
2
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PROFILE
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P R U C O L I F E I N S U R A N C E C O M P A N Y O F N E W J E R S E Y
DISCOVERY SELECT VARIABLE ANNUITY CONTRACT
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You may also allocate money to the one year fixed-rate option which guarantees a
stipulated rate of interest for a one-year period or to the Market-Value
Adjustment (the "MVA") option which guarantees a stipulated rate of interest if
held for a seven year period.
Each time you allocate or transfer money into either the fixed-rate option or
the MVA option a new interest cell is established. The interest rate for an
interest cell within the fixed-rate option is guaranteed for one year. During
the interest rate period the value of each interest cell within the MVA option
varies with changes in interest rates in the same way that the value of a bond
changes. For example, if interest rates have risen since the interest cell was
established, its value will have decreased. If you make a withdrawal or transfer
prior to the end of the interest cell, the value of the MVA option will be
adjusted up or down or not at all, depending upon the difference in the interest
rates between the date when the interest cell was established and the date of
withdrawal or transfer.
5. EXPENSES.
The Discovery Select Contract has the following cost-related product features,
outlined below.
There is an administrative charge of $30 that is imposed on each Contract
anniversary and at the time of a full withdrawal for Contracts of less than
$50,000. We deduct insurance and expense charges which total 1.40% annually of
the average daily value of your Contract allocated to the variable investment
options. There are also investment charges imposed on Contracts with money
allocated to the variable investment options which in fiscal year 1996 ranged
from 0.40% to 1.40% annually of the average daily value of the investment
portfolio. If applicable, you may be assessed a state premium tax which ranges
from 0% to 5%, depending upon the state and whether the Contract is
non-qualified or issued in connection with an IRA.
If you withdraw money in excess of the free withdrawal amount allowed in the
Contract during the first 7 years of the Contract, a withdrawal charge is
assessed. The charge is based upon the amount withdrawn and starts with 7% in
the first year and decreases 1% each year until in the 8th and later years there
is no charge.
The following chart will help you understand the charges in the Contract. The
column "Total Annual Charges" shows the total of the $30 administrative charge
(which is represented as .10%), the 1.40% insurance charges and the investment
charges for each variable investment option. The next two columns show you
examples of the charges, in dollars, you would pay under a Contract. The
examples assume that you invested $1,000 in each investment option within the
Contract earning 5% annually and that you withdraw your money (1) at the end of
year 1, and (2) at the end of year 10. For year 1, the Total Annual Charges are
assessed as well as the withdrawal charges. For year 10, the example shows the
aggregate of all the annual charges assessed for the 10 years with no withdrawal
charge. The premium tax is assumed to be 0% in both examples.
3
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PROFILE
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P R U C O L I F E I N S U R A N C E C O M P A N Y O F N E W J E R S E Y
DISCOVERY SELECT VARIABLE ANNUITY CONTRACT
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<TABLE>
<CAPTION>
TOTAL TOTAL
ANNUAL ANNUAL
TOTAL TOTAL CHARGES CHARGES
ANNUAL ANNUAL TOTAL AT END OF AT END OF
INSURANCE PORTFOLIO ANNUAL 1 YEAR 10 YEARS
PORTFOLIO CHARGES CHARGES CHARGES (1) (2)
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<S> <C> <C> <C> <C> <C>
THE PRUDENTIAL SERIES FUND, INC.
Money Market 1.50% 0.44% 1.94% $ 83 $231
Diversified Bond 1.50% 0.45% 1.95% $ 82 $223
High Yield 1.50% 0.63% 2.13% $ 84 $244
Stock Index 1.50% 0.40% 1.90% $ 82 $219
Equity Income 1.50% 0.45% 1.95% $ 82 $220
Equity 1.50% 0.50% 2.00% $ 83 $231
Global 1.50% 0.92% 2.42% $ 87 $267
Prudential Jennison 1.50% 0.66% 2.16% $ 84 $244
AIM VARIABLE INSURANCE
FUNDS, INC.
AIM V.I. Growth and Income 1.50% 0.78% 2.28% $ 85 $254
AIM V.I. Value 1.50% 0.73% 2.23% $ 85 $250
JANUS ASPEN SERIES
Growth 1.50% 0.69% 2.19% $ 85 $247
International Growth 1.50% 1.26% 2.76% $ 90 $305
MFS VARIABLE INSURANCE TRUST
Emerging Growth 1.50% 1.00% 2.50% $ 88 $279
Research 1.50% 1.00% 2.50% $ 88 $276
OCC ACCUMULATION TRUST
Managed 1.50% 0.90% 2.40% $ 87 $272
Small Cap 1.50% 1.02% 2.52% $ 88 $278
T. ROWE PRICE EQUITY SERIES, INC.
Equity Income 1.50% 0.85% 2.35% $ 86 $265
T. ROWE PRICE INTERNATIONAL
SERIES, INC.
International Stock 1.50% 1.05% 2.55% $ 88 $281
WARBURG PINCUS TRUST
Post-Venture Capital 1.50% 1.40% 2.90% $ 91 $314
</TABLE>
The portfolio charges reflect any expense reimbursement or fee waiver that may
be in effect. For more detailed information, see the Fee Table in the Prospectus
for the Contract.
6. TAXES.
Earnings in your Contract are tax-deferred until you take them out. In addition,
if money is taken out before age 59 1/2, there may be a 10% tax penalty assessed
on the amount that is deemed to be income. In general, for tax purposes, if you
take money out, earnings are deemed to be taken out first and are taxed as
income. For Contracts sold in connection with IRAs, the entire distribution
amount is generally considered taxable income.
7. ACCESS TO YOUR MONEY.
You can take money out at any time during the accumulation phase. Each year you
can take up to 10% of your total purchase payments without any charge plus any
charge-free amount still
4
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PROFILE
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P R U C O L I F E I N S U R A N C E C O M P A N Y O F N E W J E R S E Y
DISCOVERY SELECT VARIABLE ANNUITY CONTRACT
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available from the immediately preceding Contract year. If you withdraw money in
excess of the free withdrawal amount, a percentage of the amount you withdraw
may be assessed a decreasing withdrawal charge during the first seven Contract
years (7%-6%-5%-4%-3%-2%-1%-0%). A withdrawal may be subject to income tax and
to a tax penalty.
8. PERFORMANCE.
The value of the Contract will fluctuate depending upon the performance of the
investment option(s) you choose. From time to time, we may advertise total
return figures for each variable investment option. As of the date of the
Prospectus, we had offered the Contract for less than 1 full year, and therefore
no performance information is presented here.
9. DEATH BENEFIT.
If you die during the accumulation phase, the person you have chosen as the
beneficiary will receive a death benefit. The death benefit will be the greatest
of three amounts: 1) the money you have put in the Contract less any money you
have taken out including the related withdrawal charges; 2) the value of your
Contract as of the date of due proof of death; and 3) the greatest value of your
Contract calculated on every third Contract anniversary reduced by all
subsequent withdrawals and withdrawal charges. The death benefit will be subject
to tax.
10. OTHER INFORMATION.
Free Look. You may return your Contract for a refund within 10 days after you
receive it. Some states allow a longer period of time during which a Contract
may be returned for a refund. Simply deliver or mail the Contract to the
Prudential Annuity Service Center or to the representative who sold it to you.
We will return your money or Contract value in accordance with applicable law
and the Contract will be canceled. Special rules apply for Contracts issued in
connection with IRAs.
Asset Allocation. An asset allocation program is available, at no cost, to
assist you in determining how to allocate your purchase payments. Dollar Cost
Averaging. Dollar Cost Averaging allows you to have a regular amount of money
automatically transferred from the fixed-rate option or one of the variable
investment options into one or more variable investment options.
Auto-Rebalancing. Auto-rebalancing will help keep your investment in line with
the investment mix you selected. We will maintain your allocation mix by
adjusting your money between the selected variable investment options based on
the percentage allocations that you choose. This will be done at specified
intervals as elected by you.
5
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PROFILE
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P R U C O L I F E I N S U R A N C E C O M P A N Y O F N E W J E R S E Y
DISCOVERY SELECT VARIABLE ANNUITY CONTRACT
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11. INQUIRIES.
If you need more information, please contact us at:
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 Washington Street
Newark, New Jersey 07102-2992
(800) 445-4571
If you need contract owner services (such as changes in Contract information,
inquiries asto Contract values, or to elect or modify Contract options) please
contact us at:
PRUDENTIAL ANNUITY SERVICE CENTER
300 Columbus Circle
Edison, New Jersey 08837
1-888-PRU-2888 (toll free)
6
<PAGE>
PROSPECTUS
MAY 1, 1997
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
PRUCO LIFE OF NEW JERSEY MARKET-VALUE ADJUSTMENT ANNUITY CONTRACTS
DISCOVERY SELECT
This prospectus describes the DISCOVERY SELECT[SM] Annuity Contract*, an
individual variable annuity contract offered by Pruco Life Insurance Company of
New Jersey ("Pruco Life of New Jersey", "we" or "us"), a stock life insurance
company that is an indirect wholly-owned subsidiary of The Prudential Insurance
Company of America ("Prudential").
This prospectus describes the Discovery SelectSM Annuity Contract that is
available to residents of New York only.
The Contract is purchased by making an initial payment of $10,000 or more.
Additional payments of $1,000 or more may also be made. Following the deduction
for any applicable taxes, the purchase payments may be allocated as you direct
in one or more of the following ways.
O They may be allocated to one or more of nineteen subaccounts, each of
which invests in one of the following portfolios of The Prudential Series
Fund, Inc. (the "Prudential Series Fund") or other listed portfolios
(collectively, the "Funds"):
THE PRUDENTIAL SERIES FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
Money Market Portfolio Stock Index Portfolio Prudential Jennison Portfolio
Diversified Bond Portfolio Equity Income Portfolio Global Portfolio
High Yield Bond Portfolio Equity Portfolio
</TABLE>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund AIM V.I. Value Fund
<TABLE>
<CAPTION>
<S> <C>
JANUS ASPEN SERIES MFS VARIABLE INSURANCE TRUST
Growth Portfolio International Growth Portfolio Emerging Growth Series Research Series
OCC ACCUMULATION TRUST T. ROWE PRICE EQUITY SERIES, INC.
Managed Portfolio Small Cap Portfolio Equity Income Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC. WARBURG PINCUS TRUST
International Stock Portfolio Post-Venture Capital Portfolio
</TABLE>
o They may be allocated to a fixed-rate option which guarantees a stipulated
rate of interest for a one year period.
o They may be allocated to a market-value adjustment option which guarantees
a stipulated rate of interest if held for a seven year period.
Continued on next page
-------------------------------------------
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ACCOMPANIED
BY A CURRENT PROSPECTUS FOR EACH OF THE FUNDS. EACH OF THESE PROSPECTUSES SHOULD
BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
<S> <C>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY PRUDENTIAL ANNUITY SERVICE CENTER
213 Washington Street 300 Columbus Circle
Newark, New Jersey 07102-2992 Edison, New Jersey 08837
Telephone: 1-888-PRU-2888 (toll free)
</TABLE>
*DISCOVERY SELECT is a service mark of Prudential.
<PAGE>
Continued from front cover
The value allocated to the subaccounts will vary daily with the investment
performance of those accounts. If amounts allocated to a market-value adjustment
option are withdrawn or transferred prior to the expiration of the interest rate
period, the Contract value will be subject to a Market-Value Adjustment, which
could result in receipt of more or less than the original amount allocated to
that option. On the annuity date, the cash value will be applied to effect a
fixed-dollar annuity. Upon annuitization, your participation in the investment
options ceases. Prior to that annuity date, you may withdraw in whole or in part
the cash value of the Contract.
This prospectus provides information a prospective investor should know before
investing. Additional information about the Contract has been filed with the
U.S. Securities and Exchange Commission in a Statement of Additional
Information, dated May 1, 1997, which information is incorporated herein by
reference, and is available without charge upon written request to Prudential
Annuity Service Center, 300 Columbus Circle, Edison, New Jersey 08837, or by
telephoning 1-888-PRU-2888 (toll free).
The accompanying prospectuses for the Funds and the related statements of
additional information describe the investment objectives and risks of investing
in the Funds. Additional Funds and subaccounts may be offered in the future.
The Contents of the Statement of Additional Information with respect to the
Contract appear on page 25 of this prospectus.
<PAGE>
PROSPECTUS CONTENTS
PAGE
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DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS .................... 1
FEE TABLE ............................................................... 2
GENERAL INFORMATION ABOUT PRUCO LIFE OF NEW JERSEY, THE PRUCO LIFE
OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT, AND
THE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT .................... 7
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY ............................ 7
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT .... 7
THE FUNDS ............................................................. 7
THE INTEREST-RATE INVESTMENT OPTIONS AND INVESTMENTS BY PRUCO
LIFE OF NEW JERSEY .................................................. 10
DETAILED INFORMATION ABOUT THE CONTRACT ................................. 10
REQUIREMENTS FOR ISSUANCE OF A CONTRACT ............................... 10
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK" .......................... 10
ALLOCATION OF PURCHASE PAYMENTS ....................................... 10
ASSET ALLOCATION PROGRAM .............................................. 11
CASH VALUE ............................................................ 11
GUARANTEED INTEREST RATE PERIODS ...................................... 11
WHAT HAPPENS WHEN AN INTEREST CELL REACHES ITS MATURITY DATE? ......... 11
TRANSFERS ............................................................. 11
DOLLAR COST AVERAGING ................................................. 12
AUTO-REBALANCING ...................................................... 12
WITHDRAWALS ........................................................... 12
AUTOMATED WITHDRAWALS ................................................. 13
MARKET-VALUE ADJUSTMENT ............................................... 13
DEATH BENEFIT ......................................................... 13
VALUATION OF A CONTRACT OWNER'S CONTRACT FUND ......................... 14
CHARGES, FEES AND DEDUCTIONS ............................................ 14
PREMIUM TAXES AND TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS ............. 14
ADMINISTRATIVE CHARGE ................................................. 14
CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS ....................... 15
EXPENSES INCURRED BY THE FUNDS ........................................ 15
WITHDRAWAL CHARGE ..................................................... 15
TRANSACTION CHARGE .................................................... 15
OTHER CHARGES ......................................................... 16
FEDERAL TAX STATUS ...................................................... 16
DIVERSIFICATION AND INVESTOR CONTROL .................................. 16
TAXES PAYABLE BY CONTRACT OWNERS ...................................... 16
WITHHOLDING ........................................................... 17
IMPACT OF FEDERAL INCOME TAXES ........................................ 18
IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER .......................... 18
CONTRACTS USED IN CONNECTION WITH TAX FAVORED PLANS ................... 18
IRAS .................................................................. 19
SEPS .................................................................. 19
SIMPLE-IRAS ........................................................... 20
TDAS .................................................................. 20
MINIMUM DISTRIBUTION OPTION ........................................... 20
WITHHOLDING ON TAX FAVORED PLANS ...................................... 21
PENALTY FOR EARLY WITHDRAWALS ......................................... 21
ERISA DISCLOSURE ...................................................... 21
ADDITIONAL ERISA REQUIREMENTS ......................................... 22
i
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PAYOUT PROVISIONS ....................................................... 22
1. ANNUITY PAYMENTS FOR A FIXED PERIOD ................................ 22
2. LIFE ANNUITY WITH 120 PAYMENTS CERTAIN ............................. 22
3. INTEREST PAYMENT OPTION ............................................ 22
4. OTHER ANNUITY OPTIONS .............................................. 23
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT ANNUITY PURCHASE RATES .. 23
OTHER INFORMATION ....................................................... 23
MISSTATEMENT OF AGE OR SEX ............................................ 23
SALE OF THE CONTRACT AND SALES COMMISSIONS ............................ 23
VOTING RIGHTS ......................................................... 23
SUBSTITUTION OF FUND SHARES ........................................... 24
OWNERSHIP OF THE CONTRACT ............................................. 24
PERFORMANCE INFORMATION ............................................... 24
REPORTS TO CONTRACT OWNERS ............................................ 25
STATE REGULATION ...................................................... 25
EXPERTS ............................................................... 25
LITIGATION ............................................................ 25
STATEMENT OF ADDITIONAL INFORMATION ................................... 25
ADDITIONAL INFORMATION ................................................ 26
FINANCIAL STATEMENTS .................................................. 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .................................................. 27
DIRECTORS AND OFFICERS .................................................. 29
EXECUTIVE COMPENSATION .................................................. 30
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY .......................................................... B-1
MARKET-VALUE ADJUSTMENT FORMULA ......................................... C-1
ii
<PAGE>
DEFINITIONS OF SPECIAL TERMS USED IN THIS
PROSPECTUS
ACCOUNT--See the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account (the "Account"), below.
ANNUITANT--The person or persons, designated by the Contract owner, upon whose
life or lives monthly annuity payments are based after an annuity is effected.
ANNUITY CONTRACT--A contract designed to provide an annuitant with an income,
which may be a lifetime income, beginning on the annuity date.
ANNUITY DATE--The date, specified in the Contract, when annuity payments begin.
CASH VALUE--The surrender value of the Contract, which equals the Contract Fund
plus or minus any Market-Value Adjustments less any withdrawal charge and any
administrative charge due upon surrender.
CHARGE-FREE AMOUNT--The amount of purchase payments in your Contract Fund that
is not subject to a withdrawal charge.
CONTRACT ANNIVERSARY--The same day and month as the Contract date in each later
year.
CONTRACT DATE--The date Pruco Life of New Jersey received the initial purchase
payment and certain required documentation.
CONTRACT FUND--The total value attributable to a specific Contract representing
amounts invested in all the subaccounts and in the interest-rate investment
options.
CONTRACT OWNER--You. A person who purchases a DISCOVERY SELECT[SM] Contract and
makes the purchase payments. The Contract may be owned by joint owners. An owner
will usually also be an annuitant, but need not be. An owner has all rights in
the Contract before the annuity date. Subject to certain limitations and
requirements described in this prospectus, these rights include the right to
make withdrawals or surrender the Contract, to designate and change the
beneficiaries who will receive the proceeds at the death of the annuitant before
the annuity date, to transfer funds among the investment options, and to
designate a mode of settlement for the annuitant on the annuity date.
CONTRACT YEAR--A year that starts on the Contract Date or on a Contract
anniversary.
FIXED-RATE OPTION--An investment option under which Pruco Life of New Jersey
credits interest to the amount allocated at a guaranteed interest rate
periodically declared in advance by Pruco Life of New Jersey but not less than
3%.
GUARANTEED INTEREST RATE--The effective annual interest rate credited during the
interest rate period.
INTEREST CELL--A division of the interest-rate investment options which is
established whenever you allocate or transfer money into an interest-rate
investment option. The amount in the interest cell is credited with a guaranteed
interest rate, declared in advance by Pruco Life of New Jersey and never less
than 3%, if held for the duration of the cell's interest rate period.
INTEREST-RATE INVESTMENT OPTIONS--The fixed-rate option and the market-value
adjustment option.
INTEREST RATE PERIOD--The period for which the guaranteed interest rate is
credited.
MARKET-VALUE ADJUSTMENT--If amounts are withdrawn or transferred from a
market-value adjustment option before the end of the interest rate period, a
Market-Value Adjustment will occur. A Market-Value Adjustment may result in an
increase, decrease or no change in the value of the money that was in the
interest cell. For the formula used to calculate the adjustment, see
MARKET-VALUE ADJUSTMENT FORMULA, on page C-1.
MARKET-VALUE ADJUSTMENT OPTION ("MVA OPTION") --An interest-rate investment
option subject to a Market-Value Adjustment.
THE PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT (THE
"ACCOUNT")--A separate account of Pruco Life of New Jersey registered as a unit
investment trust under the Investment Company Act of 1940.
SUBACCOUNT--A division of the Account, the assets of which are invested in
shares of the corresponding portfolio of the funds.
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 are calculated, which is generally
at 4:15 p.m. New York City time on each day during which the New York Stock
Exchange is open.
VARIABLE INVESTMENT OPTIONS--The subaccounts.
1
<PAGE>
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchase Payments ............................... None
Maximum Withdrawal Charge:
- --------------------------------------------------------------------------------
THE WITHDRAWAL CHARGE WILL BE EQUAL
FOR WITHDRAWALS DURING THE CONTRACT TO THE FOLLOWING PERCENTAGE OF THE
YEAR INDICATED AMOUNT WITHDRAWN*
- --------------------------------------------------------------------------------
First Contract Year 7%
Second Contract Year 6%
Third Contract Year 5%
Fourth Contract Year 4%
Fifth Contract Year 3%
Sixth Contract Year 2%
Seventh Contract Year 1%
Eighth and Subsequent Contract Years No Charge
- --------------------------------------------------------------------------------
* The withdrawal charge is not imposed on any charge-free withdrawal amounts
or any amount used to provide income under the Life Annuity with 120
Payments Certain Option.
There will be a reduction in such withdrawal charge in the case of
contracts issued to Contract owners issue age 84 and older.
Annual Contract Fee and Fee upon Full Withdrawal ........................ $30**
** This charge will be apportioned over all the accounts making up the
Contract Fund as of the effective date of that deduction. Amounts
apportioned to the two interest-rate investment options will reduce the
interest cells on a FIFO (first in/first out) basis determined by the age
of the cell. The charge will not be made if the Contract Fund is $50,000
or more.
TRANSFER CHARGE
Imposed only for transfers in excess of twelve transfers in a Contract
year (excluding transfers in connection with dollar cost averaging
and auto-rebalancing) .................................................. $25
SEPARATE ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE CONTRACT FUND)
ALL SUBACCOUNTS
---------------
Mortality and Expense Risk Charge ................... 1.25%
Administrative Fee .................................. 0.15%
-----
Total Separate Account Annual Expenses .............. 1.40%
=====
ANNUAL EXPENSES OF THE FUNDS
(AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
INVESTMENT OTHER EXPENSES (AFTER EXPENSE
MANAGEMENT FEE EXPENSES REIMBURSEMENTS)
-------------- -------- -----------------------
<S> <C> <C> <C>
THE PRUDENTIAL SERIES FUND(1)
Money Market Portfolio .................... 0.40% 0.04% 0.44%
Diversified Bond Portfolio ................ 0.40% 0.05% 0.45%
High Yield Bond Portfolio ................. 0.55% 0.08% 0.63%
Stock Index Portfolio ..................... 0.35% 0.05% 0.40%
Equity Income Portfolio ................... 0.40% 0.05% 0.45%
Equity Portfolio .......................... 0.45% 0.05% 0.50%
Prudential Jennison Portfolio ............. 0.60% 0.06% 0.66%
Global Portfolio .......................... 0.75% 0.17% 0.92%
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
TOTAL FUND ANNUAL
INVESTMENT OTHER EXPENSES (AFTER EXPENSE
MANAGEMENT FEE EXPENSES REIMBURSEMENTS)
-------------- -------- -----------------------
<S> <C> <C> <C>
AIM VARIABLE INSURANCE FUNDS, INC.(2)
AIM V.I. Growth and Income Fund ........... 0.65% 0.13% 0.78%
AIM V.I. Value Fund ....................... 0.64% 0.09% 0.73%
JANUS ASPEN SERIES(3)
Growth Portfolio .......................... 0.65% 0.04% 0.69%
International Growth Portfolio ............ 0.05% 1.21% 1.26%
MFS VARIABLE INSURANCE TRUST(4)
Emerging Growth Series .................... 0.75% 0.25% 1.00%
Research Series ........................... 0.75% 0.25% 1.00%
OCC ACCUMULATION TRUST(5)
Managed Portfolio ......................... 0.80% 0.10% 0.90%
Small Cap Portfolio ....................... 0.80% 0.22% 1.02%
T. ROWE PRICE (6)
T. Rowe Price Equity Series, Inc.,
Equity Income Portfolio .................. 0.85% 0.00% 0.85%
T. Rowe Price International Series, Inc.,
International Stock Portfolio ............ 1.05% 0.00% 1.05%
WARBURG PINCUS TRUST(7)
Post-Venture Capital Portfolio ............ 0.62% 0.78% 1.40%
</TABLE>
The purpose of the foregoing tables is to assist Contract owners in
understanding the expenses that they bear, directly or indirectly of the Pruco
Life of New Jersey Flexible Premium Variable Annuity Account and the Funds. The
expenses relating to the Funds (other than those in the Prudential Series Fund)
have been provided to Pruco Life of New Jersey by the Funds and have not been
independently verified by Pruco Life of New Jersey. See the sections on charges
in this prospectus and the accompanying prospectuses for the Funds. The above
tables do not include any taxes attributable to purchase payments nor any
premium taxes. Currently, there is no deduction for such taxes at the time
purchase payments are made, but in some states, a deduction is made when an
annuity is effected.
(1.) The Prudential Series Fund. With respect to The Prudential Series Fund
portfolios, except for the Global Portfolio, Prudential reimburses a portfolio
when its ordinary operating expenses, excluding taxes, interest, and brokerage
commissions exceed 0.75% of the portfolio's average daily net assets. The
amounts listed for the portfolios under "Other Expenses" are based on amounts
incurred in the last fiscal year.
(2.) AIM Variable Insurance Funds, Inc. AIM may from time to time voluntarily
waive or reduce its respective fees. Fee waivers or reductions, other than those
contained in the agreement with the adviser, may be modified or terminated at
any time.
(3.) Janus Aspen Series. The fees and expenses for the Janus Aspen Series Growth
Portfolio and International Growth Portfolio in the table above are based on
gross expenses before expense offset arrangements for the fiscal year ended
December 31, 1996, net of fee waivers or reductions from Janus Capital. Janus
Capital has agreed to reduce each Portfolio's advisory fee to the extent such
fee exceeds the effective rate of the Janus retail fund corresponding to such
Portfolio. Janus Capital may terminate this fee reduction or any of the expense
limitations set forth herein at any time upon 90 days' notice to the Trustees of
the Janus Aspen Series. The fees and expenses for the International Growth
Portfolio have been restated to reflect the 1.25% expense limitation in effect
through April 30, 1998. Without fee waivers or reductions, the Management Fee,
Other Expenses and Total Fund Annual Expenses would have been 0.79%, 0.04% and
0.83% for the Growth Portfolio and 1.00%, 1.21% and 2.21% for the International
Growth Portfolio.
(4.) MFS Variable Insurance Trust. The Adviser has agreed to bear expenses for
each Series, subject to reimbursement by each Series, such that each Series'
"Other Expenses" shall not exceed 0.25% of the average daily net assets of the
series during the current fiscal year. See "Information Concerning Shares of
Each Series-Expenses." Otherwise, "Other Expenses" for the Emerging Growth
Series and the Research Series would be 0.41% and 0.73%, respectively, and
"Total Operating Expenses" would be 1.16% and 1.48%, respectively, for these
Series.
3
<PAGE>
(5.) The annual expenses of OCC Accumulation Trust Portfolios (the
"Portfolios") as of December 31, 1996 have been restated to reflect new
management fee and expense limitation arrangements in effect as of May 1, 1996.
Additionally, Other Expenses are shown gross of certain expense offsets afforded
the Portfolios which effectively lowered overall custody expenses. Effective May
1, 1996, the expenses of the Portfolios were contractually limited by OpCap
Advisors so that their respective annualized operating expenses (net of any
expense offsets) do not exceed 1.25% of their respective average daily net
assets. Furthermore, through December 31, 1997, the annualized operating
expenses of the Managed and Small Cap Portfolios will be voluntarily limited by
OpCap Advisors so that annualized operating expenses (net of any expense
offsets) of these Portfolios do not exceed 1.00% of their respective average
daily net assets. Without such contractual and voluntary expense limitations and
without giving effect to any expense offsets, the Management Fees, Other
Expenses and Total Portfolio Annual Expenses incurred for the fiscal year ended
December 31, 1996 would have been: .80%, .10% and .90%, respectively, for the
Managed Portfolio; and .80%, .26% and 1.06%, respectively, for the Small Cap
Portfolio.
(6.) T. Rowe Price Equity Series, Inc. and T. Rowe Price International Series,
Inc. With respect to the T. Rowe Price Funds, the Investment Management Fees
include the ordinary expenses of operating the Funds.
(7.) Warburg Pincus Trust. With respect to the Warburg Pincus Trust Post-Venture
Capital Portfolio, absent the anticipated waiver of fees by the Fund's
investment adviser and co-administrator, the Investment Management Fee would
equal 1.25%. Other Expenses would equal 0.82%, and Total Fund Annual Expenses
would equal 2.07%. Other Expenses for the Fund are based on annualized estimates
of expenses for the fiscal year ending December 31, 1997, net of any fee waivers
or expense reimbursements. The investment adviser and co-administrator have
undertaken to limit the Portfolio's Total Portfolio Operating Expenses to the
limits shown in the table above through December 31, 1997.
