PRUCO LIFE OF NEW JERSEY FLXBLE PRMIUM VARIABLE ANNUITY ACCT, S-1/A, 1997-02-07

PRUCO LIFE OF NEW JERSEY FLXBLE PRMIUM VARIABLE ANNUITY ACCT
S-1/A, 1997-02-07
LIFE INSURANCE

Previous: PRUCO LIFE OF NEW JERSEY FLXBLE PRMIUM VARIABLE ANNUITY ACCT, N-4 EL/A, 1997-02-07

Next: JAVELIN SYSTEMS INC, SC 13G, 1997-02-07

AS FILED WITH THE SEC ON FEBRUARY 7, 1997 REGISTRATION NO. 333-18053

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------

FORM S-1

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

PRE-EFFECTIVE AMENDMENT NO. 1 [X]

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Exact Name of Registrant)

NEW JERSEY
(State or other jurisdiction of incorporation or organization)

6311
(Primary Standard Industrial Classification Code Number)

22-2426091
(I.R.S. Employer Identification Number)

c/o PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 445-4571
(Address and telephone number of principal executive officers)

----------

THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 445-4571
(Name, address and telephone number of agent for service)

----------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being offered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [X]

<TABLE>

CALCULATION OF REGISTRATION FEE
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Proposed Proposed maximum
Title of each class of Amount to be maximum offering aggregate offering Amount of
securities to be registered registered price per unit price registration fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Participating interest in
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE
ANNUITY ACCOUNT ............ * * $150,000,000* $51,724.14*

- ------------------------------------------------------------------------------------------------------------
*The securities are not issued in predetermined amounts or units and the maximum
aggregate offering price is estimated solely for purpose of determining the
registration fee.
- ------------------------------------------------------------------------------------------------------------
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
may determine.

</TABLE>

================================================================================

<PAGE>

<TABLE>
CROSS REFERENCE SHEET
(AS REQUIRED BY FORM S-1)

--------------
<CAPTION>

S-1 ITEM NUMBER AND CAPTION LOCATION
- --------------------------- --------
<S> <C>

1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus ........ Cover

2. Inside Front and Outside Back Cover Pages of
Prospectus .................................... Inside Front Cover

3. Summary Information, Risk Factors and Ratio
of Earnings of Fixed Charges .................. Cover; Brief Description Of The Contract; Charges,
Fees and Deductions

4. Use of Proceeds ............................... The Interest-Rate Investment Options and
Investments by Pruco Life of New Jersey

5. Determination of Offering Price ............... Not applicable

6. Dilution ...................................... Not applicable

7. Selling Security Holders ...................... Not applicable

8. Plan of Distribution........................... Sale of the Contract and Sales Commissions

9. Description of Securities to be
Registered .................................... Cover; Pruco Life Insurance Company of New Jersey;
Charges, Fees and Deductions; Voting Rights

10. Interests of Named Experts
and Counsel ................................... Not applicable

11. Information with Respect to
the Registrant ................................ The Pruco Life Insurance Company of New Jersey;
Litigation; Financial Statements; State Regulation;
Federal Tax Status; Directors and Officers; Executive
Compensation

12. Disclosure of Commission Position on Indemni-
fication for Securities Act Liabilities ....... Not applicable
</TABLE>

<PAGE>

PART I

INFORMATION REQUIRED IN PROSPECTUS

<PAGE>

PROSPECTUS

FEBRUARY 10, 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 ("The Prudential").

This prospectus describes the Discovery Select(SM) 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"):

<TABLE>
<CAPTION>
THE PRUDENTIAL SERIES FUND, INC.
<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

AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund AIM V.I. Value Fund

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 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.

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)

* DISCOVERY SELECT is a service mark of The 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
Securities and Exchange Commission in a Statement of Additional Information,
dated February 10, 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 portfolios. Additional portfolios and subaccounts may be offered in the
future.

The Contents of the Statement of Additional Information with respect to the
Contract appear on page 27 of this prospectus.

<PAGE>

PROSPECTUS CONTENTS

PAGE
----
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS ...................... 1

BRIEF DESCRIPTION OF THE CONTRACT ......................................... 2

FEE TABLE ................................................................. 4

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 ...................... 9
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY ............................. 9
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT ..... 9
THE FUNDS .............................................................. 9
THE INTEREST-RATE INVESTMENT OPTIONS AND INVESTMENTS BY
PRUCO LIFE OF NEW JERSEY ............................................. 11

DETAILED INFORMATION ABOUT THE CONTRACT ................................... 12
REQUIREMENTS FOR ISSUANCE OF A CONTRACT ................................ 12
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK" ........................... 12
ALLOCATION OF PURCHASE PAYMENTS ........................................ 12
ASSET ALLOCATION PROGRAM ............................................... 12
CASH VALUE ............................................................. 13
GUARANTEED INTEREST RATE PERIODS ....................................... 13
WHAT HAPPENS WHEN AN INTEREST CELL REACHES ITS MATURITY DATE? .......... 13
TRANSFERS .............................................................. 13
DOLLAR COST AVERAGING .................................................. 13
AUTO-REBALANCING ....................................................... 14
WITHDRAWALS ............................................................ 14
AUTOMATED WITHDRAWALS .................................................. 14
MARKET-VALUE ADJUSTMENT ................................................ 15
DEATH BENEFIT .......................................................... 15
VALUATION OF A CONTRACT OWNER'S CONTRACT FUND .......................... 15

CHARGES, FEES AND DEDUCTIONS .............................................. 16
PREMIUM TAXES AND TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS .............. 16
ADMINISTRATIVE CHARGE .................................................. 16
CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS ........................ 17
EXPENSES INCURRED BY THE FUNDS ......................................... 17
WITHDRAWAL CHARGE ...................................................... 17
TRANSACTION CHARGE ..................................................... 18

FEDERAL TAX STATUS ........................................................ 18
DIVERSIFICATION AND INVESTOR CONTROL ................................... 18
TAXES PAYABLE BY CONTRACT OWNERS ....................................... 18
WITHHOLDING ............................................................ 19
IMPACT OF FEDERAL INCOME TAXES ......................................... 19
IRS REQUIRED DISTRIBUTIONS ON DEATH OF OWNER ........................... 20
TAXES ON PRUCO LIFE OF NEW JERSEY ...................................... 20
CONTRACTS USED IN CONNECTION WITH TAX FAVORED PLANS .................... 20
IRAS ................................................................... 21
SEPS ................................................................... 21
TDAS ................................................................... 21
ELIGIBLE DEFERRED COMPENSATION PLANS OF STATE OR LOCAL
GOVERNMENTS AND TAX EXEMPT ORGANIZATIONS ............................. 22
QUALIFIED PENSION AND PROFIT SHARING PLANS ............................. 22
MINIMUM DISTRIBUTION OPTION ............................................ 22
WITHHOLDING ON TAX FAVORED PLANS ....................................... 23
ERISA DISCLOSURE ....................................................... 23
ADDITIONAL ERISA REQUIREMENTS .......................................... 23

<PAGE>

EFFECTING AN ANNUITY ...................................................... 24
ANNUITY PAYMENTS FOR A FIXED PERIOD .................................... 24
LIFE ANNUITY WITH 120 PAYMENTS CERTAIN ................................. 24
INTEREST PAYMENT OPTION ................................................ 24
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT ANNUITY
PURCHASE RATES ....................................................... 24

OTHER INFORMATION ......................................................... 25
MISSTATEMENT OF AGE OR SEX ............................................. 25
SALE OF THE CONTRACT AND SALES COMMISSIONS ............................. 25
VOTING RIGHTS .......................................................... 25
SUBSTITUTION OF FUND SHARES ............................................ 26
OWNERSHIP OF THE CONTRACT .............................................. 26
PERFORMANCE INFORMATION ................................................ 26
REPORTS TO CONTRACT OWNERS ............................................. 26
STATE REGULATION ....................................................... 26
EXPERTS ................................................................ 27
LITIGATION ............................................................. 27
STATEMENT OF ADDITIONAL INFORMATION .................................... 27
ADDITIONAL INFORMATION ................................................. 27
FINANCIAL STATEMENTS ................................................... 27

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ................................................. 29

DIRECTORS AND OFFICERS .................................................... 35

EXECUTIVE COMPENSATION .................................................... 36

CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY
INSURANCE COMPANY ...................................................... B-1

MARKET-VALUE ADJUSTMENT FORMULA ........................................... C-1

<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.

BOARD--Either the Board of Directors or Board of Trustees of a Fund.

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 necessary documentation for the Contract.

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. the person who purchases a DISCOVERY SELECTSM Contract and
makes the purchase payments. The owner will usually also be an annuitant, but
need not be. The 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.

<PAGE>

BRIEF DESCRIPTION OF THE CONTRACT

The DISCOVERY SELECT(SM) Annuity Contract offers you a way to invest on a
tax-deferred basis in a variety of investment options and provide income
protection for later life by financing annuity payments commencing on the
annuity date. The Contract is a variable annuity contract. The value of the
Contract depends upon investment results of the investment option[s]. Currently,
you may place the invested portion of your purchase payments into one or a
combination of variable and interest-rate investment options. Amounts held under
the Contract may be withdrawn, in whole or in part, prior to the annuity date.
The Contract also provides for a death benefit.

The Contract is purchased by making an initial payment of at least $10,000.
Additional payments of $1,000 or more may also be made. After the deduction of
any charge for taxes attributable to purchase payments is made, purchase
payments are allocated to the subaccounts and/or the fixed-rate investment or
Market-Value Adjustment Options in accordance with your instructions.

Currently, there are nineteen variable investment options, each of which is
called a subaccount. The assets of each subaccount are invested in a
corresponding portfolio of one of the Funds.

The FIXED-RATE OPTION guarantees a stipulated rate of interest for a one-year
period. The MARKET-VALUE ADJUSTMENT OPTION (the "MVA option") guarantees a
stipulated rate of interest if held for a seven-year period.

The quoted interest rates will be expressed as an effective annual yield.
Interest will be credited daily throughout the interest rate period at a rate
that will provide the guaranteed annual effective yield over the period of one
year. The MVA and fixed-rate options are made up of individual "interest cells"
each of which is established whenever you allocate or transfer money into those
options. Your Pruco Life of New Jersey representative will tell you the rates of
interest currently in effect. This rate will never be below 3%.

The value of each Market-Value Adjustment interest cell, prior to its maturity
date, varies with changes in interest rates in the same way that the value of a
bond changes. 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 maturity date, the value of the interest cell will be adjusted up
or down or not at all, depending upon the difference in interest rates between
the date when the cell was established and the date of withdrawal or transfer.
The maximum value of the factor used in determining the amount of adjustment,
either positive or negative, is 0.40. See MARKET-VALUE ADJUSTMENT, page C-1.

Pruco Life of New Jersey makes charges under the Contract for the costs of
selling and distributing the Contract, for administering the Contract, and for
assuming mortality and expense risks under the Contract. Moreover, a charge may
be deducted for taxes attributable to purchase payments, including premium tax.
In the case of premium tax, Pruco Life of New Jersey will deduct the tax, as
provided by applicable law, either from the purchase payment when received, or
from the Contract Fund at the time the annuity is effected. The deduction may be
lower, or not made at all, for larger purchase payments. See PREMIUM TAXES AND
TAXES ATTRIBUTABLE TO PURCHASE PAYMENTS, page 16. A charge against each of the
Fund's assets is made by the investment adviser for providing investment
advisory and management services.

A mortality and expense risk charge equal to an annual rate of 1.25% is deducted
from the assets held in the variable investment options. An administrative
charge is deducted from the assets held in the variable investment options at an
annual rate of 0.15%. There will be an additional administrative charge of $30
on each Contract anniversary and at the time of a full withdrawal for Contracts
with Contract Funds less than $50,000. A withdrawal charge may be imposed upon
withdrawals made in the first seven Contract years. The maximum withdrawal
charge is 7% of the amount withdrawn. Further detail about charges may be found
under CHARGES, FEES AND DEDUCTIONS, page 16.

