AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1999
1933 ACT REGISTRATION NO. ________
1940 ACT REGISTRATION NO. 811-7975
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. ___ [ ]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
POST-EFFECTIVE AMENDMENT NO. 4 [X]
(CHECK APPROPRIATE BOX OR BOXES)
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(888) PRU-2888
(Address and telephone number of depositor's principal executive offices)
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copies to:
CHRISTOPHER E. PALMER LEE D. AUGSBURGER
SHEA & GARDNER ASSISTANT GENERAL COUNSEL
1800 MASSACHUSETTS AVENUE, N.W. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
WASHINGTON, D.C. 20036 751 BROAD STREET
(202) 828-2093 NEWARK, NEW JERSEY 07102
(973) 367-1388
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after the
effective date of this Registration.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on __________pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on __________pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] on __________pursuant to paragraph (a)(1) of Rule 485
Title of Securities Being Registered:
Interests in Individual Variable Annuity Contracts
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states 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 may determine.
<PAGE>
DISCOVERY CHOICE _________, 1999
VARIABLE ANNUITY
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE OF NEW JERSEY INSURANCE COMPANY (PRUCO LIFE OF NEW JERSEY). PRUCO
LIFE OF NEW JERSEY IS AN INDIRECT WHOLLY OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
Discovery Choice offers a wide variety of investment choices, including 24
variable investment options that invest in mutual funds managed by these leading
asset managers.
PRUDENTIAL INVESTMENTS JANUS CAPITAL
AIM ADVISORS MFS
AMERICAN CENTURY OPPENHEIMER CAPITAL
FRANKLIN ADVISERS T. ROWE PRICE
WARBURG PINCUS
Please read this prospectus before purchasing a Discovery Choice variable
annuity contract and keep it for future reference. Current prospectuses for each
of the underlying mutual funds accompany this prospectus. These prospectuses
contain important information about the mutual funds. Please read these
prospectuses and keep them for reference.
To learn more about the Discovery Choice variable annuity, you can request a
copy of the Statement of Additional Information (SAI) dated _______, 1999. The
SAI has been filed with the Securities and Exchange Commission (SEC) and is
legally a part of this prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the Discovery Choice SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. The Table of Contents of the SAI is on Page 29 of
this prospectus. For a free copy of the SAI, call us at: (888) PRU-2888 or write
to us at:
Pruco Life of New Jersey Insurance Company Prudential Annuity Service Center
213 Washington Street P.O. Box 14215
Newark, New Jersey 07102-2992 New Brunswick, New Jersey 08906
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE.
INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISK, INCLUDING THE
POSSIBLE LOSS OF YOUR MONEY. AN INVESTMENT IN DISCOVERY CHOICE IS NOT A BANK
DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY.
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
TABLE OF CONTENTS
GLOSSARY .................................................................. ii
SUMMARY ................................................................... 1
SUMMARY OF CONTRACT EXPENSES .............................................. 3
EXPENSE EXAMPLES .......................................................... 5
1. WHAT IS THE DISCOVERY CHOICE VARIABLE ANNUITY?
Short Term Cancellation Right or "Free Look" ........................... 7
2. WHAT INVESTMENT OPTIONS CAN I CHOOSE?
Variable Investment Options ............................................ 8
Transfers Among Options ................................................ 9
Dollar Cost Averaging .................................................. 10
Asset Allocation Program ............................................... 10
Auto-Rebalancing ....................................................... 10
Voting Rights .......................................................... 11
Substitution ........................................................... 11
3. WHAT KIND OF PAYMENTS WILL I RECEIVE DURING
THE INCOME PHASE? (ANNUITIZATION)
Payment Provisions ..................................................... 11
Option 1: Annuity Payments for a Fixed Period .......................... 12
Option 2: Life Annuity with 120 Payments
(10 Years) Certain ................................................... 12
Option 3: Interest Payment Option ...................................... 12
Option 4: Other Annuity Options ........................................ 12
4. WHAT IS THE DEATH BENEFIT?
Beneficiary ............................................................ 12
Calculation of the Death Benefit ....................................... 13
5. HOW CAN I PURCHASE A DISCOVERY CHOICE CONTRACT?
Purchase Payments ...................................................... 14
Allocation of Purchase Payments ........................................ 14
Calculating Contract Value ............................................. 14
6. WHAT ARE THE EXPENSES ASSOCIATED WITH
THE DISCOVERY SELECT CONTRACT?
Insurance Charges ...................................................... 15
Annual Contract Fee .................................................... 15
Premium Taxes .......................................................... 15
Transfer Fee ........................................................... 16
Company Taxes .......................................................... 16
7. HOW CAN I ACCESS MY MONEY? ............................................. 16
Automated Withdrawals .................................................. 16
Suspension of Payments or Transfers .................................... 17
8. WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED
WITH THE DISCOVERY CHOICE CONTRACT? .................................... 17
Taxes Payable by You ................................................... 17
Taxes on Withdrawals and Surrender ..................................... 17
Taxes on Annuity Payments .............................................. 18
Penalty Taxes on Withdrawals and Annuity Payments ...................... 18
Taxes Payable by Beneficiaries ......................................... 18
Withholding of Tax from Distributions .................................. 18
Annuity Qualification .................................................. 19
Diversification and Investor Control ................................... 19
Required Distributions Upon Your Death ................................. 19
Changes in the Contract ................................................ 19
Additional Information ................................................. 19
Contracts Held by Tax Favored Plans .................................... 19
Additional Tax Features for Tax Favored Plans .......................... 23
9. OTHER INFORMATION ...................................................... 24
Pruco Life Insurance Company of New Jersey ............................. 24
The Separate Account ................................................... 25
Sale and Distribution of the Contract .................................. 25
Assignment ............................................................. 25
Year 2000 Compliance ................................................... 25
Financial Statements ................................................... 27
Statement of Additional Information .................................... 27
i
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
GLOSSARY
We have tried to make this prospectus as easy to read and understand as
possible. By the nature of the contract, however, certain technical words or
terms are unavoidable. We have identified the following as some of these words
or terms.
- --------------------------------------------------------------------------------
ACCUMULATION PHASE: The period that begins with the contract date (see
definition below) and ends when you start receiving income payments, or earlier
if the contract is terminated through a full withdrawal or payment of a death
benefit.
ANNUITANT: The person whose life determines the amount of income payments that
will be paid.
ANNUITY DATE: The date when income payments are scheduled to begin.
BENEFICIARY: The person(s) or entity you have chosen to receive a death benefit.
CONTRACT DATE: The date we receive your initial purchase payment and all
necessary paperwork in good order at the Prudential Annuity Service Center.
Contract anniversaries are measured from the contract date. A contract year
starts on the contract date or on a contract anniversary.
CONTRACTOWNER, OWNER OR YOU: The person entitled to the ownership rights under
the contract.
CONTRACT VALUE: This is the total value of your contract.
DEATH BENEFIT: If the sole or last surviving owner dies, the designated
person(s) or the beneficiary will receive, at a minimum, the total amount
invested or a potentially greater amount related to market appreciation. See
"What is the Death Benefit?" on page ___.
INCOME OPTIONS: Options under the contract that define the frequency and
duration of income payments. In your contract, these are referred to as payout
or annuity options.
JOINT OWNER: The person named as the joint owner, who shares ownership rights
with the owner as defined in the contract.
PRUDENTIAL ANNUITY SERVICE CENTER: P.O. Box 14215, New Brunswick, New Jersey,
08906. The phone number is 1-888-PRU-2888.
PURCHASE PAYMENTS: The amount of money you pay us to purchase the contract.
Generally, with some restrictions you can make additional purchase payments at
any time during the accumulation phase.
SEPARATE ACCOUNT: Purchase payments allocated to the variable investment options
are held by us in a separate account called the Pruco Life of New Jersey
Flexible Premium Variable Annuity Account. The separate account is set apart
from all of the general assets of Pruco Life of New Jersey.
TAX DEFERRAL: This is a way to increase your assets without currently being
taxed. Generally, you do not pay taxes on your contract earnings until you take
money out of your contract.