EXAMPLES OF FEES AND EXPENSES
The following examples illustrate the cumulative dollar amount of all the above
expenses that would be incurred on each $1,000 of your investment.
o The examples assume a consistent 5% annual return on invested
assets;
o The examples do not take into consideration any taxes attributable
to purchase payments nor any premium taxes which may be payable at
the time of annuitization or at the time of purchase payments;
For a term less than 10 years, the expenses shown in Table I describe applicable
charges for the withdrawal of your entire Contract Fund or if you use your
Contract Fund to effect an annuity assuming, in each case, that your Contract
Fund is invested entirely in the designated portfolio. THE EXAMPLES SHOULD NOT
BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES
INCURRED IN ANY GIVEN YEAR MAY BE MORE OR LESS THAN THOSE SHOWN IN THE EXAMPLES.
4
<PAGE>
TABLE I
If you withdraw your entire Contract Fund just prior to the end of the
applicable time period or if you use your Contract Fund to effect an annuity at
the end of the applicable time period, you would pay the following cumulative
expenses on each $1,000 invested. (Note: The 1, 3 and 5 Year columns reflect the
imposition of the withdrawal charge; however, if you choose certain annuity
options after the first year this charge will not be made. Where this is the
case, the expenses shown in Table II below would be applicable. See WITHDRAWAL
CHARGE on page 15.)
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
The Prudential Series Fund
Money Market Portfolio .................. $83 $ 97 $122 $231
Diversified Bond Portfolio .............. $82 $ 95 $118 $223
High Yield Bond Portfolio ............... $84 $101 $128 $244
Stock Index Portfolio ................... $82 $ 94 $116 $219
Equity Income Portfolio ................. $82 $ 94 $117 $220
Equity Portfolio ........................ $83 $ 97 $122 $231
Prudential Jennison Portfolio ........... $84 $101 $128 $244
Global Portfolio ........................ $87 $108 $140 $267
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth And Income Fund ......... $85 $106 $133 $254
AIM V.I. Value Fund ..................... $85 $103 $131 $250
Janus Aspen Series
Growth Portfolio ........................ $85 $102 $130 $247
International Growth Portfolio .......... $90 $117 $159 $305
MFS Variable Insurance Trust
Emerging Growth Series .................. $88 $109 $145 $279
Research Series ......................... $88 $119 $144 $276
OCC Accumulation Trust
Managed Portfolio ....................... $87 $109 $142 $272
Small Cap Portfolio ..................... $88 $111 $145 $278
T. Rowe Price
T. Rowe Price Equity Series, Inc.,
Equity Income Portfolio ................ $86 $107 $139 $265
T. Rowe Price International Series, Inc.,
International Stock Portfolio .......... $88 $112 $147 $281
Warburg Pincus Trust
Post-Venture Capital Portfolio .......... $91 $122 $164 $314
5
<PAGE>
TABLE II
If you do not withdraw any portion of your Contract Fund as of the end of the
applicable time period, you would pay the following cumulative expenses on each
$1,000 invested.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
The Prudential Series Fund
Money Market Portfolio .................. $20 $62 $107 $231
Diversified Bond Portfolio .............. $19 $60 $103 $223
High Yield Bond Portfolio ............... $21 $66 $113 $244
Stock Index Portfolio ................... $19 $59 $101 $219
Equity Income Portfolio ................. $19 $59 $102 $220
Equity Portfolio ........................ $20 $62 $107 $231
Prudential Jennison Portfolio ........... $21 $66 $113 $244
Global Portfolio ........................ $24 $73 $125 $267
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth And Income Fund ......... $22 $69 $118 $254
AIM V.I. Value Fund ..................... $22 $68 $116 $250
Janus Aspen Series
Growth Portfolio ........................ $22 $67 $115 $247
International Growth Portfolio .......... $27 $84 $144 $305
MFS Variable Insurance Trust
Emerging Growth Series .................. $25 $76 $130 $279
Research Series ......................... $25 $76 $129 $276
OCC Accumulation Trust
Managed Portfolio ....................... $23 $74 $127 $272
Small Cap Portfolio ..................... $24 $76 $130 $278
T. Rowe Price
T. Rowe Price Equity Series, Inc.,
Equity Income Portfolio ................ $23 $72 $124 $265
T. Rowe Price International Series, Inc.,
International Stock Portfolio .......... $25 $77 $132 $281
Warburg Pincus Trust
Post-Venture Capital Portfolio .......... $28 $87 $149 $314
Notice that in both of the above tables, the level of cumulative charges is
identical for the 10 year column. This is because at that point there are no
withdrawal charges taken by Pruco Life of New Jersey upon surrender or
annuitization. Each year (and upon surrender), Pruco Life of New Jersey deducts
a $30 fee with respect to a Contract having a Contract Fund valued less than
$50,000. As of the date of this prospectus, no such annual charge has been
collected, although the number of Contracts with initial purchase payments above
and below $50,000 is known. The above Examples use as the annual Contract fee
the average fee that would be derived if the $30 annual fee were assessed based
on the value of the initial purchase payment for each Contract issued as of the
date of this prospectus. This average fee is allocated to each of the
subaccounts assuming a $19,000 average Contract Fund. Your actual fees will vary
based on the amount of your Contract Fund and your specific allocation.
6
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE OF NEW JERSEY,
THE PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT, AND THE
INVESTMENT OPTIONS AVAILABLE UNDER THE
CONTRACT
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is a
stock life insurance company, organized in 1982 under the laws of the State of
New Jersey. It is licensed to sell life insurance and annuities only in the
States of New Jersey and New York.
Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco Life Insurance
Company, which in turn is a wholly-owned subsidiary of Prudential, a mutual
insurance company founded in 1875 under the laws of the State of New Jersey. As
of December 31, 1996, Prudential has invested $127 million in Pruco Life of New
Jersey through its subsidiary Pruco Life Insurance Company in connection with
Pruco Life of New Jersey's organization and operation. Prudential intends from
time to time to make additional capital contributions to Pruco Life of New
Jersey as needed to enable it to meet its reserve requirements and expenses in
connection with its business. However, Prudential is under no obligation to make
such contributions and its assets do not back the benefits payable under the
Contract. Pruco Life of New Jersey's financial statements begin on page B-1 and
should be considered only as bearing upon Pruco Life of New Jersey's ability to
meet its obligations under the Contracts.
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
The Pruco Life of New Jersey Flexible Premium Variable Annuity Account (the
"Account") was established on May 20, 1996 under New Jersey law as a separate
investment account. The Account meets the definition of a "separate account"
under federal securities laws. Pruco Life of New Jersey is the legal owner of
the assets in the Account and is obligated to provide all benefits under the
Contracts. Pruco Life of New Jersey will at all times 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 are segregated from all of Pruco Life of New Jersey's other assets and
may not be charged with liabilities which arise from any other business Pruco
Life of New Jersey conducts. In addition to these assets, the Account's assets
may include funds contributed by Pruco Life of New Jersey to commence operation
of the Account and may include accumulations of the charges Pruco Life of New
Jersey makes against the Account. From time to time these additional assets will
be transferred to Pruco Life of New Jersey's general account. Before making any
such transfer, Pruco Life of New Jersey will consider any possible adverse
impact the transfer might have on the Account.
The Account is registered with the U.S. 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. This does not involve
any supervision by the SEC of the management or investment policies or practices
of the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life of New Jersey. There are currently nineteen subaccounts
within the Account which invest in corresponding portfolios of the Funds
available under the Contracts. There are additional subaccounts which invest in
other portfolios of the Prudential Series Fund which are not available under the
Contracts. Additional subaccounts may be added in the future. Pursuant to the
terms of the Contract, Pruco Life of New Jersey has the right to modify
unilaterally the Contract to limit the number and/or type of funds.
THE FUNDS
The following is a list of each Fund, its investment objectives and its
investment adviser:
THE PRUDENTIAL SERIES FUND, INC.
MONEY MARKET PORTFOLIO. The maximum current income that is consistent with
stability of capital and maintenance of liquidity through investment in
high-quality short-term debt obligations. There are no assurances that this
portfolio will maintain a stable net asset value.
DIVERSIFIED BOND PORTFOLIO. A high level of income over the longer term while
providing reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities that provide
attractive yields but do not involve substantial risk of loss of capital through
default.
7
<PAGE>
HIGH YIELD BOND PORTFOLIO. Achievement of a high total return through investment
in high yield/high risk fixed income securities in the medium to lower quality
ranges.
STOCK INDEX PORTFOLIO. Achievement of investment results that correspond to the
price and yield performance of publicly traded common stocks in the aggregate by
following a policy of attempting to duplicate the price and yield performance of
the Standard & Poor's 500 Composite Stock Price Index.
EQUITY INCOME PORTFOLIO. Both current income and capital appreciation through
investment primarily in common stocks and convertible securities that provide
favorable prospects for investment income returns above those of the Standard &
Poor's 500 Composite Stock Price Index or the New York Stock Exchange Composite
Index.
EQUITY PORTFOLIO. Capital appreciation through investment primarily in common
stocks of companies, including major established corporations as well as smaller
capitalization companies, that appear to offer attractive prospects of price
appreciation that is superior to broadly-based stock indices. Current income, if
any, is incidental.
PRUDENTIAL JENNISON PORTFOLIO. Long-term growth of capital through investment
primarily in equity securities of established companies with above-average
growth prospects. Current income, if any, is incidental.
GLOBAL PORTFOLIO. Long-term growth of capital through investment primarily in
common stock and common stock equivalents of foreign and domestic issuers.
Current income, if any, is incidental.
Prudential is the investment advisor for the assets of each of the portfolios of
the Prudential Series Fund. Prudential has a Service Agreement with its
wholly-owned subsidiary The Prudential Investment Corporation ("PIC"), which
provides that, subject to Prudential's supervision, PIC will furnish investment
advisory services in connection with the management of the Prudential Series
Fund. In addition, Prudential has entered into a Subadvisory Agreement with its
wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio.
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. GROWTH AND INCOME FUND. The Fund's investment objective is to seek
growth of capital, with current income as a secondary objective.
AIM V.I. VALUE FUND. The Fund's investment objective is to achieve long-term
growth of capital by investing primarily in equity securities judged by A I M
Advisors, Inc. to be undervalued relative to the current or projected earnings
of the companies issuing the securities, or relative market values of assets
owned by the companies issuing the securities or relative to the equity market
generally. Income is a secondary objective and would be satisfied principally
from the income (interest and dividends) generated by the common stocks,
convertible bonds and convertible preferred stocks that make up the Fund's
portfolio.
A I M Advisors, Inc., serves as the investment adviser to the AIM V.I. Value
Fund and the AIM V.I. Growth and Income Fund.
JANUS ASPEN SERIES
GROWTH PORTFOLIO. A diversified portfolio that seeks long-term growth of capital
by investing primarily in common stocks, with an emphasis on companies with
larger market capitalizations.
INTERNATIONAL GROWTH PORTFOLIO. A diversified portfolio that seeks long-term
growth of capital by investing primarily in common stocks of foreign issuers.
Janus Capital Corporation is the investment adviser to the Growth Portfolio and
the International Growth Portfolio and is responsible for the day-to-day
management of the portfolios and other business affairs of the portfolios.
MFS VARIABLE INSURANCE TRUST
EMERGING GROWTH SERIES. This Series seeks to provide long-term growth of
capital. Dividend and interest income from portfolio securities, if any, is
incidental to the Series' investment objective of long-term growth of capital.
RESEARCH SERIES. The Research Series' investment objective is to provide
long-term growth of capital and future income.
Massachusetts Financial Services Company, a Delaware corporation, is the
investment adviser to each MFS Series.
8
<PAGE>
OCC ACCUMULATION TRUST (FORMERLY KNOWN AS QUEST FOR VALUE ACCUMULATION TRUST)
MANAGED PORTFOLIO. Growth of capital over time through investment in a portfolio
consisting of common stocks, bonds and cash equivalents, the percentages of
which will vary based on management's assessments of relative investment.
SMALL CAP PORTFOLIO. Capital appreciation through investment in a diversified
portfolio of equity securities of companies with market capitalizations of under
$1 billion.
OpCap Advisors (formerly known as Quest for Value Advisors, the "OCC Manager")
is responsible for management of the OCC Accumulation Trust's business. Pursuant
to the investment advisory agreement with the OCC Accumulation Trust, and
subject to the authority of the Board of Trustees, the OCC Manager supervises
the investment operation of the Managed Portfolio and the Small Cap Portfolio,
furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities and provides certain
administrative services for the OCC Accumulation Trust.
T. ROWE PRICE
T. ROWE PRICE EQUITY SERIES, INC., EQUITY INCOME PORTFOLIO. The fund's objective
is to provide substantial dividend income as well as long-term capital
appreciation through investment in common stocks of established companies.
T. ROWE PRICE INTERNATIONAL SERIES, INC., INTERNATIONAL STOCK PORTFOLIO. The
fund's objective is long-term growth of capital through investment primarily in
common stocks of established, non-U.S. companies.
T. Rowe Price Associates, Inc. is the Investment Manager for the Equity Income
Portfolio and Rowe Price-Fleming International, Inc. is the Investment Manager
for the International Stock Portfolio.
WARBURG PINCUS TRUST
POST-VENTURE CAPITAL PORTFOLIO. Seeks long-term growth of capital by investing
primarily in equity securities of issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy.
The Warburg Pincus Trust employs Warburg, Pincus Counsellors, Inc. as investment
adviser and Abbott Capital Management, L.P. as its sub-investment adviser with
respect to a portion of the Post-Venture Capital Portfolio allocated to private
limited partnerships or other investment funds.
Further information about the Fund portfolios can be found in the accompanying
prospectuses for each Fund.
The investment advisors with respect to the various funds charge a daily
investment management fee as compensation for their services, as set forth in
the table beginning on page 2 and as more fully described in the prospectus for
each Fund.
It is conceivable that 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. Although neither the companies which
invest in the Funds, nor the Funds currently foresees any such disadvantage, the
Funds' Boards intend 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 in response thereto. This
might force a Fund to sell securities at disadvantageous prices. 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 Funds; or (4) differences between voting instructions
given by variable life insurance and variable annuity contract owners.
Pruco Life of New Jersey will be compensated by an affiliate of each of the
Funds (other than those in the Prudential Series Fund) based upon an annual
percentage of the average assets held in the Fund by Pruco Life of New Jersey
under the Contracts. These percentages vary by Fund, and reflect administrative
and other services provided by Pruco Life of New Jersey.
A FULL DESCRIPTION OF THE FUNDS, THEIR INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, AND RESTRICTIONS, THEIR EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN, AND ALL OTHER ASPECTS OF THEIR OPERATION IS CONTAINED IN THE
ACCOMPANYING PROSPECTUSES FOR EACH FUND AND IN THE RELATED STATEMENTS OF
ADDITIONAL INFORMATION, WHICH SHOULD BE READ IN CONJUNCTION WITH THIS
PROSPECTUS. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE MET.
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THE INTEREST-RATE INVESTMENT OPTIONS AND INVESTMENTS BY
PRUCO LIFE OF NEW JERSEY
Purchase payments invested in the interest-rate investment options do not result
in participation in the investment gains or losses of any designated portfolio
of investments as is the case for payments invested in the variable investment
options. The amounts invested in the interest-rate investment options are
credited with interest at rates guaranteed by Pruco Life of New Jersey. All of
Pruco Life of New Jersey's assets stand behind those guarantees.
Assets of Pruco Life of New Jersey must be invested in accordance with
requirements established by applicable state laws regarding the nature and
quality of investments that may be made by life insurance companies and the
percentage of their assets that may be committed to any particular type of
investment. In general, these laws permit investments, within specified limits
and subject to certain qualifications, in federal, state, and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments.
DETAILED INFORMATION ABOUT THE CONTRACT
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
The minimum initial purchase payment is $10,000. Any purchase payments in excess
of $2 million require prior approval of Pruco Life of New Jersey. The Contract
may generally be issued on proposed annuitants below the age of 86. Contracts
purchased in connection with Individual Retirement Annuity plans (IRAs) will
generally be issued to annuitants below the age of 70. However, IRA Contracts
may be issued up to age 80 provided that the Minimum Distribution Option or
other appropriate IRS election is made. Before issuing any Contract, we require
submission of certain information. Following our review of the information and
approval of issuance, a Contract will be issued that sets forth precisely your
rights and Pruco Life of New Jersey's obligations. You may thereafter make
additional payments of $1,000 or more, but there is no obligation to do so.
The Contract Date will be the date the initial purchase payment and required
information in good order are received at the Prudential Annuity Service Center.
The initial purchase payment is credited to the Contract Fund as of the Contract
Date. If the initial purchase payment that you submit is not accompanied by all
the information we need to issue the Contract, we will contact you to get the
needed information. If we cannot obtain all the needed information within five
business days after receipt, we will either return your initial purchase payment
or get your consent to retaining it until we have received all the necessary
information. If the current underwriting requirements are not met and the
issuance of the Contract is not approved, the purchase payment will promptly be
returned. Pruco Life of New Jersey reserves the right to change these
requirements on a non-discriminatory basis.
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"
You can cancel the Contract within 10 days after receiving it (or whatever
greater period is required in your state). A refund may be requested by mailing
or delivering the Contract to the representative who sold it or to the
Prudential Annuity Service Center. You will receive whatever your Contract is
worth as of the day we receive your request, plus or minus the market-value
adjustment with respect to any values in the MVA option. This may be more or
less than your original payments. Some states require that we return your
payments, less any previous withdrawals. If the Contract was purchased as an
IRA, and you exercise this cancellation right, the purchase payments or the
total value of the Contract Fund (whichever is greater) will be refunded to you.
ALLOCATION OF PURCHASE PAYMENTS
You determine how the initial purchase payment will be allocated among the
subaccounts and interest-rate investment options by specifying the desired
allocation on the application form for the Contract. You may choose to allocate
nothing to a particular subaccount or interest-rate option. Unless you tell us
otherwise, subsequent purchase payments will be allocated in the same
proportions as the most recent purchase payment made (unless that was a purchase
payment you directed us to allocate on a one time-only basis). Subsequent
purchase payments are credited to the Contract Fund as of the end of the
valuation period in which a proper request is received at the Prudential Annuity
Service Center. You may change the way in which subsequent purchase payments are
allocated by providing Pruco Life of New Jersey with proper written instruction
or by telephoning the Prudential Annuity Service Center, once you have provided
the appropriate identification to effect a telephone transfer. See TRANSFERS,
page 11.
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ASSET ALLOCATION PROGRAM
An Asset Allocation Program is available to assist you in determining how to
allocate your purchase payments. If you choose to participate in the program,
your registered representative will provide you with an investor profile
questionnaire. Based on your answers to the questionnaire, a software program,
designed by Prudential with the assistance of Ibbotson Associates, will identify
an asset allocation model that is appropriate for investors that have investment
objectives, risk tolerance and time horizons comparable to yours. The Asset
Allocation Program is available at no charge to you. You are under no obligation
to participate in the program or to invest according to the program
recommendations. You may ignore, in whole or in part, the investment allocations
provided by the program.
The Asset Allocation Program is intended as an aid in making your purchase
payment allocations. It is not a guarantee of investment return and there can be
no assurance that any portfolio will attain its investment objectives. You
should consider reviewing your investor profile questionnaire annually, and each
time your investor profile changes.
CASH VALUE
The cash value of the Contract is the amount you will receive if you withdraw
all of your Contract Fund. It is equal to the value of the Contract Fund plus or
minus any applicable Market-Value Adjustment of all amounts in MVA option
interest cells and minus any applicable withdrawal and administrative charges. A
withdrawal will generally have federal income tax consequences, which could
include tax penalties. You should consult with a tax adviser before making a
withdrawal. See WITHDRAWALS, on page 12 and FEDERAL TAX STATUS, on page 16.
GUARANTEED INTEREST RATE PERIODS
Pruco Life of New Jersey determines the effective guaranteed annual interest
rate ("guaranteed interest rate") that is available at any given time for the
one year fixed-rate option and for the MVA option. This is the rate that the
portion of the Contract Fund allocated to that option will earn throughout each
interest rate period. The rates change frequently and you may learn what rate[s]
are available from your Pruco Life of New Jersey representative. When you select
an interest-rate investment option, your payment will be allocated to an
interest rate cell and the interest rate will then not change until the cell's
maturity date. Interest will be added to the amount in the cell daily at a rate
that will provide the guaranteed effective yield over the period of one year.
Although the guaranteed interest rates offered may change, the minimum
guaranteed interest rate will never be less than an effective annual rate of 3%.
WHAT HAPPENS WHEN AN INTEREST CELL REACHES ITS MATURITY DATE?
On each maturity date, we will offer an election to transfer the amount maturing
into either of the available interest-rate investment options or the
subaccounts. A Market-Value Adjustment will not be made if this is done within
the first 30 days after an interest cell within the MVA option matures. Any
amount that you transfer into the same interest-rate investment option during
the 30-day period will receive the appropriate rate for that option, effective
as of the maturity date. Amounts that you withdraw or transfer into a variable
investment option or into a different interest-rate investment option during the
30-day period will receive interest for the period between the maturity date and
the date of withdrawal or transfer at the declared renewal rate for the matured
cell (i.e. as if you had taken no action within the 30-day period) and will be
effective on the date Pruco Life of New Jersey receives your request. If you do
not make an election to transfer within the 30-day period following the maturity
date, the amount maturing will ordinarily be transferred into a new interest
cell of the same duration as the maturing cell at the prevailing interest rate.
The transfer date will be the maturity date.
TRANSFERS
You may transfer out of an investment option into any combination of other
investment options available under the Contract. The transfer request may be in
dollars, such as a request to transfer $1,000 from one subaccount to another, or
may be in terms of a percentage reallocation among subaccounts. You may make
transfers by proper written notice to the Prudential Annuity Service Center, or
by telephone, once you have provided appropriate identification to effect a
telephone transfer.
You will automatically be enrolled to use the Telephone Transfer System. Pruco
Life of New Jersey has adopted procedures designed to ensure that requests by
telephone are genuine. We will not be held liable for following
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telephone instructions that we reasonably believe to be genuine. We 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.
Transfers will take effect as of the end of the valuation period in which a
proper transfer request is received at the Prudential Annuity Service Center.
Transfers out of an interest cell in the fixed-rate option are permitted only
during the 30-day period following its maturity date. Amounts transferred from a
Market-Value Adjustment Option interest cell may be subject to a Market-Value
Adjustment if the transfer is not made in the 30-day period following the
maturity date of the interest cell.
The Contract was not designed for professional market timing organizations or
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 Funds and will be discouraged. If such a pattern were
to be found, we may be required to modify the transfer procedures, including but
not limited to, not accepting transfer requests of an agent acting under a power
of attorney on behalf of more than one Owner.
You may make up to 12 transfers a year without charge. Thereafter, Pruco Life of
New Jersey will assess a charge of $25 for each subsequent transfer during that
Contract year. See TRANSACTION CHARGE, page 15. Dollar Cost Averaging and
Auto-Rebalancing transfers do not count towards the 12 transfers per year that
can be made without charge.
DOLLAR COST AVERAGING
Additionally, an administrative feature called Dollar Cost Averaging ("CD") is
available to Contract owners. This feature allows you to transfer amounts out of
the fixed-rate option or one of the variable investment options (designated as
the "CD account") and into one or more other variable investment options.
Transfers may be in specific dollar amounts or percentages of the amount in the
DCA account at the time of the transfer. If the DCA account balance drops below
$250, the entire remaining balance of the account will be transferred on the
next transfer date. You may ask that transfers be made monthly, quarterly,
semi-annually or annually. You can add to the DCA account at any time. Initial
transfers must be at least 3% of the DCA account. These amounts are subject to
change at Pruco Life of New Jersey's discretion. Any transfers made pursuant to
DCA are not counted in determining the number of transfers subject to the
transfer charge.
Each automatic transfer will take effect as of the end of the valuation period
in monthly, quarterly, semi-annual or annual intervals as designated by you
based on the date the DCA account was established provided the New York Stock
Exchange is open on that date. If the New York Stock Exchange is not open on a
transfer date, the transfer will take effect as of the end of the valuation
period which immediately follows that date. Automatic transfers will continue
until the amount in the DCA account has been transferred, or until you notify us
and we process a change in allocation or cancellation of the feature.
AUTO-REBALANCING
This Contract offers another investment technique that you may find attractive.
The Auto-Rebalancing feature allows you to automatically rebalance subaccount
assets at specified intervals based on percentage allocations that you choose.
For example, suppose your initial investment allocation of variable investment
options A and B is split 40% and 60%, respectively. Then, due to investment
results, that split changes. You may instruct that those assets be rebalanced to
your original or different allocation percentages. Auto-Rebalancing can be
performed on a one-time basis or periodically, as you choose. You may select
that rebalancing occur in monthly, quarterly, semi-annual or annual intervals
based on your Contract year. Rebalancing will take effect as of the end of the
valuation period in the intervals you specify and will continue at those
intervals until you notify us otherwise. If the New York Stock Exchange is not
open on the rebalancing date, the transfer will take effect as of the end of the
valuation period which immediately follows that date. Any transfers made
pursuant to Auto-Rebalancing are not counted in determining the number of
transfers subject to the transfer charge. The interest-rate investment options
cannot participate in this administrative feature. In addition, you should not
include the DCA account as one of the subaccounts to be rebalanced.
WITHDRAWALS
You may at any time before the annuity date make a withdrawal from the Contract
Fund of all or part of the cash value of the Contract. However, Pruco Life of
New Jersey's consent will be required for a partial withdrawal if the amount
requested is less than $500. For federal income tax purposes, withdrawals from
Contracts other than IRAs are considered to have been made first from investment
income. See TAXES PAYABLE BY CONTRACT OWNERS, page 16.
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You may specify from which investment options you would like the withdrawal
processed. The withdrawal amount may be specified as a dollar amount or as a
percentage of the Contract Fund. If you do not specify from where you would like
the withdrawal processed, a partial withdrawal will be withdrawn proportionally
from all investment options. Within the interest-rate investment options, we
will take the withdrawal first from the oldest eligible interest cell or cells.
A Market-Value Adjustment may apply. See MARKET-VALUE ADJUSTMENT, page 13.
Only amounts withdrawn from purchase payments (including full withdrawals) are
subject to a withdrawal charge. For purposes of determining withdrawal charges,
withdrawals are considered as having been made first from purchase payments. See
WITHDRAWAL CHARGE, page 15. The withdrawal will be effected as of the end of the
valuation period in which a proper withdrawal request is received at the
Prudential Annuity Service Center.
Pruco Life of New Jersey will generally pay the amount of any withdrawal, less
any required tax withholding, within 7 days after we receive a properly
completed withdrawal request. We will adjust the Contract Fund to reflect any
applicable sales and/or administrative charge and Market-Value Adjustment. We
may delay payment of any withdrawal allocable to the subaccount[s] for a longer
period if the disposal or valuation of the Account's assets is not reasonably
practicable because the New York Stock Exchange is closed for other than a
regular holiday or weekend, trading is restricted by the SEC or the SEC declares
that an emergency exists. With respect to the amount of any withdrawal allocable
to the interest-rate investment options, we expect to pay the withdrawal
promptly upon request.
AUTOMATED WITHDRAWALS
Pruco Life of New Jersey also offers an Automated Withdrawal feature which
enables you to receive periodic withdrawals in monthly, quarterly, semi-annual
or annual intervals. Withdrawals will be processed as of the end of the
valuation period in the intervals you specify and will continue at those
intervals until you notify us otherwise. If the New York Stock Exchange is not
open on the processing date, the withdrawal will be processed as of the end of
the valuation period which immediately follows that date. Withdrawals may be
made from a designated investment option or proportionally from all investment
options. Withdrawals may be expressed as a specified dollar amount or as a
percentage of the Contract Fund. Market-Value adjustments may apply, and
withdrawal charges may apply if the withdrawals in any Contract year exceed the
charge-free amount. The minimum automated withdrawal amount is $250. An
automated withdrawal will generally have federal income tax consequences, which
could include tax penalties. See TAXES PAYABLE BY CONTRACT OWNERS, on page 16.
MARKET-VALUE ADJUSTMENT
An amount transferred or withdrawn from an MVA option before its maturity date
will be subject to a Market-Value Adjustment.