In the event that the sole or last surviving annuitant dies prior to the annuity
date or the surrender of the Contract for its cash value, Pruco Life of New
Jersey will pay a death benefit to the stated beneficiary. If the annuitant was
the sole owner of the Contract and the sole beneficiary is the annuitant's
spouse, the spouse may be able to continue the Contract. See DEATH BENEFIT, page
15. In the event that the annuitant dies after an annuity has been effected but
before the entire value of the Contract is distributed, special distribution
rules apply. See EFFECTING AN ANNUITY, page 24.

Amounts may be transferred out of an investment option into any combination of
other investment options available under the Contract. There are no minimum
transfer dollar amount requirements. Market-Value Adjustments may apply.
Restrictions apply on transfers made from the fixed-rate option. See TRANSFERS,
page 13.

For a limited time, a Contract may be returned for a refund in accordance with
the terms of its "free look" provision. See SHORT-TERM CANCELLATION RIGHT OR
"FREE LOOK", page 12.

<PAGE>

You may withdraw all or part of the Contract Fund prior to the annuity date,
subject to the possible withdrawal charge mentioned above. See WITHDRAWALS, page
14. If a full or partial withdrawal is requested, it may be wholly or partially
taxable. Certain withdrawals may be subject to a federal penalty tax as well as
a federal income tax. See TAXES PAYABLE BY CONTRACT OWNERS, page 18. If a lump
sum is requested, it will generally be paid within 7 days and deducted from the
Contract Fund. See WITHDRAWALS, page 14. If an annuity option is selected,
annuity payments will be in installments of guaranteed amounts. See EFFECTING AN
ANNUITY, page 24.

This Brief Description of the Contract is intended to provide a broad overview
of the more significant features of the Contract. More detailed information will
be found in subsequent sections of this prospectus and in the Contract document.

<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 Fee ........................ 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)
TOTAL FUND
INVESTMENT ANNUAL EXPENSES
MANAGEMENT OTHER (AFTER EXPENSE
FEE EXPENSES REIMBURSEMENTS)
---------- -------- ---------------
THE PRUDENTIAL SERIES FUND(1)
Money Market Portfolio ................ 0.40% 0.04% 0.44%
Diversified Bond Portfolio ............ 0.40% 0.04% 0.44%
High Yield Bond Portfolio ............. 0.55% 0.06% 0.61%
Stock Index Portfolio ................. 0.35% 0.03% 0.38%
Equity Income Portfolio ............... 0.40% 0.03% 0.43%
Equity Portfolio ...................... 0.45% 0.03% 0.48%
Prudential Jennison Portfolio ......... 0.60% 0.19% 0.79%
Global Portfolio ...................... 0.75% 0.31% 1.06%

<PAGE>

TOTAL FUND
INVESTMENT ANNUAL EXPENSES
MANAGEMENT OTHER (AFTER EXPENSE
FEE EXPENSES REIMBURSEMENTS)
---------- -------- ---------------
AIM VARIABLE INSURANCE FUNDS, INC.(2)
AIM V.I. Growth and Income Fund ....... 0.65% 0.52% 1.17%
AIM V.I. Value Fund ................... 0.65% 0.10% 0.75%

JANUS ASPEN SERIES(3)
Growth Portfolio ...................... 0.65% 0.13% 0.78%
International Growth Portfolio ........ 0.00% 1.27% 1.27%

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% 0.14% 0.94%
Small Cap Portfolio ................... 0.80% 0.20% 1.00%

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 ........ 0.64% 0.76% 1.40%

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, The 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. The Prudential Jennison Portfolio
commenced operations in 1995. Consequently, for the fee table above and the
examples that follow, the figures shown as "Other Expenses" and total expenses
are based on actual amounts from May 1, 1995 through May 1, 1996. It is
anticipated that as average net assets of the portfolio grow, the magnitude of
"Other Expenses" will decrease and become comparable to that of other
portfolios.

(2.) AIM Variable Insurance Funds, Inc. AIM may from time to time voluntarily
waive or reduce their respective fees. Fee waivers or reductions, other than
those contained in the agreement with the adviser, may be modified or terminated
at any time. Management fees and other expenses have been restated to reflect
current agreements which do not include waivers or reductions for the AIM V.I.
Growth and Income Fund.

(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, 1995, 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
from June 3, 1996 through April 30, 1997. Without fee waivers or reductions, the
Management Fee, Other Expenses and Total Fund Annual Expenses would have been
0.85%, 0.13% and 0.98% for the Growth Portfolio and 1.00%, 2.57% and 3.57% for
the International Growth Portfolio.

(4.) MFS Variable Insurance Trust. With respect to the MFS Trust Emerging Growth
Series and Research Series the adviser has agreed to bear, subject to
reimbursement, expenses for each of the MFS Funds such that each

<PAGE>

aggregate Funds' operating expenses shall not exceed, on an annualized basis,
1.00% of the average daily net assets of the MFS Funds from November 2, 1994
through December 31, 1996, 1.25% of the average daily net assets of the Series
from January 1, 1997 through December 31, 1998, and 1.50% of the average daily
net assets of the Series from January 1, 1999 through December 31, 2004;
provided however, that this obligation may be terminated or revised at any time.
Absent this expense arrangement, "Other Expenses" and "Total Fund Annual
Expenses" would be 2.16% and 2.91%, respectively for the Emerging Growth Series
and 3.15% and 3.90% respectively for the Research Series.

(5.) OCC Accumulation Trust. The annual expenses of the OCC Accumulation Trust
Portfolios as of December 31, 1995 have been restated to reflect new management
fee and expense limitation arrangements in effect as of May 1, 1996. Effective
May 1, 1996, the expenses of the Managed and Small Cap Portfolios of the OCC
Accumulation Trust are contractually limited by OpCap Advisors so that their
respective annualized operating expenses do not exceed 1.25% of their respective
average daily net assets. Furthermore, through April 30, 1997, the annualized
operating expenses of the Managed and Small Cap Portfolios will be voluntarily
limited by OpCap Advisors so that annualized operating expenses of these
Portfolios do not exceed 1.00% of their respective average daily net assets.
Without such voluntary expense limitations, and taking into account the revised
contractual provisions effective May 1, 1996 concerning management fees and
expense limitations, the Management Fees, Other Expenses and Total Portfolio
Annual Expenses incurred for the fiscal year ended December 31, 1995 would have
remained unchanged for the Managed Portfolio and would have been .80%, .39% and
1.19%, 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 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 0.81%, and Total Fund Annual Expenses
would equal 2.06%. Other Expenses for the Fund are based on annualized estimates
of expenses for the fiscal year ending December 31, 1996, net of any fee waivers
or expense reimbursements. The investment adviser has undertaken to limit the
Fund's Total Fund Annual Expenses through December 31, 1996.

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.

<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 17.)

1 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
The Prudential Series Fund
Money Market Portfolio ................... $ 82 $ 94 $117 $220
Diversified Bond Portfolio ............... $ 82 $ 94 $117 $220
High Yield Bond Portfolio ................ $ 84 $ 99 $126 $238
Stock Index Portfolio .................... $ 82 $ 92 $114 $214
Equity Income Portfolio .................. $ 82 $ 94 $116 $219
Equity Portfolio ......................... $ 83 $ 95 $119 $225
Prudential Jennison Portfolio ............ $ 86 $105 $135 $257
Global Portfolio ......................... $ 88 $113 $148 $284

AIM Variable Insurance Funds, Inc.
AIM V.I. Growth And Income Fund .......... $ 89 $116 $154 $294
AIM V.I. Value Fund ...................... $ 85 $104 $133 $252

Janus Aspen Series
Growth Portfolio ......................... $ 86 $105 $134 $255
International Growth Portfolio ........... $ 90 $119 $159 $304

MFS Variable Insurance Trust
Emerging Growth Series ................... $ 88 $111 $145 $278
Research Series .......................... $ 88 $111 $145 $278

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 $138 $263
T. Rowe Price International Series, Inc.,
International Stock Portfolio .......... $ 88 $113 $148 $283

Warburg Pincus Trust
Post-Venture Capital Portfolio ........... $ 92 $123 $165 $317

<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 3 5 10
YEAR YEARS YEARS YEARS
---- ----- ----- -----
The Prudential Series Fund
Money Market Portfolio ................... $ 19 $ 59 $102 $220
Diversified Bond Portfolio ............... $ 19 $ 59 $102 $220
High Yield Bond Portfolio ................ $ 21 $ 64 $111 $238
Stock Index Portfolio .................... $ 19 $ 57 $ 99 $214
Equity Income Portfolio .................. $ 19 $ 59 $101 $219
Equity Portfolio ......................... $ 20 $ 60 $104 $225
Prudential Jennison Portfolio ............ $ 23 $ 70 $120 $257
Global Portfolio ......................... $ 25 $ 78 $133 $284

AIM Variable Insurance Funds, Inc. .........
AIM V.I. Growth And Income Fund .......... $ 26 $ 81 $139 $294
AIM V.I. Value Fund ...................... $ 22 $ 69 $118 $252

Janus Aspen Series
Growth Portfolio ......................... $ 23 $ 70 $119 $255
International Growth Portfolio ........... $ 27 $ 84 $144 $304

MFS Variable Insurance Trust
Emerging Growth Series ................... $ 25 $ 76 $130 $278
Research Series .......................... $ 25 $ 76 $130 $278

OCC Accumulation Trust
Managed Portfolio ........................ $ 24 $ 74 $127 $272
Small Cap Portfolio ...................... $ 25 $ 76 $130 $278

T. Rowe Price
T. Rowe Price Equity Series, Inc., Equity
Income Portfolio ....................... $ 23 $ 72 $123 $263
T. Rowe Price International Series, Inc.,
International Stock Portfolio .......... $ 25 $ 78 $133 $283

Warburg Pincus Trust
Post-Venture Capital Portfolio ......... $ 29 $ 88 $150 $317

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.

<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 The Prudential, a mutual
insurance company founded in 1875 under the laws of the State of New Jersey. As
of December 31, 1995, The 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. The 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, The 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 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.

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.

<PAGE>

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 issues.
Current income, if any, is incidental.

The Prudential is the investment advisor for the assets of each of the
portfolios of the Prudential Series Fund. The Prudential has a Service Agreement
with its wholly-owned subsidiary The Prudential Investment Corporation ("PIC"),
which provides that, subject to The Prudential's supervision, PIC will furnish
investment advisory services in connection with the management of the Prudential
Series Fund. In addition, The 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.

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.

<PAGE>

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 4 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.

<PAGE>

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. 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.
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"

Generally, you may return a Contract for refund within 10 days after you receive
it. If you purchase the Contract as an IRA, federal law
requires that you return the Contract for refund within 7 days. A refund may be
requested by mailing or delivering the Contract to the representative who sold
it or to the Prudential Annuity Service Center. As required by applicable law,
you will then receive a refund of cash value, after market value adjustment;
plus any changes that have been made against the contract fund, variable
investment options (subaccounts), or purchase payments.

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). 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 13.

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 The 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.

<PAGE>

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 14 and FEDERAL TAX STATUS, on page 18.

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. In the latter
case, the percentages must be whole numbers. 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 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 among subaccounts 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 from interest-rate investment options will take effect
on the day we receive your proper notice 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.

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 18. 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 ("DCA") 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

<PAGE>

(designated as the "DCA 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 18.

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 C-1.

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 17. 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

<PAGE>

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.
Additionally, Pruco Life of New Jersey's consent will be required for any
partial withdrawal of less than $500.