VARIABLE INVESTMENT OPTION: When you choose a variable investment option, we
purchase shares of the mutual fund which are held as an investment for that
option. We hold these shares in the separate account. The division of the
separate account of Pruco Life of New Jersey that invests in a particular mutual
fund is referred to in your contract as a subaccount.
ii
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
SUMMARY: FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE
CORRESPONDING SECTION IN THE PROSPECTUS.
1. WHAT IS THE DISCOVERY CHOICE VARIABLE ANNUITY?
The Discovery Choice Variable Annuity is a contract, between you, the
owner, and us, the insurance company, Pruco Life Insurance Company of New Jersey
("PLNJ"). Pruco Life Insurance Company of New Jersey will hereafter be referred
to as Pruco Life of New Jersey, we or us. The contract allows you to invest on a
tax-deferred basis in one or more of 24 variable investment options. The
contract is intended for retirement savings or other long-term investment
purposes and provides for a death benefit.
The variable investment options are designed to offer the opportunity for a
favorable return. However, this is NOT guaranteed. It is possible, due to market
changes, that your investments may decrease in value.
You can invest your money in any or all of the variable investment options.
You are allowed 12 tax free transfers each contract year among the variable
investment options, without a charge.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase; and the income phase. During the accumulation phase, any
earnings grow on a tax-deferred basis and are generally only taxed as income
when you make a withdrawal. The income phase starts when you begin receiving
regular payments from your contract. The amount of money you are able to
accumulate in your contract during the accumulation phase will help determine
the amount of payments you will receive during the income phase. Other factors
will affect the amount of your payments such as age, gender and the payout
option you selected.
If you change your mind about owning Discovery Choice, YOU MAY CANCEL YOUR
CONTRACT WITHIN 10 DAYS AFTER RECEIVING IT (or whatever time period is required
in the state ). This time period is referred to as the Free-Look period.
2. WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any or all of the variable investment options
that use the mutual funds described in the fund prospectuses provided with this
prospectus:
THE PRUDENTIAL SERIES FUND
Diversified Bond Portfolio
Diversified Conservative Growth Portfolio
Equity Income Portfolio
Equity Portfolio
Global Portfolio
High Yield Bond Portfolio
Money Market Portfolio
Prudential Jennison Portfolio
Small Capitalization Stock Portfolio
Stock Index Portfolio
20/20 Focus Portfolio
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
American Century VP Value
JANUS ASPEN SERIES
Growth Portfolio
International Growth Portfolio
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series
Research Series
OCC ACCUMULATION TRUST
Managed Portfolio
Small Cap Portfolio
TEMPLETON VARIABLE PRODUCTS
SERIES FUND
Franklin Small Cap Investments Fund - Class 2
T.ROWE PRICE
Equity Series - Equity Income Portfolio
International Series - International Stock Portfolio
WARBURG PINCUS TRUST
Post-Venture Capital Portfolio
Depending upon market conditions, you may earn or lose money in any of
these options. The value of your contract will fluctuate depending upon the
investment performance of the mutual funds used by the variable investment
options that you choose. Performance information for the
1
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
variable investment options is provided in the Statement of Additional
Information (SAI). Past performance is not a guarantee of future results.
3. WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one
of several options, including guaranteed payments for the annuitant's lifetime.
Generally, once you begin receiving regular payments, you cannot change your
payment plan.
4. WHAT IS THE DEATH BENEFIT?
If the sole or last surviving owner or joint owner dies before the income
phase of the contract begins, the person(s) or entity that you have chosen as
your beneficiary will receive at a minimum, the total amount invested adjusted
for withdrawals or a potentially greater amount relating to market appreciation
depending on the death benefit option you choose.
5. HOW CAN I PURCHASE A DISCOVERY CHOICE ANNUITY CONTRACT?
You can purchase this contract, under most circumstances, with a minimum
initial purchase payment of $10,000. Generally, you can add $1,000 or more at
any time during the accumulation phase of the contract. Your representative can
help you fill out the proper forms.
6. WHAT ARE THE EXPENSES ASSOCIATED WITH THE DISCOVERY CHOICE CONTRACT?
The contract has insurance features and investment features, and there are
costs related to each. Each year we deduct a contract maintenance charge if your
contract value is less than $50,000. This charge is equal to the lesser of $30
or 2% of your contract value. For insurance and administrative costs, we also
deduct an annual charge of 1.35% or 1.65% of the average daily value of all
assets allocated to the variable investment options, depending on the death
benefit option that you have chosen.
There are a few states/jurisdictions that assess a premium tax when you
begin receiving regular income payments from your annuity. In those states, we
will assess the required premium tax charge which can range up to 5%.
There are also charges made by the mutual funds which are invested in by
the variable investment options. These annual charges currently range from 0.37%
to 1.40% of a fund's average daily assets.
7. HOW CAN I ACCESS MY MONEY?
You may take money out at any time during the accumulation phase. You may,
however, be subject to income tax, if you make a withdrawal prior to age 59-1/2
an additional tax penalty as well.
8. WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE DISCOVERY CHOICE
CONTRACT?
Your earnings are generally not taxed until withdrawn. If you take money
out during the accumulation phase, earnings are withdrawn first and are taxed as
income. If you are younger than 59-1/2 when you take money out, you may be
charged a 10% federal tax penalty on the earnings in addition to ordinary
taxation. A portion of the payments you receive during the income phase is
considered partly a return of your original investment. As a result, that
portion of each payment is not taxable as income. Generally, all amounts
withdrawn from an Individual Retirement Annuity (IRA) contracts are taxable and
subject to the 10% penalty if withdrawn prior to age 59-1/2.
9. OTHER INFORMATION
This contract is issued by Pruco Life of New Jersey, an indirect wholly
owned subsidiary of the Prudential Insurance Company of America, and sold by
registered representatives.
2
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
SUMMARY OF CONTRACT EXPENSES
- --------------------------------------------------------------------------------
The purpose of this summary is to help you to understand the costs you will pay
for Discovery Choice. This summary includes the expenses of the mutual funds
used by the variable investment options but does not include any charge for
premium taxes that might be applicable in your state.
FOR MORE DETAILED INFORMATION:
More detailed information can be found on page ___ under the section called,
"What Are The Expenses Associated With The Discovery Choice Variable Annuity?"
For more detailed expense information about the mutual funds, please refer to
the individual fund prospectuses which you will find at the back of this
prospectus.
TRANSACTION EXPENSES
- --------------------------------------------------------------------------------
TRANSFER FEE (SEE NOTE 1 BELOW)
- --------------------------------------------------------------------------------
First 12 transfers per year $ 0.00
Each transfer after 12 $ 10.00
ANNUAL CONTRACT FEE AND CONTRACT CHARGE UPON
FULL WITHDRAWAL (SEE NOTE 2 BELOW)
- --------------------------------------------------------------------------------
$ 30.00
ANNUAL ACCOUNT EXPENSES
- --------------------------------------------------------------------------------
AS A PERCENTAGE OF YOUR AVERAGE ACCOUNT VALUE.
BASIC DEATH BENEFIT OPTION
- --------------------------------------------------------------------------------
Insurance Charge: 1.35%
ENHANCED DEATH BENEFIT OPTION
- --------------------------------------------------------------------------------
Insurance Charge: 1.65%
NOTE 1: YOU WILL NOT BE CHARGED FOR TRANSFERS MADE IN CONNECTION WITH DOLLAR
COST AVERAGING AND AUTO-REBALANCING.
NOTE 2: THIS FEE IS ASSESSED ANNUALLY AND AT THE TIME OF A FULL WITHDRAWAL
PROVIDED THE VALUE OF YOUR CONTRACT IS LESS THAN $50,000.
NOTES FOR ANNUAL MUTUAL FUND EXPENSES (APPEARING ON PAGE ___):
THESE EXPENSES ARE BASED ON THE HISTORICAL FUND EXPENSES FOR THE YEAR ENDED
DECEMBER 31, 1998, EXCEPT AS INDICATED. FUND EXPENSES ARE NOT FIXED OR
GUARANTEED BY THE DISCOVERY CHOICE CONTRACT AND MAY VARY FROM YEAR TO YEAR.