The amount of the Market-Value Adjustment depends upon the difference between
the guaranteed interest rate for the interest cell from which the withdrawal or
transfer is being made and the interest rate being declared on the date of the
withdrawal or transfer by Pruco Life of New Jersey for interest rate periods
approximately equal to one year longer than the time remaining until the
maturity date of the interest cell. Pruco Life of New Jersey may not always
offer MVA options at all durations. Rates for intermediate durations not
currently offered will be declared as often as rates for durations which are
offered. Such declared rates will be determined in a manner consistent with the
offered rates, but reflecting the different investment horizon of the
intermediate duration. If you specify your withdrawal or transfer as a dollar
amount, the Market-Value Adjustment may increase or decrease the amount
remaining in the MVA option. If you request the withdrawal or transfer as a
percentage of the Contract Fund, the Market-Value Adjustment may increase or
decrease the amount being withdrawn or transferred. If the current declared rate
is higher than the guaranteed rate, there will be a decrease. If the current
declared rate is lower than the guaranteed rate, there will be an increase. The
adjustment--whether up or down--will never be greater than 40% of each amount
subject to the adjustment. For a more precise description of how the
Market-Value Adjustment is determined, and an example of how it affects the
amount remaining after a partial withdrawal, see MARKET-VALUE ADJUSTMENT FORMULA
on page C-1.
DEATH BENEFIT
If the last surviving or sole annuitant dies prior to the annuity date, Pruco
Life of New Jersey will, upon receipt of all of the information necessary to
make the payment (including due proof of death and election of a payment
option), pay a death benefit to the beneficiary designated by the Contract
owner. The death benefit will equal the greatest of: (1) the Contract Fund as of
the date of due proof of death; (2) the sum of all invested purchase payments
made less total withdrawals made (including withdrawal charges); and (3) the
greatest of the Contract Fund values calculated on every third Contract
anniversary reduced by all subsequent withdrawals and withdrawal charges. If the
owner
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dies, and is not the last surviving or sole annuitant, this death benefit is not
applicable. For a discussion of the required distribution rules, SEE TAXES
PAYABLE BY CONTRACT OWNERS, page 16.
The beneficiary may receive this amount in one sum or under a payout option.
Unless the beneficiary has been irrevocably designated, you may change the
beneficiary at any time. If the annuitant dies after he or she has begun to
receive annuity payments, the death benefit, if any, will be determined by the
type(s) of payout provisions then in effect.
If the annuitant was the sole owner of the Contract, the annuitant's spouse was
the sole beneficiary, and the spouse had an unrestricted right to receive the
death benefit in one sum, then the spouse has the right to continue the Contract
as annuitant and owner.
VALUATION OF A CONTRACT OWNER'S CONTRACT FUND
The value of your Contract Fund is the sum of your interests in the variable
investment options and in the interest-rate investment options. The portion of
the Contract Fund allocated to the Account is the sum of the interests in each
subaccount. The values are measured in Units, for example, Money Market Units,
Diversified Bond Units or High Yield Bond Units. Every purchase payment made by
an owner is converted into Units of the subaccount or subaccounts selected by
dividing the amount of the purchase payment by the Unit Value for the subaccount
to which that amount has been allocated. The value of these Units changes each
valuation period to reflect the investment results, expenses, and charges of the
subaccount and the corresponding Fund. Further detail about Units is contained
in the Statement of Additional Information.
There is, of course, no guarantee that your Contract Fund will increase or that
it will not fall below the amount of your total purchase payments. However,
Pruco Life of New Jersey guarantees a minimum interest rate of 3% a year on that
portion of the Contract Fund allocated to the interest-rate investment options.
Excess interest on payments allocated to the interest-rate investment options
may be credited in addition to the guaranteed interest rate. A Market-Value
Adjustment may apply to amounts held in the MVA option, which could reduce
effective annual yields below the guaranteed interest rate levels.
CHARGES, FEES AND DEDUCTIONS
PREMIUM TAXES AND TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS
A charge may be deducted for premium taxes and any taxes attributable to
purchase payments. For these purposes, "premium taxes and taxes attributable to
purchase payments" shall include state or local premium taxes and any federal
premium taxes and any federal, state or local income, excise, business or any
other type of tax (or component thereof) measured by or based upon the amount of
premium received by Pruco Life of New Jersey. If Pruco Life of New Jersey pays a
state or local tax at the time purchase payments are made, the deduction will be
made at that time based on the applicable rate. Pruco Life of New Jersey also
reserves the right to deduct from each purchase payment a charge up to a maximum
of 0.3% for federal income taxes measured by premiums where state approval has
been obtained. Currently, no such charge is being made in any state. For a
further discussion of the federal tax rules, see FEDERAL TAX STATUS, page 16.
ADMINISTRATIVE CHARGE
There is an administrative charge to reimburse Pruco Life of New Jersey for the
expenses incurred in administering the Contracts. This includes such things as
issuing the Contract, establishing and maintaining records, and providing
reports to Contract owners. This charge is deducted daily from the assets in
each of the variable subaccounts and is equivalent to an effective annual rate
of 0.15% (.00041065% daily). There will be an additional charge of $30 annually
and upon surrender on Contracts with less than $50,000 in the Contract Fund.
This $30 charge will be apportioned over all investment options making up the
Contract Fund as of the effective date of that deduction.
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CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS
A deduction is made daily from the assets of each of the variable investment
options to reimburse Pruco Life of New Jersey for assuming the risk that our
estimates of longevity and of the expenses we expect to incur over the lengthy
periods that the Contract may be in effect will turn out to be incorrect. The
charge is made daily at an annual rate of 1.25% (.00340349% daily) of the assets
held in the subaccounts. This charge is not assessed against amounts allocated
to the interest-rate investment options.
EXPENSES INCURRED BY THE FUNDS
The charges and expenses of the Funds are indirectly borne by the Contract
owners. Detail about investment management fees and other underlying fund
expenses are provided in the fee table and in the accompanying prospectuses for
the Funds and the related statements of additional information.
WITHDRAWAL CHARGE
A withdrawal charge may be made upon full or partial withdrawals. The charge
compensates Pruco Life of New Jersey for paying all of the expenses of selling
and distributing the Contracts, including sales commissions, printing of
prospectuses, sales administration, preparation of sales literature, and other
promotional activities. No withdrawal charge is imposed whenever earnings are
withdrawn.
Withdrawals are deemed to be made first from purchase payments and then from
earnings. A portion of the purchase payments to be withdrawn in any Contract
year may be withdrawn without the imposition of any charge. That amount is
referred to as the "charge-free amount". It is equal to 10% of the total of all
purchase payments plus any charge-free amount still available from the
immediately preceding Contract year. An example of how the charge-free amount
and the withdrawal charge are determined is given on page C-1 as part of the
example of how the Market-Value Adjustment works.
If your withdrawal of purchase payments exceeds the charge-free amount and it is
made within the first seven Contract years, a percentage charge will be applied.
The withdrawal charge is based on Contract date, not deposit date. The following
table sets forth the rates that apply:
- --------------------------------------------------------------------------------
THE WITHDRAWAL CHARGE WILL BE EQUAL
FOR WITHDRAWALS DURING THE CONTRACT TO THE FOLLOWING PERCENTAGE OF THE
YEAR INDICATED AMOUNT WITHDRAWN*
- --------------------------------------------------------------------------------
First Contract Year 7%
Second Contract Year 6%
Third Contract Year 5%
Fourth Contract Year 4%
Fifth Contract Year 3%
Sixth Contract Year 2%
Seventh Contract Year 1%
Eighth and Subsequent Contract Years No Charge
- --------------------------------------------------------------------------------
* SUBJECT TO CHARGE-FREE AMOUNT DESCRIBED ABOVE.
- --------------------------------------------------------------------------------
No withdrawal charge is made upon a withdrawal used to effect an annuity under
the Life Annuity with 120 Payments Certain option. See PAYOUT PROVISONS, page
22. Pruco Life of New Jersey may reduce or eliminate the amount of the
withdrawal charge when the Contract is sold under circumstances which reduce its
sales expenses. Some examples are: if there is a large group of individuals that
will be purchasing the Contract or a prospective purchaser already has a
relationship with Pruco Life of New Jersey or its affiliates.
Contracts issued to annuitants aged 84 or older are subject to a reduced
withdrawal charge. The withdrawal charge will never be greater than permitted by
applicable law or regulation.
TRANSACTION CHARGE
There is a charge of $25 for each transfer you make after the first 12
(excluding DCA and Auto-Rebalancing transfers) in a Contract year. The charge is
taken pro-rata from the investment options from which the transfer is made. Any
affected MVA option cells will not undergo a Market-Value Adjustment as a result
of this processing and increase in the value of the Contract will be subject to
current tax.
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OTHER CHARGES
The Account is not a separate taxpayer for purposes of the Code. The earnings of
the Account are taxed as part of the operations of Pruco Life of New Jersey. No
charge is currently being made against the Account for company federal income
taxes (excluding any charge for taxes attributable to premiums). Pruco Life of
New Jersey will review the question of a charge to the Account for company
federal income taxes periodically. Such a charge may be made in future years for
any company federal income taxes that would be attributable to the Account.
Under current law, Pruco Life of New Jersey 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 Account. If there is a material
change in the applicable state or local tax laws, the imposition of any such
taxes upon Pruco Life of New Jersey that are attributable to the Account may
result in a corresponding charge against the Account.
FEDERAL TAX STATUS
The following discussion is based on current law and interpretations which may
change. The discussion is general in nature. It is not intended as tax advice.
Nor does it consider any applicable state or other tax laws. A qualified tax
adviser should be consulted for complete information and advice. The following
rules do not generally apply to annuity contracts held by or for non-natural
persons (e.g., corporations) or to contracts held under tax-favored retirement
plans. Where a Contract is held by a non-natural person, unless the Contract
owner is a nominee or agent for a natural person (or in other limited
circumstances), the Contract will generally not be treated as an annuity for tax
purposes, and increases in the value of the Contract will be subject to current
tax.
DIVERSIFICATION AND INVESTOR CONTROL
Section 817(h) of the Internal Revenue Code (the "Code") provides that the
underlying investments for a variable annuity must satisfy certain
diversification requirements. For further detail on diversification
requirements, see DIVIDENDS, DISTRIBUTIONS, AND TAXES in the accompanying
prospectus for the Prudential Series Fund.
IRS regulations issued to date do not provide guidance concerning the extent to
which Contract owners may direct their investments to particular subaccounts of
a separate account without causing the Contract owners instead of Pruco Life of
New Jersey to be considered the owners of the underlying assets. Such guidance
will be included in regulations or revenue rulings under Section 817(d) relating
to the definition of a variable contract. The ownership rights under the
Contract are similar to, but different in certain respects from, those addressed
by the Internal Revenue Service in Rulings in which it was determined that
Contract owners were not owners of separate account assets. For example, a
Contract owner has the choice of more Funds, including Funds with similar broad
investment strategies and different investment managers, and may be able to
reallocate amounts between subaccounts more frequently than in such rulings.
While Pruco Life of New Jersey believes it will be considered the owner of the
Account assets, these differences could result in a Contract owner being
considered the owner of the Account assets. Because of this uncertainty, Pruco
Life reserves the right to make such changes as it deems necessary to assure
that the Contract qualifies as an annuity for tax purposes. Any such changes
will apply uniformly to affected Contract owners and will be made with such
notice to affected Contract owners as is feasible under the circumstances.
TAXES PAYABLE BY CONTRACT OWNERS
Under current law, Pruco Life of New Jersey believes that the Contract will be
treated as an annuity for federal income tax purposes and that the issuing
insurance company, Pruco Life of New Jersey, and not the Contract owner, will be
treated as the owner of the underlying investments for the Contract.
Accordingly, generally no tax should be payable by any Contract owner as a
result of any increase in the value of the Contract until money is received by
him or her. It is important, however, to consider how amounts that are received
will be taxed.
The Code provides generally that amounts withdrawn by a Contract owner from his
or her Contract, before annuity payments begin, will be treated for tax purposes
as being first withdrawals of investment income, rather than withdrawals of
purchase payments, until all investment income has been withdrawn.
To the extent assignment is authorized by the Contract, the assignment or pledge
of (or agreement to assign or pledge) any portion of the value of the Contract
for a loan will be treated as a withdrawal subject to these rules. For
non-qualified Contracts, amounts withdrawn before annuity payments begin which
represent a distribution of investment income will be taxable as ordinary income
and may, under certain circumstances, be subject to a penalty tax. Amounts which
represent a withdrawal of purchase payments will not be taxable as ordinary
income and may, under certain circumstances, be subject to a
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penalty tax. Moreover, all annuity contracts issued by the same company (and
affiliates) to the same Contract owner during any calendar year shall be treated
as one annuity contract for purposes of determining whether an amount is subject
to tax under these rules.
Different tax rules apply to your receipt of annuity payments. For Contracts
other than those used in connection with tax favored plans, a portion of each
annuity payment you receive under a Contract will be treated as a partial return
of your purchase payments and will not be taxable. The remaining portion of the
annuity payment will be taxed as ordinary income. Exactly how an annuity payment
is divided into taxable and non-taxable portions depends upon the period over
which annuity payments are expected to be received, which in turn is governed by
the form of annuity selected and, where a lifetime annuity is chosen, by the
life expectancy of the annuitant. Annuity payments which are received after the
annuitant recovers the full amount of the purchase payments will be fully
includible in income. Should annuity payments cease on account of the death of
the annuitant before purchase payments have been fully recovered, the annuitant,
on his or her last tax return (or in certain cases the beneficiary) is allowed a
deduction for the unrecovered amount.
The Code provides that any amount received under an annuity contract which is
included in income may be subject to a penalty tax. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include withdrawals: (1) made on or after the
Contract owner reaches age 59 1/2; (2) made on or after the death of the
Contract owner; (3) attributable to the Contract owner becoming disabled within
the meaning of Code section 72(m)(7); (4) in the form of level annuity payments
made not less frequently than annually under a lifetime annuity; (5) allocable
to investment in the Contract before August 14, 1982; (6) under a qualified
funding asset (defined by Code section 130(d)); or (7) under an immediate
annuity contract (within the meaning of section 72(u)(4)).
If the 10% penalty tax does not apply to a withdrawal by reason of the exception
for withdrawals in the form of a level annuity (clause (4) above), but the
series of payments is modified (other than by reason of death or disability),
either (a) before the end of the 5-year period beginning with the first payment
and after the Contract Owner reaches age 59 1/2, or (b) before the Contract
Owner attains age 50 1/2, the Contract Owner's tax for the year of the
modification will be increased by the penalty tax that would have been imposed
without the exception, plus interest for the deferral period.
Where a contract is issued in exchange for a Contract containing purchase
payments made before August 14, 1992, favorable tax rules may apply to certain
withdrawls from the Contract. Consult a tax advisor for information regarding
these rules.
Election of the interest payment option is not considered as an annuity payment
for tax purposes. Accordingly, unless the Contract is held by an individual
retirement annuity, such election will cause investment income under the
Contract to be taxable.
Generally, the same tax rules apply to amounts received by the beneficiary as
those set forth above with respect to the Contract owner. The election of an
annuity payment option may defer taxes otherwise payable upon the receipt of a
lump sum death benefit. Certain minimum distribution requirements apply in the
case where the owner dies. See IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER,
page 18.
In addition, a transfer of the Contract to or the designation of a beneficiary
who is either 37 1/2 years younger than the Contract owner or a grandchild of
the Contract owner may have Generation Skipping Transfer tax consequences under
section 2601 of the Code.
Certain transfers of a Contract for less than full consideration, such as a
gift, will trigger tax on the investment income in the Contract. This rule does
not apply to certain transfers between spouses or incident to divorce. See
OWNERSHIP OF THE CONTRACT, page 24.
WITHHOLDING
Generally, unless you elect to the contrary, the portion of any amounts you
receive under your Contract that are attributable to investment income will be
subject to withholding to meet federal income tax obligations. The rate of
withholding on annuity payments made to you will be determined on the basis of
the withholding certificate you may file with Pruco Life of New Jersey. If you
do not file such a certificate, you will be treated, for purposes of determining
your withholding rate, as a married person with three exemptions. The rate of
withholding on all other payments made to you under your Contract, such as
amounts you receive upon withdrawals, will be 10%. Thus, if
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you fail to elect that Pruco Life of New Jersey not do so, it will withhold from
withdrawal by, or annuity payment to, you the appropriate percentage of the
amount of the payment that constitutes investment income and hence is taxable.
Pruco Life of New Jersey will provide you with forms and instructions concerning
your right to elect that no amount be withheld from payments to you. If you
elect not to have withholding made, you are liable for payment of federal income
taxes on the taxable portion of the distribution. You may be subject to
penalties under the estimated tax payment rules if your withholding and
estimated tax payments are not sufficient. If you do not provide a social
security number or other taxpayer identification number, you will not be
permitted to elect out of withholding. Special withholding rules apply for
nonresident aliens. Generally, there will be no withholding for taxes until you
actually receive payments under your Contract.
IMPACT OF FEDERAL INCOME TAXES
In general, if you expect to accumulate savings over a relatively long period of
time without making significant withdrawals, there should be tax advantages,
regardless of your tax bracket, in purchasing a Contract rather than, for
example, a mutual fund with a similar investment policy and approximately the
same level of expected investment results. This is because little or no income
taxes are incurred by you or by Pruco Life of New Jersey while you hold the
Contract and it is generally advantageous to defer the payment of income taxes,
so that the investment return is compounded without any deduction for income
taxes. The advantage may be considerably greater if you decide to liquidate your
investment in the form of monthly annuity payments after your retirement, and
even more so if your income, and your tax rate, are lower at that time than they
were during your working years.
IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER
If the Contract Owner dies before the entire interest in the Contract is
distributed, the value of the Contract must be distributed to the designated
beneficiary as described in this section so that the Contract qualifies as an
annuity under the Internal Revenue Code.
If the death occurs on or after the annuity date, the remaining portion of the
interest in the Contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death. If the death occurs
before the annuity date, the entire interest in the Contract must be distributed
within 5 years after the date of death. However, if an annuity payment option is
selected by the designated beneficiary and if annuity payments begin within 1
year of the owner's death, the value of the Contract may be distributed over the
beneficiary's life or a period not exceeding the beneficiary's life expectancy.
The owner's designated beneficiary is the person to whom ownership of the
Contract passes by reason of death, and must be a natural person. Special
additional rules apply to Contracts issued in conjunction with plans subject to
Section 457 of the Code. For Contracts purchased in connection with a tax
favored plan where the owner's spouse is the beneficiary, annuity payments need
only begin on or before April 1 of the calendar year following the calendar year
in which the owner would have attained age 70 1/2 or in some instances the
remaining interest in the Contract may be rolled over to an IRA owned by the
spouse.
If any portion of the Contract Owner's interest is payable to (or for the
benefit of) the surviving spouse of the owner, such portion of the Contract may
be continued with the surviving spouse as the owner. This rule does not apply to
Contracts issued in connection with tax favored plans other than IRAs.
CONTRACTS USED IN CONNECTION WITH TAX FAVORED PLANS
Currently, the Contract may be purchased for use in connection with individual
retirement accounts and annuities ("IRAs") which are subject to Section 408(a)
and 408(b) of the Code. At some time in the future, we may allow the Contract to
be purchased in connection with other retirement arrangements which are entitled
to favorable federal income tax treatment ("tax favored plans"). These include:
simplified employee pension plans ("SEPs") under Section 408(k) of the Code,
saving incentive match plans for employees-IRA ("SIMPLE-IRAs") under Section
408(p) of the Code, and tax deferred annuities under Section 403(b) of the Code
("TDAs"). Such plans, accounts, and annuities must satisfy certain requirements
of the Code in order to be entitled to the federal income tax benefits accorded
to these plans. A discussion of these requirements is beyond the scope of this
prospectus, and it is assumed that such requirements are met with respect to a
Contract purchased for use in connection with a tax favored plan.
In general, assuming the requirements and limitations of the Code provisions
applicable to the particular type of tax favored plan involved are satisfied,
purchase payments (other than after-tax employee payments) under the Contract
will be deductible (or not includible in income) up to certain amounts each year
and federal income tax will
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not be imposed on the investment income and realized gains of the subaccounts in
which the purchase payments have been invested until a distribution is received.
Persons contemplating the purchase of a Contract in connection with a tax
favored plan should consult their tax advisor before purchasing a Contract for
such purposes.
The comments which follow concerning specific tax favored plans are intended
merely to call attention to certain of their features. No attempt has been made
to discuss in full the tax ramifications involved or to offer tax advice. As
suggested above, a qualified tax advisor should be consulted for advice and
answers to any questions.
IRAS
Because the Contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to an IRA (generally, $2,000),
a Contract may be purchased as a Section 408(b) IRA only in connection with a
"rollover" of the proceeds of a qualified plan, TDA or IRA. The Code permits
persons who are entitled to receive certain qualifying distributions from a
qualified pension or profit-sharing plan described in Section 401(a) or 403(a),
TDA, or an IRA, to directly rollover or make, within 60 days, a tax-free
"rollover" of all or any part of the amount of such distribution to an IRA which
they establish. Additionally, the spouse of a deceased employee may roll over to
an IRA certain distributions received by the spouse from a qualified pension or
profit-sharing plan, TDA or IRA on account of the employee's death. Once the
Contract has been purchased, regular IRA contributions will be accepted to the
extent permitted by law. However, if regular IRA contributions are made, the
Funds in the Contract cannot be used as a conduit IRA and may not later be
placed in another plan that is qualified under Sections 401(a), 403(a) or 403(b)
of the Code.
In order to qualify as an IRA under Section 408(b) of the Code, a Contract (or
an endorsement made a part of the Contract) must contain certain additional
provisions: (1) the owner of the Contract must be the annuitant, except when a
transfer is made to a former spouse in accordance with a divorce decree as
provided in Section 408(d)(6) of the Code; (2) the rights of the owner cannot be
forfeitable; (3) the Contract may not be sold, assigned, discounted or pledged
for any purpose to any person except Pruco Life of New Jersey; and (4) except in
the case of a "rollover" contribution, the annual premium may not exceed $2,000;
(5) generally, the annuity date may be no later than April 1 of the calendar
year following the calendar year in which the annuitant attains age 70 1/2; and
(6) annuity and death benefit payments must satisfy certain minimum distribution
requirements. Contracts issued as Section 408(b) IRAs will conform to such
requirements.
In general, the full amount distributed from an IRA (and not properly rolled
over to another IRA) is subject to federal income tax and to the withholding
rules described above. A 10% early distribution penalty applies to distributions
made before the Contract owner reaches age 59 1/2, subject to exceptions (1) -
(4) above (see TAXES PAYABLE BY CONTRACT OWNERS on page 16). If the owner
borrows against the IRA or engages in certain prohibited transactions, the
Contract ceases to qualify as an IRA and the full amount is deemed to be
distributed. In addition, any amount pledged as security for a loan is deemed to
be distributed. Payments generally must begin by April 1 of the calendar year
following attainment of age 70 1/2 and are subject to certain minimum
distribution requirements.
SEPS
Under a SEP, annual employer contributions to an IRA established by an employee
are not includible in income up to the lesser of $30,000 or 15% of the
employee's earned income (excluding the employer's contribution to the SEP). In
addition, a SEP must satisfy certain minimum participation requirements and
contributions may not discriminate in favor of highly compensated employees.
Contracts issued as Section 408(b) IRAs established under a SEP must satisfy the
requirements described above for a Section 408(b) IRA.
Certain SEP arrangements are permitted to allow employees to elect to reduce
their salaries by as much as $9,500 (in 1996) and have their employer make
contributions on their behalf to the SEP. These arrangements, called salary
reduction SEPs, are available only if the employer maintaining the SEP has 25 or
fewer employees and at least 50% of the eligible employees elect to make salary
reduction contributions. Other limitations may reduce the permissible
contribution level for highly compensated employees. New salary reduction SEPs
may not be established after 1996.
In accordance with IRS regulations, persons who purchase a Contract used as an
IRA, including one established under a SEP arrangement, are given disclosure
material prepared by Pruco Life of New Jersey. The material includes this
prospectus, a copy of the Contract, and a brochure containing information about
eligibility, contribution limits, tax consequences, and other particulars
concerning IRAs. The regulations require that such persons be given a free look
after making an initial contribution in which to affirm or reverse their
decision to
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participate. Therefore, within the free look, a person may cancel his or her
Contract by notifying Pruco Life of New Jersey in writing, and Pruco Life of New
Jersey will refund all of the purchase payments under the Contract or, if
greater, the amount credited under the Contract (less any bonus) computed as of
the valuation period that Pruco Life of New Jersey receives the notice for
cancellation. See SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK", page 10.
SIMPLE-IRAS
Under a SIMPLE-IRA, an employee can elect to contribute up to $6,000 (in 1997,
indexed) per year to an IRA. Employer contributions are also provided as either
a match (up to 3% of compensation) or 2% nonelective contribution. These
contributions are not taxable until withdrawn, and are fully vested.
Distributions are generally taxed under the rules applicable to IRAs.
SIMPLE-IRAs are not subject to the general nondiscrimination rules and
simplified reporting rules apply.
To qualify for a SIMPLE-IRA, the employer may employ no more than 100 employees
(on a controlled group basis) who received at least $5,000 in compensation from
the employer in the preceding year, and may not maintain any other
employer-sponsored retirement plan to which contributions were made or benefits
accrued.
TDAS
Section 403(b) of the Code permits employers and employees of Section 501(c)(3)
tax-exempt organizations and public educational organizations to make, subject
to certain limitations, contributions to an annuity in which the employee's
rights are nonforfeitable (commonly referred to as a "tax deferred annuity").
The amounts contributed under a TDA and increments thereon are not taxable as
income until distributed as annuity income or otherwise. Generally,
contributions to a TDA may be made through a salary reduction arrangement up to
a maximum of $9,500. However, under certain special rules, the limit could be
increased as much as $3,000. In addition, the Code permits certain total
distributions from a TDA to be "rolled over" to another TDA or IRA. Certain
partial distributions from a TDA may be "rolled over" to an IRA.
An annuity contract will not qualify as a TDA, unless under such contract
distributions from salary reduction contributions and earnings thereon (other
than distributions attributable to assets held as of December 31, 1988) may be
paid only on account of attainment of age 59 1/2, severance of employment,
death, total and permanent disability and, in limited circumstances, hardship.
(Such hardship withdrawals are permitted, however, only to the extent of salary
reduction contributions and not earnings thereon.)
The Section 403(b)(11) withdrawal restrictions referred to above do not apply to
the transfer of all or part of a Contract owner's interest in his or her
Contract among the available investment options offered by Pruco Life of New
Jersey or to the direct transfer of all or part of the Contract owner's interest
in the Contract to a Section 403(b) tax-deferred annuity contract of another
insurance company or to a mutual fund custodial account under Section 403(b)(7)
of the Code.
In imposing the restrictions on withdrawals as described above, Pruco Life of
New Jersey is relying upon a no-action letter dated November 28, 1988 from the
Chief of the Office of Insurance Products and Legal Compliance of the Securities
and Exchange Commission to the American Council of Life Insurance.
Employer contributions are subject generally to the same coverage, minimum
participation and nondiscrimination rules applicable to qualified pension and
profit-sharing plans. Distributions from a TDA generally must commence by April
1 of the calendar year following the later of the calendar year in which the
employee: (1) attains age 70 1/2; or (2) retires. Distributions must satisfy
minimum distribution requirements similar to those that apply to qualified plans
generally.
MINIMUM DISTRIBUTION OPTION
A Minimum Distribution Option is available under IRAs and certain other tax
favored plans. This option enables the owner to satisfy IRS minimum distribution
requirements without having to annuitize or cash surrender the Contract.
Distributions from tax favored plans generally must begin by April 1 of the
calendar year following the later of the calendar year in which the employee:
(1) attains age 70 1/2; or (2) retires (part 2 is not applicable to IRAs). The
owner can select either a "calculation" or "recalculation" method to determine
the minimum distribution payout. Pruco Life of New Jersey will send the owner a
check for the minimum distribution amount less any partial withdrawals made
during the year. Pruco Life of New Jersey's calculations are based on the cash
value of this Contract, the calculation method chosen and the owner's age as
specified on the application. Other calculation
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methods may be available for an owner/spouse combination. If the owner has other
tax favored accounts, he or she will be responsible for taking the minimum
distribution from each.
WITHHOLDING ON TAX FAVORED PLANS
Certain distributions from qualified retirement plans and 403(b) annuities will
be subject to mandatory 20% federal income tax withholding unless the
distribution is an eligible rollover distribution that is "directly" rolled over
into another qualified plan, 403(b) annuity or IRA. Unless the Contract Owner
elects to the contrary, the portion of any taxable amounts received under the
Contract will be subject to withholding to meet federal income tax obligations.