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.

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

<PAGE>

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 any 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 the time based on the applicable rate. In many states,
Pruco Life of New Jersey pays a premium tax when an annuity is effected. In
those states, the tax will be deducted at that time. The tax rates currently in
effect in those states that impose a tax range from 1% to 5%. Prudential 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 in those states where
approval has been obtained. Currently, no such charge is being made in any
state.

A deduction for any such taxes imposed on purchase payments will not be made,
however, except to the extent that the total tax attributable to premiums is in
excess of 4% when: (1) your total purchase payments, less any purchase payments
withdrawn, equal or exceed $50,000; or (2) you purchase separate Contracts for
each of your children or grandchildren as annuitants, each Contract has purchase
payments totaling at least $25,000, and total purchase payments, less any
purchase payments withdrawn, equal or exceed $50,000. Special tax rules apply to
multiple annuity contracts issued by the same company (and affiliates) to the
same Contract owner during any calendar year. See FEDERAL TAX STATUS, page 18.

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.

<PAGE>

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.

To the extent that the charge for these risks exceeds the actual cost of
expenses and benefits, Pruco Life of New Jersey will realize a gain. These
proceeds will become part of Pruco Life of New Jersey's general account and will
be available to cover any deficiency to the extent to which withdrawal charges
are less than sales expenses under the Contracts.

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 less all withdrawals of purchase payments previously made 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 exceeds the charge-free amount and it is made within the
first seven Contract years, a percentage charge will be applied. 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 EFFECTING AN ANNUITY,
page 24. Also, at our discretion, we may reduce or waive withdrawal charges for
certain classes of contracts (e.g., contracts purchased by Prudential employees
or exchanged from existing contracts).

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.

To the extent that the contingent deferred sales charge is insufficient to
recover all distribution expenses associated with the Contracts, the deficiency
will be met from Pruco Life of New Jersey's surplus which is, in part, derived
from the charges for the assumption of mortality and expense risks and from
mortality gains from Contracts under which annuity payments are being made.

<PAGE>

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.

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.

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. Amounts
withdrawn before annuity payments begin which represent a distribution of
investment income will be taxable as ordinary income and may be subject to a
penalty tax. Amounts which represent a withdrawal of purchase payments will not
be taxable as ordinary income or subject to a 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 individual retirement annuities, 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

<PAGE>

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 amounts: (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) under a
qualified funding asset (defined by Code section 130(d)), or (6) under an
immediate annuity contract (within the meaning of section 72(u)(4)).

Election of the interest pay 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, except that the early
withdrawal penalty tax does not apply. 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 20.

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 26.

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 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.

19
<PAGE>

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, 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.

TAXES ON PRUCO LIFE OF NEW JERSEY

The earnings of the Account are taxed as part of the operations of Pruco Life of
New Jersey. No charge is being made currently against the Account for company
federal income taxes. 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 federal income taxes that would be
attributable to the Contract.

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 Contract or the Account. If
there is a material change in applicable state or local tax laws, the imposition
of any such taxes upon Pruco Life of New Jersey that are attributable to the
Account may result in a corresponding charge against the Account.

CONTRACTS USED IN CONNECTION WITH TAX FAVORED PLANS

The Contract may be purchased for use in connection with various retirement
arrangements entitled to favorable federal income tax treatment ("tax favored
plans"). These are individual retirement accounts and annuities ("IRAs") subject
to Section 408(a) and 408(b) of the Code, simplified employee pension plans
("SEPs") under Section 408(k) of the Code, tax deferred annuities ("TDAs") under
Section 403(b) of the Code, deferred compensation plans of state and local
governments and tax exempt organizations under Section 457 of the Code, and
pension, profit sharing and annuity plans qualified under Sections 401(a) and
403(a) of the Code. 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 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

<PAGE>

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), a tax-deferred section 403(b) annuity ("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) annuity
and death benefit payments must satisfy certain minimum distribution
requirements. Contracts issued as Section 408(b) rollover 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 18). 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 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 7 days after
making an initial contribution in which to affirm or reverse their decision to
participate. Therefore, within 7 days after establishing the Contract, 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. This 7-day period may or may not coincide with any part
of the 10-day free look period described under SHORT-TERM CANCELLATION RIGHT OR
"FREE LOOK", page 12.

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

21
<PAGE>

$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 must satisfy minimum distribution
requirements similar to those that apply to qualified plans generally.

ELIGIBLE DEFERRED COMPENSATION PLANS OF STATE OR LOCAL GOVERNMENTS
AND TAX EXEMPT ORGANIZATIONS

A Contract may be used to fund an eligible deferred compensation plan of a state
or local government or a tax-exempt organization. The amounts contributed under
such plans and increments thereon are not taxable as income until distributed or
otherwise made available to the employee or other beneficiary. If the
requirements of Section 457 of the Code are not met, however, employees may be
required to include in gross income all or part of the contributions and
earnings thereon. The assets of deferred compensation plans are part of the
employer's general assets. Contributions generally may not exceed the lesser of
$7,500 or 33 1/3% of the employee's compensation. Distributions must begin by
April 1 of the year following attainment of age 70 1/2. However, for
governmental and church plans, distributions may be delayed until April 1 of the
calendar year following the calendar year the participant retires if that is
later. Distributions are subject to special minimum distribution rules in
addition to the minimum distribution requirements for qualified plans. Rollovers
are not permitted.

QUALIFIED PENSION AND PROFIT SHARING PLANS

A Contract may be used to fund a qualified pension or profit-sharing plan. The
plan itself must satisfy the coverage, minimum participation, nondiscrimination
and minimum distribution and all other requirements applicable generally to
qualified pension and profit-sharing plans. The Code also imposes dollar
limitations on contributions that may be made to or benefits that may be
received from a qualified pension or profit-sharing plan (including a limitation
of $9,500 (in 1996) on the amount that an employee may contribute through a
salary reduction arrangement in the case of a plan with a qualified "cash or
deferred" arrangement). For self-employed individuals who establish qualified
plans, contributions are deductible within the limits prescribed by the Code.
Annual deductible contributions cannot exceed the lesser of $30,000 or 25% of
"earned income". For this purpose "earned income" is computed after the
deduction for contributions to the plan is considered. Distributions are subject
to certain minimum distribution requirements.

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 year
following attainment of age 70 1/2. 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 and less any applicable
withdrawal charges and plus or minus any applicable market value adjustment.
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

<PAGE>

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
may elect 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.
Distributions to Contract owners under an eligible deferred compensation plan
subject to Section 457 of the Code are treated as the payment of wages for
federal income tax purposes and thus are subject to the general withholding
requirements. Your employer, and not Pruco Life of New Jersey, is required to
withhold on wage payments.

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 16. Information about sales
representatives and commissions may be found under SALE OF THE CONTRACT AND
SALES COMMISSIONS, page 25. 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.

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.

<PAGE>

EFFECTING AN ANNUITY

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. In
certain cases, any applicable withdrawal charge will be waived. 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, 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 1%
to 5% of the amount applied to effect an annuity. See PREMIUM TAXES, page 16.
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 three forms listed below and other forms may be
available with our consent. 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.

ANNUITY PAYMENTS FOR A FIXED PERIOD

Payments will be 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.

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.

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 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.

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.

<PAGE>

Special provisions may apply if the Contract is issued in connection with an
IRA. The necessary information will be provided by the plan sponsor or
administrator.

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
The 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
1111 Durham Avenue, South Plainfield, New Jersey 07080. The Contract is sold by
registered representatives of Prusec who are also authorized by state insurance
departments to do so. The Contract may also be sold through other broker-dealers
authorized by Prusec and applicable law to do so. Registered representatives of
such other broker-dealers may be paid on a different basis than described below.
The maximum commission that will be paid to the representative is 3.5% of the
purchase payment received, and the amount 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. Such commissions will be subject
to reduction if Pruco Life of New Jersey issues a Contract on and after the
annuitant's 84th birthday. The representative may be required to return all of
the first year commission if the Contract is not continued through the first
year. Representatives who meet certain productivity, profitability, and
persistency standards with regard to the sale of the Contract will be eligible
for additional compensation.

Sales expenses in any year are not equal to the deduction for sales loads in
that year. Pruco Life of New Jersey expects to recover its total sales expenses
over the periods the Contracts are in effect. To the extent that the sales
charges are insufficient to cover total sales expenses, the sales expenses will
be recovered from Pruco Life of New Jersey's surplus.

VOTING RIGHTS

As stated above, all of the assets held in the subaccounts of the Account are
invested in shares of the corresponding portfolios of the 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 are required to hold 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 Investment Company Act of 1940. 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 agreement or any
change in a portfolio's fundamental investment policy, Contract owners
participating in such portfolios will vote separately on the matter, pursuant to
the requirements of Rule 18f-2 under the Investment Company Act of 1940.

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

<PAGE>

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, an annuitant. Ownership of the
Contract may, however, be transferred to another person who need not be the
person who is to receive annuity payments. 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.

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 an annual report for the Account and annual and
semi-annual reports for the Funds.

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.

<PAGE>

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 audited financial statements included in this prospectus have been examined
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein. Such financial statements have been included herein in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing. Deloitte & Touche LLP's principal business address is
Two Hilton Court, Parsipanny, New Jersey 07054-0319.

On March 12, 1996, Deloitte & Touche LLP was dismissed as the independent
accountants of Pruco Life. There have been no disagreements with Deloitte &
Touche LLP on any matter of accounting principles or practices, financial
statement 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 on behalf of
those persons who purchased life insurance policies based on complaints about
sales practices engaged in by The Prudential, Pruco Life of New Jersey and
agents appointed by The Prudential and Pruco Life of New Jersey. The Prudential
has agreed to indemnify Pruco Life of New Jersey for any and all losses
resulting from such litigation.

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

ADDITIONAL INFORMATION

A registration statement has been filed with the SEC under the Securities Act of
1933, relating to the offering described in this prospectus. This prospectus
does not include all of the information set forth in the registration statement.
Certain portions have been omitted pursuant to the rules and 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 as
of the date of this prospectus, the Account had not yet commenced operations,
had no assets or liabilities, and had not received any income or incurred any
expenses.

<PAGE>

SELECTED FINANCIAL DATA

The following selected financial data for Pruco Life Insurance Company of New
Jersey should be read in conjunction with the CONSOLIDATED FINANCIAL STATEMENTS
OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY and notes thereto included in this
prospectus beginning on page B-1.

Pruco Life Insurance Company of New Jersey

<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------------
GAAP Basis | Statutory Basis
---------------------------------------- | ---------------------------------------
For the Nine |
Months Ended |
Sept. 30, 1996 |
Unaudited 1995 1994 | 1993 1992 1991
-------------- ---------- ---------- | ---------- ---------- ----------
($000's)
<S> <C> <C> <C> <C> <C> <C>
Revenues |
Premiums, annuity fund deposits |
and other revenue ....................... $ 46,128 $ 68,049 $ 51,781 | $ 114,287 $ 113,237 $ 120,934
Net investment income ..................... 32,333 43,530 42,357 | 47,700 53,063 54,412
---------- ---------- ---------- | ---------- ---------- ----------
Total revenues .............................. 78,461 111,579 94,138 | 161,987 166,300 175,346
---------- ---------- ---------- | ---------- ---------- ----------
Benefits and expenses |
Current and future benefits and claims .... 36,015 47,695 44,939 | 103,552 100,782 109,181
Other expenses ............................ 3,853 21,881 23,716 | 19,182 19,371 17,943
---------- ---------- ---------- | ---------- ---------- ----------
Total benefits and expenses ................. 39,868 69,576 68,655 | 122,734 120,153 127,124
---------- ---------- ---------- | ---------- ---------- ----------
Income before provision in lieu of income |
tax and cumulative effect of a change in |
accounting principle ...................... 38,593 42,003 25,483 | 39,253 46,147 48,222
Provision in lieu of income tax ............. 13,507 15,002 9,483 | 19,460 22,701 18,033
---------- ---------- ---------- | ---------- ---------- ----------
Net income before cumulative effect of a |
change in accounting principle ............ $ 25,086 $ 27,001 $ 16,000 | $ 19,793 $ 23,446 $ 30,189
---------- ---------- ---------- | ---------- ---------- ----------
Cumulative effect on prior years (to |
December 31, 1990) of change in |
reserve basis ............................. -- -- -- | -- -- 24,706
---------- ---------- ---------- | ---------- ---------- ----------
Net income .................................. $ 25,086 $ 27,001 $ 16,000 | $ 19,793 $ 23,446 $ 54,895
========== ========== ========== | ========== ========== ==========
Assets ...................................... $1,641,749 $1,558,282 $1,424,886 | $1,352,455 $1,269,743 $1,182,569
========== ========== ========== | ========== ========== ==========
</TABLE>

<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. -- Chairman and Director, Prudential Investment
Advisory Company, Ltd. since 1988; President, Prudential Life Insurance Company,
Ltd. since 1987. Age 49.