(1) THE PRUDENTIAL SERIES FUND: BECAUSE THIS IS THE FIRST YEAR OF OPERATION OF
THE DIVERSIFIED CONSERVATIVE GROWTH PORTFOLIO AND THE 20/20 FOCUS PORTFOLIO,
OTHER EXPENSES ARE ESTIMATED BASED ON MANAGEMENT'S PROJECTION OF NON-MANAGEMENT
FEE EXPENSES.
(2) AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. AND T.ROWE PRICE FUNDS:
MANAGEMENT FEES INCLUDE ORDINARY EXPENSES OF OPERATING THE FUNDS.
(3) JANUS ASPEN SERIES: FEE REDUCTIONS REDUCE MANAGEMENT FEES TO THE LEVEL OF
THE CORRESPONDING JANUS RETAIL FUND. JANUS HAS AGREED TO CONTINUE THE APPLICABLE
WAIVERS AND FEE REDUCTIONS UNTIL AT LEAST THE NEXT ANNUAL RENEWAL OF THE
ADVISORY AGREEMENT.
(4) TEMPLETON VARIABLE PRODUCTS SERIES FUND: FIGURES REFLECT EXPENSES FROM THE
FUND'S INCEPTION ON MANY 1, 1998 AND ARE ANNUALIZED. THE INVESTMENT MANAGER
AGREED IN ADVANCE TO LIMIT MANAGEMENT FEES AND MAKE CERTAIN PAYMENTS TO REDUCE
THE FUND'S EXPENSES AS NECESSARY SO THAT TOTAL ACTUAL EXPENSES DID NOT EXCEED
1.25% OF THE FUND'S CLASS 2 NET ASSETS IN 1998. THE INVESTMENT MANAGER HAS
AGREED TO CONTINUE THIS ARRANGEMENT IN 1998. THE FUND MAINTAINS A DISTRIBUTION
OR "12B-1" PLAN FOR CLASS 2 WHICH IS INCLUDED IN OTHER EXPENSES AND IS DESCRIBED
IN ITS PROSPECTUS.
(5) WARBURG PINCUS TRUST: ACTUAL FEES AND EXPENSES FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 WERE 1.08% AND 0.32% FOR MANAGEMENT FEES AND OTHER EXPENSES,
RESPECTIVELY. FEE WAIVERS AND EXPENSE REIMBURSEMENT OR CREDITS REDUCED FEES AND
EXPENSES DURING 1998 BUT MAY BE DISCONTINUED AT ANY TIME.
3
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
SUMMARY OF CONTRACT EXPENSES
ANNUAL MUTUAL FUND EXPENSES (after reimbursement, if any)
- --------------------------------------------------------------------------------
As a percentage of each Fund's average daily net assets:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT TOTAL TOTAL
MANAGEMENT OTHER CONTRACTUAL ACTUAL
THE PRUDENTIAL SERIES FUND (1) FEES EXPENSES EXPENSES EXPENSES*
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Diversified Bond Portfolio 0.40% 0.02% 0.42% 0.42%
Diversified Conservative Growth Portfolio 0.75% 0.20% 0.95% 0.95%
Equity Income Portfolio 0.40% 0.02% 0.42% 0.42%
Equity Portfolio 0.45% 0.02% 0.47% 0.47%
Global Portfolio 0.75% 0.11% 0.86% 0.86%
High Yield Bond Portfolio 0.55% 0.03% 0.58% 0.58%
Money Market Portfolio 0.40% 0.01% 0.41% 0.41%
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
Small Capitalization Stock Portfolio 0.40% 0.07% 0.47% 0.47%
Stock Index Portfolio 0.35% 0.02% 0.37% 0.37%
20/20 Focus Portfolio 0.75% 0.20% 0.95% 0.95%
AIM VARIABLE INSURANCE FUNDS, INC
- ----------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 0.61% 0.04% 0.65% 0.65%
AIM V.I. Value Fund 0.61% 0.05% 0.66% 0.66%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. (2)
- ----------------------------------------------------------------------------------------------------------------------------
American Century VP Value 1.00% 0.0% 1.00% 1.00%
JANUS ASPEN SERIES (3)
- ----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio 0.72% 0.03% 0.75% 0.68%
International Growth Portfolio 0.75% 0.20% 0.95% 0.86%
MFS VARIABLE INSURANCE TRUST
- ----------------------------------------------------------------------------------------------------------------------------
Emerging Growth Series 0.75% 0.10% 0.85% 0.85%
Research Series 0.75% 0.11% 0.86% 0.86%
OCC ACCUMULATION TRUST
- ----------------------------------------------------------------------------------------------------------------------------
Managed Portfolio 0.78% 0.04% 0.82% 0.82%
Small Cap Portfolio 0.80% 0.08% 0.88% 0.88%
TEMPLETON VARIABLE PRODUCTS SERIES FUND (4)
- ----------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Investments Fund - Class 2 0.75% 1.25% 2.00% 1.25%
T.ROWE PRICE (2)
- ----------------------------------------------------------------------------------------------------------------------------
Equity Series - Equity Income Portfolio 0.85% 0.00% 0.85% 0.85%
International Series - International Stock Portfolio 1.05% 0.00% 1.05% 1.05%
WARBURG PINCUS TRUST (5)
- ----------------------------------------------------------------------------------------------------------------------------
Post-Venture Capital Portfolio 1.25% 0.45% 1.70% 1.40%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* REFLECTS FEE WAIVERS AND REIMBURSEMENT OF EXPENSES, IF ANY. SEE NOTES ON
PAGE ___.
THE "EXPENSE EXAMPLES" ON THE FOLLOWING PAGES ARE CALCULATED USING THE TOTAL
ACTUAL EXPENSES.
4
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
THESE EXAMPLES WILL HELP YOU COMPARE THE FEES AND EXPENSES OF THE DIFFERENT
VARIABLE INVESTMENT OPTIONS OFFERED BY DISCOVERY CHOICE. YOU CAN ALSO USE THE
EXAMPLE TO COMPARE THE COST OF DISCOVERY CHOICE WITH OTHER VARIABLE ANNUITY
CONTRACTS.
EXAMPLE 1: BASIC DEATH BENEFIT OPTION
This example assumes that you:
o Invest $10,000 in Discovery Choice;
o Elect the BASIC Death Benefit Option;
o Allocate all of your assets to only one of the variable investment
options;
o That investment has a 5% return each year; and
o The mutual fund's operating expenses remain the same each year.
EXAMPLE 2: ENHANCED DEATH BENEFIT OPTION
This example assumes that you:
o Invest $10,000 in Discovery Choice;
o Elect the ENHANCED Death Benefit Option;
o Allocate all of your assets to only one of the variable investment
options;
o That investment has a 5% return each year; and
o The mutual fund's operating expenses remain the same each year.
Because this contract has no withdrawal charges, your costs are not impacted by
whether or not you choose to make withdrawals. Your actual costs may be higher
or lower, but on the following page are examples of what your costs would be
based on these assumptions.
NOTES FOR EXPENSE EXAMPLES:
- --------------------------------------------------------------------------------
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
IF YOUR CONTRACT VALUE IS LESS THAN $50,000, ON YOUR CONTRACT ANNIVERSARY (AND
UPON A FULL WITHDRAWAL), WE DEDUCT THE LESSER OF $30.00 OR 2% OF THE CONTRACT
VALUE. THE EXAMPLES USE AN AVERAGE NUMBER AS THE AMOUNT OF THE ANNUAL CONTRACT
FEE. THIS AMOUNT WAS CALCULATED BY ESTIMATING THE CONTRACT FEES THAT WILL BE
COLLECTED IN THE INITIAL YEARS OF THIS CONTRACT AND THEN DIVIDING THAT NUMBER BY
THE TOTAL ASSETS ESTIMATED TO BE ALLOCATED TO THE VARIABLE INVESTMENT OPTIONS
DURING THE SAME TIME PERIOD. BASED ON THESE ESTIMATES, THE ANNUAL CONTRACT FEE
IS INCLUDED AS AN ANNUAL CHARGE OF 0.05% OF CONTRACT VALUE. YOUR ACTUAL FEES
WILL VARY BASED ON THE AMOUNT OF YOUR CONTRACT AND YOUR SPECIFIC ALLOCATION(S).