The rate of withholding on annuity payments where mandatory withholding is not
required will be determined on the basis of the withholding certificate filed by
the Contract Owner with Pruco Life of New Jersey. For annuity payments not
subject to mandatory withholding, if no such certificate is filed, the Contract
Owner will be treated, for purposes of determining the withholding rate, as a
married person with three exemptions; the rate of withholding on all other
payments made under the Contract, such as amounts received upon withdrawals,
will be 10%. Thus, if the Contract Owner fails to elect that there be no
withholding, Pruco Life of New Jersey will withhold from every withdrawal or
annuity payment the appropriate percentage of the amount of the payment that is
taxable. Pruco Life of New Jersey will provide the Contract Owner with forms and
instructions concerning the right to elect that no amount be withheld from
payments. Recipients who elect not to have withholding made are liable for
payment of federal income taxes on the taxable portion of the distribution. All
recipients may be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient. Contract Owners who
do not provide a social security number or other taxpayer identification number
will not be permitted to elect out of withholding. Generally, there will be no
withholding for taxes until payments are actually received under the Contract.
PENALTY FOR EARLY WITHDRAWALS
A 10% penalty tax will generally apply to the taxable part of distributions
received from an IRA, SEP, SIMPLE-IRA (25% penalty in certain situations),
Section 403(b) annuity, and qualified retirement plan before age 59 1/2. Limited
exceptions are provided, such as where amounts are paid in the form of a
qualified life annuity, upon death of the employee, to pay certain medical
expenses, or in certain instances disability or upon separation from service on
or after the attainment of age 55.
ERISA DISCLOSURE
The Employee Retirement Income Security Act of 1974 ("ERISA") prevents a
fiduciary and other "parties in interest" with respect to a pension or
profit-sharing plan from receiving any benefit from any party dealing with the
plan as a result of the sale of the Contract (other than benefits that would
otherwise be provided in the plan).
Administrative exemptions issued by the Department of Labor under ERISA permit
transactions between insurance agents and qualified pension and profit sharing
plans under Section 401(a) and 403(a) of the Code and with SEPs or IRAs. To be
able to rely on the exemptions certain information must be disclosed to the plan
fiduciary purchasing the insurance contract. The information that must be
disclosed includes the relationship between the agent and the insurer, a
description of any charges, fees, discounts, penalties or adjustments that may
be imposed in connection with the purchase, holding, exchange or termination of
the Contract, as well as the commissions received by the agent. Information
about any applicable charges, fees, discounts, penalties or adjustments may be
found under CHARGES, FEES AND DEDUCTIONS, page 14. Information about sales
representatives and commissions may be found under SALE OF THE CONTRACT AND
SALES COMMISSIONS, page 23. Additional information relevant for qualified plan
or IRA investment may be found in the Contract and accompanying documentation.
In addition to disclosure, other conditions apply to the use of the exemption.
For example, a plan fiduciary may not be a partner or employee of the Prudential
representative making the sale. The fiduciary must not be a relative of the
representative (including spouse, direct descendant, spouse of a direct
descendant, ancestor, brother, sister, spouse of a brother or sister). The
representative may not be an employee, officer, director or partner of either
the independent fiduciary or the employer establishing the plan. No relative of
the representative may: (1) control, directly or indirectly, the corporation
establishing or maintaining the plan; (2) be either a partner with a 10% or more
interest in the partnership or the sole proprietor establishing or maintaining
the plan; or (3) be an owner of a 5% or more interest in a Subchapter S
Corporation establishing or maintaining the plan. In addition, no affiliate
(including relatives) of the representative may be a trustee, administrator or a
fiduciary with written authority to acquire, manage or dispose of the assets of
the plan.
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ADDITIONAL ERISA REQUIREMENTS
If your retirement arrangement is part of a plan governed by ERISA, additional
requirements such as spousal consent to distributions may be necessary. Consult
the terms of your retirement arrangement.
PAYOUT PROVISIONS
The Contract can be annuitized at any time after the end of the first Contract
year. Upon the annuity date, the cash value of the Contract will be converted
into a fixed-dollar annuity payable to the annuitant[s] named in the Contract.
If two annuitants are named in the Contract, you may decide how much of the
amount is to be applied for each annuitant and under which form[s] of annuity.
If the Contract is not large enough to produce an initial monthly payment of $50
(which may be less in some states) you will be paid the cash value in a single
sum. There is no minimum required monthly payment in New Jersey.
When you choose to annuitize, all amounts held in the investment options will be
withdrawn. An amount equal to the premium tax, if any, imposed by the state in
which the Contract Owner resides is then deducted (unless deducted earlier).
Many states do not impose a premium tax. In other states the tax ranges from 0%
to 5% of the amount applied to effect an annuity. See PREMIUM TAXES, page 14.
Some local jurisdictions also impose a tax. The amount remaining is applied to
effect an annuity. This amount becomes part of Pruco Life of New Jersey's
general account.
The amount of the monthly payments will depend upon the amount applied and the
table of rates set forth in the Contract which we guarantee will be used even if
longevity has significantly improved since the Contract date. If Pruco Life of
New Jersey is offering more favorable rates at that time, then those rates will
be used.
The annuity will be in one of the forms listed below. All the annuity options
under this Contract are fixed annuity options. Your participation in the
variable investment options ceases when the annuity is effected. Unless we
consent to a later date, an annuity must begin no later than the Contract
anniversary coinciding with or next following the annuitant's 90th birthday (or
the younger annuitant's if there are two annuitants named in the Contract). We
will then make payments to the annuitant on the first day of each period
determined by the form of annuity selected. Unless applicable law states
otherwise, if you have not selected an annuity option to take effect by the
annuity date, the Interest Payment Option (see below) will become effective
then. Special rules apply in the case of a Contract issued in connection with an
IRA.
1. ANNUITY PAYMENTS FOR A FIXED PERIOD
Payments will be made to the annuitant during his or her lifetime for up to 25
years. Payments may be in monthly, quarterly, semi-annual, or annual
installments. If the annuitant dies during the annuity certain period, unless
you designate otherwise, the beneficiary will receive a lump sum payment. The
amount of the lump sum payment is determined by discounting each remaining
unpaid payment at the interest rate used to compute the actual payments. If the
payments were based on the table of rates set forth in the Contract, the
interest rate used is 3 1/2% a year.
2. LIFE ANNUITY WITH 120 PAYMENTS CERTAIN
Payments will be made to the annuitant monthly during his or her lifetime. If
the annuitant dies before the 120th monthly payment is due, monthly annuity
payments do not continue to the beneficiary designated by the annuitant unless
he or she so selects. Instead, the present value of the remaining unpaid
installments, up to and including the 120th monthly payment, is payable to the
beneficiary in one sum. In calculating the present value of the unpaid future
payments, we will discount each such payment at the interest rate used to
compute the amount of the actual 120 payments. If the payments were based on the
table of rates set forth in the Contract, an interest rate of 3 1/2% a year is
used. Once annuity payments have begun, an annuitant may withdraw the present
value of any of the 120 payments certain that have not been paid. No surrender
charge is applicable under this option.
3. INTEREST PAYMENT OPTION
The annuitant may choose to have Pruco Life of New Jersey hold a designated
amount to accumulate at interest. Unless applicable law states otherwise, if no
option has been selected by the annuity date, this option will
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automatically become effective. Pruco Life of New Jersey will pay interest at an
effective rate of at least 3% a year, and we may pay a higher rate of interest.
Special provisions may apply if the Contract is issued in connection with an
IRA.
4. OTHER ANNUITY OPTIONS
Currently you may choose to receive the proceeds of your Contract Fund in the
form of payments like those of any annuity or life annuity then regularly
offered by Prudential or by Pruco Life of New Jersey that (1) is based on United
States currency; (2) is bought by a single sum; (3) does not provide for
dividends; and (4) does not normally provide for deferral of the first payment.
Prudential and Pruco Life of New Jersey currently offer a number of different
annuity options, including joint and survivor annuities covering more than one
person.
Under Option 4, unless a fixed period annuity of less than 10 years is selected,
Pruco Life of New Jersey will waive withdrawal charges that might be applicable
under other annuity options. Further, if you select Option 1 without a right of
withdrawal, Pruco Life of New Jersey will effect that option under Option 3 if
doing so provides greater monthly payments.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT ANNUITY PURCHASE RATES
Although the Contract generally provides for sex-distinct annuity purchase rates
for life annuities, those rates are not applicable to Contracts offered in
states that have adopted regulations prohibiting sex-distinct annuity purchase
rates. Rather, blended unisex annuity purchase rates for life annuities will be
provided under all Contracts issued in those states, whether the annuitant is
male or female. Other things being equal, such unisex annuity purchase rates
will result in the same monthly annuity payments for male and female annuitants.
OTHER INFORMATION
MISSTATEMENT OF AGE OR SEX
If an annuitant's stated age or sex (except where unisex rates apply) or both
are incorrect in the Contract, we will change each benefit and the amount of
each annuity payment to that which the total purchase payment amounts would have
bought for the correct age and sex. Also, we will adjust for the amount of any
overpayments we have already made.
SALE OF THE CONTRACT AND SALES COMMISSIONS
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 213 Washington
Street, Newark, New Jersey 07102-2992. The Contract is sold by registered
representatives of Prusec and may also be sold through other broker-dealers
authorized by Prusec. Registered representatives of such other broker-dealers
may be paid on a different basis than described below. The maximum commission
that will be paid to the broker-dealer to cover both the individual
representative's commission and other distribution expenses will not exceed 6%
of the purchase payment. In addition, trail commissions based on the size of the
Contract Fund may be paid.
VOTING RIGHTS
As stated above, all of the assets held in the subaccounts of the Account are
invested in shares of the corresponding Funds. Pruco Life of New Jersey is the
legal owner of those shares and as such has the right to vote on any matter
voted on at any shareholders meetings of the Funds. However, as required by law,
Pruco Life of New Jersey votes the shares of the Funds at any regular and
special shareholders meetings the Funds in accordance with voting instructions
received from Contract owners. The Funds may not hold annual shareholders
meetings when not required to do so under the laws of the state of their
incorporation or the 1940 Act. Fund shares for which no timely instructions from
Contract owners are received, and any shares owned directly or indirectly by
Pruco Life of New Jersey are voted in the same proportion as shares in the
respective portfolios for which instructions are received. Should the applicable
federal securities laws or regulations, or their current interpretation, change
so as to permit Pruco Life of New Jersey to vote shares of the Funds in its own
right, it may elect to do so.
Generally, you may give voting instructions on matters that would be changes in
fundamental policies and any matter requiring a vote of the shareholders of the
Funds. With respect to approval of the investment advisory
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agreement or any change in a fund's fundamental investment policy, Contract
Owners participating in such Funds will vote separately on the matter.
The number of Fund shares for which you may give instructions is determined by
dividing the portion of the value of the Contract derived from participation in
a subaccount, by the value of one share in the corresponding portfolio of the
applicable Fund. The number of votes for which you may give Pruco Life of New
Jersey instructions is determined as of the record date chosen by the Board of
the applicable Fund. We furnish you with proper forms and proxies to enable you
to give these instructions. We reserve the right to modify the manner in which
the weight to be given voting instructions is calculated where such a change is
necessary to comply with current federal regulations or interpretations of those
regulations.
Pruco Life of New Jersey may, if required by state insurance regulations,
disregard voting instructions if such instructions would require shares to be
voted so as to cause a change in the sub-classification or investment objectives
of one or more of the Funds' portfolios, or to approve or disapprove an
investment advisory contract for a Fund. In addition, Pruco Life of New Jersey
itself may disregard voting instructions that would require changes in the
investment policy or investment adviser of one or more of the Funds' portfolios,
provided that we reasonably disapprove such changes in accordance with
applicable federal regulations. If we do disregard voting instructions, we will
advise you of that action and our reasons for such action in the next annual or
semi-annual report to Contract Owners.
SUBSTITUTION OF FUND SHARES
Although Pruco Life of New Jersey believes it to be unlikely, it is possible
that in the judgment of its management, one or more of the portfolios of the
Funds may become unsuitable for investment by Contract Owners. This may occur
because of investment policy changes, tax law changes, the unavailability of
shares for investment or at the discretion of Pruco Life of New Jersey. In that
event, we 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. You
will be notified of such substitution.
OWNERSHIP OF THE CONTRACT
The Contract Owner is entitled to exercise all the rights under the Contract.
The Contract Owner is usually, but not always the annuitant. Ownership of the
Contract may, however, be transferred to another person who need not be the
person who is to receive the annuity payment. Transfer of the ownership of a
Contract may involve federal income tax consequences, or may be prohibited under
certain Contracts, and you should consult with a qualified tax adviser before
attempting any such transfer. Generally, ownership of the Contract is not
assignable to a tax-qualified retirement plan or program without Pruco Life of
New Jersey's consent.
PERFORMANCE INFORMATION
Performance information for the subaccounts may appear in advertising and
reports to current and prospective Contract Owners. Performance information is
based on historical investment experience of the Funds, adjusted to take charges
under the Contract into account, and does not indicate or represent future
performance.
Total returns are based on the overall dollar or percentage change in value of a
hypothetical investment over a stipulated period, and assume a surrender of the
Contract at the end of the period. Total return quotations reflect changes in
unit values and the deduction of applicable charges including any applicable
withdrawal charges.
A cumulative total return reflects performance over a stated period of time. An
average annual total return reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if the performance had
been constant over the entire period.
The Money Market Subaccount may advertise its current and effective yield.
Current yield reflects the income generated by an investment in the subaccount
over a specified seven-day period. Effective yield is calculated in a similar
manner except that income earned is assumed to be reinvested.
Reports or advertising may include comparative performance information,
including, but not limited to: comparisons to market indices; comparisons to
other investments; performance rankings; personalized illustrations of
historical performance; and data presented by analysts or included in
publications.
See PERFORMANCE INFORMATION in the Statement of Additional Information for
recent performance information.
24
<PAGE>
REPORTS TO CONTRACT OWNERS
You will be sent quarterly statements that provide certain information pertinent
to your Contract. These statements provide Contract data that apply only to each
particular Contract, including Contract values and transactions during the
period. You may request current Contract information at any time, however, we
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 for the applicable Funds.
If a single individual or company invests in the Prudential Series Fund through
more than one variable insurance contract, then the individual or company will
receive only one copy of each annual and semi-annual report issued by the
Prudential Series Fund. However, if such individual or company wishes to receive
multiple copies of any such report, a request may be made by calling the
toll-free telephone number listed on the cover page of this prospectus.
STATE REGULATION
Pruco Life of New Jersey is subject to regulation and supervision by the New
Jersey Department of Banking and Insurance, 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 of New Jersey 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 of New Jersey
is required to file with New Jersey 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.
EXPERTS
The financial statements included in this prospectus for the year ended December
31, 1996 have been audited by Price Waterhouse LLP, independent accountants, as
stated in their reports appearing herein, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing. Price Waterhouse LLP's principal business address is 1177 Avenue of
the Americas, New York, New York 10036.
The financial statements included in this prospectus for years ended December
31, 1995 and December 31, 1994, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing. Deloitte & Touche LLP's principal address is
Two Hilton Court, Parsippany, New Jersey 07054-0319.
On March 12, 1996, Deloitte & Touche LLP was dismissed as the independent
accountants of Pruco Life of New Jersey. There have been no disagreements with
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statements disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of the accountant, would have caused them to make a
reference to the matter in their reports.
LITIGATION
Several actions have been brought against Pruco Life of New Jersey alleging that
Pruco Life of New Jersey and its agents engaged in improper life insurance sales
practices. Prudential has agreed to indemnify Pruco Life of New Jersey for
losses if any, resulting from such litigation. No other significant litigation
is being brought against Pruco Life of New Jersey that would have a material
effect on its financial position.
STATEMENT OF ADDITIONAL INFORMATION
The contents of the Statement of Additional Information include:
OTHER INFORMATION CONCERNING THE ACCOUNT
PRINCIPAL UNDERWRITER
DETERMINATION OF SUBACCOUNT UNIT VALUES
PERFORMANCE INFORMATION
COMPARATIVE PERFORMANCE INFORMATION
25
<PAGE>
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC, 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 regulations of the SEC. The omitted
information may, however, be obtained from the SEC's principal office in
Washington, D.C., upon payment of a prescribed fee.
Further information, including statutory statements filed with the state
insurance departments, may also be obtained from Pruco Life of New Jersey's
office. The address and telephone number of Pruco Life of New Jersey are set
forth on the cover of this prospectus.
FINANCIAL STATEMENTS
The financial statements of Pruco Life of New Jersey should be distinguished
from the financial statements of the Account, and should be considered only as
bearing upon the ability of Pruco Life of New Jersey to meet its obligations
under the Contracts.
This prospectus does not contain financial statements for the Account because
the Account recently commenced operations.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AS OF DECEMBER 31, 1996
Pruco Life Insurance Company of New Jersey (the Company) is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
The Company is an indirect subsidiary of The Prudential Insurance Company of
America (Prudential), and a direct subsidiary of Pruco Life Insurance Company
(Pruco Life). Pruco Life is a stock life insurance company domiciled in the
state of Arizona. The Company markets individual insurance and annuities through
Prudential's sales force.
The business climate in the United States was characterized by moderate economic
growth, low inflation, and growing investor confidence that fueled bond and
stock prices. Merger and consolidation activity accelerated, as well as
expansion of US companies into foreign markets. Those economic trends impacted
the insurance industry during the year, prompting them to implement strategies,
including consolidation, and sales of certain lines of business to counter risk,
control expenses and diversify products to remain competitive. Regulatory
changes which opened the insurance industry to other financial institutions,
particularly banks and mutual funds, heightened competition in investment type
products since those institutions were positioned to deliver the same products
through large, stable distribution channels. In addition, the industry has been
beset by negative publicity following the discovery of unacceptable sales
practices that resulted in investigations of most large insurers, including
Prudential. In spite of the difficult operating environment, 1996 was a year of
progress for the Company. It achieved solid performance, instituted significant
cost reduction programs, and strategic initiatives which are expected to place
it on a firm course of continued growth.
The Company's assets were $1.7 billion at December 31, 1996 compared to $1.6
billion at December 31, 1995. The Company recorded net income of $31.8 million
during 1996, an increase of $4.8 million or 17.7% in comparison to the $27.0
million earned in 1995.
1. RESULTS OF OPERATIONS
1996 versus 1995
Realized investment gains decreased by $2.4 million from $3.6 million for the
year ended December 31,1995 to $1.2 million for the same period in 1996. This
decrease is a result of trading activity in the bond portfolio and current
market conditions.
Policyholders' benefits for the year end December 31, 1996 were $28.6 million
compared to $26.3 million for the same period in 1995. This increase of $2.3
million is attributable to increased reserves and the mortality costs associated
with new and existing products.
Interest credited to policyholders' account balances decreased $1.3 million from
$21.4 million for the year ended 1995 to $20.1 million for the same period in
1996. This decrease is primarily attributable to slightly lower interest rates
for the Company's fixed annuity products.
Other operating costs and expenses decreased $9.0 million from $21.9 million for
the twelve months ended 1995 to $12.9 million for the same period in 1996. This
is primarily due to a decrease in the amortization of deferred policy
acquisition costs, and a company wide initiative to reduce expenses.
1995 versus 1994
The Company recorded net income of $27.0 million and $16.0 million for 1995 and
1994, respectively.
Policy charges and fee income increased $4.5 million from $55.0 million in 1994
to $59.5 million for the twelve months ended December 31, 1995. This increase is
attributable to higher sales of annuity products and fees earned on withdrawals
and surrenders.
Realized investment gains in 1995 were $3.6 million as compared to losses of
$8.3 million in 1994. This increase of $11.9 million is due to the Company's
restructuring of its investment portfolio which more closely aligns its
liability duration to reduce its portfolio interest rate risk.
Policyholders' benefits increased $3.5 million from $22.8 million for the year
ended December 31, 1994 to $26.3 million for the same period in 1995. Increased
benefits in 1995 were attributable to a large amount of withdrawal activity in
the fixed rate annuity products.
2. LIQUIDITY
For an insurance company, cash needs, for the purpose of paying current
benefits, making policy loans, and paying expenses, are met primarily from
premiums and investment income. Benefit expenses incurred in 1996, 1995, and
1994 were $28.6 million, $26.3 million, and $22.8 million, respectively. Cash
flows are anticipated to be sufficient to meet the Company's liquidity needs for
the foreseeable future.
3. CAPITAL RESOURCES
The primary components of the Company's total assets of $1.7 billion at December
31, 1996 are as follows (as a percentage of total assets): fixed income
securities 32.8%, separate account assets (fixed income and equity securities)
52.1%, policy loans 6.7%, and other assets 8.4%.
27
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for Pruco Life Insurance Company of New
Jersey should be read in conjunction with the FINANCIAL STATEMENTS OF PRUCO LIFE
INSURANCE COMPANY OF NEW JERSEY and notes thereto included in this prospectus
beginning on page B-1.
<TABLE>
<CAPTION>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
GAAP BASIS STATUTORY BASIS
----------------------------------------- ------------------------
1996 1995 1994 1993 1992
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Premiums and other revenue ................ $ 65,184 $ 68,049 $ 51,781 $ 114,287 $ 113,237
Net investment income ..................... 43,784 43,530 42,357 47,700 53,063
--------------------------------------------------------------------------
Total revenues ............................. 108,968 111,579 94,138 161,987 166,300
Benefits and expenses:
Current and future benefits and
claims ................................... 48,722 47,695 44,939 103,552 100,782
Other expenses ............................ 12,848 21,881 23,716 19,182 19,371
--------------------------------------------------------------------------
Total benefits and expenses ................ 61,570 69,576 68,655 122,734 120,153
--------------------------------------------------------------------------
Income before income tax provision ......... 47,398 42,003 25,483 39,253 46,147
Income tax provision ....................... 15,611 15,002 9,483 19,460 22,701
--------------------------------------------------------------------------
Net income ................................. $ 31,787 $ 27,001 $ 16,000 $ 19,793 $ 23,446
==========================================================================
Assets ..................................... $1,695,616 $1,558,282 $1,424,886 $1,352,455 $1,269,743
==========================================================================
</TABLE>
In 1996, the Company retroactively adopted applicable accounting pronouncements
to present its financial statements in conformity with generally accepted
accounting principles. Refer to footnote 1.B. of the Financial Statements.
28
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
WILLIAM M. BETHKE, Director.--President, Prudential Capital Markets Group since
1992.
IRA J. KLEINMAN, Director.-- Executive Vice President, International Insurance
Group since 1997; 1995 to 1997: Chief Marketing and Product Development Officer,
Prudential Individual Insurance Group 1993 to 1995: President, Prudential
Select; Prior to 1993: Senior Vice President of Prudential.
MENDEL A. MELZER, Director.--Chief Investment Officer, Mutual Funds and
Annuities, Prudential Investments since 1996; 1995 to 1996: Chief Financial
Officer of the Money Management Group of Prudential; 1993 to 1995: Senior Vice
President and Chief Financial Officer of Prudential Preferred Financial
Services; Prior to 1993: Managing Director, Prudential Investment Corporation.
ESTHER H. MILNES, President and Director.--Vice President and Actuary,
Prudential Individual Insurance Group since 1996; 1993 to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services; Prior
to 1993: Vice President and Associate Actuary of Prudential.
I. EDWARD PRICE, Vice Chairman and Director.--Senior Vice President and Actuary,
Prudential Individual Insurance Group since 1995; 1994 to 1995: Chief Executive
Officer, Prudential International Insurance; 1993 to 1994: President, Prudential
International Insurance; Prior to 1993: Senior Vice President and Company
Actuary of Prudential.
WILLIAM F. YELVERTON, Chairman and Director.--Chief Executive Officer,
Prudential Individual Insurance Group since 1995; Prior to 1995: Chief Executive
Officer, New York Life Worldwide.
OFFICERS WHO ARE NOT DIRECTORS
SUSAN L. BLOUNT, Secretary.--Vice President and Secretary of Prudential since
1995; Prior to 1995: Assistant General Counsel for Prudential Residential
Services Company.
C. EDWARD CHAPLIN, Treasurer.--Vice President and Treasurer of Prudential since
1995; 1993 to 1995: Managing Director and Assistant Treasurer of Prudential;
1992 to 1993: Vice President and Assistant Treasurer, Banking and Cash
Management for Prudential.
LINDA S. DOUGHERTY, Vice President, Comptroller and Chief Accounting
Officer.--Vice President and Comptroller, Prudential Individual Insurance Group
since 1997; Prior to 1997: Vice President, Accounting, Prudential.
JAMES C. DROZANOWSKI, Senior Vice President.--Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996:
President and Chief Executive Officer of Chase Manhattan Bank; 1993 to 1995:
Vice President, North America Customer Services, Chase Manhattan Bank; Prior to
1993: Operations Executive, Global Securities Services, Chase Manhattan Bank.
CLIFFORD E. KIRSCH, Chief Legal Officer.--Chief Counsel, Variable Products, Law
Department of Prudential since 1995; 1994 to 1995: Associate General Counsel
with Paine Webber; Prior to 1994: Assistant Director in the Division of
Investment Management with the Securities and Exchange Commission.
FRANK P. MARINO, Senior Vice President.--Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services.
MARIO A. MOSSE, Senior Vice President.--Vice President, Annuity Services,
Prudential Investments since 1996; Prior to 1996, Vice President, Chase
Manhattan Bank.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary.--Vice President and
Associate Actuary, Prudential.
KAREN L. SHAPIRO, Senior Vice President.--Vice President, Prudential Individual
Insurance Group since 1996; Vice President and Associate General Counsel,
Prudential Securities Incorporated 1993 to 1996; Prior to 1993: Senior Associate
with Shaw, Pittman, Potts and Trowbridge.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
* SUBSIDIARY OF PRUDENTIAL
29
<PAGE>
EXECUTIVE COMPENSATION
Executive Officers of Pruco Life may also serve one or more affiliated companies
of Pruco Life. Pruco Life of New Jersey is a subsidiary of Pruco Life.
Allocations have been made as to each individual's time devoted to his duties as
an executive officer of Pruco Life and its subsidiaries. The following table
shows the cash compensation paid, based on these allocations, to the executive
officers of Pruco Life as a group for services rendered in all capacities in
Pruco Life and its subsidiaries during 1996. Directors of Pruco Life who are
also employees of Prudential do not receive compensation in addition to their
compensation as employees of Prudential.
- --------------------------------------------------------------------------------
NAME & PRINCIPAL ALLOCATED CASH
POSITION YEAR COMPENSATION ($)
- --------------------------------------------------------------------------------
Esther H. Milnes 1996 $21,136
President 1995 $14,250
1994 $ 9,846
Linda S. Dougherty 1996 $55,931
Vice President & Comptroller 1995 $ -----
1994 $ -----
Hwei-Chung S. Shao 1996 $21,048
Chief Actuary 1995 $ -----
1994 $ -----
Clifford E. Kirsch 1996 $54,190
Chief Legal Counsel 1995 $30,962
1994 $ -----
Frank P. Marino 1996 $12,076
Senior Vice President 1995 $ -----
1994 $ -----
- --------------------------------------------------------------------------------
- ------- Did not hold position during this year.