IRA J. KLEINMAN, Director. -- Chief Marketing and Product Development Officer,
Prudential Individual Insurance Group since 1995; 1993 to 1995: President,
Prudential Select; Prior to 1993: Senior Vice President of The Prudential.
Age 49.

MENDEL MELZER, Director. -- Chief Financial Officer of the Money Management
Group of The Prudential since 1995; 1993 to 1995: Senior Vice President and
Chief Financial Officer of Prudential Preferred Financial Services; Prior to
1993: Managing Director, The Prudential Investment Corporation. Age 35.

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 The Prudential. Age 45.

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 The Prudential. Age 53.

WILLIAM F. YELVERTON, Chariman of the Board and Director. -- Chief Executive
Officer, Prudential Individual Insurance Group since 1995; Prior to 1995: Chief
Executive Officer, New York Life Worldwide. Age 54.

OFFICERS WHO ARE NOT DIRECTORS

BEVERLY R. BARNEY, Senior Vice President. -- Vice President and Re-Engineering
Officer, Prudential Individual Insurance Group since 1995; 1993 to 1995: Senior
Vice President and Associate Actuary, Prudential Direct; Prior to 1993: Senior
Vice President and Actuary of Pruco Life. Age 48.

SUSAN L. BLOUNT, Secretary.-- Vice President and Secretary of The Prudential
since 1995; Prior to 1995: Assistant General Counsel for Prudential Residential
Services Company. Age 38.

C. EDWARD CHAPLIN, Treasurer. -- Vice President and Treasurer of The Prudential
since 1995; 1993 to 1995: Managing Director and Assistant Treasurer of The
Prudential; 1992 to 1993: Vice President and Assistant Treasurer, Banking and
Cash Management for The Prudential; Prior to 1992: Regional Vice President of
Prudential Mortgage Capital Company. Age 39.

CLIFFORD E. KIRSCH, Chief Legal Officer. -- Chief Counsel, Variable Products,
Law Department of The 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. Age 36.

SHIRLEY SHAO, Senior Vice President and Chief Actuary. -- Vice President and
Assistant Actuary, The Prudential and Executive Vice President and Chief
Financial Officer, Prudential of Taiwan since 1989. Age 41.

FRANK MARINO, Senior Vice President. -- Vice President, Policyholder Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services. Age 51.

KAREN SHAPIRO, Senior Vice President. -- Vice President, Individual Insurance
Group since 1996; Vice President and Associate General Counsel, Prudential
Securities Incorporated 1993 to 1996; 1990 to 1993: Senior Associate with
Shaw, Pittman, Potts and Trowbridge. Age 40.

MICHAEL R. SHAPIRO, Senior Vice President. -- Vice President, Marketing and
Product Development, Prudential Individual Insurance Group since 1996; Prior to
1996: Senior Vice President, Prudential Select Brokerage. Age 48.

LINDA DOUGHERTY, Vice President, Comptroller and Chief Accounting Officer. --
Vice President Accounting, The Prudential since 1988. Age 47.

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

<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 1995. Directors of Pruco Life who are
also employees of The Prudential do not receive compensation in addition to
their compensation as employees of The Prudential.

- --------------------------------------------------------------------------------
NAME & PRINCIPAL | | ALLOCATED CASH
POSITION | YEAR | COMPENSATION ($)
- --------------------------------|-------------------|---------------------------
Esther H. Milnes | 1995 | $ 17,879
President | 1994 | $ 14,250
| 1993 | $ 9,846
| |
Beverly R. Barney | 1995 | $ 9,771
Senior Vice President | 1994 | $ 0
| 1993 | $126,142
| |
Helen M. Galt | **1995 | $_______
President | **1994 | $_______
| |
| **1993 | $ 13,382
- --------------------------------------------------------------------------------
** Resigned Position as of July, 1993.
- --------------------------------------------------------------------------------

<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 statements of financial position of Pruco Life
Insurance Company of New Jersey as of December 31, 1995 and 1994, and the
related statements of operations, changes in stockholder's equity and cash flows
for the years then ended. 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 1994, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

As discussed in Note 1 to the financial statements, the Company has
retroactively adopted all applicable general accepted accounting principles
relating to subsidiaries of mutual life insurance companies and has changed, as
of January 1, 1995, the method of accounting for fixed maturity investments.

- ------------------------------
DELOITTE & TOUCHE, LLP

Parsippany, New Jersey
December 19, 1996

B-1

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
(GAAP BASIS)

December 31,
------------------------
1995 1994
---------- ----------
(000's)

ASSETS

Fixed maturities
Held to maturity ................................. $ -- $ 527,304
Available for sale ............................... 513,433 --
Policy loans ....................................... 98,194 85,277
Short-term investments ............................. 45,308 41,695
---------- ----------
Total Invested Assets ............... 656,935 654,276
---------- ----------
Cash ............................................... -- 17
Deferred policy acquisition costs .................. 96,031 105,105
Premiums due ....................................... 344 385
Accrued investment income .......................... 11,579 11,262
Receivable from affiliates ......................... 3,616 1,827
Other assets ....................................... 281 1,568
Assets held in Separate Accounts ................... 789,427 642,049
Income tax receivable .............................. 69 8,397
---------- ----------
TOTAL ASSETS ....................................... $1,558,282 $1,424,886
========== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities
Future policy benefits and other policyholders'
liabilities ...................................... $ 92,045 $ 91,145
Policyholders' account balances .................... 375,193 427,887
Other liabilities .................................. 6,279 6,583
Deferred income taxes payable ...................... 23,809 20,349
Payable to affiliate ............................... 5,375 4,568
Separate Account liabilities ....................... 787,566 639,928
---------- ----------
Total Liabilities .................................. 1,290,267 1,190,460
---------- ----------
Contingencies - Note 10
Stockholder's Equity
Common Stock, $5 par value;
400,000 shares;
authorized,issued and
outstanding ...................................... 2,000 2,000
Paid-in-capital .................................... 125,000 125,000
Unrealized investment gains (net of income tax) .... 6,588 --
Retained earnings .................................. 134,427 107,426
---------- ----------
Total Stockholder's Equity ......................... 268,015 234,426
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY ............................. $1,558,282 $1,424,886
========== ==========

SEE NOTES TO THE FINANCIAL STATEMENTS

B-2

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF OPERATIONS
(GAAP BASIS)

Years ended December 31,
------------------------
1995 1994
---------- ----------
(000's)

REVENUE

Premiums ............................................. $ 1,042 $ 1,869
Net investment income ................................ 43,530 42,357
Realized investment gains/(losses) ................... 3,592 (8,310)
Policy fee income .................................... 59,515 55,021
Other income ......................................... 3,900 3,201
--------- ---------
Total Revenue ........................................ 111,579 94,138
--------- ---------

BENEFITS AND EXPENSES

Interest credited to policyholders' account balances . 21,364 22,151
Policyholders' benefits .............................. 26,331 22,788
Other operating costs and expenses ................... 21,881 23,716
--------- ---------

Total Benefits and Expenses .......................... 69,576 68,655
--------- ---------

Income before income tax provision ................... 42,003 25,483
--------- ---------
Income tax provision

Current .......................................... 15,248 10,666
Deferred ......................................... (246) (1,183)
--------- ---------
Total income tax provision ........................... 15,002 9,483
--------- ---------

NET INCOME ........................................... $ 27,001 $ 16,000
========= =========

SEE NOTES TO THE FINANCIAL STATEMENTS

B-3

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(GAAP BASIS)

Years ended December 31,
------------------------
1995 1994
----------- ---------
(000's)

Common Stock

Balance, beginning of year ............................ $ 2,000 $ 2,000
Issued during year .................................... -- --
--------- ---------

Balance, end of year .................................. 2,000 2,000
--------- ---------

Paid in Capital

Balance, beginning of year ............................ 125,000 125,000
Paid in during year ................................... -- --
--------- ---------

Balance, end of year .................................. 125,000 125,000
--------- ---------

Unrealized Investment Gains

Balance, beginning of year ............................ -- --
Adoption of SFAS 115 .................................. (11,189) --
Net change in unrealized investment gains/(losses) .... 17,777 --
--------- ---------

Balance, end of year .................................. 6,588 --
--------- ---------

Retained Earnings

Statutory balance, beginning of year .................. -- 27,783
Cumulative effect of Adoption of GAAP ................. -- 63,643
--------- ---------
GAAP balance, beginning of year ....................... 107,426 91,426
Net income ............................................ 27,001 16,000
--------- ---------

Balance, end of year .................................. 134,427 107,426
--------- ---------

TOTAL STOCKHOLDER'S EQUITY ............................ $ 268,015 $ 234,426
========= =========

SEE NOTES TO THE FINANCIAL STATEMENTS

B-4

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
(GAAP BASIS)

Years ended December 31,
--------------------------
1995 1994
--------- ----------
(000's)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .............................................................. $ 27,001 $ 16,000
Adjustments to reconcile net income to net cash from
operations:
Increase in future policy benefits and other policyholders' liabilities 900 3,936
General account policy fee income ..................................... (11,931) (7,744)
Interest credited to policyholders' account balances .................. 21,364 22,151
Net decrease/(increase) in Separate Accounts .......................... 260 (310)
Net realized investment (gains)/losses ................................ (3,592) 8,310
Amortization and Non-Cash items ....................................... (6,839) 3,778
(Increase)/decrease in operating assets:
Accrued investment income ........................................... (317) (679)
Premiums due ........................................................ 41 26
Receivable from affiliates .......................................... (1,789) (132)
Deferred acquisition costs .......................................... 9,074 4,727
Current income taxes ................................................ 8,328 (7,869)
Other assets ........................................................ 1,287 2,759
Increase/(decrease) in operating liabilities:
Payable to affiliate ................................................ 807 (3,798)
Deferred income taxes payable ....................................... 3,460 (1,183)
Other liabilities ................................................... (304) 2,988
--------- ---------
Cash Flows From Operating Activities .................................... 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 ................................................ 553,681 --
Payments for the purchase of:
Fixed maturities:
Held to maturity ................................................ -- (658,008)
Available for sale .............................................. (522,757) --
Policy loans .......................................................... (12,917) (15,511)
Net (payments) for short-term investments ............................. (3,613) (12,095)
--------- ---------
Cash Flows From Investing Activities .................................... 14,394 20,274
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits ............................................................ 18,348 22,336
Withdrawals (net of transfers to/from separate accounts) ............ (80,509) (85,590)
--------- ---------
Cash Flows From Investing Activities .................................... (62,161) (63,254)
--------- ---------
Net (decrease) in Cash .............................................. (17) (20)
Cash, beginning of year ............................................. 17 37
--------- ---------
CASH, END OF YEAR ....................................................... $ 0 $ 17
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes ............................................ $ 7,900 $ 17,679
========= =========
</TABLE>

SEE NOTES TO THE FINANCIAL STATEMENTS

B-5

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

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 single pay deferred 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. Interpretation No. 40 changed the practice of mutual life insurance
companies and their subsidiaries with respect to utilizing statutory basis
financial statements for general purposes in that such financial statements are
no longer allowed to be referred to as having been prepared in accordance with
Generally Accepted Accounting Principles (GAAP). As a result of Interpretation
No. 40, the Company has restated the 1995 and 1994 consolidated financial
statements in accordance with GAAP.