PREMIUM TAXES ARE NOT REFLECTED IN THE EXAMPLES. OUR CHARGE FOR PREMIUM TAXES
MAY APPLY DEPENDING ON THE STATE WHERE YOU LIVE.
5
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
<TABLE>
<CAPTION>
EXPENSE EXAMPLES 1 AND 2
- ------------------------------------------------------------------------------------------------------------------------------------
EXAMPLE 1: EXAMPLE 2:
WITH THE BASIC DEATH BENEFIT WITH THE ENHANCED DEATH BENEFIT
-------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Diversified Bond Portfolio $185 $573 $ 985 $2137 $215 $664 $1139 $2452
Diversified Conservative Growth Portfolio $238 $733 $1255 $2686 $268 $823 $1405 $2983
Equity Income Portfolio $185 $573 $ 985 $2137 $215 $664 $1139 $2452
Equity Portfolio $190 $588 $1011 $2190 $220 $679 $1164 $2503
Global Portfolio $229 $706 $1210 $2595 $259 $796 $1360 $2895
High Yield Bond Portfolio $201 $621 $1068 $2306 $231 $712 $1220 $2615
Money Market Portfolio $184 $569 $ 980 $2127 $214 $661 $1134 $2441
Prudential Jennison Portfolio $206 $637 $1093 $2358 $236 $727 $1245 $2666
Small Capitalization Stock Portfolio $190 $588 $1011 $2190 $220 $679 $1164 $2503
Stock Index Portfolio $180 $557 $ 959 $2084 $210 $649 $1114 $2400
20/20 Focus Portfolio $238 $733 $1255 $2686 $268 $823 $1405 $2983
AIM VARIABLE INSURANCE FUNDS INC.
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund $208 $643 $1103 $2379 $238 $733 $1255 $2686
AIM V.I. Value Fund $209 $646 $1108 $2390 $239 $736 $1260 $2696
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Value $243 $748 $1280 $2736 $273 $838 $1430 $3032
JANUS ASPEN SERIES
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio $211 $652 $1119 $2410 $241 $742 $1270 $2716
International Growth Portfolio $229 $706 $1210 $2595 $259 $796 $1360 $2895
MFS VARIABLE INSURANCE TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Growth Series $228 $703 $1205 $2585 $258 $793 $1355 $2885
Research Series $229 $706 $1210 $2595 $259 $796 $1360 $2895
OCC ACCUMULATION TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Managed Portfolio $225 $694 $1190 $2554 $255 $785 $1340 $2856
Small Cap Portfolio $231 $712 $1220 $2615 $261 $802 $1370 $2915
TEMPLETON VARIABLE PRODUCTS SERIES FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Investments Fund - Class 2 $268 $823 $1405 $2983 $298 $913 $1552 $3271
T. ROWE PRICE
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Series - Equity Income Portfolio $228 $703 $1205 $2585 $258 $793 $1355 $2885
International Series - Int'l Stock Portfolio $248 $764 $1306 $2786 $278 $853 $1454 $3080
WARBURG PINCUS TRUST
- ------------------------------------------------------------------------------------------------------------------------------------
Post-Venture Capital Portfolio $283 $868 $1479 $3128 $313 $957 $1625 $3411
</TABLE>
THESE EXAMPLES DO NOT SHOW PAST OR FUTURE EXPENSES. ACTUAL EXPENSES FOR A
PARTICULAR YEAR MAY BE MORE OR LESS THAN THOSE SHOWN IN THE EXAMPLES.
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DISCOVERY CHOICE VARIABLE ANNUITY
1. WHAT IS THE DISCOVERY CHOICE VARIABLE ANNUITY?
The Discovery Choice Variable Annuity is a contract between you, the owner,
and us, the insurance company, Pruco Life Insurance Company of New Jersey (Pruco
Life of New Jersey, We or Us).
Under our contract or agreement, in exchange for your payment to us, we
promise to pay you a guaranteed income stream that can begin any time after the
second contract anniversary. Your annuity is in the accumulation phase until you
decide to begin receiving annuity payments. The date you begin receiving annuity
payments is the annuity date. On the annuity date, your contract switches to the
income phase.
This annuity contract benefits from tax deferral. Tax deferral means that
you are not taxed on earnings or appreciation on the assets in your contract
until you withdraw money from your contract.
Discovery Choice is a variable annuity contract. This means that during the
accumulation phase, you can allocate your assets among 24 variable investment
options. The amount of money you are able to accumulate in your contract during
the accumulation phase depends upon the investment performance of the mutual
fund associated with that variable investment option. Because the mutual funds'
portfolios fluctuate in value depending upon market conditions, your contract
value can either increase or decrease. This is important, since the amount of
the annuity payments you receive during the income phase depends upon the value
of your contract at the time you begin receiving payments.
As the owner of the contract, you have all of the decision-making rights
under the contract. You will also be the annuitant unless you designate someone
else. The annuitant is the person who receives the annuity payments when the
income phase begins. The annuitant is also the person whose life is used to
determine how much and how long these payments will continue. On and after the
annuity date, the annuitant is the owner and may not be changed.
The beneficiary is the person(s) or entity designated to receive any death
benefit if the owner(s) dies during the accumulation phase. You may change the
beneficiary any time prior to the annuity date by making a written request to
us. Your request becomes effective when we approve it. The beneficiary becomes
the owner when a death benefit is payable.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Discovery Choice, you may cancel your
contract within 10 days after receiving it (or whatever period is required by
applicable law). You can request a refund by returning the contract either to
the representative who sold it to you, or to the Prudential Annuity Service
Center at the address shown on the first page of this prospectus. You will
receive, depending on applicable law:
o Your full purchase payment; or
o The amount your contract is worth as of the day we receive your request.
This amount may be more or less than your original payment.
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DISCOVERY CHOICE VARIABLE ANNUITY
2. WHAT INVESTMENT OPTIONS CAN I CHOOSE?
The contract gives you the choice of allocating your purchase payments to
any one or more of 24 variable investment options. The 24 variable investment
options invest in mutual funds managed by leading investment advisors. Each of
these mutual funds has a separate prospectus that is provided with this
prospectus. YOU SHOULD READ THE MUTUAL FUND PROSPECTUS BEFORE YOU DECIDE TO
ALLOCATE YOUR ASSETS TO THE VARIABLE INVESTMENT OPTION USING THAT FUND.
VARIABLE INVESTMENT OPTIONS
Listed below are the mutual funds in which the variable investment options
invest. Each variable investment option has a different investment objective.
THE PRUDENTIAL SERIES FUND, INC.
o Diversified Bond Portfolio
o Diversified Conservative Growth Portfolio
o Equity Income Portfolio
o Equity Portfolio
o Global Portfolio
o High Yield Bond Portfolio
o Money Market Portfolio
o Prudential Jennison Portfolio (domestic equity)
o Small Capitalization Stock Portfolio
o Stock Index Portfolio
o 20/20 Focus Portfolio
The Prudential Series Fund, Inc. is managed by Prudential through another
company it owns called The Prudential Investment Corporation. The Prudential
Investment Corporation manages each of the portfolios of the Prudential Series
Fund except the Prudential Jennison Portfolio and the Diversified Conservative
Growth Portfolio. For the Jennison Portfolio, Prudential Investment Corporation
oversees another company owned by Prudential called Jennison Associates Capital
Corp. that provides the day to day investment advisory services. For the
Diversified Conservative Growth Portfolio, Prudential Investment Corporation
oversees The Dreyfus Corporation and Pacific Investment Management Company,
which provide the day to day investment advisory services.