- --------------------------------------------------------------------------------
30
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
DECEMBER 31,
1996 1995
---------- ----------
(000'S)
ASSETS
Fixed maturities - Available for sale $ 555,898 $ 513,433
Policy loans 113,918 98,194
Short term investments 17,002 45,308
---------- ----------
Total invested assets 686,818 656,935
---------- ----------
Cash 3,928 --
Deferred policy acquisition costs 106,965 96,031
Premiums due 401 344
Accrued investment income 12,908 11,579
Receivable from affiliates -- 3,616
Federal income tax receivable -- 69
Other assets 1,335 281
Separate Account assets 883,261 789,427
---------- ----------
TOTAL ASSETS $1,695,616 $1,558,282
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Future policy benefits and other policyholders' $ 100,663 $ 92,045
liabilities
Policyholders' account balances 375,448 375,193
Federal income tax payable 1,970 --
Deferred federal income tax payable 24,175 23,809
Payable to affiliate 6,059 5,375
Other liabilities 11,990 6,279
Separate Account liabilities 880,065 787,566
---------- ----------
TOTAL LIABILITIES 1,400,370 1,290,267
---------- ----------
CONTINGENCIES - NOTE 9
STOCKHOLDER'S EQUITY
Common Stock, $5 par value;
400,000 shares,
authorized; issued and
outstanding at December 31, 1996 and 1995 2,000 2,000
Paid-in-capital 125,000 125,000
Net unrealized investment gains (less deferred income 2,032 6,588
tax)
Retained earnings 166,214 134,427
---------- ----------
TOTAL STOCKHOLDER'S EQUITY 295,246 268,015
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,695,616 $1,558,282
========== ==========
SEE NOTES TO THE FINANCIAL STATEMENTS
B-1
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF OPERATIONS
YEAR ENDED
DECEMBER 31,
1996 1995 1994
----------------------------
(000'S)
REVENUES
Premiums $ 1,345 $ 1,042 $ 1,869
Policy charges and fee income 58,571 59,515 55,021
Net investment income 43,784 43,530 42,357
Realized investment gains(losses) 1,221 3,592 (8,310)
Other income 4,047 3,900 3,201
----------------------------
TOTAL REVENUES 108,968 111,579 94,138
----------------------------
BENEFITS AND EXPENSES
Policyholders' benefits 28,653 26,331 22,788
Interest credited to policyholders' account 20,069 21,364 22,151
balances
Other operating costs and expenses 12,848 21,881 23,716
----------------------------
TOTAL BENEFITS AND EXPENSES 61,570 69,576 68,655
----------------------------
Income before income tax provision 47,398 42,003 25,483
Income tax provision 15,611 15,002 9,483
----------------------------
NET INCOME $ 31,787 $ 27,001 $ 16,000
============================
SEE NOTES TO THE FINANCIAL STATEMENTS
B-2
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
--------------------------------
(000'S)
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of year $ 2,000 $ 2,000 $ 2,000
Issued during year -- -- --
--------------------------------
Balance, end of year 2,000 2,000 2,000
--------------------------------
PAID IN CAPITAL
Balance, beginning of year 125,000 125,000 125,000
Paid in during year -- -- --
--------------------------------
Balance, end of year 125,000 125,000 125,000
--------------------------------
NET UNREALIZED INVESTMENT GAINS (LESS DEFERRED
INCOME TAX)
Balance, beginning of year 6,588 -- --
Adoption of SFAS 115 -- (11,189) --
Net change in unrealized investment gains(losses) (4,556) 17,777 --
--------------------------------
Balance, end of year 2,032 6,588 --
--------------------------------
RETAINED EARNINGS
Balance, beginning of year 134,427 107,426 91,426
Net income 31,787 27,001 16,000
--------------------------------
Balance, end of year 166,214 134,427 107,426
--------------------------------
TOTAL STOCKHOLDER'S EQUITY $ 295,246 $ 268,015 $234,426
================================
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
B-3
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
---------------------------------
(000'S)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 31,787 $ 27,001 $ 16,000
Adjustments to reconcile net income to net cash from
operating activities:
Increase in future policy benefits and other policyholders' 8,618 900 3,936
liabilities
General account policy fee income (9,963) (11,931) (7,744)
Interest credited to policyholders' account balances 20,069 21,364 22,151
Net decrease (increase) in Separate Accounts (1,335) 260 (310)
Net realized investment (gains)losses (1,221) (3,592) 8,310
Amortization and other non-cash items 8,908 (6,839) 3,778
Change in:
Accrued investment income (1,329) (317) (679)
Premiums due (57) 41 26
Receivable from affiliates 3,616 (1,789) (132)
Deferred policy acquisition costs (10,934) 9,074 4,727
Other assets (985) 1,287 2,759
Payable to affiliate 684 807 (3,798)
Federal income tax payable 1,970 8,328 (7,869)
Deferred federal income tax payable 366 3,460 (1,183)
Other liabilities 5,711 (304) 2,988
---------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES 55,905 47,750 42,960
---------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Held to maturity -- -- 705,888
Available for sale 901,775 553,681 --
Payments for the purchase of:
Fixed maturities:
Held to maturity -- -- (658,008)
Available for sale (956,483) (522,757) --
Policy loans (15,724) (12,917) (15,511)
Net proceeds (payments) of short term investments 28,306 (3,613) (12,095)
---------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES (42,126) 14,394 20,274
---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 16,754 18,348 22,336
Withdrawals (net of transfers to/from separate accounts) (26,605) (80,509) (85,590)
---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES (9,851) (62,161) (63,254)
---------------------------------
Net increase(decrease) in Cash 3,928 (17) (20)
Cash, beginning of year -- 17 37
---------------------------------
CASH , END OF YEAR $ 3,928 $ 0 $ 17
=================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid $ 11,673 $ 7,900 $ 17,679
=================================
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES
A. GENERAL
Pruco Life Insurance Company of New Jersey (the Company), a stock life insurance
company domiciled in New Jersey, is an indirect subsidiary of The Prudential
Insurance Company of America (Prudential), a mutual life insurance company, and
a direct subsidiary of Pruco Life Insurance Company (Pruco Life), a stock life
insurance company domiciled in the state of Arizona. The Company markets
individual life insurance and annuities through Prudential's sales force.
B. BASIS OF PRESENTATION
The Financial Accounting Standards Board (FASB) issued Interpretation No. 40,
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises", as amended by Statement of Financial
Accounting Standards (SFAS) No. 120, "Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts", effective for fiscal years beginning after December
15, 1995. Financial statements of mutual life insurance companies, and their
wholly owned stock life insurance subsidiaries, for periods beginning after
December 15, 1995 which are prepared on the basis of statutory accounting
practices will no longer be characterized as in conformity with generally
accepted accounting principles (GAAP). As a result, the Company has prepared its
1996 financial statements in accordance with all applicable GAAP pronouncements.
The 1995 and 1994 financial statements, which were previously prepared on the
statutory basis of accounting, have been restated in accordance with GAAP. The
cumulative effect of adopting GAAP as of January 1, 1994 was an increase in
retained earnings of $63.6 million. See Note 7 for a reconciliation of the
Company's surplus and net income determined in accordance with statutory
accounting practices with equity and net income determined on a GAAP basis.
On January 1, 1995, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expanded the use of fair value
accounting for those securities that a company does not have positive intent and
ability to hold to maturity. Implementation of this statement decreased
stockholder's equity by $11.2 million net of deferred income tax benefit of $6.3
million. In 1994 prior to the adoption of SFAS 115, all fixed maturities were
carried at amortized cost.
C. INVESTMENTS
Fixed Maturities - Where the Company may not have the positive intent to hold
fixed maturities until maturity, the securities are classified as "Available for
Sale." These securities are reported at market value based principally on their
quoted market prices. The associated unrealized gains and losses, net of income
taxes and deferred policy acquisition costs, are included as a component of
equity or if deemed to be other than temporary, are included as a realized loss.
Policy Loans are stated primarily at unpaid principal balances.
Realized Investment Gains and Losses are reported based on specific
identification of the investments sold.
Short-term investments are fixed maturities that mature within one year, and are
reported at estimated fair value.
D. REVENUE RECOGNITION AND RELATED EXPENSES
Universal life contracts are long duration life insurance contracts that involve
significant mortality and morbidity risk with both fixed and guaranteed terms.
Investment contracts, such as deferred annuities, are long duration contracts
that do not subject the insurance enterprise to risks arising from policyholder
mortality or morbidity. Amounts received as payments for these contracts are
reported as deposits to policyholders' account balances. Revenues from these
contracts consist primarily of amounts assessed during the period against
policyholders' account balances for mortality charges, policy administration
fees and surrender charges. Policy benefits and claims that are charged to
expenses include benefit claims incurred in the period in excess of related
policyholders' account balances.
Premiums, policy benefits and claims from individual life policies and payout
annuities, generally are recognized in operations when due.
B-5
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
E. DEFERRED POLICY ACQUISITION COSTS
Acquisition costs consist of commissions and other costs which vary with and are
primarily related to the production or acquisition of new business. Acquisition
costs related to universal life products and investment-type contracts are
deferred and amortized in proportion to total estimated gross profits arising
principally from investment results, mortality, expense margins and surrender
charges based on historical and anticipated future experience. As required,
amortization expense also includes the impact of revised estimates to expected
gross profits, which is the basis for amortizing deferred policy acquisition
costs. Amortization of deferred policy acquisition costs, including the impact
of revised estimates of gross profits, was $(2.2) million, $8.9 million, and
$11.0 million for the years ended December 31, 1996, 1995, and 1994,
respectively. Deferred policy acquisition costs are analyzed to determine if
they are recoverable from future income, including investment income. If such
costs are determined to be unrecoverable, they are expensed at the time of
determination. The effect on the deferred policy acquisition asset that would
result from realization of unrealized investment gains(losses) is recognized
with an offset to unrealized investment gains(losses) in stockholder's equity.
F. FUTURE POLICY BENEFITS AND POLICYHOLDERS' ACCOUNT BALANCES
Benefit reserve liabilities for payout annuities such as matured deferred
annuities and supplementary contracts represent the present values of estimated
future benefits payments and related expenses. Present values for matured
deferred annuity contracts are computed using interest rates ranging from 6.5%
to 8.75%. The mortality assumption for these contracts is the 83 IAM tables.
Reserves for supplementary contracts are stated at interest rates that vary from
7.25% to 8.25% using mortality and morbidity assumptions either from company
experience or various actuarial tables.
When liabilities for future policy benefits plus the present value of expected
future gross deposits are insufficient to provide expected future policy
benefits and expenses, unrecoverable deferred policy acquisition costs are
written off and thereafter, if required, a premium deficiency reserve is
established as a charge to income.
Policyholders' account balances for universal life and investment-type contracts
are equal to the policy account values. The policy account values represent an
accumulation of gross deposits plus interest credited less expense and mortality
charges and withdrawals.
Interest crediting rates on life insurance products range from 3.4% to 6.6%.
G. SEPARATE ACCOUNTS
Separate Accounts represent funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
policyholders. All Separate Account assets are carried at market value. Deposits
to all Separate Accounts are reported as increases in Separate Account
liabilities, which equal the Separate Account policy account fund values.
Charges assessed against policyholders' account balances for mortality, policy
administration and surrender charges are included in policy charges and fee
income. Mortality and expense risk charges are applied against the
policyholders' account balance. The Separate Account assets are legally
segregated and are not subject to claims that arise out of any other business of
the Company.
H. ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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.
B-6
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
2. FIXED MATURITIES
Gross unrealized gains and losses for securities, by major security type, are as
follows:
<TABLE>
<CAPTION>
DECEMBER, 31, 1996
- ------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and $ 29,386 $ 1 $ 174 $ 29,213
agencies
Foreign government bonds 38,853 420 52 39,221
Corporate securities 483,439 5,108 1,133 487,414
Mortgage-backed securities 50 -- -- 50
- ------------------------------------------------------------------------------------------------------
Total $551,728 $ 5,529 $1,359 $555,898
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and $ 81,806 $ 1,287 $ -- $ 83,093
agencies
Foreign government bonds 25,849 1,128 -- 26,977
Corporate securities 353,514 11,130 340 364,304
Mortgage-backed securities 36,872 2,192 5 39,059
- ------------------------------------------------------------------------------------------------------
Total $498,041 $15,737 $ 345 $513,433
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-7
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
The amortized cost and estimated fair value of fixed maturities at December 31,
1996, categorized by contractual maturity, are shown below. Actual maturities
will differ from contractual maturities because borrowers may prepay obligations
with or without call or prepayment penalties.
DECEMBER 31, 1996
- ---------------------------------------------------------------------------
Estimated
Amortized Fair
(000's) Cost Value
- ---------------------------------------------------------------------------
AVAILABLE FOR SALE
Due in one year or less $ 43,723 $ 43,951
Due after one year through five years 444,883 448,048
Due after five years through ten years 57,989 58,586
Due after ten years 5,083 5,263
Mortgage-backed securities 50 50
- ---------------------------------------------------------------------------
Total $551,728 $555,898
- ---------------------------------------------------------------------------
Proceeds from the sale of fixed maturities during 1996, 1995, and 1994 were
$869.6 million, $535.3 million, and $672.8 million, respectively. Gross gains of
$5.2 million, $6.8 million, and $3.3 million and gross losses of $4.0 million,
$3.2 million, and $11.6 million were realized on those sales during 1996, 1995,
and 1994, respectively.
B-8
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
3. NET INVESTMENT INCOME
YEAR ENDED
DECEMBER 31,
Net investment income consists of: 1996 1995 1994
----------------------------------
Gross investment income (000'S)
<S> <C> <C> <C>
Fixed maturities $ 36,193 $ 36,861 $ 36,565
Policy loans 5,761 5,029 4,290
Short term investments 2,504 2,290 2,364
Other 28 51 44
----------------------------------
44,486 44,231 43,263
Investment expenses (702) (701) (906)
----------------------------------
Net investment income $ 43,784 $ 43,530 $ 42,357
==================================
4. INVESTMENT GAINS(LOSSES)
YEAR ENDED
DECEMBER 31,
1996 1995 1994
----------------------------------
(000'S)
Fixed maturities:
Realized investment gains $ 5,232 $ 6,785 $ 3,327
Realized investment losses (4,011) (3,193) (11,637)
----------------------------------
Realized investment gains(losses) $ 1,221 $ 3,592 ($ 8,310)
==================================
YEAR ENDED
DECEMBER 31,
1996 1995 1994
----------------------------------
(000'S)
<S> <C> <C> <C>
Net unrealized investment gains, beginning of period $ 6,588 $ -- $ --
Net unrealized investment gains(losses) on fixed maturities (11,222) 32,875 --
Deferred income tax benefit(provision) 4,040 (11,835) --
Deferred policy acquisition costs (net of deferred income 2,626 (3,263) --
taxes)
----------------------------------
Net change in unrealized investment gains(losses) (4,556) 17,777 --
Adoption of SFAS 115 -- (11,189) --
----------------------------------
Net unrealized investment gains, end of period $ 2,032 $ 6,588 $ --
==================================
</TABLE>
B-9
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
5. FAIR VALUE INFORMATION
The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies. Considerable judgment is
applied, as necessary, in interpreting data to develop the estimates of fair
value. Accordingly, the estimates presented 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 fair values.
Fixed Maturities - Fair values for fixed maturities are based on quoted market
prices or estimates from independent pricing services.
Policy Loans - The estimated fair value is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan repayment.
Policyholders' Account Balances - Fair values for policyholders' account
balances are equal to the policy account values.
Short-term Investments - Fair values for short-term investments are based on
quoted market prices or estimates from independent pricing services.
The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- ---------- -------------- ----------
(000'S)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities -- Available
for sale $555,898 $555,898 $513,433 $513,433
Policy loans 113,918 110,262 98,194 99,057
Short-term investments 17,002 17,002 45,308 45,308
Financial Liabilities:
Policyholders'
account balances $375,448 $375,448 $375,193 $375,193
</TABLE>
B-10
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
6. INCOME TAXES
The Company is a member of a group of affiliated companies which join in filing
a consolidated federal income tax return in addition to separate company state
and local tax returns. The Internal Revenue Code limits the amount of nonlife
insurance losses that may offset life insurance company taxable income.
Companies operating outside the United States are taxed under applicable foreign
statutes.
Pursuant to the tax allocation arrangement, 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 when assets and liabilities have
different values for financial statement and tax reporting purposes.
The components of income taxes are as follows:
YEAR ENDED
DECEMBER 31,
1996 1995 1994
------------------------------
(000'S)
Current income tax provision:
Federal income tax $ 13,589 $ 13,868 $ 9,431
State and local income tax (907) 1,380 1,235
------------------------------
Total current income tax 12,682 15,248 10,666
Deferred income tax provision (benefit):
Federal income tax 2,848 (239) (1,150)
State and local income tax 81 (7) (33)
------------------------------
Total deferred income tax 2,929 (246) (1,183)
------------------------------
Total income tax provision $ 15,611 $ 15,002 $ 9,483
==============================
The income tax provision is different from the amount computed using the
expected federal income tax rate of 35% for the following reasons:
YEAR ENDED
DECEMBER 31,
1996 1995 1994
---------------------------------
(000'S)
Expected federal income tax expense $ 16,589 $ 14,702 $ 8,919
State income taxes (826) 1,373 1,202
Other (152) (1,073) (638)
---------------------------------
Total income tax provision $ 15,611 $ 15,002 $ 9,483
=================================
B-11
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
The components of net deferred income taxes payable are as follows:
YEAR ENDED
DECEMBER 31,
1996 1995
------- -------
DEFERRED INCOME TAX ASSETS (000'S)
Insurance liabilities $ 6,189 $ 6,966
Other -- 276
------- -------
Total deferred income tax assets $ 6,189 $ 7,242
------- -------
DEFERRED INCOME TAX LIABILITIES
Deferred acquisition costs $28,424 $25,322
Net investment gains 1,940 5,729
------- -------
Total deferred income tax liabilities 30,364 31,051
------- -------
Deferred federal income tax payable $24,175 $23,809
======= =======
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns through 1989. The Service is examining
the years 1990 through 1992. Discussions are being held with the Service with
respect to proposed adjustments. However, management believes there are adequate
defenses against, or sufficient reserves to provide for, such adjustments.
B-12
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
7. STOCKHOLDER'S EQUITY RECONCILIATION
The reconciliation of statutory net income to GAAP net income, and statutory
surplus to GAAP equity as of December 31, 1996, 1995, and 1994 are as follows:
1996 1995 1994
---------------------------------
(000'S)
Statutory net income $ 24,774 $ 25,567 $ 16,309
Deferred acquisition costs 5,656 (2,589) (4,727)
Deferred premium 221 (58) 241
Insurance liabilities 1,154 4,366 4,614
Income taxes (2,883) 510 8,518
Interest maintenance reserve (765) 1,285 (10,327)
Separate accounts and other 3,630 (2,080) 1,372
---------------------------------
GAAP net income $ 31,787 $ 27,001 $ 16,000
=================================
Statutory surplus $ 216,019 $ 191,607 $ 163,066
Investment valuation 4,170 15,392 --
Deferred acquisition costs 106,965 96,031 105,105
Deferred premium (2,205) (2,426) (2,368)
Insurance liabilities (21,501) (25,062) (23,882)
Income taxes (21,829) (21,510) (13,015)
Asset valuation reserve and interest
maintenance reserve 13,598 13,966 5,512
Other 29 17 8
---------------------------------
GAAP stockholder's equity $ 295,246 $ 268,015 $ 234,426
=================================
The New York State Insurance Department ("Department") recognizes only statutory
accounting for determining and reporting the financial condition and results of
operations of an insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial condition warrants
the payment of a dividend to its stockholders. No consideration is given by the
Department to financial statements prepared in accordance with generally
accepted accounting principles in making such determinations.
B-13
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
8. RELATED PARTY TRANSACTIONS
A. SERVICE AGREEMENTS
The Company, Prudential, Pruco Life, and Pruco Securities Corporation, an
indirect wholly-owned subsidiary of Prudential, operate under service and lease
agreements whereby services of officers and employees, supplies, use of
equipment and office space are provided. The net cost of these services
allocated to the Company were $12 million, $16 million, and $15 million for the
years ended December 31, 1996, 1995, and 1994, respectively.
B. PENSION PLANS
The Company is an indirect wholly-owned subsidiary of Prudential which sponsors
several defined benefit pension plans that cover substantially all of its
employees. Benefits are generally based on career average earnings and credited
length of service. Prudential's funding policy is to contribute annually the
amount necessary to satisfy the Internal Revenue Service contribution
guidelines.
No pension expense for contributions to the plan was allocated to the Company in
1996, 1995, or 1994 because the plan was subject to the full funding limitation
under the Internal Revenue Code.
C. POSTRETIREMENT LIFE AND HEALTH BENEFITS
Prudential also sponsors certain life insurance and health care benefits for its
retired employees. Substantially all employees may become eligible to receive a
benefit if they retire after age 55 with at least 10 years of service.
Prudential elected to amortize its obligation over twenty years. A provision for
contributions to the postretirement fund is included in the net cost of services
allocated to the Company discussed above for the years ended December 31, 1996,
1995, and 1994.
D. REINSURANCE
The Company currently has one reinsurance agreement in place with Prudential
(the reinsurer). This contract is a yearly renewable term agreement 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 of $2.5 million. The Company is not
relieved of its primary obligation to the policyholder as a result of this
reinsurance transaction. This agreement had no material effect on net income for
the years ended December 31, 1996, 1995, and 1994.
9. CONTINGENCIES
Several actions have been brought against the Company on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by Prudential, the Company and agents appointed by Prudential and the
Company. Prudential has agreed to indemnify the Company for any and all losses
resulting from such litigation.
10. DIVIDENDS
The Company is subject to New Jersey law which limits the amount of dividends
that insurance companies may pay to stockholders. The maximum dividend which may
be paid in any twelve month period without prior approval of the New Jersey
Commissioner of Insurance is limited to the greater of 10% of 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 and the Company's surplus
position at December 31, 1996, the Company would be permitted a maximum of $25
million in dividend distributions in 1997, all of which could be paid in cash,
without approval from The State of New Jersey Department of Insurance.
B-14
<PAGE>
Report of Independent Accountants
To the Board of Directors of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statement of financial position and the related
statements of operations, of stockholder's equity and of cash flows present
fairly, in all material respects, the financial position of Pruco Life Insurance
Company of New Jersey at December 31, 1996, and the results of its operations
and its cash flows for the year in conformity with generally accepted accounting
principles. 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 audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards 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 audit provides a reasonable basis for the opinion expressed
above.
/s/
PRICE WATERHOUSE LLP
New York, New York
April 11, 1997
B-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Board of Directors of
Pruco Life Insurance Company of New Jersey
Newark, New Jersey
We have audited the accompanying statement of financial position of Pruco Life
Insurance Company of New Jersey as of December 31, 1995, and the related
statements of operations, stockholder's equity and cash flows for the years
ended December 31, 1995 and 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements presents fairly, in all
material respects, the financial position of Pruco Life Insurance Company of New
Jersey as of December 31, 1995, and the results of operations and cash flows for
the years ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, the Company has
retroactively adopted all applicable generally accepted accounting principles
relating to stock life insurance subsidiaries of mutual life insurance companies
and has changed, as of January 1, 1995, the method of accounting for fixed
maturity investments.
/s/
Deloitte & Touche LLP
Parsippany, NJ
December 19, 1996
B-16
<PAGE>
MARKET-VALUE ADJUSTMENT FORMULA
The Market-Value Adjustment, which is applied to withdrawals and transfers made
at any time other than the 30-day period following the end of an interest rate
period, involves three amounts:
1. The number of whole months remaining in the existing interest rate
period.
2. The guaranteed interest rate.
3. The interpolated value of the interest rates that Pruco Life of New
Jersey declares for the number of whole years remaining and the
duration 1 year longer than the number of whole years remaining in
the existing interest rate period.
Stated as a formula, the Market Value Factor is equal to:
(M/12) x (R-C), not to exceed +0.40 or be less than -0.40;
Where,
M = the number of whole months (not to be less than one) remaining in
the interest rate period.
R = the Contract's guaranteed interest rate expressed as a decimal.
Thus 6.2% is converted to 0.062.
C = the interpolated value of the interest rates, expressed as a
decimal, that Pruco Life of New Jersey declares for the number of
whole years remaining and the duration 1 year longer than the number
of whole years remaining as of the date the request for a withdrawal
or transfer is received or m/365 x (n + 1) year rate + (365-m)/1365
x n year rate, where 'n' equals years and 'm' equals days remaining
in year 'n' of the existing interest rate period.
The Market-Value Adjustment is then equal to the Market Value Factor multiplied
by the amount subject to a Market-Value Adjustment.
The steps below explain how a Market-Value Adjustment is calculated.
STEP 1: Divide the number of whole months left in the existing interest
rate period (not to be less than one)by 12.
STEP 2: Interpolate the interest rates Pruco Life of New Jersey declares
on the date the request for withdrawal or transfer is received for the
duration of years equal to the whole number of years determined in Step 1,
plus the whole number of years plus 1 additional year.
STEP 3: Subtract this interpolated interest rate from the guaranteed
interest rate. The result could be negative.
STEP 4: Multiply the results of Step 1 and Step 2. Again, the result could
be negative. If the result is less than -0.4, use the value -0.4. If the
result is in between -0.4 and 0.4, use the actual value. If the result is
more than 0.4, use the value 0.4.
STEP 5: Multiply the result of Step 3 (which is the Market Value Factor)
by the value of the amount subject to a Market-Value Adjustment. The
result is the Market-Value Adjustment.
STEP 6: The result of Step 4 is added to the interest cell. If the
Market-Value Adjustment is positive, the interest cell will go up in
value. If the Market-Value Adjustment is negative, the interest cell will
go down in value.
Depending upon when the withdrawal request is made, a withdrawal charge may
apply.
C-1
<PAGE>
The following example will illustrate the application of a Market-Value
Adjustment and the determination of the withdrawal charge. Suppose a Contract
owner made two invested purchase payments, the first in the amount of $10,000 on
December 1, 1995, all of which was allocated to the Equity Subaccount, and the
second in the amount of $5,000 on October 1, 1997, all of which was allocated to
the MVA Option with a guaranteed interest rate of 8% (0.08) for 7 years. A
request for withdrawal of $8,500 is made on February 1, 2000 (the Contract owner
does not provide any withdrawal instructions). On that date the amount in the
Equity Subaccount is equal to $12,000 and the amount in the interest cell with a
maturity date of September 30, 2004 is $5,985.23, so that the Contract Fund on
that date is equal to $17,985.23.
On February 1, 2000, the interest rates declared by Pruco Life of New Jersey for
the durations 4 and 5 years (4 whole years remaining until September 30, 2004,
plus 1 year) are 10.8% and 11.4%, respectively.
The following computations would be made:
1. Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
2. Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
DATE PAYMENT FREE
---- ------- ----
12/1/95 $10,000 $1,000
12/1/96 $2,000
10/1/97 $ 5,000 $2,500
12/1/97 $4,000
12/1/98 $5,500
12/1/99 $7,000
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the
fourth Contract year) for a total of $7,000.
3. Since the withdrawal request is in the fifth Contract year, a 3%
withdrawal charge rate applies to any portion of the withdrawal which is
not charge-free.
$8,500.00 requested withdrawal amount
-$7,000.00 charge-free
---------
$1,500.00 additional amount needed to complete withdrawal
The Contract provides that the Contract Fund will be reduced by an amount
which, when reduced by the withdrawal charge, will equal the amount
requested. Therefore, in order to produce the amount needed to complete
the withdrawal request ($1,500), we must "gross-up" that amount, before
applying the withdrawal charge rate. This is done by dividing by 1 minus
the withdrawal charge rate.
$1,500.00 / (1-.03) =
$1,500.00 / 0.97 = $1,546.39 grossed-up amount
Please note that a 3% withdrawal charge on this grossed-up amount reduces
it to $1,500, the balance needed to complete the request.
$1,546.39 grossed-up amount
X .03 withdrawal charge rate
---------
$ 46.39 withdrawal charge
4. The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interpolated value for the interest
rates that would be offered for interest cells with durations of whole
years remaining and whole year plus 1 remaining in the existing interest
rate period), which is -0.03, multiplied by 4.58333 (55 months remaining
until September 30, 2004, divided by 12) or -0.13750. Thus, there will be
a negative Market-Value Adjustment of approximately 14% of the amount in
the interest cell that is subject to the adjustment.
-0.13750 X $5,985.23 = -822.97 negative MVA
$ 5,985.23 unadjusted value
--------
$ 5,162.26 adjusted value
$12,000.00 Equity value
--------
$17,162.26 adjusted Contract Fund
C-2
<PAGE>
5. The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over
all accounts making up the Contract Fund following the Market-Value
Adjustments, if any, associated with the MVA option.
Equity ($ 12,000 / $17,162.26) X $8,546.39 = $5,975.71
7-Yr MVA ($5,162.26 / $17,162.26) X $8,546.39 = $2,570.68
---------
$8,546.39
6. The adjusted value of the interest cell, $5,162.26, reduced by the
withdrawal of $2,570.68 leaves $2,591.58. This amount must be "unadjusted"
by dividing it by 0.86250 (1 plus the Market-Value Adjustment of -0.13750)
to determine the amount remaining in the interest cell to which the
guaranteed interest rate of 8% will continue to be credited until
September 30, 2004 or a subsequent withdrawal. That amount is $3,004.73.
C-3
<PAGE>
o FLEXIBLE PREMIUM VARIABLE ANNUITY
ACCOUNT
o THE PRUDENTIAL SERIES FUND, INC.
o AIM VARIABLE INSURANCE FUNDS, INC.
o JANUS ASPEN SERIES
o MFS VARIABLE INSURANCE TRUST
o OCC ACCUMULATION TRUST
o T. ROWE PRICE EQUITY SERIES, INC.
o T. ROWE PRICE INTERNATIONAL SERIES, INC.
o WARBURG PINCUS TRUST
==============================================
- --------------------------------------------------------------------------------
-----------------
Bulk Rate
U.S. Postage
PAID
A Subsidiary of Jersey City, N.J.