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.

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.

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 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 and surrender charges. Premiums
from traditional life and annuity policies with life contingencies generally are
recognized as income when due. Policy benefits and claims that are charged to
expenses include benefit claims incurred in the period in excess of related
Policyholders' account balances.

B-6

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

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. Deferred
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 stockholders' equity.

F. FUTURE POLICY BENEFITS AND POLICYHOLDERS' ACCOUNT BALANCES

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 premium payments plus credited interest less expense and
mortality charges and withdrawals.

Benefit liabilities for annuities during the accumulation period are equal to
the accumulated Policyholders' account balances and after annuitization are
equal to the present value of expected future payments.

Interest crediting rates on these life insurance products range from 3.35% to
7%.

When liabilities for future policy benefits plus the present value of expected
future gross premiums 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 earnings.

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. Assets are carried at market value. Deposits to all Separate
Accounts are reported as increases in Separate Account liabilities. Charges
assessed against Policyholders' account balances for mortality, policy
administration and surrender charges are included in Policy Fee Income.
Mortality and expense risk charges are applied against the Policyholders'
account balance. The 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-7

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

2. FIXED MATURITIES

Gross unrealized gains and losses for securities, by major security type, are as
follows:

At 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 agencies................................. $ 81,806 $ 1,287 $ -- $ 83,093

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
======== ======== ======== ========

<CAPTION>
At December 31, 1994
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
HELD TO MATURITY

U.S. Treasury securities and obligations of U.S. government
corporations and agencies ............................... $116,502 $ 10 $ 11,641 $104,871

Foreign government bonds .................................. 34,554 1,631 723 35,462

Corporate securities ...................................... 336,641 1,261 7,524 330,378

Mortgage-backed securities ................................ 39,607 180 677 39,110

-------- -------- -------- --------
Total ..................................................... $527,304 $ 3,082 $ 20,565 $509,821
======== ======== ======== ========
</TABLE>

The amortized cost and estimated fair value of fixed maturities at December 31,
1995, 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.

At December 31, 1995
-----------------------
Estimated
Amortized Fair
Cost Value
--------- ---------
(000's)
AVAILABLE FOR SALE

Due in one year or less ............................. $ 57,798 $ 58,194

Due after one year through five years ............... 329,260 339,602

Due after five years through ten years .............. 55,151 57,403

Due after ten years ................................. 18,960 19,176

Mortgage-backed securities .......................... 36,872 39,058
-------- --------

Total ............................................... $498,041 $513,433
======== ========

Proceeds from the sale/maturity of fixed maturities during 1995 and 1994 were
$553.7 million and $705.9 million, respectively. Gross gains of $6.8 million and
$3.3 million and gross losses of $3.2 million and $11.6 million were realized on
those sales during 1995 and 1994, respectively.

B-8

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

3. NET INVESTMENT INCOME
Years ended December 31,
------------------------
1995 1994
--------- ---------
(000's)
Net investment income consisted of:
Gross investment income
Fixed maturities ............................... $ 36,861 $ 36,565
Policy loans ................................... 5,029 4,290
Short term investments ......................... 2,290 2,364
Other .......................................... 51 44
-------- --------
44,231 43,263
Investment expenses .............................. (701) (906)
======== ========
Net investment income ............................ $ 43,530 $ 42,357
======== ========

4. INVESTMENT GAINS/(LOSSES)
Years ended December 31,
------------------------
1995 1994
--------- ---------
(000's)

Fixed maturities:
Realized investment gains ........................ $ 6,785 $ 3,327
Realized investment losses ....................... (3,193) (11,637)
-------- --------
$ 3,592 ($ 8,310)
-------- --------

Realized investment gains/(losses) ................. $ 3,592 ($ 8,310)
======== ========

Years ended December 31,
------------------------
1995 1994
--------- ---------
(000's)
Unrealized investment gains/(losses)
Fixed maturities - Available for sale ............. $ 32,875 --
-------- --------
32,875 --

Other adjustments (a) ............................... (3,263) --
Deferred tax provision .............................. (11,835) --
-------- --------
Net change in unrealized gains/(losses) ............. 17,777 --
Adoption of SFAS 115 ................................ (11,189) --
Net unrealized gains/(losses), beginning of year .... -- --
-------- --------

Net unrealized investment gains/(losses),
end of year ....................................... $ 6,588 --
======== ========

- ----------------

(a) Other adjustments consist of deferred policy acquisition costs of $5.1
million and deferred income taxes of $1.8 million.

B-9

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

5. FAIR VALUE INFORMATION

The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies for only those accounts for
which fair value disclosures are required. 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
patterns.

Investment-type insurance contract liabilities - Fair values for the Company's
investment-type insurance contract liabilities are estimated using a discounted
cash flow model, based on interest rates currently being offered for similar
contracts.

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, 1995 and 1994.

1995 1994
-------------------------- --------------------------
Carrying Value Fair Value Carrying Value Fair Value
-------------- ---------- -------------- ----------
(000's)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities ................. $513,433 $513,433 $527,304 $509,821
Policy loans ..................... 98,194 99,057 85,277 76,734
Short-term investments ........... 45,308 45,308 41,695 41,695

Financial Liabilities:
Policyholders'
account balances ............... $375,193 $375,193 $427,887 $427,887
</TABLE>

6. INSURANCE

Liabilities for single premium universal life contracts and investment-type
contracts such as deferred annuities are the Policyholders' account balances.

Liabilities for payout annuities such as matured deferred annuities and
supplementary contracts are the present values of estimated future benefits
payments and related expenses. Present values for these contracts are computed
using interest rates ranging from 6.5% to 11%. The mortality assumption for
these contracts is the 83 IAM tables.

Supplementary benefits are stated at interest rates that vary from 4% to 6.5%
using mortality and morbidity assumptions either from company experience or
various actuarial tables.

B-10

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

7. INCOME TAXES

Net unrealized investment gains and losses are presented in equity net of
deferred income taxes. At December 31, 1995, the taxes attributable to these
items amounted to $3.7 million.

The Internal Revenue Service (the "Service") has conducted examinations of the
federal income tax returns of the Company through 1992. Discussions are being
held with the Service with respect to proposed adjustments. However, management
believes there are adequate defenses against, or sufficient accruals to provide
for, such adjustments.

The components of the income taxes are as follows:

Years ended December 31,
------------------------
1995 1994
--------- --------
(000's)
Current income tax ............................ $ 15,248 $ 10,666
Deferred income tax ........................... (246) (1,183)
-------- --------
Total income taxes ............................ $ 15,002 $ 9,483
======== ========

The tax effects of temporary differences that give rise to deferred income tax
assets and liabilities are presented below:

Years ended December 31,
------------------------
1995 1994
--------- --------
(000's)
DEFERRED INCOME TAX ASSETS
Insurance liabilities ......................... $ 6,966 $ 8,538
Other ......................................... 276 315
-------- --------
Total deferred income tax assets .............. $ 7,242 $ 8,853
======== ========

DEFERRED INCOME TAX LIABILITIES
Deferred acquisition costs .................... $ 25,322 $ 29,014
Net capital gains ............................. 5,729 188
-------- --------
Total deferred income tax liabilities ......... $ 31,051 $ 29,202
-------- --------
Deferred income tax payable ................... ($23,809) ($20,349)
======== ========

The differences between the statutory federal income tax and the effective
income tax as reflected in the accompanying statement of operations are:

Years ended December 31,
------------------------
1995 1994
--------- --------
(000's)
Tax at statutory rate ......................... $ 14,702 $ 8,919
State income taxes ............................ 1,373 1,201
Other items, net .............................. (1,073) (637)
-------- --------
Total income tax provision .................... $ 15,002 $ 9,483
======== ========

B-11

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

8. STOCKHOLDER'S EQUITY RECONCILIATION

The reconciliation of statutory net income to GAAP net income, and statutory
surplus to GAAP equity as of December 31, 1995 and 1994 are as follows:

1995 1994
--------- ----------
(000's)

Statutory net income ....................... $ 25,567 $ 16,309
Deferred acquisition costs ............... (2,589) (4,727)
Deferred premium ......................... (58) 241
Insurance liabilities .................... 4,366 4,614
Deferred income taxes .................... 510 8,518
Interest maintenance reserve ............. 1,285 (10,327)
Separate account ......................... (2,080) 1,372
--------- ---------
GAAP net income ............................ $ 27,001 $ 16,000
========= =========

Statutory surplus .......................... $ 191,607 $ 163,066
Investment valuation ..................... 15,392 --
Deferred acquisition costs ............... 96,031 105,105
Deferred premium ......................... (2,426) (2,368)
Insurance liabilities .................... (25,062) (23,882)
Deferred income taxes .................... (21,510) (13,015)
Asset valuation reserve/interest
maintenance reserve .................... 13,966 5,512
Other .................................... 17 8
--------- ---------
GAAP stockholder's equity .................. $ 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-12

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(GAAP BASIS)

9. 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 $16 million and $15 million for the years ended
December 31, 1995 and 1994, respectively.

B. PENSION PLANS

The Company is a 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
1995 or 1994.

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, 1995
and 1994.

D. REINSURANCE

The Company has one reinsurance agreement in place with Prudential (the
reinsurer). Specifically: 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. This agreement had no
material effect on net income for the years ended December 31, 1995 and 1994.

10. 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.

11. DIVIDENDS

The Company is subject to New Jersey law which limits the amount of dividends
that insurance companies can pay to stockholders. The maximum dividend which may
be paid in any 12 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, on a
statutory accounting basis, of the preceding calendar year. Based on these
limitations, the Company would be permitted a maximum of $26 million in dividend
distributions in 1996, all of which could be paid in cash, without approval from
The Department of Insurance of the State of New Jersey.