AIM VARIABLE INSURANCE FUNDS, INC.
o AIM V.I. Growth and Income Fund
o AIM V.I. Value Fund
AIM Advisors, Inc. serves as investment adviser to both of these funds.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
o American Century VP Value
American Century Investment Management, Inc. is the investment adviser for
American Century VP Value.
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DISCOVERY CHOICE VARIABLE ANNUITY
JANUS ASPEN SERIES
o Growth Portfolio
o International Growth Portfolio
Janus Capital Corporation serves as investment adviser to the Growth
Portfolio and the International Growth Portfolio.
MFS VARIABLE INSURANCE TRUST
o Emerging Growth Series
o Research Series (long-term growth and future income)
Massachusetts Financial Services Company, a Delaware corporation, is the
investment adviser to the Emerging Growth Series and the Research Series.
OCC ACCUMULATION TRUST
o Managed Portfolio (equity)
o Small Cap Portfolio
OpCap Advisors is the investment adviser to the Managed Portfolio and the
Small Cap Portfolio.
T. ROWE PRICE
o T. Rowe Price Equity Series, Inc., Equity Income Portfolio
o T. Rowe Price International Series, Inc., International Stock
Portfolio
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.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
o Franklin Small Cap Investments Fund--Class 2
Franklin Advisers, Inc. is the investment manager for this portfolio of the
Templeton Variable Products Series Fund.
WARBURG PINCUS TRUST
o Post-Venture Capital Portfolio
Warburg Pincus Counselors, Inc. serves as investment adviser and Abbott Capital
Management, L.P. serves as sub-investment adviser for that portion of the
Post-Venture Capital Portfolio allocated to private limited partnerships or
other investment funds.
Except for the Prudential Series Fund Inc., we are paid by each fund or an
affiliate of each fund for administrative and other services that we provide.
The amount we receive is based on an annual percentage of the average assets of
Discovery Choice invested in that fund.
TRANSFERS AMONG OPTIONS
You can transfer money among the variable investment options. Your transfer
request may be made by telephone or in writing to the Prudential Annuity Service
Center. Only two transfers per month may be made by telephone. After that, all
transfer requests must be in writing with an original signature. We have
procedures in place to confirm that instructions received by telephone are
genuine. We will not be liable for following telephone instructions that we
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DISCOVERY CHOICE VARIABLE ANNUITY
reasonably believe to be genuine. Your transfer request will take effect at the
end of the business day on which it was received. Our business day closes,
usually at 4:15 p.m. Eastern time.
During the contract accumulation phase, you can make 12 transfers each contract
year, among the investment options, without charge. If you make more than 12
transfers in one contract year, you may be charged up to $30 for each additional
transfer. Currently we charge only $10 for additional transfers. (Dollar Cost
Averaging and Auto-Rebalancing transfers are always free, and do not count
toward the 12 free transfers per year.)
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature allows you to systematically transfer
either a fixed dollar amount or a percentage out of the Money Market Portfolio
and into any other variable investment option(s). You can transfer money to more
than one variable investment option. The investment option used for the
transfers is designated as the DCA account. You can have these automatic
transfers made from the DCA account monthly, quarterly, semiannually or
annually. By allocating amounts on a regular schedule instead of allocating the
total amount at one particular time, you may be less susceptible to the impact
of market fluctuations.
Each transfer from your DCA account must be at least $100. Transfers will be
made automatically on the schedule you elect until the entire amount in your DCA
account has been transferred or until you tell us to discontinue the transfers.
If your DCA account balance drops below $100, the entire remaining balance of
the account will be transferred on the next transfer date. You can allocate
subsequent purchase payments to re-open the DCA account at any time.
Your transfers will be made on the last calendar day of each transfer period you
have selected, provided that the New York Stock Exchange is open on that date.
If the New York Stock Exchange is not open on a particular transfer date, the
transfer will take effect on the next business day.
Any transfers you make because of Dollar Cost Averaging are not counted toward
the 12 free transfers you are allowed each contract year. This feature is
available only during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having advice when deciding on the allocation of your
money. If you choose to participate in the Asset Allocation Program, your
representative will give you a questionnaire to complete that will help
determine a program that is appropriate for you. Your asset allocation will be
prepared based on your answers to the questionnaire. You will not be charged for
this service and you are not obligated to participate or to invest according to
program recommendations.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of the investment options may cause your allocation to shift.
For example, an investment option that initially holds only a small percentage
of your assets could perform much better than another investment option. Over
time, this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your
10
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DISCOVERY CHOICE VARIABLE ANNUITY
assets to return to your original allocation or to change allocations by
selecting the Auto-Rebalancing feature. The DCA account cannot participate in
this feature.
Your rebalancing will be done monthly, quarterly, semiannually or annually based
on your choice. The rebalancing will be done on the last calendar day of the
period you have chosen, provided that the New York Stock Exchange is open on
that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of Auto-Rebalancing are not counted toward the 12
free transfers you are allowed per year. This feature is available only during
the contract accumulation phase.
VOTING RIGHTS
We are the legal owner of the shares in the mutual funds available as variable
investment options. However, we vote the shares of the mutual funds according to
voting instructions we receive from contractowners. We will mail you a proxy
which is a form you need to complete and return to us to tell us how you wish us
to vote. When we receive those instructions, we will vote all of the shares we
own on your behalf in accordance with those instructions. Fund shares for which
we do not receive instructions or, that we own on your behalf, are voted in the
same proportion as shares for which instructions are received from
contractowners. We may change the way your voting instructions are calculated if
it is required by federal regulation.
SUBSTITUTION
We may substitute one or more of the mutual funds used by the variable
investment options. We may also cease to allow investments in existing funds. We
would do this only if events such as investment policy changes or tax law
changes make the mutual fund unsuitable. We would not do this without the
approval of the Securities and Exchange Commission and necessary state insurance
department approvals. You will be given specific notice in advance of any
substitution we intend to make.
3. WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
PAYMENT PROVISIONS
The annuitant can begin receiving annuity payments any time after the second
contract anniversary (or as required by state law, if different). Annuity
payments must begin no later than the contract anniversary that coincides with
or follows the annuitant's 90th birthday (unless we agree to another date).
You may choose among the income plans described below at any time before the
annuity date. These plans are called annuity options or settlement options.
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that your participation in the variable
investment options ends on the annuity date. If you have not selected an annuity
option by the annuity date, the Life Income Annuity Option (Option 2, described
below) will automatically be selected unless prohibited by applicable law.
GENERALLY, ONCE THE ANNUITY PAYMENTS BEGIN, YOU CANNOT CHANGE THE ANNUITY
OPTION.
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DISCOVERY CHOICE VARIABLE ANNUITY
OPTION 1. ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for a period you choose, up to 25
years. The annuity payments may be made monthly, quarterly, semiannually, or
annually, as you choose for the fixed period. If the annuitant dies during the
income phase payments will continue to the beneficiary for the remainder of the
fixed period. A lump sum payment will be made to the beneficiary if the
beneficiary so chooses. The amount of the lump sum payment is determined by
calculating the present value of the unpaid future payments. This is done by
using the interest rate used to compute the actual payments. The interest rate
used will always be at least 3% a year.
OPTION 2. LIFE INCOME ANNUITY OPTION
Under this option, we will make annuity payments to the annuitant monthly,
quarterly, semiannually, or annually you choose, as long as the annuitant is
alive. If the annuitant dies before we have made 10 years worth of payments, we
will pay the beneficiary the present value of the remaining annuity payments in
one lump sum unless the annuitant has specifically instructed that the remaining
monthly annuity payments continue to be paid to the beneficiary. The present
value of the remaining annuity payments is calculated by using the interest rate
used to compute the amount of the original 120 payments. The interest rate used
will always be at least 3% a year. No withdrawal charge is applicable under this
option.
If you have not selected an annuity option by the annuity date, this is the
option we will automatically select for you, unless prohibited by applicable
law.
OPTION 3. INTEREST PAYMENT OPTION
Under this option, you can choose to have us hold all or a portion of your
contract value in order to accumulate interest. You can receive interest
payments on a monthly, quarterly, semiannual, or annual basis or you can allow
the interest to accrue on your contract assets. Under this option, we will pay
you interest at an effective rate of at least 3% a year.