[LOGO] Prudential Permit No. 60
-----------------
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-3777
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The DISCOVERY SELECT(SM) Annuity Contract* (the "Contract") is an individual
variable annuity contract issued by the Pruco Life Insurance Company of New
Jersey ("Pruco Life of New Jersey"), a stock life insurance company that is an
indirect wholly-owned subsidiary of The Prudential Insurance Company of America
("Prudential") and is funded through the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (the "Account"). The Contract is purchased by
making an initial purchase payment of $10,000 or more; subsequent payments must
be $1,000 or more.
This statement of additional information relates to the Discovery
Select(SM) Annuity Contract available to residents of New York only.
This statement of additional information is not a prospectus and should be
read in conjunction with the Contract's prospectus, dated May 1, 1997,
which is available without charge upon written request to the Prudential Annuity
Service Center, 300 Columbus Circle, Edison, New Jersey 08837, or by telephoning
1-888-PRU-2888 (toll free).
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
OF NEW JERSEY 300 COLUMBUS CIRCLE
213 WASHINGTON STREET EDISON, NEW JERSEY 08837
NEWARK, NEW JERSEY 07102-2992 TELEPHONE: 1-888-PRU-2888 (TOLL FREE)
* DISCOVERY SELECT is a service mark of Prudential.
Catalog No. 40M261Y
<PAGE>
CONTENTS
PAGE
----
Other Information Concerning the Account ................................ 1
Principal Underwriter ................................................... 1
Determination of Subaccount Unit Values ................................. 1
Performance Information ................................................. 1
Comparative Performance Information ..................................... 5
<PAGE>
OTHER INFORMATION CONCERNING THE ACCOUNT
PRINCIPAL UNDERWRITER
Pruco Securities Corporation ("Prusec"), an indirectly wholly-owned
subsidiary of Prudential, performs all sales and distribution functions
regarding the Contracts and may be deemed to be the "principal underwriter" of
the Account under the Investment Company Act of 1940.
DETERMINATION OF SUBACCOUNT UNIT VALUES
The value for each Subaccount Unit is computed as of the end of each
"valuation period" as defined in the prospectus (also referred to in this
section as "business day"). On any given business day the value of a Unit in
each subaccount will be determined by multiplying the value of a Unit of that
subaccount for the preceding business day by the net investment factor for that
subaccount for the current business day. The net investment factor for any
business day is determined by dividing the value of the assets of the subaccount
for that day by the value of the assets of the subaccount for the preceding
business day (ignoring, for this purpose, changes resulting from new purchase
payments and withdrawals), and subtracting from the result the daily equivalent
of the 1.4% annual charge for administrative expenses and mortality and expense
risks. (See CHARGES, FEES, AND DEDUCTIONS in the prospectus.) The value of the
assets of a subaccount is determined by multiplying the number of shares of The
Prudential Series Fund, Inc. or other underlying portfolios (the "Funds") held
by that subaccount by the net asset value of each share and adding the value of
dividends declared by the Funds but not yet paid.
PERFORMANCE INFORMATION
The tables that follow provide performance information for each subaccount
through December 31, 1996. The performance information is based on historical
experience and does not indicate or represent future performance.
AVERAGE ANNUAL TOTAL RETURN
The DISCOVERY SELECT Annuity is a new contract. The returns shown below
were calculated using historical investment returns of the portfolios of the
Funds. All fees, expenses and charges associated with the DISCOVERY SELECT
Annuity and the Funds have been reflected in these returns, as if the Contract
had existed from the inception date of each Funds' portfolios.
Table 1 below shows the average annual rates of total return on
hypothetical investments of $1,000 for periods ended December 31, 1996 in each
subaccount other than the Money Market Subaccount. These figures assume
withdrawal of the investments at the end of the period other than to effect an
annuity under the Contract. This table assumes deferred sales charges.
1
<PAGE>
<TABLE>
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
<CAPTION>
From Date
Five Ten Portfolio
One Year Years Years Established
Fund Date Ended Ended Ended Through
Portfolio Established 12/31/96 12/31/96 12/31/96 12/31/96
--------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
The Prudential Series Fund
Diversified Bond Portfolio ............... 6/83 -1.92% 5.88% 6.82% 8.18%
High Yield Bond Portfolio ................ 2/87 4.97% 10.58% N/A 7.30%
Stock Index Portfolio .................... 10/87 15.99% 13.04% N/A 14.74%
Equity Income Portfolio .................. 2/88 15.17% 13.39% N/A 13.13%
Equity Portfolio ......................... 6/83 12.00% 15.58% 13.52% 13.37%
Prudential Jennison Portfolio ............ 5/95 7.95% N/A N/A 19.23%
Global Portfolio ......................... 9/88 13.16% 11.04% N/A 8.89%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund .......... 5/94 13.40% N/A N/A 16.72%
AIM V.I. Value Fund ...................... 6/93 8.55% N/A N/A 16.12%
Janus Aspen Series
Growth Portfolio ......................... 9/93 11.93% N/A N/A 13.97%
International Growth Portfolio ........... 5/94 27.95% N/A N/A 16.88%
MFS Variable Insurance Trust
Emerging Growth Series ................... 7/95 10.53% N/A N/A 19.89%
Research Series .......................... 7/95 15.76% N/A N/A 18.58%
OCC Accumulation Trust (Note 2)
Managed Portfolio ........................ 8/88 16.24% 17.43% N/A 18.48%
Small Cap Portfolio ...................... 8/88 12.29% 12.80% N/A 13.10%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio .................. 3/94 13.03% N/A N/A 19.24%
T. Rowe Price International Series, Inc.
International Stock Portfolio ............ 3/94 8.24% N/A N/A 7.23%
Warburg Pincus Trust
Post-Venture Capital Portfolio ........... 9/96 N/A N/A N/A -27.54%
[/R]
</TABLE>
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Note 1: This table assumes deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had
commenced operations on August 1, 1988, then called Quest for Value
Accumulation Trust (the "Old Trust"), was effectively divided into two
investment funds--the Old Trust and the present Quest for Value
Accumulation Trust (the "Present Trust")--at which time the Present
Trust Commenced Operations.
The average annual rates of total return shown above are computed by
finding the average annual compounded rates of return over the periods shown
that would equate the initial amount invested to the withdrawal value, in
accordance with the following formula: P(1+T)[superior n] - ERV. In the formula,
P is a hypothetical investment of $1,000; T is the average annual total return;
"n" is the number of years; and ERV is the withdrawal value at the end of the
periods shown. These figures assume deduction of the maximum withdrawal charge
that may be applicable to a particular period.
2
<PAGE>
NON-STANDARD TOTAL RETURN
Table 2 below shows the average annual rates of return as in Table 1, but
assumes that the investments are not withdrawn at the end of the period or that
the Contract owner annuitizes at the end of the period. This table assumes no
deferred sales charges.
<TABLE>
TABLE 2
AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL
<CAPTION>
From Date
Five Ten Portfolio
One Year Years Years Established
Fund Date Ended Ended Ended Through
Portfolio Established 12/31/96 12/31/96 12/31/96 12/31/96
--------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Prudential Series Fund
Diversified Bond Portfolio ............... 6/83 2.88% 6.01% 6.82% 8.18%
High Yield Bond Portfolio ................ 2/87 9.77% 10.68% N/A 7.30%
Stock Index Portfolio .................... 10/87 20.79% 13.14% N/A 14.74%
Equity Income Portfolio .................. 2/88 19.97% 13.49% N/A 13.13%
Equity Portfolio ......................... 6/83 16.80% 15.67% 13.52% 13.37%
Prudential Jennison Portfolio ............ 5/95 12.75% N/A N/A 21.76%
Global Portfolio ......................... 9/88 17.96% 11.15% N/A 8.89%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund .......... 5/94 18.20% N/A N/A 17.73%
AIM V.I. Value Fund ...................... 6/93 13.35% N/A N/A 16.57%
Janus Aspen Series
Growth Portfolio ......................... 9/93 16.73% N/A N/A 14.50%
International Growth Portfolio ........... 5/94 32.75% N/A N/A 17.89%
MFS Variable Insurance Trust
Emerging Growth Series ................... 7/95 15.33% N/A N/A 22.95%
Research Series .......................... 7/95 20.56% N/A N/A 21.65%
OCC Accumulation Trust (Note 2)
Managed Portfolio ........................ 8/88 21.04% 17.51% N/A 18.48%
Small Cap Portfolio ...................... 8/88 17.09% 12.90% N/A 13.10%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio .................. 3/94 17.83% N/A N/A 20.17%
T. Rowe Price International Series, Inc.
International Stock Portfolio ............ 3/94 13.04% N/A N/A 8.35%
Warburg Pincus Trust
Post-Venture Capital Portfolio ........... 9/96 N/A N/A N/A -6.23%
</TABLE>
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Note 1: This table assumes no deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which
had commenced operations on August 1, 1988, then called Quest for Value
Accumulation Trust (the "Old Trust"), was effectively divided into
two investment funds--the Old Trust and the present Quest for Value
Accumulation Trust (the "Present Trust")--at which time the Present
Trust Commenced Operations.
3
<PAGE>
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
<TABLE>
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
<CAPTION>
From Date
Five Ten Portfolio
One Year Years Years Established
Fund Date Ended Ended Ended Through
Portfolio Established 12/31/96 12/31/96 12/31/96 12/31/96
--------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Prudential Series Fund
Diversified Bond Portfolio ............... 6/83 2.88% 33.86% 93.51% 190.43%
High Yield Bond Portfolio ................ 2/87 9.77% 66.12% N/A 100.14%
Stock Index Portfolio .................... 10/87 20.79% 85.41% N/A 254.52%
Equity Income Portfolio .................. 2/88 19.97% 88.27% N/A 198.64%
Equity Portfolio ......................... 6/83 16.80% 107.02% 255.40% 448.96%
Prudential Jennison Portfolio ............ 5/95 12.75% N/A N/A 38.94%
Global Portfolio ......................... 9/88 17.96% 69.62% N/A 102.45%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund .......... 5/94 18.20% N/A N/A 54.54%
AIM V.I. Value Fund ...................... 6/93 13.35% N/A N/A 73.24%
Janus Aspen Series
Growth Portfolio ......................... 9/93 16.73% N/A N/A 56.34%
International Growth Portfolio ........... 5/94 32.75% N/A N/A 55.09%
MFS Variable Insurance Trust
Emerging Growth Series ................... 7/95 15.33% N/A N/A 34.66%
Research Series .......................... 7/95 20.56% N/A N/A 32.61%
OCC Accumulation Trust (Note 2)
Managed Portfolio ........................ 8/88 21.04% 124.11% N/A 316.82%
Small Cap Portfolio ...................... 8/88 17.09% 83.40% N/A 181.81%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio .................. 3/94 17.83% N/A N/A 65.86%
T. Rowe Price International Series, Inc.
International Stock Portfolio ............ 3/94 13.04% N/A N/A 24.71%
Warburg Pincus Trust
Post-Venture Capital Portfolio ........... 9/96 N/A N/A N/A -1.61%
</TABLE>
- ----------
Note 1: This table assumes no deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had
commenced operations on August 1, 1988, then called Quest for Value
Accumulation Trust (the "Old Trust"), was effectively divided into two
investment funds--the Old Trust and the present Quest for Value
Accumulation Trust (the "Present Trust")--at which time the Present
Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.00
4
<PAGE>
MONEY MARKET SUBACCOUNT YIELD
The "yield" and "effective yield" figures for the Money Market Subaccount
shown below were calculated using historical investment returns of the Money
Market Portfolio of the Prudential Series Fund. All fees, expenses and charges
associated with the DISCOVERY SELECT Annuity and the Series Fund have been
reflected.
The "yield" and "effective yield" of the Money Market Subaccount for the
seven days ended December 31, 1996 were 3.72% and 3.79%, respectively.
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the Money Market Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the difference by the value of the subaccount at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7), with the resulting figure carried
to the nearest ten-thousandth of 1%.
The deduction referred to above consists of the 1.25% charge for mortality
and expense risks and the 0.15% charge for administration. It does not reflect
the withdrawal charge.
The effective yield is obtained by taking the base period return, adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula: Effective Yield--((base period
return + 1) 365/7) -1.
The yields on amounts held in the Money Market Subaccount will fluctuate on
a daily basis. Therefore, the stated yields for any given period are not an
indication of future yields.
COMPARATIVE PERFORMANCE INFORMATION
Reports or advertising may include comparative performance information,
including, but not limited to: (1) comparisons to market indices such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line
Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the
Lehman Brothers bond indices; (2) comparisons to other investments, such as
certificates of deposit; (3) performance rankings assigned by services such as
Morningstar, Inc. and Variable Annuity Research and Data Services (VARDS), and
Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow
Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in
publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune,
Money Magazine, and Financial World.
5
<PAGE>
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
TELEPHONE: (800) 445-4571
<PAGE>
ITEM 24
EXHIBITS
(a) Financial Statements
Statements of Pruco Life of New Jersey's Financial Position as of
December 31, 1996 and 1995; and the related Statements of Operations of
Stockholder's Equity, and of Cash Flows for the years ended December
31, 1996, 1995 and 1994; and the Notes to the Financial Statements.
(b) Exhibits
(1) Resolutions of the Board of Directors of Pruco Life Insurance Company
of New Jersey establishing the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account and the Pruco Life of New Jersey
Modified Guaranteed Annuity Account. (Note 3)
(2) Agreements for custody of securities and similar investments--Not
Applicable.
(3) (a) Form of Distribution Agreement between Pruco Securities Corporation
(Underwriter) and Pruco Life Insurance Company of New Jersey
(Depositor). (Note 3)
(b) Form of Selected Broker Agreement between Prudential Securities
Incorporated and Pruco Securities Corporation with respect to sale
of Contracts. (Note 3)
(4) The Prudential DISCOVERY SELECT Contract. (Note 3)
(5) Application form for the Contract. (Note 3)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company of New
Jersey, as amended March 11, 1983. (Note 2)
(b) By-laws of Pruco Life Insurance Company of New Jersey, as amended
February 1, 1991. (Note 2)
(7) Contract of reinsurance in connection with variable annuity contract--
Not Applicable.
(8) Other material contracts performed in whole or in part after the date
the registration statement is filed:
(a) Form of Fund Participation Agreement. (Note 4 )
(9) Opinion of Counsel as to legality of the securities being registered.
(Note 2) and (Note 6)
(10) (a) Written consent of Price Waterhouse LLP, independent accountants.
(Note 1)
(b) Written consent of Deloitte & Touche LLP, independent auditors.
(Note 1)
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<PAGE>
(11) All financial statements omitted from Item 23, Financial Statements--
Not Applicable.
(12) Agreements in consideration for providing initial capital between or
among Registrant, Depositor, Underwriter, or initial Contract owners--
Not Applicable.
(13) Schedule of Performance Computations. (Note 1)
(14) Powers of Attorney.
(a) William M. Bethke, Ira J. Kleinman, Mendel A. Melzer, Esther H.
Milnes I. Edward Price and William F. Yelverton (Note 3)
(b) Linda S. Dougherty. (Note 7)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post-Effective Amendment No. 17 to Form
S-6 Registration No.2-89780, filed March 1, 1991, on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 3) Incorporated by reference to Form N-4, Registration Statement
No. 333-18113 filed December 18, 1996, on behalf of the Pruco Life of
New Jersey Flexible Premium Variable Annuity Account.
(Note 4) Incorporated by reference to Form N-4, Registration No. 333-06701,
filed June 26, 1996, on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 5) Incorporated by reference to Pre-Effective Amendment No. 1 to Form
N-4 Registration No. 333-18117 filed February 7, 1997, on behalf of the
Pruco Life of New Jersey Flexible Premium Variable Annuity Account.
(Note 6) Incorporated by reference to Registrant's Form 24f-2 filed on
February 28, 1997.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 9 to
Form S-1, Registration No. 33-20018, filed April 9, 1997 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property Account.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Incorporated by reference to the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account prospectus under "Directors and Officers" contained in
Part A of this registration statement.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), a
corporation organized under the laws of New Jersey, is an indirect, wholly-owned
subsidiary of The Prudential Insurance Company of America, ("Prudential"), a
mutual life insurance company organized under the laws of New Jersey. The
subsidiaries of Prudential and short descriptions of each are set forth on
the following pages.
C-2
<PAGE>
Pruco Life of New Jersey may be deemed to control the following separate
accounts which are registered as unit investment trusts under the Investment
Company Act of 1940: the Pruco Life of New Jersey Variable Appreciable Account,
the Pruco Life of New Jersey Variable Insurance Account, the Pruco Life of New
Jersey Single Premium Variable Life Account, Pruco Life of New Jersey Single
Premium Variable Annuity Account, the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account (Registrant), the Pruco Life of New Jersey Modified
Guaranteed Annuity Account and the Pruco Life of New Jersey Variable Contract
Real Property Account (separate accounts of Pruco Life of New Jersey).
The above-referenced separate accounts, along with The Prudential and
certain of Prudential's separate accounts, hold all the shares of The
Prudential Series Fund, Inc., a Maryland corporation. In addition, The
Prudential holds all the shares of Prudential's Gibraltar Fund, a Maryland
Corporation, in three of its separate accounts. The Prudential Series Fund, Inc.
and Prudential's Gibraltar Fund are registered as open-end diversified,
management investment companies under the Investment Company Act of 1940.
Additionally, the aforementioned separate accounts of The Prudential are
registered as unit investment trusts under the Investment Company Act of 1940.
In addition, Pruco Life may also be deemed to be under common control with
The Prudential Variable Contract Account-2, The Prudential Variable Contract
Account-10, and The Prudential Variable Contract Account-11, separate accounts
of The Prudential, all of which are registered as open-end, diversified,
management investment companies under the Investment Company Act of 1940.
The subsidiaries of Prudential and short descriptions of each are listed under
Item 25 of Post-Effective Amendment No. 32 to the Form N-1A Registration
Statement for The Prudential Series Fund, Inc., Registration No. 2-80896, filed
February 28, 1997, the text of which is hereby incorporated.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of April 3, 1997, there were 50 Contract owners of qualified Contracts and
126 owners of non-qualified Contracts offered by the Registrant.
ITEM 28. INDEMNIFICATION
The Prudential Directors' and Officers' Liability and Corporation
Reimbursement Insurance program, purchased by Prudential from Aetna Casualty
& Surety Company, CNA Insurance Companies, Lloyds of London, Great American
Insurance Company, Reliance Insurance Company, Corporate Officers & Directors
Assurance Ltd., A.C.E. Insurance Company, Ltd., XL Insurance Company, Ltd., and
Zurich-American Insurance Company, provides reimbursement for "Loss" (as defined
in the policies) which the Company pays as indemnification to its directors or
officers resulting from any claim for any actual or alleged act, error,
misstatement, misleading statement, omission, or breach of duty by persons in
the discharge of their duties in their capacities as directors or officers of
Prudential, any of its subsidiaries, or certain investment companies
affiliated with Prudential. Coverage is also provided to the individual
directors or officers for such Loss, for which they shall not be indemnified.
Loss essentially is the legal liability on claims against a director or officer,
including adjudicated damages, settlements and reasonable and necessary legal
fees and expenses incurred in defense of adjudicatory proceedings and appeals
therefrom. Loss does not include punitive or exemplary damages or the multiplied
portion of any multiplied damage award, criminal or civil fines or penalties
imposed by law, taxes or wages, or matters which are uninsurable under the law
pursuant to which the policies are construed.
There are a number of exclusions from coverage. Among the matters excluded
are Losses arising as the result of (1) claims brought about or contributed to
by the criminal, dishonest or fraudulent acts or omissions or the willful
violation of any law by a director or officer, (2) claims based on or
attributable to directors or officers gaining personal profit or advantage to
which they were not legally entitled, and (3) claims arising from actual or
alleged performance of, or failure to perform, services as, or in any capacity
similar to, an investment adviser, investment banker, underwriter, broker or
dealer, as those terms are defined in the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Advisers Act of 1940, the Investment
Company Act of 1940, any rules or regulations thereunder, or any similar
federal, state or local statute, rule or regulation.
The limit of coverage under the Program for both individual and corporate
reimbursement coverage is $150,000,000. The retention for corporate
reimbursement coverage is $10,000,000 per loss.
The relevant provisions of New Jersey law permitting or requiring
indemnification, New Jersey being the state of organization of The Prudential,
can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The
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<PAGE>
relevant provisions of Arizona law, Arizona being the state of organization of
Pruco Life, can be found in Section 10-005 of the Arizona Statutes Annotated.
The text of Prudential's by-law 26, which relates to indemnification of
officers and directors, is incorporated by reference to Exhibit 1.A.(6)(b) of
Post-Effective Amendment No. 1 to Form S-6, Registration No. 33-61079, filed
April 25, 1996, on behalf of The Prudential Variable Appreciable Account. The
text of Pruco Life of New Jersey's by-laws, Article VIII, which relates to
indemnification of officers and directors, is incorporated by reference to
Exhibit (6)(b) to this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Pruco Securities Corporation also acts as principal underwriter for the
Pruco Life PRUvider Variable Appreciable Account, the Pruco Life Variable
Insurance Account, the Pruco Life Variable Appreciable Account, the Pruco
Life Variable Universal Account, the Pruco Life Single Premium Variable Life
Account, the Pruco Life Single Premium Variable Annuity Account, the Pruco
Life Flexible Premium Variable Annuity Account, the Pruco Life Modified
Guaranteed Annuity Account, the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account, the Pruco Life of New Jersey Modified Guaranteed
Annuity Account, the Pruco Life of New Jersey Variable Insurance Account,
the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of
New Jersey Single Premium Variable Life Account, the Pruco Life of New
Jersey Single Premium Variable Annuity Account, The Prudential Variable
Appreciable Account, The Prudential Individual Variable Contract Account,
The Prudential Qualified Individual Variable Contract Account, Prudential's
Annuity Plan Account, Prudential's Investment Plan Account, Prudential's
Annuity Plan Account-2, Prudential's Gibraltar Fund, and The Prudential
Series Fund, Inc.
(b) Name and Principal Positions and Offices
Business Address with Underwriter
------------------ ---------------------
William Frisby Yelverton* Chairman and Director
Richard Topp* President and Director
E. Michael Caulfield* Director
Joseph Mahoney* Director
James Avery Jr.* Director
Richard Painter** Director
Lisa Ramaswamy** Chief Financial Officer and Comptroller
Clifford E. Kirsch** Chief Legal Officer and Secretary
- --------------
* Principal Business Address: Prudential Plaza, Newark, NJ 07102
** Principal Business Address: 213 Washington Street, Newark, NJ 07102
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section
31 (a) of the 1940 Act and the rules promulgated thereunder are maintained by
the Registrant through The Prudential Insurance Company of America, Prudential
Plaza, Newark, New Jersey 07102-3777.
ITEM 31. MANAGEMENT SERVICES
Summary of any contract not discussed in Part A or Part B of the
registration statement under which management-related services are provided to
the Registrant--Not Applicable.
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<PAGE>
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this Registrant
Statement as frequently as is necessary to ensure that the audited financial
statements in the Registration Statement are never more than 16 months old
for so long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant can
check to request a statement of additional information, or (2) a postcard or
similar written communication affixed to or included in the prospectus that
the applicant can remove to send for a statement of additional information.
(c) Registrant undertakes to deliver any statement of additional information and
any financial statements required to be made available under this Form
promptly upon written or oral request.
(d) Restrictions on withdrawal under Section 403(b) Contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the
Chief of the Office of Insurance Products and Legal Compliance of the
Securities and Exchange Commission to the American Council of Life Insurance
on November 28, 1988.
(e) Pruco Life of New Jersey hereby represents that the fees and charges
deducted under the contract, in the aggregate, are reasonable in relation to
the services rendered, the expenses expected to be incurred and the risks
assumed by the Pruco Life of New Jersey.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that this Amendment is filed solely for one or more of the purposes
specified in Rule 485(b)(1) under the Securities Act of 1933 and that no
material event requiring disclosure in the prospectus, other than one listed
in Rule 485(b)(1), has occurred since the effective date of the most recent
Registration Statement which included a prospectus and has caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal hereunto affixed and attested, all in the city
of Newark and the State of New Jersey, on this 25th day of April, 1997.
THE PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
(REGISTRANT)
BY: PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(DEPOSITOR)
Attest: /s/ CLIFFORD E. KIRSCH *By: /s/ ESTHER H. MILNES
- -------------------------------------- ---------------------------------
Clifford E. Kirsch Esther H. Milnes
Chief Legal Officer President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
Signature and Title April 25, 1997
-------------------
/s/ *
- --------------------------------------
Esther Milnes
President and Director
/s/ *
- --------------------------------------
Linda S. Dougherty
Chief Accounting Officer, Vice
President and Comptroller
/s/ *
- --------------------------------------
William M. Bethke
Director
/s/ *
- -------------------------------------- *By: /s/ CLIFFORD E. KIRSCH
Ira J. Kleinman ---------------------------------
Director Clifford E. Kirsch
(Attorney-in-fact)
/s/ *
- --------------------------------------
Mendel A. Melzer
Director
/s/ *
- --------------------------------------
I. Edward Price
Director
/s/ *
- --------------------------------------
William F. Yelverton
Chairman of the Board and Director
C-6
<PAGE>
EXHIBIT INDEX
(10) (a) Consent of Price Waterhouse LLP ..................... C-8
(10) (b) Consent of Deloitte and Touche LLP .................. C-9
(13) Schedule of Performance Computations ................ C-10
C-7
Exhibit 10(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No.1 to the registration statement on Form N-4 (the
"Registration Statement") of our report dated April 11, 1997, relating to the
financial statements of Pruco Life Insurance Company of New Jersey, which
appears in such Prospectus.
We also consent to the reference to us under the heading "Experts", in the
Prospectus.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 24, 1997
C-8
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the use in this Post-Effective Amendment No. 1 on Form N-4
Registration Statement No. 333-18117 of The Pruco Life of New Jersey Flexible
Premium Variable Annuity Account of the Pruco Life Insurance Company of New
Jersey of our report dated December 19, 1996, relating to the financial
statements of The Pruco Life Insurance Company of New Jersey, which is part of
such Registration Statement, and to the reference to us under the heading
"Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Parsippany, New Jersey
April 25, 1997
C-9
DISCOVERY SELECT 9/30/96
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
Inception 1 year 5 years 10 years Since
Date Ending Ending Ending Inception
30-Sep-96 30-Sep-96 30-Sep-96 through
30-Sep-96
- --------------------------------------------------------------------------------
DIBOND 6/83 -1.94% 6.12% 6.86% 8.07%
HIYLD 2/87 6.33% 11.20% N/A 7.35%
OPPMAN 8/88 11.44% 17.60% N/A 18.11% See Note 2
STIX 10/87 11.90% 12.96% N/A 14.22%
EQINC 2/88 3.29% 12.45% N/A 12.26%
AIMGRI 5/94 6.05% N/A N/A 15.95%
TREQST 3/94 12.18% N/A N/A 18.04%
EQUITY 6/83 4.79% 14.55% 13.05% 12.95%
PRUJEN 5/95 3.84% N/A N/A 19.80%
AIMVAL 5/93 -2.22% N/A N/A 15.07%
JANGRW 9/93 13.21% N/A N/A 14.31%
MFSRSR 7/95 15.85% N/A N/A 17.64%
MFSEMG 7/95 20.51% N/A N/A 26.37%
OPPSMC 8/88 5.56% 12.56% N/A 12.71% See Note 2
GLOBAL 9/88 2.94% 9.99% N/A 8.45%
JANINT 5/94 24.41% N/A N/A 15.52%
TRINST 3/94 4.54% N/A N/A 6.14%
- --------------------------------------------------------------------------------
Note: This table assumes deferred sales charges
Note 2 : Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds - the
Old Trust and the present Quest for Value Accumulation Trust (the "Present
Trust") - at which time the Present Trust commenced Operations.