B-13

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
(GAAP BASIS)

September 30,
---------------------------------
1996 1995
---------- ----------
(000's)
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale ...................................... $ 527,118 $ 510,379
Policy loans ............................................... 109,526 95,204
Short-term investments ..................................... 35,025 34,320
---------- ----------
Total Invested Assets ....................... 671,669 639,903
---------- ----------
Cash ....................................................... (26) 160
Deferred policy acquisition costs .......................... 112,636 93,129
Premiums due ............................................... 446 361
Accrued investment income .................................. 13,315 12,970
Receivable from affiliates ................................. 1,150 1,024
Other assets ............................................... 66 2,647
Assets held in Separate Accounts ........................... 842,493 765,907
Income tax receivable ...................................... -- 1,823
---------- ----------
TOTAL ASSETS $1,641,749 $1,517,924
========== ==========

LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Future policy benefits and other policyholders'
liabilities ............................................. $ 100,798 $ 91,403
Policyholders' account balances ............................ 374,023 372,140
Other liabilities .......................................... 13,104 7,929
Deferred income tax payable ................................ 23,052 22,062
Income tax payable ......................................... 2,856 --
Payable to affiliate ....................................... 4,045 5,074
Separate Account liabilities ............................... 838,546 763,254
---------- ----------
Total Liabilities .......................................... 1,356,424 1,261,862
---------- ----------
Contingencies - Note 10
Stockholder's Equity
Common Stock, $5 par value;
400,000 shares;
authorized,issued and
outstanding ........................................ 2,000 2,000
Paid-in-capital ............................................ 125,000 125,000
Unrealized investment gains (net of income tax) ............ (1,188) 1,573
Retained earnings .......................................... 159,513 127,489
---------- ----------
Total Stockholder's Equity ................................. 285,325 256,062
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY .................................... $1,641,749 $1,517,924
========== ==========
</TABLE>

B-14

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP BASIS)

Periods ended
September 30,
---------------------------
1996 1995
-------- -------
(000's)
<S> <C> <C>

REVENUE

Premiums ...................................................... $ 1,637 $ 905
Net investment income ......................................... 32,333 32,519
Realized investment gains/(losses) ............................ 576 1,233
Policy fee income ............................................. 40,872 45,972
Other income .................................................. 3,043 2,548
-------- --------

Total Revenue ................................................. 78,461 83,177
-------- --------

BENEFITS AND EXPENSES

Interest credited to policyholders' account balances .......... 16,811 17,761
Policyholders' benefits ....................................... 19,204 18,675
Other operating costs and expenses ............................ 3,853 15,875
-------- --------

Total Benefits and Expenses ................................... 39,868 52,311
-------- --------

Income before income tax provision: ........................... 38,593 30,866
-------- --------
Income tax provision
Current ................................................... 10,076 9,937
Deferred .................................................. 3,431 866
-------- --------
Total income tax provision .................................... 13,507 10,803
-------- --------

NET INCOME .................................................... $ 25,086 $ 20,063
======== ========

</TABLE>

B-15

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(UNAUDITED)
(GAAP BASIS)

Periods ended
September 30,
-------------------------
1996 1995
-------- --------
(000's)
Common Stock
Balance, beginning of period .................. $ 2,000 $ 2,000
Issued during period .......................... -- --
-------- --------
Balance, end of period ........................ 2,000 2,000
-------- --------
Paid in Capital
Balance, beginning of period .................. 125,000 125,000
Paid in during period ......................... -- --
-------- --------
Balance, end of period ........................ 125,000 125,000
-------- --------
Unrealized Investment Gains
Balance, beginning of period .................. 6,588 --
Adoption of SFAS 115 .......................... -- 6,909
Net change in unrealized gains/(losses) ....... (7,776) (5,336)
-------- --------
Balance, end of period ........................ (1,188) 1,573
-------- --------
Retained Earnings
Balance, beginning of period .................. 134,427 107,426
Net Income .................................... 25,086 20,063
-------- --------
Balance, end of period ........................ 159,513 127,489
-------- --------
TOTAL STOCKHOLDER'S EQUITY .................... $285,325 $256,062
======== ========

B-16

<PAGE>

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(GAAP BASIS)
<TABLE>
<CAPTION>

Periods ended
September 30,
-----------------------------
1996 1995
-------- --------
(000's)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................... $ 25,086 $ 20,063
Adjustments to reconcile net income to net cash from operations .............. 1,909 30,063
-------- --------
Cash Flows From Operating Activities ......................................... 26,995 50,126
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities
Available for sale .............................................. 746,459 427,109
Payments for the purchase of:
Fixed maturities
Available for sale .............................................. (779,266) (399,860)
Policy loans ............................................................ (11,333) (9,927)
Other ................................................................... 17,981 (10,629)
Net proceeds for short term investments ................................. 10,301 7,375
-------- --------
Cash Flows From Investing Activities ......................................... (15,858) 14,068
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits ........................................................... 13,860 10,680
Withdrawals (net of transfers to/from separate accounts) ........... (25,023) (74,731)
-------- --------
Cash Flows From Financing Activities ......................................... (11,163) (64,051)
-------- --------
Net increase/(decrease) in Cash ......................................... (26) 143
Cash, beginning of period ............................................... 0 17
-------- --------
CASH, END OF PERIOD .......................................................... $ (26) $ 160
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes ............................................. $ 8,031 $ 0
========= =========

</TABLE>

B-17

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of
Pruco Life Insurance Company of New Jersey
Newark, New Jersey

We have audited the accompanying statements of financial position-statutory
basis of Pruco Life Insurance Company of New Jersey (the "Company") as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholder's equity, and cash flows for each of the three years in
the period ended December 31, 1995. 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 from
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.

As described in Notes 2 and 10, as of the first quarter of 1996, the Company has
changed its accounting policies to conform to all generally accepted accounting
principles pronouncements. Therefore, these financial statements, which were
prepared in conformity with the accounting practices prescribed or permitted by
the insurance Department of the State of New Jersey (statutory basis), which is
a comprehensive basis of accounting, are no longer in accordance with generally
accepted accounting principles. The effects on such financial statements of the
differences between the statutory basis of accounting and generally accepted
accounting principles are also described in Note 10.

In our opinion, because of the effects of the differences between the two bases
of accounting referred to in the preceding paragraph, such financial statements
do not present fairly, in all material respects, the financial position of Pruco
Life Insurance Company of New Jersey as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.

However, in our opinion, the accompanying statutory basis financial statements
present fairly, in all material respects, the financial position of Pruco Life
Insurance Company of New Jersey as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, on the basis of accounting described in Note 2.

/s/ DELOITTE & TOUCHE LLP

Parsippany, New Jersey
March 15, 1996, except for Note 10
as to which the date is January 22, 1997

B-18

<PAGE>

FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
(STATUTORY BASIS)

December 31,
------------------------
1995 1994
---------- ----------
($000's)
ASSETS

Fixed maturities (market value $513,433
and $509,821) ................................ $ 498,041 $ 527,304
Policy loans ................................... 98,194 85,277
Short-term investments ......................... 45,308 41,695
---------- ----------
Total Investments ........................ 641,543 654,276
Cash ........................................... -- 17
Accrued investment income ...................... 11,579 11,262
Premiums due and deferred ...................... 2,770 2,753
Receivable from affiliate ...................... 3,616 1,827
Federal income taxes ........................... 368 8,597
Other assets ................................... 253 1,549
Assets held in Separate Accounts ............... 789,427 642,049
---------- ----------
TOTAL ASSETS ....................................... $1,449,556 $1,322,330
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY

LIABILITIES:
Policy liabilities and insurance reserves:
Future policy benefits and claims ........... $ 449,617 $ 497,353
Other policy claims and benefits payable .... 2,494 3,268
Interest maintenance reserve (IMR) .......... 8,216 6,931
Payable to affiliates .......................... 5,375 4,568
Other liabilities .............................. 8,878 14,117
Asset valuation reserve (AVR) .................. 5,749 5,512
Liabilities related to Separate Accounts ....... 777,620 627,515
---------- ----------
TOTAL LIABILITIES .................................. 1,257,949 1,159,264
--------- ---------
STOCKHOLDER'S EQUITY:
Common Stock, $5 par value; 400,000 shares
authorized, issued and outstanding ........... 2,000 2,000
Paid-in capital ................................ 125,000 125,000
Unassigned surplus ............................. 64,607 36,066
---------- ----------
TOTAL STOCKHOLDER'S EQUITY ......................... 191,607 163,066
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ......... $1,449,556 $1,322,330
========== ==========

SEE NOTES TO THE FINANCIAL STATEMENTS

B-19

<PAGE>

FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)

Years ended December 31,
--------------------------------
1995 1994 1993
-------- -------- --------
($000's)
REVENUE

Premiums and annuity considerations ....... $ 97,660 $106,117 $105,390
Net investment income ..................... 44,580 44,381 47,700
Net realized investment gains/(losses) .... 1,257 (2,825) 6,066
Other income .............................. 3,900 3,201 2,831
-------- -------- --------
TOTAL REVENUE ............................... 147,397 150,874 161,987
-------- -------- --------
BENEFITS AND EXPENSES

Current and future benefits and claims .... 89,115 100,555 100,514
Commission expenses ....................... 2,538 3,075 3,038
General, administrative and other expenses. 18,133 17,149 19,182
-------- -------- --------
TOTAL BENEFITS AND EXPENSES ................. 109,786 120,779 122,734
-------- -------- --------
Income before provision in lieu of federal
income tax .............................. 37,611 30,095 39,253
Provision in lieu of federal
income tax .............................. (8,833) (16,765) (19,460)
-------- -------- --------
NET INCOME .................................. $ 28,778 $ 13,330 $ 19,793
======== ======== ========

SEE NOTES TO THE FINANCIAL STATEMENTS

B-20

<PAGE>

FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF STOCKHOLDER'S EQUITY
(STATUTORY BASIS)

Years ended December 31,
--------------------------------
1995 1994 1993
-------- -------- --------
($000's)
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
-------- -------- --------

UNASSIGNED SURPLUS
Balance, beginning of year ............... 36,066 22,942 29,333
Net income ............................... 28,778 13,330 19,793
Net unrealized investment gains/(losses).. -- -- --
(Increase)/Decrease in AVR ............... (237) (206) (184)
Dividends to stockholder ................. -- -- (26,000)
-------- -------- --------
Balance, end of year ..................... 64,607 36,066 22,942
-------- -------- --------
TOTAL STOCKHOLDER'S EQUITY ................. $191,607 $163,066 $149,942
======== ======== ========

SEE NOTES TO THE FINANCIAL STATEMENTS

B-21

<PAGE>

<TABLE>
FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
<CAPTION>

Years Ended December 31,
-----------------------------------
1995 1994 1993
--------- --------- ---------
($000's)

<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES

Net income ........................................... $ 28,778 $ 13,330 $ 19,793
Adjustments to reconcile net income to
net cash from operations:
Increase (decrease) in policy
liabilities and insurance reserves ............... (48,509) (40,237) (13,998)
Net (increase) decrease in Separate Accounts ....... 2,728 1,220 3,426
Net realized investment(gains)/loss ................ (1,257) 2,825 (6,066)
Amortization and other non-cash items .............. 879 1,696 1,791
(Increase) decrease in operating assets:
Policy loans .................................... (12,917) (15,511) (13,921)
Accrued investment income ....................... (317) (679) 500
Premiums due and deferred ....................... (17) 268 115
Receivable from affiliate ....................... (1,789) (132) (953)
Federal income taxes ............................ 8,229 (8,448) 4,065
Other assets .................................... 1,296 2,760 (3,808)
Increase (decrease) in operating liabilities:
Payable to affiliates ........................... 807 (3,419) 732
Federal income taxes ............................ -- -- --
Other liabilities ............................... (5,239) 10,522 (1,271)
--------- --------- ---------
CASH FLOW FROM (USED FOR) OPERATING ACTIVITIES .......... (27,328) (35,805) (9,595)
--------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from the sale/maturity of:
Fixed maturities .................................. 553,681 705,889 443,879
Payments for the purchase of:
Fixed maturities .................................. (522,757) (658,008) (391,561)
Net proceeds (payments) of short-term
investments ....................................... (3,613) (12,096) (17,838)
--------- --------- ---------
CASH FLOW FROM (USED FOR) INVESTING ACTIVITIES .......... 27,311 35,785 34,480
--------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES

Dividends paid ......................................... -- -- (26,000)
--------- --------- ---------
Net increase (decrease) in Cash ........................ (17) (20) (1,115)
Cash, beginning of year ............................. 17 37 1,152
--------- --------- ---------
CASH, END OF YEAR ....................................... $ 0 $ 17 $ 37
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid in lieu of income taxes ................... $ 7,900 $ 17,679 $ 15,396
========= ========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES

Dividends paid in the form of fixed
maturities ........................................ $ -- $ -- $ --
========= ========= =========
</TABLE>

SEE NOTES TO THE FINANCIAL STATEMENTS

B-22

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

1. General

Pruco Life Insurance Company of New Jersey (the Company), a stock life
insurance company domiciled in the State of New Jersey, is an indirect
subsidiary of The Prudential Insurance Company of America (The 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
single-pay deferred annuities through The Prudential's sales force.