This option is not available if your contract is held in an IRA.
OPTION 4. OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time you choose to receive your annuity payments, we may make available to
you any of the fixed annuity options that are offered at your annuity date.
4. WHAT IS THE DEATH BENEFIT?
The death benefit feature protects the value of the contract for the
beneficiary.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named,
during the accumulation period you can change the beneficiary at any time before
the owner or last survivor, if joint owners, dies.
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DISCOVERY CHOICE VARIABLE ANNUITY
CALCULATION OF THE DEATH BENEFIT
The death benefit to which your beneficiary is entitled depends on whether you
elected the basic death benefit or the enhanced death benefit.
BASIC DEATH BENEFIT:
If the sole or last survivor of the owner or joint owner dies during the
accumulation period, after we receive the appropriate proof of death and any
other needed documentation ("due proof of death"), your beneficiary will receive
the greater of the following:
1. the contract value as of the date we receive due proof of death; or
2. the total of all purchase payments made, proportionally reduced by the
effect of withdrawals.
ENHANCED DEATH BENEFIT:
If the sole or last survivor of the owner or joint owner dies during the
accumulation period and prior to age 80, after we receive due proof of death,
your beneficiary will receive the greater of the following:
1. the contract value as of the date we receive due proof of death; or
2. the guaranteed minimum death benefit (GMDB). The GMDB is calculated daily
and is equal to: the highest value of the contract on any contract
anniversary. This is called the step-up value. Before the first contract
anniversary, the step-up value is the initial purchase payment increased by
subsequent purchase payments and proportionally reduced by the effect of
withdrawals. Between anniversaries, the step-up is increased only by
purchase payments and proportionally reduced by the effect of withdrawals.
After the contract anniversary on or next following the 80th birthday of the
sole or older of the owner or joint owner, the beneficiary will receive a death
benefit equal to the greater of:
(a) the contract value as of the date we receive due proof of death;
or
(b) the GMDB as of the contract anniversary on or next following the
sole or older of the owner or joint owner's 80th birthday
increased by subsequent purchase payments since such contract
anniversary and proportionally reduced by the effect of
withdrawals since such contract anniversary.
Here is an example of a proportional reduction:
If an owner withdrew 50% of a contract valued at $100,000 and if the step-up
value at that time was $80,000, the new step-up value following the withdrawal
would be $40,000, or 50% of what it had been prior to the withdrawal.
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DISCOVERY CHOICE VARIABLE ANNUITY
5. HOW CAN I PURCHASE A DISCOVERY CHOICE CONTRACT?
PURCHASE PAYMENTS
A purchase payment is the amount of money you give us to purchase the contract.
The minimum purchase payment is $10,000. With some restrictions, you can make
additional purchase payments of at least $1,000 or more at any time during the
accumulation phase. However, no purchase payments may be made on or after the
85th birthday of:
o the owner
o joint owner
o the annuitant.
We have established an aggregate maximum purchase payment limit of $2 million,
and we limit the maximum total purchase payments per contract in any contract
year, other than the first, to $2 million. Depending on the applicable state,
other limits may apply.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable investment options based on the percentages you choose. The percentage
of your allocation to a specific investment option can range in whole
percentages from 1% to 100%. If you make additional purchase payments, they will
be allocated in the same way as your initial allocation unless you tell us
otherwise. You may submit an allocation change request at any time. Contact the
Prudential Annuity Service Center for details.
We will credit these purchase payments to your contract as of the end of the
business day on which the payment is received. Our business day closes when the
New York Stock Exchange does, usually at 4:15 p.m. Eastern time.
CALCULATING CONTRACT VALUE
The value of your contract will go up or down depending on the investment
performance of the variable investment option(s) you choose. To determine the
value of your contract, we use a unit of measure called an accumulation unit. An
accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1. adding up the total amount of money allocated to a specific investment
option;
2. subtracting from that amount insurance charges and any other applicable
charges such as for taxes; and
3. dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment, we credit your contract with accumulation
units of the subaccount or subaccounts selected. The number of accumulation
units credited to your contract is determined by dividing the amount of the
purchase payment allocated to an investment option by the unit price of the
accumulation unit for that investment option. We calculate the unit price for
each investment option after the New York Stock Exchange closes each day and
then credit your contract. The value of the accumulation units can increase,
decrease, or remain the same from day to day. The Accumulation Unit Values Chart
on page ____ of this prospectus gives you more detailed information about the
accumulation units of the variable investment options.
We cannot guarantee that your contract value will increase or that it will not
fall below the amount of your total purchase payments.
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DISCOVERY CHOICE VARIABLE ANNUITY
6. WHAT ARE THE EXPENSES ASSOCIATED WITH THE DISCOVERY CHOICE CONTRACT?
There are charges and other expenses associated with the contract that reduce
the return on your investment. These charges and expenses are described below.
INSURANCE CHARGES
Each day, we make a deduction for the insurance charge. The insurance charge
covers our expenses for mortality and expense risk, administration, marketing
and distribution. The mortality risk portion of the charge is for assuming the
risk that the annuitant(s) will live longer than expected based on our life
expectancy tables. When this happens, we pay a greater number of annuity
payments. The expense risk portion of the charge is for assuming that the
current charges will be insufficient in the future to cover the cost of
administering the contract. The administrative expense portion of the charge is
for the expenses associated with the administration of the contract. This would
include preparing and issuing the contract; establishing and maintaining
contract records; preparation of confirmations and annual reports; personnel
costs; legal and accounting fees; filing fees and systems costs.
The insurance charge is equal, on an annual basis, to 1.35% (Basic Death
Benefit) or 1.65% (Enhanced Death Benefit) of the daily value of the contract,
after expenses have been deducted.
If the charges under the contract are not sufficient, then we will bear the
loss. We do, however, expect to profit from this charge. The insurance risk
charge for your contract cannot be increased. Any profits made from this charge
may be used by us to pay for the costs of distributing the contracts.
ANNUAL CONTRACT FEE
Each contract year during the accumulation phase, if your contract value is less
than $50,000, we will deduct the lesser of $30 or 2% of your contract value, for
administrative expenses. (This fee may differ in certain states). While this is
what we currently charge, we may increase this charge up to a maximum of $60.
Also, we may raise the level of the contract value at which we waive this fee.
The charge will be deducted proportionately from each of the contract's variable
investment options. This charge will also be deducted when you surrender your
contract if your contract value is less than $50,000.
PREMIUM TAXES
Some states and/or municipalities charge premium taxes or similar taxes. We are
responsible for the payment of these taxes and will make a deduction from the
value of the contract to pay them. Some of these taxes are due when the contract
is issued, others are due when annuity payments begin. It is our current
practice not to deduct a charge for these taxes until annuity payments begin. In
the few states that impose a tax, the current rates range up to 5%. If, in the
future, we are charged for additional taxes that are based on purchase payments,
that charge may be passed on to contractowners.
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DISCOVERY CHOICE VARIABLE ANNUITY
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract (contract date). If you make more than 12
transfers in a contract year (excluding Dollar Cost Averaging and
Auto-Rebalancing), we will deduct a transfer fee of $10 for each additional
transfer. The transfer fee will be deducted proportionately from all the
affected investment options.
COMPANY TAXES
We will pay the taxes on the earnings of the separate account. We are not
currently charging the separate account for taxes. We will periodically review
the issue of charging the separate account for these taxes and may impose a
charge in the future.
7. HOW CAN I ACCESS MY MONEY?
You can access your money by:
o Making a withdrawal (either partial or complete); or
o Electing to receive annuity payments during the income phase.
YOU CAN MAKE WITHDRAWALS ONLY DURING THE ACCUMULATION PHASE (UNLESS THE PAYMENT
OPTION YOU CHOOSE PROVIDES FOR WITHDRAWALS).
When you make a complete withdrawal, you will receive the value of your contract
on the day you made the withdrawal. We will calculate the value of your contract
and charges, if any, as of the date we receive your request in good order at the
Prudential Annuity Service Center.