DISCOVERY SELECT 09/30/96
TABLE 2
AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWL
- --------------------------------------------------------------------------------
Inception 1 year 5 years 10 years Since
Date Ending Ending Ending Inception
30-Sep-96 30-Sep-96 30-Sep-96 through
30-Sep-96
- --------------------------------------------------------------------------------
DIBOND 6/83 4.36% 6.35% 6.86% 8.07%
HIYLD 2/87 12.63% 11.39% N/A 7.35%
OPPMAN 8/88 17.74% 17.76% N/A 18.11% See Note 2
STIX 10/87 18.20% 13.14% N/A 14.22%
EQINC 2/88 9.59% 12.63% N/A 12.26%
AIMGRI 5/94 12.35% N/A N/A 17.12%
TREQST 3/94 18.48% N/A N/A 19.13%
EQUITY 6/83 11.09% 14.72% 13.05% 12.95%
PRUJEN 5/95 10.14% N/A N/A 22.92%
AIMVAL 5/93 4.08% N/A N/A 15.59%
JANGRW 9/93 19.51% N/A N/A 15.00%
MFSRSR 7/95 22.15% N/A N/A 22.03%
MFSEMG 7/95 26.81% N/A N/A 30.71%
OPPSMC 8/88 11.86% 12.75% N/A 12.71% See Note 2
GLOBAL 9/88 9.24% 10.20% N/A 8.45%
JANINT 5/94 30.71% N/A N/A 16.70%
TRINST 3/94 10.84% N/A N/A 7.41%
- --------------------------------------------------------------------------------
Note: This table assumes no deferred sales charges
Note 2 : Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
( the "Old Trust"), was effectively divided into two investment funds - the
Old Trust and the present Quest for Value Accumulation Trust (the "Present
Trust") - at which time the Present Trust commenced Operations.
DISCOVERY SELECT 09/30/96
TABLE 3
CUMULATIVE WITH NO CHARGES
- --------------------------------------------------------------------------------
Inception 1 year 5 years 10 years Since
Date Ending Ending Ending Inception
30-Sep-96 30-Sep-96 30-Sep-96 through
30-Sep-96
- --------------------------------------------------------------------------------
DIBOND 6/83 4.36% 36.07% 94.19% 181.13%
HIYLD 2/87 12.63% 71.50% N/A 97.64%
OPPMAN 8/88 17.74% 126.46% N/A 289.21% See Note 2
STIX 10/87 18.20% 85.42% N/A 228.71%
EQINC 2/88 9.59% 81.27% N/A 170.84%
AIMGRI 5/94 12.35% N/A N/A 46.46%
TREQST 3/94 18.48% N/A N/A 54.96%
EQUITY 6/83 11.09% 98.71% 241.05% 406.62%
PRUJEN 5/95 10.14% N/A N/A 33.99%
AIMVAL 5/93 4.08% N/A N/A 62.05%
JANGRW 9/93 19.51% N/A N/A 53.10%
MFSRSR 7/95 22.15% N/A N/A 26.69%
MFSEMG 7/95 26.81% N/A N/A 37.46%
OPPSMC 8/88 11.86% 82.22% N/A 165.57% See Note 2
GLOBAL 9/88 9.24% 62.51% N/A 91.81%
JANINT 5/94 30.71% N/A N/A 45.19%
TRINST 3/94 10.84% N/A N/A 19.58%
- -------------------------------------------------------------------------------
Note: This table assumes no deferred sales charges
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
( the "Old Trust"), was effectively divided into two investment funds - the
Old Trust and the present Quest for Value Accumulation Trust (the "Present
Trust") - at which time the Present Trust commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000
C-10
<PAGE>
Discovery Select - MMKT Subaccount Yield
Unit Value
Tue. 09/24/96 1.03439
Wed. 09/25/96 1.03449
Thu. 09/26/96 1.03459
Fri. 09/27/96 1.03490
Sat. 09/28/96 1.03490
Sun. 09/29/96 1.03490
Mon. 09/30/96 1.03500
Rate of Return 0.0575336% *(365/7) = 3.00%
Effective Yield ((1+.0575336)^(365/7)-1) 3.04%
Step 1 1.03439 = 0.0000258598
-------
40,000
Step 2 30.00 = 0.0821917808
----- X 7 Days
365 -------------
0.5753424658
Step 3 = 1 *2 0.0000148782
Step 4 9/30 UV 1.03500
- 9/24 UV 1.03439
---------- -------
0.00061
Step 5 = 4-3 0.0005951218
Step 6 0.000595128 = 0.0005753360
-----------
1.03439
Step 7 = 6 * (365/7) 0.03000
Step 8 = 7 * 100 2.99997
C-11
<PAGE>
TABLE 3
<TABLE>
<CAPTION>
A B C D E=(A/D)-1 F=(B/D)-1 G=(C/D)-1
5 YR 10 YR SINCE INCEPT 5 YR ROR 10 YR ROR SINCE INCEPT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DIBOND 1,360.74 1,941.88 2,811.27 1,000.00 36.07% 94.19% 181.13%
HIYLD 1,715.04 N/A 1,976.45 1,000.00 71.50% N/A 97.64%
OPPMAN 2,264.62 N/A 3,892.09 1,000.00 126.46% N/A 289.21%
STIX 1,854.21 N/A 3,287.13 1,000.00 85.42% N/A 228.71%
HIDIV 1,812.70 N/A 2,708.36 1,000.00 81.27% N/A 170.84%
AIMGRI N/A N/A 1,464.58 1,000.00 N/A N/A 46.46%
TREQST N/A N/A 1,549.56 1,000.00 N/A N/A 54.96%
EQUITY 1,987.07 3,410.47 5,066.18 1,000.00 98.71% 241.05% 406.62%
GROWTH N/A N/A 1,339.94 1,000.00 N/A N/A 33.99%
AIMVAL N/A N/A 1,620.53 1,000.00 N/A N/A 62.05%
JANGRW N/A N/A 1,530.98 1,000.00 N/A N/A 53.10%
MFSRSR N/A N/A 1,266.87 1,000.00 N/A N/A 26.69%
MFSEMG N/A N/A 1,374.63 1,000.00 N/A N/A 37.46%
OPPSMC 1,822.17 N/A 2,655.67 1,000.00 82.22% N/A 165.57%
GLEQ 1,625.08 N/A 1,918.10 1,000.00 62.51% N/A 91.81%
JANINT N/A N/A 1,451.90 1,000.00 N/A N/A 45.19%
TRINST N/A N/A 1,195.80 1,000.00 N/A N/A 19.58%
</TABLE>
C-12
<PAGE>
AVG POLICY SIZE 40000 30/40000*1000 $0.75 ANNUAL CHG
<TABLE>
<CAPTION>
DISCOVERY SELECT BOND STOCK HIDIV HIYLD GLEQ GROWTH STIX TRINST TREQST
- ---------------- ---- ----- ----- ----- ---- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR % OF RETURN 4.43% 11.17% 9.66% 12.70% 9.32% 10.22% 18.28% 10.92% 18.56%
ERV(ENDING REDEEMABLE VALUE) 1044.33 1111.66 1096.62 1127.04 1093.19 1102.19 1182.78 1109.19 1185.57
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75
ERV LESS ADMIN CHARGE 1043.58 1110.91 1095.87 1126.29 1092.44 1101.44 1182.03 1108.44 1184.82
ROR BEFORE LOAD 4.36% 11.09% 9.59% 12.63% 9.24% 10.14% 18.20% 10.84% 18.48%
CHARGE FREE AMOUNT 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
AMT SUBJ TO LOAD 900.00 900.00 900.00 900.00 900.00 900.00 900.00 900.00 900.00
1ST YEAR SALE CHARGE 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
AMT OF LOAD 63.00 63.00 63.00 63.00 63.00 63.00 63.00 63.00 63.00
ERV LESS ADMIN CHG & LOAD 980.58 1047.91 1032.87 1063.29 1029.44 1038.44 1119.03 1045.44 1121.82
RETURN W/SALES LOAD AND ADM CHG -1.94% 4.79% 3.29% 6.33% 2.94% 3.84% 11.90% 4.54% 12.18%
<CAPTION>
ANNUALIZED RATES OF RETURN
AVG POLICY SIZE 40000
DISCOVERY SELECT JANINT JANGRW MFSEMG MFSRSR AIMGRI AIMVAL OPPMAN OPPSMC
- ---------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR % OF RETURN 30.78% 19.58% 26.88% 22.22% 12.42% 4.15% 17.82% 11.93%
ERV(ENDING REDEEMABLE VALUE) 1307.83 1195.81 1268.81 1222.25 1124.22 1041.55 1178.16 1119.31
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75
ERV LESS ADMIN CHARGE 1307.08 1195.06 1268.06 1221.50 1123.47 1040.80 1177.41 1118.56
ROR BEFORE LOAD 30.71% 19.51% 26.81% 22.15% 12.35% 4.08% 17.74% 11.86% 249.77% W/OUT
CHARGE FREE AMOUNT 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
AMT SUBJ TO LOAD 900.00 900.00 900.00 900.00 900.00 900.00 900.00 900.00
1ST YEAR SALE CHARGE 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% 7.00%
AMT OF LOAD 63.00 63.00 63.00 63.00 63.00 63.00 63.00 63.00
ERV LESS ADMIN CHG & LOAD 1244.08 1132.06 1205.06 1158.50 1060.47 977.80 1114.41 1055.56
RETURN W/SALES LOAD AND ADM CHG 24.41% 13.21% 20.51% 15.85% 6.05% -2.22% 11.44% 5.56% 142.67% WITH
</TABLE>
ANNUALIZED RATES OF RETURN 30/40000*1000 = $0.75
AVG POLICY SIZE 40000
<TABLE>
<CAPTION>
DISCOVERY SELECT BOND STOCK HIDIV HIYLD GLEQ GROWTH STIX TRINST TREQST
- ---------------- ---- ----- ----- ----- ---- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 YR RATE OF RETURN
YEARS IN EXISTENCE 5.00 5.00 5.00 5.00 5.00 N/A 5.00 N/A N/A
'91(OR INCEPT) TO '92 ROR 11.26% 11.07% 11.20% 19.31% -4.59% N/A 8.99% N/A N/A
'91 TO '92 ERV 1112.62 1110.68 1112.03 1193.12 954.05 N/A 1089.90 N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A 0.75 N/A N/A
'91 TO '92 ERV LESS ADMIN CHG 1111.87 1109.93 1111.28 1192.37 953.30 N/A 1089.15 N/A N/A
'92(OR INCEPT) TO '93 ROR 9.23% 22.10% 22.80% 13.67% 27.96% N/A 10.95% N/A N/A
'92 TO '93 ERV 1214.46 1355.19 1364.60 1355.36 1219.88 N/A 1208.43 N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A 0.75 N/A N/A
'92 TO '93 ERV LESS ADMIN CHG 1213.71 1354.44 1363.85 1354.61 1219.13 N/A 1207.68 N/A N/A
'93(OR INCEPT) TO '94 ROR -5.08% 6.49% 5.70% 3.04% 10.79% N/A 1.94% N/A N/A
'93 TO '94 ERV 1152.04 1442.33 1441.55 1395.76 1350.69 N/A 1231.14 N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A 0.75 N/A N/A
'93 TO '94 ERV LESS ADMIN CHG 1151.29 1441.58 1440.80 1395.01 1349.94 N/A 1230.39 N/A N/A
'94(OR INCEPT) TO '95 ROR 13.30% 24.09% 14.83% 9.18% 10.23% N/A 27.53% N/A N/A
'94 TO '95 ERV 1304.45 1788.91 1654.43 1523.13 1487.98 N/A 1569.06 N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A 0.75 N/A N/A
'94 TO '95 ERV LESS ADMIN CHG 1303.70 1788.16 1653.68 1522.38 1487.23 N/A 1568.31 N/A N/A
'95(OR INCEPT) TO '96 ROR 4.43% 11.17% 9.66% 12.70% 9.32% N/A 18.28% N/A N/A
'95 TO '96 ERV 1361.49 1987.82 1813.45 1715.79 1625.83 N/A 1854.96 N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A 0.75 N/A N/A
'95 TO '96 ERV LESS ADMIN CHG 1360.74 1987.07 1812.70 1715.04 1625.08 N/A 1854.21 N/A N/A
ANNUALIZED ROR BEFORE LOAD 6.35% 14.72% 12.63% 11.39% 10.20% N/A 13.14% N/A N/A
CHARGE FREE AMOUNT 500.00 500.00 500.00 500.00 500.00 N/A 500.00 N/A N/A
AMT SUBJ TO LOAD 500.00 500.00 500.00 500.00 500.00 N/A 500.00 N/A N/A
5TH (OR INCEPTION) SALE CHARGE 3.00% 3.00% 3.00% 3.00% 3.00% N/A 3.00% N/A N/A
AMT OF LOAD 15.00 15.00 15.00 15.00 15.00 N/A 15.00 N/A N/A
ERV LESS LOAD 1345.74 1972.07 1797.70 1700.04 1610.08 N/A 1839.21 N/A N/A
ANN.5YR RET W/LOAD AND ADM CHG 6.12% 14.55% 12.45% 11.20% 9.99% N/A 12.96% N/A N/A
<CAPTION>
ANNUALIZED RATES OF RETURN
AVG POLICY SIZE 40000
DISCOVERY SELECT JANINT JANGRW MFSEMG MFSRSR AIMGRI AIMVAL OPPMAN OPPSMC
- ---------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 YR RATE OF RETURN
YEARS IN EXISTENCE N/A N/A N/A N/A N/A N/A 5.00 5.00
'91(OR INCEPT) TO '92 ROR N/A N/A N/A N/A N/A N/A 19.66% 13.04%
'91 TO '92 ERV N/A N/A N/A N/A N/A N/A 1196.64 1130.44
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A 0.75 0.75
'91 TO '92 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A 1195.89 1129.69
'92(OR INCEPT) TO '93 ROR N/A N/A N/A N/A N/A N/A 15.58% 28.32%
'92 TO '93 ERV N/A N/A N/A N/A N/A N/A 1382.20 1449.63
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A 0.75 0.75
'92 TO '93 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A 1381.45 1448.88
'93(OR INCEPT) TO '94 ROR N/A N/A N/A N/A N/A N/A 3.31% 1.08%
'93 TO '94 ERV N/A N/A N/A N/A N/A N/A 1427.17 1464.53
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A 0.75 0.75
'93 TO '94 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A 1426.42 1463.78
'94(OR INCEPT) TO '95 ROR N/A N/A N/A N/A N/A N/A 34.85% 11.31%
'94 TO '95 ERV N/A N/A N/A N/A N/A N/A 1923.56 1629.36
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A 0.75 0.75
'94 TO '95 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A 1922.81 1628.61
'95(OR INCEPT) TO '96 ROR N/A N/A N/A N/A N/A N/A 17.82% 11.93%
'95 TO '96 ERV N/A N/A N/A N/A N/A N/A 2265.37 1822.92
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A 0.75 0.75
'95 TO '96 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A 2264.62 1822.17
ANNUALIZED ROR BEFORE LOAD N/A N/A N/A N/A N/A N/A 17.76% 12.75% 98.95% W/OUT
CHARGE FREE AMOUNT N/A N/A N/A N/A N/A N/A 500.00 500.00
AMT SUBJ TO LOAD N/A N/A N/A N/A N/A N/A 500.00 500.00
5TH (OR INCEPTION) SALE CHARGE N/A N/A N/A N/A N/A N/A 3.00% 3.00%
AMT OF LOAD N/A N/A N/A N/A N/A N/A 15.00 15.00
ERV LESS LOAD N/A N/A N/A N/A N/A N/A 2249.62 1807.17
ANN.5YR RET W/LOAD AND ADM CHG N/A N/A N/A N/A N/A N/A 17.60% 12.56% 97.43% WITH
</TABLE>
C-13
<PAGE>
ANNUALIZED RATES OF RETURN
<TABLE>
<CAPTION>
DISCOVERY SELECT
10 YR RATE OF RETURN BOND STOCK HIDIV HIYLD GLEQ GROWTH STIX TRINST TREQST
- -------------------- ---- ----- ----- ----- ---- ------ ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS IN EXISTENCE 10.00 10.00 8.61 9.60 8.03 1.42 8.95 2.50 2.50
'85 TO '86 ERV LESS ADMIN CHG 1,000.00 1,000.00 N/A N/A N/A N/A N/A N/A N/A
'86 TO '87 ROR -1.87% 36.57% N/A N/A N/A N/A N/A N/A N/A
'86 TO '87 ERV 981.29 1,365.68 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'86 TO '87 ERV LESS ADMIN CHG 980.54 1,364.93 N/A N/A N/A N/A N/A N/A N/A
'87 TO '88 ROR 11.08% -14.04% N/A N/A N/A N/A N/A N/A N/A
'87 TO '88 ERV 1,089.19 1,173.23 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'87 TO '88 ERV LESS ADMIN CHG 1,088.44 1,172.48 N/A N/A N/A N/A N/A N/A N/A
'88(OR INCEPT) TO '89 ROR 9.08% 28.33% N/A N/A N/A N/A N/A N/A N/A
'88 TO '89 ERV 1,187.25 1,504.66 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'88 TO '89 ERV LESS ADMIN CHG 1,186.50 1,503.91 N/A N/A N/A N/A N/A N/A N/A
'89(OR INCEPT) TO '90 ROR 5.22% -14.27% N/A N/A N/A N/A N/A N/A N/A
'89 TO '90 ERV 1,248.38 1,289.24 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'89 TO '90 ERV LESS ADMIN CHG 1,247.63 1,288.49 N/A N/A N/A N/A N/A N/A N/A
'90(OR INCEPT) TO '91 ROR 14.34% 33.12% N/A N/A N/A N/A N/A N/A N/A
'90 TO '91 ERV 1,426.51 1,715.26 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'90 TO '91 ERV LESS ADMIN CHG 1,425.76 1,714.51 N/A N/A N/A N/A N/A N/A N/A
'91(OR INCEPT) TO '92 ROR 11.26% 11.07% N/A N/A N/A N/A N/A N/A N/A
'91 TO '92 ERV 1,586.34 1,904.26 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'91 TO '92 ERV LESS ADMIN CHG 1,585.59 1,903.51 N/A N/A N/A N/A N/A N/A N/A
'92(OR INCEPT) TO '93 ROR 9.23% 22.10% N/A N/A N/A N/A N/A N/A N/A
'92 TO '93 ERV 1,731.88 2,324.15 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'92 TO '93 ERV LESS ADMIN CHG 1,731.13 2,323.40 N/A N/A N/A N/A N/A N/A N/A
'93(OR INCEPT) TO '94 ROR -5.08% 6.49% N/A N/A N/A N/A N/A N/A N/A
'93 TO '94 ERV 1,643.18 2,474.15 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'93 TO '94 ERV LESS ADMIN CHG 1,642.43 2,473.40 N/A N/A N/A N/A N/A N/A N/A
'94(OR INCEPT) TO '95 ROR 13.30% 24.09% N/A N/A N/A N/A N/A N/A N/A
'94 TO '95 ERV 1,860.92 3,069.34 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'94 TO '95 ERV LESS ADMIN CHG 1,860.17 3,068.59 N/A N/A N/A N/A N/A N/A N/A
'95(OR INCEPT) TO '96 ROR 4.43% 11.17% N/A N/A N/A N/A N/A N/A N/A
'95 TO '96 ERV 1,942.63 3,411.22 N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A N/A N/A N/A
'95 TO '96 ERV LESS ADMIN CHG 1,941.88 3,410.47 N/A N/A N/A N/A N/A N/A N/A
ANNUALIZED ROR BEFORE LOAD 6.86% 13.05% N/A N/A N/A N/A N/A N/A N/A
CHARGE FREE AMOUNT 1,000.00 1,000.00 N/A N/A N/A N/A N/A N/A N/A
AMT SUBJ TO LOAD 0.00 0.00 N/A N/A N/A N/A N/A N/A N/A
10TH (OR INCEPTION) SALE CHARGE 0.00% 0.00% N/A N/A N/A N/A N/A N/A N/A
AMT OF LOAD 0.00 0.00 N/A N/A N/A N/A N/A N/A N/A
ERV LESS LOAD 1,941.88 3,410.47 N/A N/A N/A N/A N/A N/A N/A
ANN.10YR RET W/LOAD AND ADM CHG 6.86% 13.05% N/A N/A N/A N/A N/A N/A N/A
ANNUALIZED RATES OF RETURN
<CAPTION>
DISCOVERY SELECT
10 YR RATE OF RETURN JANINT JANGRW MFSEMG MFSRSR AIMGRI AIMVAL OPPMAN OPPSMC
- -------------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
YEARS IN EXISTENCE 2.41 3.05 1.19 1.19 2.41 3.33 8.16 8.16
'85 TO '86 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'86 TO '87 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'86 TO '87 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'86 TO '87 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'87 TO '88 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'87 TO '88 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'87 TO '88 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'88(OR INCEPT) TO '89 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'88 TO '89 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'88 TO '89 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'89(OR INCEPT) TO '90 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'89 TO '90 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'89 TO '90 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'90(OR INCEPT) TO '91 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'90 TO '91 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'90 TO '91 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'91(OR INCEPT) TO '92 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'91 TO '92 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'91 TO '92 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'92(OR INCEPT) TO '93 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'92 TO '93 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'92 TO '93 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'93(OR INCEPT) TO '94 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'93 TO '94 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'93 TO '94 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'94(OR INCEPT) TO '95 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'94 TO '95 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'94 TO '95 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
'95(OR INCEPT) TO '96 ROR N/A N/A N/A N/A N/A N/A N/A N/A
'95 TO '96 ERV N/A N/A N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
'95 TO '96 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A N/A N/A
ANNUALIZED ROR BEFORE LOAD N/A N/A N/A N/A N/A N/A N/A N/A W/OUT 19.91%
CHARGE FREE AMOUNT N/A N/A N/A N/A N/A N/A N/A N/A
AMT SUBJ TO LOAD N/A N/A N/A N/A N/A N/A N/A N/A
10TH (OR INCEPTION) SALE CHARGE N/A N/A N/A N/A N/A N/A N/A N/A
AMT OF LOAD N/A N/A N/A N/A N/A N/A N/A N/A
ERV LESS LOAD N/A N/A N/A N/A N/A N/A N/A N/A
ANN.10YR RET W/LOAD AND ADM CHG N/A N/A N/A N/A N/A N/A N/A N/A WITH 19.91%
</TABLE>
C-14
<PAGE>
ANNUALIZED RATES OF RETURN
<TABLE>
<CAPTION>
DISCOVERY SELECT
SINCE INCEPTION RATE OF RETURN BOND STOCK HIDIV HIYLD GLEQ GROWTH
- ------------------------------ ---- ----- ----- ----- ---- ------
<S> <C> <C> <C> <C> <C> <C>
YEARS IN EXISTENCE 13.31 13.32 8.61 9.60 8.03 1.42
INCEPT. TO '83 ROR 0.53% -0.80% N/A N/A N/A N/A
INCEPT. TO 'ERV 1005.32 991.96 N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.23 0.24 N/A N/A N/A N/A
INCEPT TO '83 ERV LESS ADMIN CHG 1005.08 991.72 N/A N/A N/A N/A
83 TO '84 ROR 7.46% 2.40% N/A N/A N/A N/A
INCEPT. TO '84 ERV 1080.09 1015.54 N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A
INCEPT. TO 84 ERV LESS ADMIN CHG 1079.34 1014.79 N/A N/A N/A N/A
'84 TO '85 ROR 15.67% 12.54% N/A N/A N/A N/A
'84 TO '85 ERV 1248.50 1142.03 N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A
'84 TO '85 ERV LESS ADMIN CHG 1247.75 1141.28 N/A N/A N/A N/A
'85 TO '86 ROR 15.89% 30.05% N/A N/A N/A N/A
'85 TO '86 ERV 1446.06 1484.20 N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A N/A N/A N/A
'85 TO '86 ERV LESS ADMIN CHG 1445.31 1483.45 N/A N/A N/A N/A
'86 TO '87 ROR -1.87% 36.57% N/A -2.93% N/A N/A
'86 TO '87 ERV 1418.26 2025.91 N/A 970.68 N/A N/A
ANNUAL ADMIN CHARGE 0.75 0.75 N/A 0.45 N/A N/A
'86 TO '87 ERV LESS ADMIN CHG 1417.51 2025.16 N/A 970.23 N/A N/A
'87(OR INCEPT) TO '88 ROR 11.08% -14.04% 7.64% 6.12% 0.74% N/A
'87 TO '88 ERV 1574.60 1740.74 1076.42 1029.62 1007.39 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.46 0.75 0.02 N/A
'87 TO '88 ERV LESS ADMIN CHG 1573.85 1739.99 1075.96 1028.87 1007.37 N/A
'88(OR INCEPT) TO '89 ROR 9.08% 28.33% 23.44% 3.09% 23.61% N/A
'88 TO '89 ERV 1716.71 2232.94 1328.17 1060.66 1236.12 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A
'88 TO '89 ERV LESS ADMIN CHG 1715.96 2232.19 1327.42 1059.91 1235.37 N/A
'89(OR INCEPT) TO 90 ROR 5.22% -14.27% -12.05% -13.76% -14.69% N/A
'89 TO '90 ERV 1805.46 1913.58 1167.47 914.08 1053.85 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A
'89 TO '90 ERV LESS ADMIN CHG 1,804.71 1,912.83 1,166.72 913.33 1,053.10 N/A
'90(OR INCEPT) TO '91 ROR 14.34% 33.12% 28.01% 26.22% 12.10% N/A
'90 TO '91 ERV 2,063.47 2,546.38 1,493.57 1,152.77 1,180.54 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A
'90 TO '91 ERV LESS ADMIN CHG 2,062.72 2,545.63 1,492.82 1,152.02 1,179.79 N/A
'91(OR INCEPT) TO '92 ROR 11.26% 11.07% 11.20% 19.31% -4.59% N/A
'91 TO '92 ERV 2,295.02 2,827.37 1,660.06 1,374.50 1,125.58 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A
'91 TO '92 ERV LESS ADMIN CHG 2,294.27 2,826.62 1,659.31 1,373.75 1,124.83 N/A
'92(OR INCEPT) TO '93 ROR 9.23% 22.10% 22.80% 13.67% 27.96% N/A