2. Summary of Significant Accounting Policies and Principles

A. Basis of Presentation

The financial statements are presented in conformity with generally
accepted accounting principles ("GAAP"), which for mutual life
insurance companies and their insurance subsidiaries are statutory
accounting practices prescribed or permitted by the National
Associations of Insurance Commissioners ("NAIC") and their respective
domiciliary home state insurance departments. Prescribed statutory
accounting practices include publications of the NAIC, state laws,
regulations and general administrative rules. Permitted statutory
accounting practices encompass all accounting practices not so
prescribed.

Certain reclassifications have been made to the 1993 and 1994 financial
statements and footnotes to conform to the 1995 presentation. Included
in the Statement of Operations are certain items which, under statutory
accounting practices, are charged or credited directly to surplus.

Pruco Life Insurance Company of New Jersey, domiciled in the State of
New Jersey, prepares its statutory financial statements in accordance
with accounting practices prescribed or permitted by the New Jersey
Department of Insurance ("the Department").

The Company, with permission from the Department, prepares an Annual
Report that differs from the Annual Statement filed with the Department
in that subsidiaries are consolidated and certain financial statement
captions are presented differently.

Management has used estimates and assumptions in the preparation of the
financial statements that affect the reported amounts of assets,
liabilities, revenue and expenses. Actual results could differ from
those estimates.

The following is a reconciliation of Statutory Net Income with net
income per the financial statements.

Years ended December 31,
---------------------------------------
1995 1994 1993
---- ---- ----
($000's)
<S> <C> <C> <C>
Statutory net income including net
gains and losses on sales of investments ....... $ 25,567 $ 16,309 $ 20,075
Adjustments to reconcile to net income
as follows:
Change in General Account reserve
due to changes in valuation basis .............. 24 3,156 166
Gain/(loss) due to income tax applicable
to other than current year ..................... 5,266 (7,534) --
Net gain/(loss) from operations in
Separate Accounts .............................. (2,080) 1,372 (458)
Other ............................................ 1 27 10
-------- -------- --------
Net Income ....................................... $ 28,778 $ 13,330 $ 19,793
======== ======== ========
</TABLE>

B-23

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

B. Future Application of Accounting Standards

The Financial Accounting Standards Board (the "FASB") issued Interpretation
No. 40, "Applicability of Generally Accepted Accounting Principles to
Mutual Life Insurance and Other Enterprises", which, as amended, is
effective for fiscal years beginning after December 15, 1995.
Interpretation No. 40 changes the current practice of mutual life insurance
companies with respect to utilizing statutory basis financial statements
for general purposes, in not allowing such financial statements to be
referred to as having been prepared in accordance with GAAP. Interpretation
No. 40 requires GAAP financial statements of mutual life insurance
companies to apply all GAAP pronouncements, unless specifically exempted.
See Note 10 of the Notes to the Financial Statements for the impact of
Interpretation No. 40 on the Company's Total Stockholders' Equity.

C. Investments

Fixed maturities are stated at amortized cost. Short-term investments are
stated at amortized cost, which approximates fair value.

Policy loans are stated primarily at unpaid principal balances.

Realized investment gains and losses are reported based on specific
identification of the investments sold.

D. Future Policy Benefits, Losses, and Claims

Reserves for individual life insurance are calculated using various
methods, interest rates and mortality tables which produce reserves that
meet the aggregate requirements of state laws and regulations.
Approximately 7% of individual life insurance reserves are determined using
the net level premium method, or by using the greater of net level premium
reserve or the policy cash value. About 93% of individual life insurance
reserves are calculated according to the Commissioner's Reserve Valuation
Method (CRVM), or methods which compare CRVM reserves to policy cash
values.

Reserves for deferred individual annuity contracts are determined using the
Commissioner's Annuity Reserve Valuation Method (CARVM) and the Net Level
Premium Method.

For life insurance and annuities, unpaid claims include estimates of both
death benefits on reported claims and those which are incurred but not
reported.

Reserves for other deposit funds or other liabilities with life
contingencies reflect the contract deposit account or experience
accumulation for the contract and any purchased annuity reserves.

E. Revenue Recognition and Related Expenses

Premium revenues are recognized as income over the premium paying period of
the related policy. Annuity considerations are recognized as revenue when
received. Expenses, including new business acquisition costs such as
commissions, are charged to operations as incurred.

B-24

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

F. Federal Income Taxes

The Company is a member of a group of affiliated companies which join in
filing a consolidated federal tax return. Pursuant to a tax allocation
agreement, current tax liabilities are determined for individual companies
based upon their separate return basis taxable income. Members with taxable
income incur an amount in lieu of the separate return basis federal tax.
Members with a loss for tax purposes recognize a current benefit in
proportion to the amount of their losses utilized in computing consolidated
taxable income. Differences between estimated liabilities and actual
payments are included in the current year's operations as an adjustment to
the provision in lieu of income taxes. For the year 1993, the Company was
allocated a portion of the consolidated income tax liability attributable
to Section 809 in the Internal Revenue Code (commonly referred to as the
"Equity Tax"). Since 1994, the Company has no longer been allocated this
Equity Tax.

Taxes on the Company are calculated under the Internal Revenue Code of 1986
which provides that life insurance companies be taxed on their gain from
operations after dividends to policyholders. In calculating this tax, the
Code requires the capitalization and amortization of policy acquisition
expenses.

G. Asset Valuation Reserve and Interest Maintenance Reserve

The Asset Valuation Reserve (AVR) and the Interest Maintenance Reserve
(IMR) are required for life insurance companies under NAIC regulations. The
AVR is calculated based on a statutory formula and designed to mitigate the
effects of valuation and credit-related losses on unassigned surplus.

The components of AVR at December 31, 1995 and 1994 are as follows:

Fixed Maturities
($000's)
----------------

Beginning of Year 1994 -- AVR .................. $5,306
Additions ...................................... 206
Deductions ..................................... --
------
End of Year 1994 -- AVR ........................ $5,512
======

Beginning of Year 1995 -- AVR ................. $5,512
Additions ...................................... 237
Deductions ..................................... --
------
End of Year 1995 -- AVR ........................ $5,749
======

The IMR captures net realized capital gains and losses resulting from
changes in the general level of interest rates. These gains and losses are
amortized into investment income over the expected remaining life of the
investment sold. The IMR balance was $8.2 million, and $6.9 million at
December 31, 1995 and 1994 respectively. "Net realized investment
gains/(losses) of $2.3 million and $(5.5) million were deferred in 1995 and
1994, respectively. Amortized into "Net investment income" were $1.1
million and $2.0 million of IMR for the year ended December 31, 1995 and
1994, respectively.

B-25

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

H. 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. Assets are carried at market value. Deposits
to such accounts are included in revenues with a corresponding liability
increase included in benefits and expenses. The assets of each account are
legally segregated and are not subject to claims that arise out of any
other business of the Company. Consequently, management believes that is
appropriate to combine Separate Account policyholder net investment income
and net realized and unrealized capital gains/(losses) along with benefit
payments and change in reserves in "Current and future benefits and
claims". Policyholder net investment income and net realized and unrealized
gains/(losses) for the years ended December 31, 1995, 1994 and 1993 were
$152 million, $(7) million and $86 million, respectively.

3. Federal Income Taxes

The following is a reconciliation of the Company's federal tax provision as
computed at the federal tax rate with that computed at the Company's
effective tax rate.

<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------------
1995 1994 1993
---- ---- ----
($000's)
<S> <C> <C> <C>
Income before provision in lieu of federal
income taxes ....................................... $37,611 $30,095 $39,253
Statutory tax rate .................................... 35% 35% 35%
------- ------- -------
Expected federal income taxes ......................... $13,164 $10,533 $13,739
Tax effect of:
Statutory/tax policy reserve difference ............ (3,994) 4,279 1,367
Timing differences in tax/book income
recognition ....................................... 1,366 (2,743) 2,151
Timing differences in tax/book income
recognition-other ................................. (840) (78) (25)
(Increase)/Decrease in life insurance
premiums deferred and uncollected ................ (14) 94 40
Capitalization of policy acquisition
expenses ......................................... (849) 4,680 1,541
Allocated equity tax ............................... -- -- 647
------- ------- -------
Federal income taxes .................................. $ 8,833 $l6,765 $19,460
======= ======= =======
Effective tax rate .................................... 23% 56% 50%
======= ======= =======

</TABLE>

B-26

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

<TABLE>

4. NET INVESTMENT INCOME

Net investment income consisted of:

Years Ended December 31,
-------------------------------------------
1995 1994 1993
-------- ------- -------
($000's)
<S> <C> <C> <C>
Gross investment income
Fixed maturities .................................................. $36,861 $36,565 $40,546
Policy loans ...................................................... 5,029 4,290 3,506
Short-term investments ............................................ 2,290 2,364 1,817
Other ............................................................. 51 44 25
------- ------- -------
44,231 43,263 45,894
Investment expenses ................................................ (701) (906) (581)
------- ------- -------
43,530 42,357 45,313
Amortization of interest maintenance reserve ....................... 1,050 2,024 2,387
------- ------- -------
Net investment income ............................................... $44,580 $44,381 $47,700
======= ======= =======

5. INVESTMENTS AND INVESTMENT GAINS (LOSSES)

Net realized and unrealized gains (losses) were as follows:

Years Ended December 31,
------------------------------------------

1995 1994 1993
------- ------- -------
($000's)
<S> <C> <C> <C>
Realized Gains
Fixed maturities ................................................ $ 3,593 $(8,311) $13,225
Short-term investments -- 1 26
Tax effected amounts transferred to
interest maintenance reserve .................................... (2,335) 5,485 (7,185)
------- ------- -------
Net realized investment gains ...................................... $ 1,258 $(2,825) $ 6,066
======= ======= =======
Unrealized Gains (Losses) Fixed maturities ......................... $ -- $ -- $ --
------- ------- -------
Net unrealized investment gains .................................... $ -- $ -- $ --
Balance beginning of year .......................................... $ -- $ -- $ --
------- ------- -------
Balance end of year ................................................ $ -- $ -- $ --
======= ======= =======
</TABLE>

B-27

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, and 1993
(STATUTORY BASIS)

FIXED MATURITIES
($000's)

At December 31,
---------------------- Increase (Decrease) in
Amortized Market difference between market value
cost value and amortized cost during the year
--------- --------- ----------------------------------
1995 ..... $498,041 $513,433 $32,875
1994 ..... 527,304 509,821 (36,813)
1993 ..... 587,213 606,543 (1,472)

The amortized cost and estimated market values of investments in fixed
maturities at December 31, 1995 and 1994 are as follows:

<TABLE>

1995
--------------------------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
($000's) ($000's) ($000's) ($000's)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations
and agencies ................................ $ 81,806 $ 1,287 -- $ 83,093

Debt securities issued by foreign
governments and their agencies .............. 25,849 1,128 -- 26,977

Corporate securities .......................... 353,514 11,131 340 364,305

Mortgage-backed securities .................... 36,871 2,192 5 39,058
-------- ------- ---- --------
Total ......................................... $498,040 $15,738 $345 $513,433
======== ======= ==== ========

1994
--------------------------------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized market
cost gains losses value
($000's) ($000's) ($000's) ($000's)
-------- ------- ------- -------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations
of U.S. government corporations
and agencies ................................ $116,502 $ 10 $11,641 $104,871

Debt securities issued by foreign
governments and their agencies .............. 34,554 1,631 723 35,462

Corporate securities .......................... 336,641 1,261 7,524 330,378

Mortgage-backed securities .................... 39,607 180 677 39,110
-------- ------ ------- --------
Total ......................................... $527,304 $3,082 $20,565 $509,821
======== ====== ======= ========
</TABLE>

B-28

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, and 1993
(STATUTORY BASIS)

The amortized cost and estimated market value of fixed maturities at
December 31, 1995 by contractual maturity, are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

Estimated
Amortized market
cost value
($000's) ($000's)
-------- --------
Due in one year or less ........................ $ 57,798 $ 58,194
Due after one year through five years .......... 329,260 339,601
Due after five years through ten years ......... 55,151 57,404
Due after ten years ............................ 18,960 19,176
-------- --------
461,169 474,375
Mortgage-backed securities ..................... 36,872 39,058
-------- --------
Total .......................................... $498,041 $513,433
======== ========

Proceeds from the sale/maturity of fixed maturities during 1995, 1994 and
1993 were $553.7 million, $705.9 million and $443.9 million, respectively. Gross
gains of $6.8 million, $3.3 million and $13.4 million and gross losses of $3.2
million, $11.6 million and $.2 million were realized on those sales during 1995,
1994 and 1993, respectively.