Unless you tell us otherwise, any partial withdrawal will be made
proportionately from all of the affected variable investment options you have
selected. The minimum amount which may be withdrawn is $250. If, after a
withdrawal, your contract value is less than $2,000, we have the right to choose
to end your contract.
We will generally pay the withdrawal amount, less any required tax withholding,
within seven days after we receive a withdrawal request in good order. We will
deduct applicable charges, if any, from the assets in your contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE. FOR A MORE COMPLETE EXPLANATION, SEE SECTION 8 OF THIS PROSPECTUS.
AUTOMATED WITHDRAWALS
We offer an Automated Withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
You can make withdrawals from any designated investment option or proportionally
from all investment options. The minimum automated withdrawal amount you can
make is $100.
INCOME TAXES AND A 10% PENALTY TAX ON EARNINGS MAY APPLY TO AUTOMATED
WITHDRAWALS AS WELL AS ANY OTHER WITHDRAWALS MADE FROM YOUR CONTRACT.
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DISCOVERY CHOICE VARIABLE ANNUITY
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
o The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
o Trading on the New York Stock Exchange is restricted;
o An emergency exists during which sales and redemptions of shares of the
mutual funds are not reasonable or we cannot reasonably value the
accumulation units; or
o The Securities and Exchange Commission, by order, so permits suspension or
postponement of payments for the protection of owners.
8. WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE DISCOVERY CHOICE
CONTRACT?
The tax considerations associated with the Discovery Choice contract vary
depending on whether the contract is (i) owned by an individual and not
associated with a tax-favored retirement plan, or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. It is not intended as tax advice. A qualified
tax adviser should be consulted for complete information and advice.
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
CONTRACTS OWNED BY INDIVIDUALS
- ------------------------------
(NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT PLANS)
TAXES PAYABLE BY YOU
Generally, annuity contracts issued by the same company (and affiliates) to you
during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn.
If you assign all or part of your contract as collateral for a loan, the part
assigned will be treated as a withdrawal. Also, if you elect the interest
payment option, that election will be treated, for tax purposes, as surrendering
your contract.
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DISCOVERY CHOICE VARIABLE ANNUITY
If you transfer your contract for less than full consideration, such as by gift,
you will trigger tax on the gain in the contract. This rule does not apply if
you transfer the contract to your spouse or incident to divorce.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction is allowed for the unrecovered
amount.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered tax-free,
the full amount of the annuity payments will be taxable. If annuity payments
stop due to the death of the annuitant before the full amount of your purchase
payments have been recovered, a tax deduction is allowed for the unrecovered
amount.
PENALTY TAXES ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10%
penalty tax. Amounts are not subject to this penalty tax if:
o the amount is paid on or after you reach age 59-1/2 or die;
o the amount received is attributable to your becoming disabled;
o the amount paid or received is in the form of level annuity payments not
less frequently than annually under a lifetime annuity.
TAXES PAYABLE BY BENEFICIARIES
Generally, the same tax rules apply to amounts received by your beneficiary as
those set forth above with respect to you. The election of an annuity payment
option instead of a lump sum death benefit may defer taxes. Certain minimum
distribution requirements apply upon your death, as discussed further below.
WITHHOLDING OF TAX FROM DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. These elections must be made on the appropriate Pruco Life of New
Jersey forms.
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DISCOVERY CHOICE VARIABLE ANNUITY
ANNUITY QUALIFICATION
- ---------------------
DIVERSIFICATION AND INVESTOR CONTROL
In order to qualify for the tax rules applicable to annuity contracts described
above, the contract must be an annuity contract for tax purposes. This means
that the assets underlying the annuity contract must be diversified, according
to certain rules. It also means that Pruco Life of New Jersey, and not you as
the contract-owner, must have sufficient control over the underlying assets to
be treated as the owner of the underlying assets for tax purposes. We believe
these rules, which are further discussed in the Statement of Additional
Information, will be met.
REQUIRED DISTRIBUTIONS UPON YOUR DEATH
Upon your death (or the death of a joint owner, if earlier), certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the interest
in the contract must be distributed at least as rapidly as under the method of
distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract must be
distributed within 5 years after the date of death. However, if an annuity
payment option is selected by your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
ownership of the contract passes by reason of death, and must be a natural
person.
If any portion of the contract is payable to (or for the benefit of) your
surviving spouse, such portion of the contract may be continued with your spouse
as the owner.
CHANGES IN THE CONTRACT
We reserve the right to make any changes we deem necessary to assure that the
contract qualifies as an annuity contract for tax purposes. Any such changes
will apply to all contractowners and you will be given notice to the extent
feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
o The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
o Your contract was issued in exchange for a contract containing
purchase payments made before August 14, 1982.
o You are a nonresident alien.
o You transfer your contract to, or designate, a beneficiary who is
either 37-1/2 years younger than you or a grandchild.
o You wish additional withholding on withholding taxes.
CONTRACTS HELD BY TAX FAVORED PLANS
- -----------------------------------
The following discussion covers annuity contracts held under tax-favored
retirement plans.
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DISCOVERY CHOICE VARIABLE ANNUITY
Currently, the contract may be purchased for use in connection with individual
retirement accounts and annuities ("IRAs") which are subject to Sections 408(a),
408(b) and 408A of the Code. At some future time we may allow the contract to be
purchased in connection with other retirement arrangements which are also
entitled to favorable federal income tax treatment ("tax favored plans"). These
other tax favored plans include:
Simplified employee pension plans ("SEPs") under Section 408(k) of the Code;
Saving incentive match plans for employees-IRAs ("SIMPLE-IRAs") under Section
408(p) of the Code; and Tax-deferred annuities ("TDAs") under Section 403(b) of
the Code. This description assumes that (i) we will be offering this to both IRA
and non-IRA tax favored plans, and (ii) you have satisfied the requirements for
eligibility for these products.
Types of Tax Favored Plans
IRAS
If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus, contract and a brochure containing information about eligibility,
contribution limits, tax particulars and other IRA information. In addition to
this information (some of which is summarized below), the IRS requires that you
have a "free look" after making an initial contribution to the contract. During
this time, you can cancel the contract by notifying us in writing, and we will
refund all of the purchase payments under the contract (or, if provided by
applicable state law, the amount credited under the contract, calculated as of
the date that we receive this cancellation notice, if greater).
Contributions Limits/Rollovers: Because of the way the contract is designed, you
may only purchase a contract for an IRA in connection with a "rollover" of
amounts from a qualified retirement plan. You must make a minimum initial
payment of $10,000 to purchase a contract. This minimum is greater than the
maximum amount of any annual contribution you may make to an IRA (which is
generally $2,000/year). The "rollover" rules under the Code are fairly
technical; however, an individual (or his or her surviving spouse) may generally
"roll over" certain distributions from tax favored retirement plans (either
directly or within 60 days from the date of these distributions) if he or she
meets the requirements for distribution. Once you buy the contract, you can make
regular IRA contributions under the contract (to the extent permitted by law).
However, if you make such regular IRA contributions, you should note that you
will not be able to treat the contract as a "conduit IRA," which means that you
will not be able subsequently to "roll over" the contract funds into another
Section 401(a) plan or TDA (although you may be able to transfer the funds to
another IRA).
Required Provisions: Contracts that are IRAs (or endorsements that are part of
the contract) must contain certain provisions:
o You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
o Your rights as owner are non-forfeitable;
o You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
o The annual premium you pay cannot be greater than $2,000 (which does not
include any rollover amounts);
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DISCOVERY CHOICE VARIABLE ANNUITY
o The date on which annuity payments must begin cannot be later than the
April 1st of the calendar year after the calendar year you turn age 70-1/2;
and
o Death and annuity payments must meet "minimum distribution requirements"
(described below).
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
o A 10% "early distribution penalty" (described below);
o Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
o Failure to take a minimum distribution (also generally described below).