'92 TO '93 ERV 2,505.96 3,451.24 2,037.55 1,561.53 1,439.38 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A
'92 TO '93 ERV LESS ADMIN CHG 2,505.21 3,450.49 2,036.80 1,560.78 1,438.63 N/A
'93(OR INCEPT) TO '94 ROR -5.08% 6.49% 5.70% 3.04% 10.79% N/A
'93 TO '94 ERV 2,377.93 3,674.37 2,152.83 1,608.20 1,593.87 N/A
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 N/A
'93 TO '94 ERV LESS ADMIN CHG 2,377.18 3,673.62 2,152.08 1,607.45 1,593.12 N/A
'94(OR INCEPT) TO '95 ROR 13.30% 24.09% 14.83% 9.18% 10.23% 21.67%
'94 TO '95 ERV 2,693.41 4,558.75 2,471.18 1,755.08 1,756.02 1,216.70
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 0.31
'94 TO '95 ERV LESS ADMIN CHG 2,692.66 4,558.00 2,470.43 1,754.33 1,755.27 1,216.39
'95(OR INCEPT) TO '96 ROR 4.43% 11.17% 9.66% 12.70% 9.32% 10.22%
'95 TO '96 ERV 2,812.02 5,066.93 2,709.11 1,977.20 1,918.85 1,340.69
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 0.75
'95 TO '96 ERV LESS ADMIN CHG 2,811.27 5,066.18 2,708.36 1,976.45 1,918.10 1,339.94
ANNUALIZED ROR BEFORE LOAD 8.07% 12.95% 12.26% 7.35% 8.45% 22.92%
CHARGE FREE AMOUNT 1,000.00 1,000.00 900.00 1,000.00 800.00 200.00
AMT SUBJ TO LOAD 0.00 0.00 100.00 0.00 200.00 800.00
10TH (OR INCEPTION) SALE CHARGE 0.00% 0.00% 0.00% 0.00% 0.00% 6.00%
AMT OF LOAD 0.00 0.00 0.00 0.00 0.00 48.00
ERV LESS LOAD 2,811.27 5,066.18 2,708.36 1,976.45 1,918.10 1,291.94
ANN. RET W/LOAD AND ADM CHG 8.07% 12.95% 12.26% 7.35% 8.45% 19.80%
ANNUALIZED RATES OF RETURN
<CAPTION>
DISCOVERY SELECT
SINCE INCEPTION RATE OF RETURN STIX TRINST TREQST JANINT JANGRW MFSEMG
- ------------------------------ ---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
YEARS IN EXISTENCE 8.95 2.50 2.50 2.41 3.05 1.19
INCEPT. TO '83 ROR N/A N/A N/A N/A N/A N/A
INCEPT. TO 'ERV N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A
INCEPT TO '83 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A
83 TO '84 ROR N/A N/A N/A N/A N/A N/A
INCEPT. TO '84 ERV N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A
INCEPT. TO 84 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A
'84 TO '85 ROR N/A N/A N/A N/A N/A N/A
'84 TO '85 ERV N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A
'84 TO '85 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A
'85 TO '86 ROR N/A N/A N/A N/A N/A N/A
'85 TO '86 ERV N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A
'85 TO '86 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A
'86 TO '87 ROR N/A N/A N/A N/A N/A N/A
'86 TO '87 ERV N/A N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A N/A
'86 TO '87 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A N/A
'87(OR INCEPT) TO '88 ROR 18.65% N/A N/A N/A N/A N/A
'87 TO '88 ERV 1186.54 N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.71 N/A N/A N/A N/A N/A
'87 TO '88 ERV LESS ADMIN CHG 1185.83 N/A N/A N/A N/A N/A
'88(OR INCEPT) TO '89 ROR 30.51% N/A N/A N/A N/A N/A
'88 TO '89 ERV 1547.68 N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 N/A N/A N/A N/A N/A
'88 TO '89 ERV LESS ADMIN CHG 1546.93 N/A N/A N/A N/A N/A
'89(OR INCEPT) TO 90 ROR -10.90% N/A N/A N/A N/A N/A
'89 TO '90 ERV 1378.26 N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 N/A N/A N/A N/A N/A
'89 TO '90 ERV LESS ADMIN CHG 1,377.51 N/A N/A N/A N/A N/A
'90(OR INCEPT) TO '91 ROR 28.59% N/A N/A N/A N/A N/A
'90 TO '91 ERV 1,771.38 N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 N/A N/A N/A N/A N/A
'90 TO '91 ERV LESS ADMIN CHG 1,770.63 N/A N/A N/A N/A N/A
'91(OR INCEPT) TO '92 ROR 8.99% N/A N/A N/A N/A N/A
'91 TO '92 ERV 1,929.81 N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE 0.75 N/A N/A N/A N/A N/A
'91 TO '92 ERV LESS ADMIN CHG 1,929.06 N/A N/A N/A N/A N/A
'92(OR INCEPT) TO '93 ROR 10.95% N/A N/A N/A 1.93% N/A
'92 TO '93 ERV 2,140.33 N/A N/A N/A 1,019.32 N/A
ANNUAL ADMIN CHARGE 0.75 N/A N/A N/A 0.03 N/A
'92 TO '93 ERV LESS ADMIN CHG 2,139.58 N/A N/A N/A 1,019.29 N/A
'93(OR INCEPT) TO '94 ROR 1.94% 4.47% 6.20% -1.88% 2.64% N/A
'93 TO '94 ERV 2,181.14 1,044.75 1,062.04 981.24 1,046.19 N/A
ANNUAL ADMIN CHARGE 0.75 0.38 0.38 0.31 0.75 N/A
'93 TO '94 ERV LESS ADMIN CHG 2,180.39 1,044.37 1,061.66 980.93 1,045.44 N/A
'94(OR INCEPT) TO '95 ROR 27.53% 3.36% 23.24% 13.31% 22.60% 8.41%
'94 TO '95 ERV 2,780.55 1,079.50 1,308.40 1,111.48 1,281.67 1,084.13
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 0.14
'94 TO '95 ERV LESS ADMIN CHG 2,779.80 1,078.75 1,307.65 1,110.73 1,280.92 1,083.99
'95(OR INCEPT) TO '96 ROR 18.28% 10.92% 18.56% 30.78% 19.58% 26.88%
'95 TO '96 ERV 3,287.88 1,196.55 1,550.31 1,452.65 1,531.73 1,375.38
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75 0.75
'95 TO '96 ERV LESS ADMIN CHG 3,287.13 1,195.80 1,549.56 1,451.90 1,530.98 1,374.63
ANNUALIZED ROR BEFORE LOAD 14.22% 7.41% 19.13% 16.70% 15.00% 30.71%
CHARGE FREE AMOUNT 900.00 300.00 300.00 300.00 300.00 100.00
AMT SUBJ TO LOAD 100.00 700.00 700.00 700.00 700.00 900.00
10TH (OR INCEPTION) SALE CHARGE 0.00% 5.00% 5.00% 5.00% 4.00% 6.00%
AMT OF LOAD 0.00 35.00 35.00 35.00 28.00 54.00
ERV LESS LOAD 3,287.13 1,160.80 1,514.56 1,416.90 1,502.98 1,320.63
ANN. RET W/LOAD AND ADM CHG 14.22% 6.14% 18.04% 15.52% 14.31% 26.37%
ANNUALIZED RATES OF RETURN
<CAPTION>
DISCOVERY SELECT
SINCE INCEPTION RATE OF RETURN MFSRSR AIMGRI AIMVAL OPPMAN OPPSMC
- ------------------------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
YEARS IN EXISTENCE 1.19 2.41 3.33 8.16 8.16
INCEPT. TO '83 ROR N/A N/A N/A N/A N/A
INCEPT. TO 'ERV N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A
INCEPT TO '83 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A
83 TO '84 ROR N/A N/A N/A N/A N/A
INCEPT. TO '84 ERV N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A
INCEPT. TO 84 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A
'84 TO '85 ROR N/A N/A N/A N/A N/A
'84 TO '85 ERV N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A
'84 TO '85 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A
'85 TO '86 ROR N/A N/A N/A N/A N/A
'85 TO '86 ERV N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A
'85 TO '86 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A
'86 TO '87 ROR N/A N/A N/A N/A N/A
'86 TO '87 ERV N/A N/A N/A N/A N/A
ANNUAL ADMIN CHARGE N/A N/A N/A N/A N/A
'86 TO '87 ERV LESS ADMIN CHG N/A N/A N/A N/A N/A
'87(OR INCEPT) TO '88 ROR N/A N/A N/A 0.07% -0.23%
'87 TO '88 ERV N/A N/A N/A 1000.67 997.68
ANNUAL ADMIN CHARGE N/A N/A N/A 0.12 0.12
'87 TO '88 ERV LESS ADMIN CHG N/A N/A N/A 1000.55 997.56
'88(OR INCEPT) TO '89 ROR N/A N/A N/A 29.56% 19.43%
'88 TO '89 ERV N/A N/A N/A 1296.33 1191.36
ANNUAL ADMIN CHARGE N/A N/A N/A 0.75 0.75
'88 TO '89 ERV LESS ADMIN CHG N/A N/A N/A 1295.58 1190.61
'89(OR INCEPT) TO 90 ROR N/A N/A N/A -6.89% -15.03%
'89 TO '90 ERV N/A N/A N/A 1206.30 1011.62
ANNUAL ADMIN CHARGE N/A N/A N/A 0.75 0.75
'89 TO '90 ERV LESS ADMIN CHG N/A N/A N/A 1,205.55 1,010.87
'90(OR INCEPT) TO '91 ROR N/A N/A N/A 42.48% 44.13%
'90 TO '91 ERV N/A N/A N/A 1,717.66 1,457.00
ANNUAL ADMIN CHARGE N/A N/A N/A 0.75 0.75
'90 TO '91 ERV LESS ADMIN CHG N/A N/A N/A 1,716.91 1,456.25
'91(OR INCEPT) TO '92 ROR N/A N/A N/A 19.66% 13.04%
'91 TO '92 ERV N/A N/A N/A 2,054.54 1,646.20
ANNUAL ADMIN CHARGE N/A N/A N/A 0.75 0.75
'91 TO '92 ERV LESS ADMIN CHG N/A N/A N/A 2,053.79 1,645.45
'92(OR INCEPT) TO '93 ROR N/A N/A 8.95% 15.58% 28.32%
'92 TO '93 ERV N/A N/A 1,089.49 2,373.74 2,111.46
ANNUAL ADMIN CHARGE N/A N/A 0.25 0.75 0.75
'92 TO '93 ERV LESS ADMIN CHG N/A N/A 1,089.24 2,372.99 2,110.71
'93(OR INCEPT) TO '94 ROR N/A 1.38% 5.76% 3.31% 1.08%
'93 TO '94 ERV N/A 1,013.76 1,152.00 2,451.53 2,133.52
ANNUAL ADMIN CHARGE N/A 0.31 0.75 0.75 0.75
'93 TO '94 ERV LESS ADMIN CHG N/A 1,013.45 1,151.25 2,450.78 2,132.77
'94(OR INCEPT) TO '95 ROR 3.73% 28.69% 35.28% 34.85% 11.31%
'94 TO '95 ERV 1,037.26 1,304.16 1,557.36 3,304.93 2,374.02
ANNUAL ADMIN CHARGE 0.14 0.75 0.75 0.75 0.75
'94 TO '95 ERV LESS ADMIN CHG 1,037.12 1,303.41 1,556.61 3,304.18 2,373.27
'95(OR INCEPT) TO '96 ROR 22.22% 12.42% 4.15% 17.82% 11.93%
'95 TO '96 ERV 1,267.62 1,465.33 1,621.28 3,892.84 2,656.42
ANNUAL ADMIN CHARGE 0.75 0.75 0.75 0.75 0.75
'95 TO '96 ERV LESS ADMIN CHG 1,266.87 1,464.58 1,620.53 3,892.09 2,655.67
ANNUALIZED ROR BEFORE LOAD 22.03% 17.12% 15.59% 18.11% 12.71% W/OUT 260.72%
CHARGE FREE AMOUNT 100.00 300.00 400.00 800.00 800.00
AMT SUBJ TO LOAD 900.00 700.00 600.00 200.00 200.00
10TH (OR INCEPTION) SALE CHARGE 6.00% 5.00% 4.00% 0.00% 0.00%
AMT OF LOAD 54.00 35.00 24.00 0.00 0.00
ERV LESS LOAD 1,212.87 1,429.58 1,596.53 3,892.09 2,655.67
ANN. RET W/LOAD AND ADM CHG 17.64% 15.95% 15.07% 18.11% 12.71% WITH 242.97%
C-15
</TABLE>
<PAGE>
UNIT VALUES FOR THE LAST DAY OF EVERY QUARTER SINCE INCEPTION FOR THE PRU
DISCOVERY SELECT PRODUCTS
<TABLE>
<CAPTION>
DISCOVERY SELECT BOND STOCK HIDIV HIYLD GLEQ GROWTH STIX
- ----------------
INCEPTION DATE 08-Jun-83 06-Jun-83 19-Feb-88 23-Feb-87 19-Sep-88 01-May-95 19-Oct-87
<S> <C> <C> <C> <C> <C> <C> <C>
WHOLE YEARS SINCE
INCEPTION 13.00 13.00 8.00 9.00 8.00 1.00 8.00
INCEPTION UNIT VALUE 0.99691 1.00241 0.99730 0.99968 0.99848 1.00866 0.80241
30-Sep-83 1.00221 0.99435 N/A N/A N/A N/A N/A
30-Sep-84 1.07700 1.01823 N/A N/A N/A N/A N/A
30-Sep-85 1.24580 1.14590 N/A N/A N/A N/A N/A
30-Sep-86 1.44380 1.49021 N/A N/A N/A N/A N/A
30-Sep-87 1.41678 2.03515 N/A 0.97037 N/A N/A N/A
30-Sep-88 1.57378 1.74932 1.07351 1.02977 1.00586 N/A 0.95209
30-Sep-89 1.71664 2.24492 1.32515 1.06159 1.23424 N/A 1.24262
30-Sep-90 1.80617 1.92449 1.16547 0.91553 1.05289 N/A 1.10713
30-Sep-91 2.06514 2.56190 1.49197 1.15554 1.18030 N/A 1.42369
30-Sep-92 2.29772 2.84544 1.65912 1.37870 1.12607 N/A 1.55168
30-Sep-93 2.50972 3.47422 2.03732 1.56716 1.44096 N/A 1.72162
30-Sep-94 2.38221 3.69964 2.15338 1.61477 1.59646 N/A 1.75506
30-Sep-95 2.69911 4.59104 2.47267 1.76307 1.75970 1.22724 2.23815
30-Sep-96 2.81876 5.10366 2.71157 1.98705 1.92369 1.35265 2.64723
UNIT VALUES FOR THE LAST DAY OF EVERY QUARTER SINCE INCEPTION FOR THE PRU
DISCOVERY SELECT PRODUCTS
<CAPTION>
DISCOVERY SELECT TRINST TREQST JANINT JANGRW MFSEMG MFSRSR AIMGRI
- ----------------
INCEPTION DATE 31-Mar-94 31-Mar-94 02-May-94 13-Sep-93 24-Jul-95 24-Jul-95 02-May-94
WHOLE YEARS SINCE
INCEPTION 2.00 2.00 2.00 3.00 1.00 1.00 2.00
INCEPTION UNIT VALUE 0.99985 0.99985 0.99996 0.99996 0.99996 0.99996 0.99996
30-Sep-83 N/A N/A N/A N/A N/A N/A N/A
30-Sep-84 N/A N/A N/A N/A N/A N/A N/A
30-Sep-85 N/A N/A N/A N/A N/A N/A N/A
30-Sep-86 N/A N/A N/A N/A N/A N/A N/A
30-Sep-87 N/A N/A N/A N/A N/A N/A N/A
30-Sep-88 N/A N/A N/A N/A N/A N/A N/A
30-Sep-89 N/A N/A N/A N/A N/A N/A N/A
30-Sep-90 N/A N/A N/A N/A N/A N/A N/A
30-Sep-91 N/A N/A N/A N/A N/A N/A N/A
30-Sep-92 N/A N/A N/A N/A N/A N/A N/A
30-Sep-93 N/A N/A N/A 1.01928 N/A N/A N/A
30-Sep-94 1.04459 1.06188 0.98120 1.04618 N/A N/A 1.01372
30-Sep-95 1.07973 1.30867 1.11179 1.28258 1.08409 1.03722 1.30451
30-Sep-96 1.19763 1.55152 1.45403 1.53372 1.37550 1.26774 1.46656
PREPARED BY:
REVIEWED BY:
UNIT VALUES FOR THE LAST DAY OF EVERY QUARTER SINCE INCEPTION FOR THE PRU
DISCOVERY SELECT PRODUCTS
<CAPTION>
DISCOVERY SELECT AIMVAL OPPMAN OPPSMC
- ----------------
INCEPTION DATE 01-Jun-93 01-Aug-88 01-Aug-88
<S> <C> <C> <C> <C>
WHOLE YEARS SINCE
INCEPTION 3.00 8.00 8.00
Total
INCEPTION UNIT VALUE 1.00881 0.99989 0.99989 16.81394
30-Sep-83 N/A N/A N/A 1.99656
30-Sep-84 N/A N/A N/A 2.09523
30-Sep-85 N/A N/A N/A 2.39170
30-Sep-86 N/A N/A N/A 2.93401
30-Sep-87 N/A N/A N/A 4.42230
30-Sep-88 N/A 1.00056 0.99757 9.38246
30-Sep-89 N/A 1.29635 1.19138 11.31289
30-Sep-90 N/A 1.20701 1.01227 10.19096
30-Sep-91 N/A 1.71975 1.45902 13.05731
30-Sep-92 N/A 2.05793 1.64933 14.56599
30-Sep-93 1.09909 2.37853 2.11644 19.36434
30-Sep-94 1.16241 2.45725 2.13931 24.10806
30-Sep-95 1.57246 3.31366 2.38130 32.22699
30-Sep-96 1.63779 3.90401 2.66541 36.59852
</TABLE>
C-16
<PAGE>
UNIT VALUES FOR THE LAST DAY OF EVERY QUARTER SINCE INCEPTION FOR THE PRU DISCO
SELECT PRODUCTS
<TABLE>
<CAPTION>
DISCOVERY SELECT BOND STOCK HIDIV HIYLD GLEQ GROWTH STIX TRINST TREQST
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE 08-Jun-83 06-Jun-83 19-Feb-88 23-Feb-87 19-Sep-88 01-May-95 19-Oct-87 31-Mar-94 31-Mar-94
WHOLE YEARS SINCE
INCEPTION 13.00 13.00 8.00 9.00 8.00 1.00 8.00 2.00 2.00
INCEPTION UNIT VALUE 0.99691 1.00241 0.99730 0.99968 0.99848 1.00866 0.80241 0.99985 0.99985
30-Jun-83 1.00263 1.02682 N/A N/A N/A N/A N/A N/A N/A
30-Sep-83 1.00221 0.99435 N/A N/A N/A N/A N/A N/A N/A
31-Dec-83 1.01524 0.98054 N/A N/A N/A N/A N/A N/A N/A
1984 31-Mar-84 1.02483 0.93938 N/A N/A N/A N/A N/A N/A N/A
30-Jun-84 1.01481 0.93882 N/A N/A N/A N/A N/A N/A N/A
30-Sep-84 1.07700 1.01823 N/A N/A N/A N/A N/A N/A N/A
31-Dec-84 1.13344 1.04168 N/A N/A N/A N/A N/A N/A N/A
1985 31-Mar-85 1.14693 1.13401 N/A N/A N/A N/A N/A N/A N/A
30-Jun-85 1.22545 1.20733 N/A N/A N/A N/A N/A N/A N/A
30-Sep-85 1.24580 1.14590 N/A N/A N/A N/A N/A N/A N/A
31-Dec-85 1.32595 1.36494 N/A N/A N/A N/A N/A N/A N/A
1986 31-Mar-86 1.39617 1.56588 N/A N/A N/A N/A N/A N/A N/A
30-Jun-86 1.41615 1.60984 N/A N/A N/A N/A N/A N/A N/A
30-Sep-86 1.44380 1.49021 N/A N/A N/A N/A N/A N/A N/A
31-Dec-86 1.49670 1.54936 N/A N/A N/A N/A N/A N/A N/A
1987 31-Mar-87 1.50981 1.87814 N/A 1.01369 N/A N/A N/A N/A N/A
30-Jun-87 1.47264 1.93737 N/A 1.00140 N/A N/A N/A N/A N/A
30-Sep-87 1.41678 2.03515 N/A 0.97037 N/A N/A N/A N/A N/A
31-Dec-87 1.48043 1.55338 N/A 0.93936 N/A N/A 0.85903 N/A N/A
1988 31-Mar-88 1.53083 1.70198 1.00261 1.00061 N/A N/A 0.89961 N/A N/A
30-Jun-88 1.54510 1.81001 1.06050 1.01172 N/A N/A 0.95207 N/A N/A
30-Sep-88 1.57378 1.74932 1.07351 1.02977 1.00586 N/A 0.95209 N/A N/A
31-Dec-88 1.57964 1.79322 1.09680 1.04843 1.07983 N/A 0.97813 N/A N/A
1989 31-Mar-89 1.58916 1.89404 1.15356 1.06436 1.12695 N/A 1.04210 N/A N/A
30-Jun-89 1.70938 2.05552 1.24706 1.08803 1.12363 N/A 1.12827 N/A N/A
30-Sep-89 1.71664 2.24492 1.32515 1.06159 1.23424 N/A 1.24262 N/A N/A
31-Dec-89 1.76801 2.29422 1.32679 1.01279 1.26541 N/A 1.26306 N/A N/A
<CAPTION>
DISCOVERY SELECT JANINT JANGRW MFSEMG MFSRSR AIMGRI AIMVAL OPPMAN OPPSMC
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE 02-May-94 13-Sep-93 24-Jul-95 24-Jul-95 02-May-94 01-Jun-93 01-Aug-88 01-Aug-88
WHOLE YEARS SINCE
INCEPTION 2.00 3.00 1.00 1.00 2.00 3.00 8.00 8.00
INCEPTION UNIT VALUE 0.99996 0.99996 0.99996 0.99996 0.99996 1.00881 0.99989 0.99989 16.81394
30-Jun-83 N/A N/A N/A N/A N/A N/A N/A N/A 2.02945
30-Sep-83 N/A N/A N/A N/A N/A N/A N/A N/A 1.99656
31-Dec-83 N/A N/A N/A N/A N/A N/A N/A N/A 1.99578
1984 31-Mar-84 N/A N/A N/A N/A N/A N/A N/A N/A 1.96421
30-Jun-84 N/A N/A N/A N/A N/A N/A N/A N/A 1.95363
30-Sep-84 N/A N/A N/A N/A N/A N/A N/A N/A 2.09523
31-Dec-84 N/A N/A N/A N/A N/A N/A N/A N/A 2.17512
1985 31-Mar-85 N/A N/A N/A N/A N/A N/A N/A N/A 2.28094
30-Jun-85 N/A N/A N/A N/A N/A N/A N/A N/A 2.43278
30-Sep-85 N/A N/A N/A N/A N/A N/A N/A N/A 2.39170
31-Dec-85 N/A N/A N/A N/A N/A N/A N/A N/A 2.69089
1986 31-Mar-86 N/A N/A N/A N/A N/A N/A N/A N/A 2.96205
30-Jun-86 N/A N/A N/A N/A N/A N/A N/A N/A 3.02599
30-Sep-86 N/A N/A N/A N/A N/A N/A N/A N/A 2.93401
31-Dec-86 N/A N/A N/A N/A N/A N/A N/A N/A 3.04606
1987 31-Mar-87 N/A N/A N/A N/A N/A N/A N/A N/A 4.40164
30-Jun-87 N/A N/A N/A N/A N/A N/A N/A N/A 4.41141
30-Sep-87 N/A N/A N/A N/A N/A N/A N/A N/A 4.42230
31-Dec-87 N/A N/A N/A N/A N/A N/A N/A N/A 4.83220
1988 31-Mar-88 N/A N/A N/A N/A N/A N/A N/A N/A 6.13564
30-Jun-88 N/A N/A N/A N/A N/A N/A N/A N/A 6.37940
30-Sep-88 N/A N/A N/A N/A N/A N/A 1.00056 0.99757 9.38246
31-Dec-88 N/A N/A N/A N/A N/A N/A 1.03786 1.01297 9.62688
1989 31-Mar-89 N/A N/A N/A N/A N/A N/A 1.14942 1.09464 10.11423
30-Jun-89 N/A N/A N/A N/A N/A N/A 1.20189 1.11059 10.66437
30-Sep-89 N/A N/A N/A N/A N/A N/A 1.29635 1.19138 11.31289
31-Dec-89 N/A N/A N/A N/A N/A N/A 1.35673 1.18235 11.46936
</TABLE>
C-17
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 31-Mar-90 1.74036 2.23465 1.27222 0.96666 1.15976 N/A 1.21953 N/A N/A
30-Jun-90 1.79428 2.28791 1.30917 1.01715 1.21030 N/A 1.28772 N/A N/A
30-Sep-90 1.80617 1.92449 1.16547 0.91553 1.05289 N/A 1.10713 N/A N/A
31-Dec-90 1.88843 2.14426 1.25965 0.88031 1.08669 N/A 1.20018 N/A N/A
1991 31-Mar-91 1.93178 2.54576 1.39732 1.01671 1.13425 N/A 1.36794 N/A N/A
30-Jun-91 1.95982 2.56794 1.42269 1.09665 1.12538 N/A 1.35821 N/A N/A
30-Sep-91 2.06514 2.56190 1.49197 1.15554 1.18030 N/A 1.42369 N/A N/A
31-Dec-91 2.16852 2.66469 1.58384 1.20818 1.19366 N/A 1.53544 N/A N/A
1992 31-Mar-92 2.13280 2.80723 1.56248 1.28975 1.13553 N/A 1.49022 N/A N/A
30-Jun-92 2.21191 2.82123 1.59376 1.32878 1.18434 N/A 1.51129 N/A N/A
30-Sep-92 2.29772 2.84544 1.65912 1.37870 1.12607 N/A 1.55168 N/A N/A
31-Dec-92 2.29194 3.00000 1.72009 1.40033 1.13674 N/A 1.62200 N/A N/A
1993 31-Mar-93 2.38331 3.26582 1.90917 1.48145 1.23501 N/A 1.68565 N/A N/A
30-Jun-93 2.44112 3.35740 1.97475 1.54887 1.28352 N/A 1.68585 N/A N/A
30-Sep-93 2.50972 3.47422 2.03732 1.56716 1.44096 N/A 1.72162 N/A N/A
31-Dec-93 2.48943 3.60570 2.07432 1.64713 1.60476 N/A 1.75431 N/A N/A
1994 31-Mar-94 2.41065 3.50101 2.03262 1.63845 1.53641 N/A 1.68051 0.99985 0.99985
30-Jun-94 2.37820 3.51214 2.03906 1.61797 1.53198 N/A 1.68075 1.00648 1.01342
30-Sep-94 2.38221 3.69964 2.15338 1.61477 1.59646 N/A 1.75506 1.04459 1.06188
30-Dec-94 2.37561 3.65464 2.07507 1.58019 1.50533 N/A 1.74751 1.00728 1.06022
1995 31-Mar-95 2.47253 3.96491 2.19764 1.65780 1.49401 N/A 1.90917 1.00104 1.14384
30-Jun-95 2.64432 4.23150 2.35171 1.71894 1.63630 1.12463 2.08204 1.03905 1.21932
30-Sep-95 2.69911 4.59104 2.47267 1.76307 1.75970 1.22724 2.23815 1.07973 1.30867
31-Dec-95 2.82857 4.73205 2.49069 1.83209 1.72032 1.24327 2.36221 1.10437 1.40860
1996 31-Mar-96 2.76354 4.96716 2.63240 1.88681 1.82365 1.28380 2.47973 1.15567 1.46762
30-Jun-96 2.76596 5.04308 2.64792 1.90659 1.88361 1.32734 2.57933 1.19593 1.50526
30-Sep-96 2.81876 5.10366 2.71157 1.98705 1.92369 1.35265 2.64723 1.19763 1.55152
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 31-Mar-90 N/A N/A N/A N/A N/A N/A 1.30368 1.13117 11.02803
30-Jun-90 N/A N/A N/A N/A N/A N/A 1.39023 1.18407 11.48083
30-Sep-90 N/A N/A N/A N/A N/A N/A 1.20701 1.01227 10.19096
31-Dec-90 N/A N/A N/A N/A N/A N/A 1.29213 1.05300 10.80465
1991 31-Mar-91 N/A N/A N/A N/A N/A N/A 1.55612 1.25113 12.20101
30-Jun-91 N/A N/A N/A N/A N/A N/A 1.62229 1.33498 12.48796
30-Sep-91 N/A N/A N/A N/A N/A N/A 1.71975 1.45902 13.05731
31-Dec-91 N/A N/A N/A N/A N/A N/A 1.86092 1.53837 13.75362
1992 31-Mar-92 N/A N/A N/A N/A N/A N/A 1.95413 1.70897 14.08111
30-Jun-92 N/A N/A N/A N/A N/A N/A 1.95175 1.64842 14.25148
30-Sep-92 N/A N/A N/A N/A N/A N/A 2.05793 1.64933 14.56599
31-Dec-92 N/A N/A N/A N/A N/A N/A 2.17831 1.85035 15.19976
1993 31-Mar-93 N/A N/A N/A N/A N/A N/A 2.25024 1.99725 16.20790
30-Jun-93 N/A N/A N/A N/A N/A 1.04992 2.30742 2.03405 17.68290
30-Sep-93 N/A 1.01928 N/A N/A N/A 1.09909 2.37853 2.11644 19.36434
31-Dec-93 N/A 1.03060 N/A N/A N/A 1.11975 2.37335 2.18516 19.88451
1994 31-Mar-94 N/A 1.03899 N/A N/A N/A 1.14703 2.34605 2.09741 21.42883
30-Jun-94 0.96178 1.02019 N/A N/A 0.97476 1.09567 2.40329 2.00545 23.24114
30-Sep-94 0.98120 1.04618 N/A N/A 1.01372 1.16241 2.45725 2.13931 24.10806
30-Dec-94 0.96290 1.04447 N/A N/A 0.99101 1.14893 2.40478 2.12447 23.68241
1995 31-Mar-95 0.92301 1.11969 N/A N/A 1.07328 1.25820 2.70937 2.06215 24.98664
30-Jun-95 1.01429 1.18159 N/A N/A 1.18230 1.41395 3.09791 2.23452 28.17237
30-Sep-95 1.11179 1.28258 1.08409 1.03722 1.30451 1.57246 3.31366 2.38130 32.22699
31-Dec-95 1.16948 1.34097 1.16778 1.10015 1.30858 1.54376 3.45213 2.41418 33.21920
1996 31-Mar-96 1.27761 1.44865 1.24335 1.15983 1.36888 1.54899 3.68746 2.50577 34.70092
30-Jun-96 1.41050 1.47543 1.33460 1.22504 1.42154 1.61976 3.73399 2.60294 35.67882
30-Sep-96 1.45403 1.53372 1.37550 1.26774 1.46656 1.63779 3.90401 2.66541 36.59852
C-18
</TABLE>