The Company invests in both investment grade and non-investment grade
securities. The Securities Valuation Office (SVO) of the NAIC rates fixed
maturities held by insurers (SVO rated securities accounted for approximately
94.3% and 99.0% of the Company's total fixed maturities balances at December
31, 1995 and 1994, respectively) for regulatory purposes and groups investments
into six categories ranging from highest quality bonds to those in or near
default. The lowest three NAIC categories represent, for the most part, high
yield securities and are defined by the NAIC as including any security with a
public agency rating of b+ or b1 or less. At December 31, 1995 the Company held
two securities at statement value of $4.5 million with a NAIC rating of 4. At
December 31, 1994, the Company held no securities in the three lowest NAIC
categories.

6. RELATED PARTY TRANSACTIONS

A. SERVICE AGREEMENTS

The Company, The Prudential, Pruco Life, and Pruco Securities Corporation,
an indirect wholly-owned subsidiary of the 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 $16 million, $15 million, and $17 million for the
years ended December 31, 1995, 1994 and 1993, respectively.

B. EMPLOYEES BENEFIT PLANS

PENSION PLANS

The Company is a wholly-owned subsidiary of The 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. The 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 1995, 1994 or 1993 because the plan was subject to the full funding
limitation under the Internal Revenue Code.

B-29

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

POSTRETIREMENT LIFE AND HEALTH BENEFITS

The 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. Postretirement benefits, with respect to The Prudential, are
recognized in accordance with prescribed NAIC policy. The Prudential has 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, 1995, 1994 and 1993.

C. REINSURANCE

The Company currently has one reinsurance agreement in place with The
Prudential (the reinsurer). Specifically: 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 ($2.5 million). This
agreement had no material effect on net income for the years ended December 31,
1995, 1994, 1993.

D. OTHER TRANSACTIONS

The Company has issued approximately 375 variable appreciable life
contracts to The Prudential for the purpose of funding non-qualified pension
benefits for certain employees. Included in insurance premiums and annuity
considerations are $12 million each for the years ended December 31, 1995, 1994
and 1993, which are attributable to these contracts.

7. DIVIDENDS

The Company is subject to New Jersey law which limits the amount of
dividends that insurance companies can pay to stockholders. The maximum dividend
that may be paid in any 12 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. Based on these limitations, the Company would be
permitted a maximum of $26 million in dividend distributions in 1996, all of
which could be paid in cash, without the approval from The Department of
Insurance of the State of New Jersey.

8. FAIR VALUE INFORMATION

The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies for only those accounts for
which fair value disclosures are required. Considerable judgment is necessarily
applied 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. For all other financial instruments presented in the table, the carrying
value is a reasonable estimate of fair value.

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

POLICY LOANS. The estimated fair value is calculated using a discounted
cash flow model based upon current U.S. Treasury rates and historical loan
repayments.

B-30

<PAGE>

NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(STATUTORY BASIS)

INVESTMENT-TYPE INSURANCE CONTRACT LIABILITIES. Fair values for the
Company's investment-type insurance contract liabilities are estimated using a
discounted cash flow model, based on interest rates currently being offered for
similar contracts.

The following table discloses the carrying amounts and estimated fair
values of the Company's financial instruments at December 31, 1995 and 1994.

<TABLE>

1995 1994
---------------------- ----------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- ----- -------- -----
($000's)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities .................. $498,041 $513,433 $527,304 $509,821
Policy loans ...................... 98,194 99,057 85,277 76,734
Short-term investments ............ 45,308 45,308 41,695 41,695

Financial Liabilities:
Investment-type
insurance contracts ............. $100,625 $ 99,929 $166,183 $159,463

</TABLE>

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 The Prudential, the Company, and agents appointed by The
Prudential and the Company. The Prudential has agreed to indemnify the Company
for any and all losses resulting from such litigation.

10. SUBSEQUENT EVENT

As required by Interpretation No. 40, in the first quarter of 1996, the
Company changed its basis of accounting from statutory accounting practices to
Generally Accepted Accounting Prnciples ("GAAP") (See Note 2). The effect of
this change to Total Stockholders' Equity at December 31, 1995 was an increase
of $76.4 million.

B-31

<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 M1365 X (n + 1) year rate + (365-m)/365 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 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 ($ 12,000/417,162.26) x $8,546.39 = $5,975.71
7-Yr MVA (%5,162.26/417,162.26) 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

===========================================

_______________________________________________________________________________
===========================================

A Subsidiary of

[LOGO] PRUDENTIAL

Pruco Life Insurance Company Of New Jersey
213 Washington Street
Newark, New Jersey 07102-3777

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

<PAGE>

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Not applicable.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Prudential Directors' and Officers' Liability and Corporation Reimbursement
Program, purchased by The Prudential from Aetna Casualty & Surety Company, CNA
Insurance Company, Lloyds Insurance 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 reimbursment for "Loss" (as defined in the policies)
which the Company pays as indemnification to its directors or officers resulting
from any claim or claims by reason of any actual or alleged act, error,
misstatement, misleading statement, omission, or breach of duty by persons in
the discharge of their duties solely in their capacities as directors or
officers of The Prudential, any of its subsidiaries, or certain investment
companies affiliated with The 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 of a directors or
officers, (2) claims based on or a 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
relevant provisions of New Jersey law, New Jersey being the state of
organization of Pruco Life of New Jersey, can be found in the text of The
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.4 to Form S-6, Registration No.33-20000, filed March 2, 1990, on
behalf of The Prudential Variable Appreciable Account. The text of Pruco Life of
New Jersey's by-laws, which relates to indemnification of officers and
directors, is incorporated by reference 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 15. RECENT SALES OF UNREGISTERED SECURITIES

Not applicable.

II-1

<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

(1) (a) Form of Distribution Agreement between Pruco Securities Corporation
(Underwriter) and Pruco Life Insurance Company of New Jersey
(Depositor). (Note 3)

(3) (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)

(5) Opinion of Counsel and consent to its use as to legality of the
securities being registered. (Note 1)

(10) The Prudential DISCOVERY Select Contract. (Note 3)

(23) Written consent of Deloitte & Touche LLP, independent auditors.
(Note 1)

(24) Powers of Attorney.
William M. Bethke, Linda S. Dougherty, Ira J. Kleinman,
Mendel A. Melzer, Esther H. Milnes, I. Edward Price and
William F. Yelverton. (Note 3)

(27) Financial Data Schedule. (Note 1)

(b) Financial Statement Schedules

(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 Registration Statement No. 333-18053 filed
on Form S-1 filed December 17, 1996, on behalf of Pruco Life
Insurance Company of New Jersey.

II-2

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Pre-Effective Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Newark, State of New Jersey, on the 7th day of February, 1997.

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Registrant)

By: /s/ ESTHER H. MILNES
-------------------------------------
Esther H. Milnes
President

Pursuant to the requirements of the Securities Act of 1933, this Pre-Effective
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and the date indicated.

SIGNATURE AND TITLE

/s/ * February 7, 1997
- ----------------------------------
William F. Yelverton
Chairman of the Board and Director

/s/ *
- ----------------------------------
Esther H. Milnes
President and Director

/s/ *
- ----------------------------------
Linda Dougherty
Chief Accounting Officer
and Comptroler

/s/ *
- ---------------------------------- *By: /s/ THOMAS J. LOFTUS
Mendel A. Melzer --------------------------------------
Director Thomas J. Loftus
(Attorney-in-Fact)

/s/ *
- ----------------------------------
William Bethke
Director

/s/ *
- ----------------------------------
Ira J. Kleinman
Director

/s/ *
- ----------------------------------
I. Edward Price
Director

II-3

<PAGE>

EXHIBIT INDEX

(5) Opinion of Counsel

(23) Consent of Deloitte & Touche LLP

(27) Financial Data Schedules

II-4

[ThePrudential Logo] CLIFFORD E. KIRSCH
Chief Legal Officer

PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 Washington Street, Newark, NJ 07102-2992
201 802-7333 Fax: 201 802-8357

January 14, 1997

Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992

Gentlemen:

In my capacity as Chief Legal Officer of Pruco Life Insurance Company of New
Jersey ("Pruco Life of New Jersey"), I have reviewed the establishment of the
Pruco Life of New Jersey Flexible Premium Variable Annuity Account (the
"Account") on May 20, 1996, by the Board of Directors of Pruco Life of New
Jersey as a separate account for assets applicable to certain individual
variable annuity contracts, pursuant to the provisions of Section 17B:28-7 of
the New Jersey Insurance Code. I was responsible for oversight of the
preparation and review of the Registration Statement on Form S-1, as amended,
filed by Pruco Life of New Jersey with the Securities and Exchange Commission
(Registration No. 333-18053) under the Securities Act of 1933 and the Investment
Company Act of 1940 for the registration of certain individual variable annuity
contracts issued with respect to the Account.

I am of the following opinion:

(1) Pruco Life of New Jersey was duly organized under the laws of New
Jersey and is a validly existing corporation.

(2) The Account has been duly created and is validly existing as a separate
account pursuant to the aforesaid provisions of New jersey law.

(3) The portion of the assets held in the Account equal to the reserve and
other liabilities for variable benefits under the individual variable
annuity contracts is not chargeable with liabilities arising out of any
other business Pruco Life of New Jersey may conduct.

(4) The individual variable annuity contracts are legal and binding
obligations of Pruco Life of New Jersey in accordance with their terms.

In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.

I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.

Very truly yours,

Clifford E. Kirsch

A Subsidiary of
The Prudential Insurance Company of America

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement No. 333-18053 on Form S-1
of Pruco Life Insurance Company of New Jersey of our report dated December 19,
1996, relating to the financial statements of Pruco Life Insurance Company of
New Jersey, and our report dated March 15, 1996, except for note 10 as to which
the date is January 22, 1997, relating to the financial statements-statutory
basis of Pruco Life Insurance Company of New Jersey, appearing in the
Prospectus, 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
February 7, 1997

<ARTICLE> 7

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<DEBT-HELD-FOR-SALE> 513,433
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 513,433
<EQUITIES> 0
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 656,935
<CASH> 0
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 96,031
<TOTAL-ASSETS> 1,558,282
<POLICY-LOSSES> 92,045
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 375,193
<NOTES-PAYABLE> 0
0
0
<COMMON> 2,000
<OTHER-SE> 266,015
<TOTAL-LIABILITY-AND-EQUITY> 1,558,282
1,042
<INVESTMENT-INCOME> 43,530
<INVESTMENT-GAINS> 3,592
<OTHER-INCOME> 63,415
<BENEFITS> 47,695
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 42,003
<INCOME-TAX> 15,002
<INCOME-CONTINUING> 27,001
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,001
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0

</TABLE>