SEPS
SEPs are a variation on a standard IRA, and contracts issued to a SEP must
satisfy the same general requirements described under IRAs (above). There are,
however, some differences:
o If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $30,000 or (b) 15% of the employee's earned income (not including the
employer contribution amount as "earned income" for these purposes);
o SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
o Some SEPs for small employers permit salary deferrals (up to $10,000 in
1999) with the employer making these contributions to the SEP. However, no
new "salary reduction" or "SAR-SEPs" can be established after 1996.
You will also be provided the same information, and have the same "free look"
period, as you would have if you were purchasing the contract for a standard
IRA.
SIMPLE-IRAS
SIMPLE-IRAs are another variation on the standard IRA, available to small
employers (under 100 employees, on a "controlled group" basis) that do not offer
other tax favored plans. SIMPLE-IRAs are also subject to the same basic IRA
requirements with the following exceptions:
o Participants in a SIMPLE-IRA may contribute up to $6,000 (in 1999,
indexed), as opposed to the usual $2,000 limit, and employer contributions
may also be provided as either a match (up to 3% of your compensation); and
o SIMPLE -IRAs are not subject to the SEP nondiscrimination rules.
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DISCOVERY CHOICE VARIABLE ANNUITY
ROTH IRAS
Congress amended the Code in 1997 to add a new Section 408A, creating the "Roth
IRA" as a new type of individual retirement plan. Like standard IRAs, income
within a Roth IRA accumulates tax-free, and contributions are subject to
specific limits. Roth IRAs have, however, the following differences:
o Contributions to a Roth IRA cannot be deducted from your gross income;
o "Qualified distributions" (generally, held for 5 years and payable on
account of death, disability, attainment of age 59-1/2, or first
time-homebuyer) from Roth IRAs are excludable from your gross income; and
o If eligible, you may make contributions to a Roth IRA after attaining age
70-1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because the contract's minimum initial payment of $10,000 is greater than the
maximum annual contribution permitted to be made to a Roth IRA (generally,
$2,000 less any contributions to a traditional IRA), you may purchase a contract
as a Roth IRA only in connection with a "rollover" or "conversion" of the
proceeds of another traditional IRA, conduit IRA, SEP, SIMPLE-IRA, or Roth IRA.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who receive certain qualifying
distributions from such non-Roth IRAs, to directly rollover or make, within 60
days, a "rollover" of all or any part of the amount of such distribution to a
Roth IRA which they establish. This conversion triggers current taxation (but is
not subject to a 10% early distribution penalty). Once the contract has been
purchased, regular Roth IRA contributions will be accepted to the extent
permitted by law.
TDAS
You may own a TDA generally if you are either an employer or employee of a
tax-exempt organization (as defined under Code Section 501(c)(3)) or a public
educational organization, and you may make contributions to a TDA so long as the
employee's rights to the annuity are nonforfeitable. Contributions to a TDA, and
any earnings, are not taxable until distribution. You may also make
contributions to a TDA under a salary reduction agreement, generally up to a
maximum of $10,000 (1999, indexed). Further, you may roll over TDA amounts to
another TDA or an IRA.
A contract may only qualify as a TDA if distributions (other than
"grandfathered" amounts held as of December 31, 1988) may be made only on
account of:
o Your attainment of age 59-1/2;
o Your severance of employment;
o Your death;
o Your total and permanent disability; or
o Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
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DISCOVERY CHOICE VARIABLE ANNUITY
In any event, you must begin receiving distributions from your TDA by April 1st
of the calendar year after the calendar year you turn age 70-1/2 or retire,
whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general contribution,
nondiscrimination, and minimum participation rules applicable to "qualified"
retirement plans.
ADDITIONAL TAX FEATURES FOR TAX FAVORED PLANS
- ---------------------------------------------
MINIMUM DISTRIBUTION OPTION
If you hold the contract under an IRA or other tax favored plan, you can satisfy
the IRS minimum distribution requirements described above (generally,
distribution after age 70-1/2) under the contract without either annuitizing or
"cash surrendering" a portion of the contract. You, as owner of the contract,
can select either a "calculation" or "recalculation" method to determine the
minimum distribution. We will send you a check for the minimum distribution
amount, less any other partial withdrawals that you made during the year. More
information on the mechanics of this calculation is available on request.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% penalty tax to the taxable part of distributions received from
an IRA, SEP, SIMPLE-IRA (which may increase to 25%), Roth IRA, TDA or qualified
retirement plan before you attain age 59-1/2. There are only limited exceptions
to this tax, and you should consult your tax adviser for further details.
WITHHOLDING
The Code requires a mandatory 20% federal income tax withholding for certain
distributions from a TDA or qualified retirement plan, unless the distribution
is an eligible rollover contribution that is "directly" rolled into another
qualified plan, IRA (including the IRA variations described above) or TDA. For
all other distributions, unless you elect otherwise, we will withhold federal
income tax from the taxable portion of such distribution at an appropriate
percentage. The rate of withholding on annuity payments where no mandatory
withholding is required is determined on the basis of the withholding
certificate that you file with us. If you do not file a certificate, we will
automatically withhold federal taxes on the following basis:
o For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
o For all other distributions, you will be withheld at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes.
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DISCOVERY CHOICE VARIABLE ANNUITY
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "What Are the Expenses Associated with the
Discovery Choice Contract" starting on page ___.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale and Distribution of the Contract on page ____."
In addition, other relevant information required by the exemptions is contained
in the contract and accompanying documentation. Please consult your tax advisor
if you have any additional questions.
9. OTHER INFORMATION
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company 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.
Prudential is currently considering reorganizing itself into a publicly traded
stock company through a process known as "demutualization." On February 10,
1998, the Company's Board of Directors authorized management to take the
preliminary steps necessary to allow the Company to demutualize. On July 1,
1998, legislation was enacted in New Jersey that would permit this conversion to
occur and that specified the process for conversion. Demutualization is a
complex process involving development of a plan of reorganization, adoption of a
plan by the Company's Board of Directors, a public hearing, voting by qualified
policyholders and regulatory approval, all of which could take two or more years
to complete. Prudential's management and Board of Directors have not yet
determined to demutualize and it is possible that, after careful review,
Prudential could decide not to go public.
The plan of reorganization, which hasn't been developed and approved, would
provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible.
Generally, the amount of shares or other consideration eligible customers would
receive would be based on a number of factors, including the types, amounts and
issue years of their policies. As a general rule, owners of Prudential-issued
insurance policies and annuity contracts would be eligible, while mutual fund
customers and customers of the Company's subsidiaries, such as the Pruco Life
insurance companies, would not be. It has not yet been determined whether any
exceptions to that general rule will be made with respect to policyholders and
contract owners of Prudential's subsidiaries.
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DISCOVERY CHOICE VARIABLE ANNUITY
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (separate account), to hold the assets that are
associated with the contracts. The separate account was established under New
Jersey law on May 20, 1996, and is registered with the U.S. Securities and
Exchange Commission under the Investment Company Act of 1940, as a unit
investment trust, which is a type of investment company. The assets of the
separate account are held in the name of Pruco Life of New Jersey and legally
belong to us. These assets are kept separate from all of our other assets and
may not be charged with liabilities arising out of any other business we may
conduct. More detailed information about Pruco Life of New Jersey, including its
audited financial statements, are provided in the Statement of Additional
Information.
SALE AND DISTRIBUTION OF THE CONTRACT
Prudential Investment Management Services LLC ("PIMS"), 751 Broad Street,
Newark, New Jersey 07102-3777, acts as the distributor of the contracts. PIMS is
a wholly-owned subsidiary of Prudential and is a limited liability corporation
organized under Delaware law in 1996. It is a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. Commissions for the sales of contracts are paid to
Prudential representatives and to other independent broker-dealers who sell the
contracts. Registered representatives of independent broker-dealers may be paid
on a different basis than those affiliated with PIMS. The maximum commission
that will be paid to the broker-dealer to cover both the individual
representative's commission and other distribution expenses will not be more
than 1.25% of the purchase payment.
ASSIGNMENT
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice. We will not be liable
for any payment or other action we take in accordance with the contract if that
action occurs before we receive notice of the assignment. AN ASSIGNMENT, LIKE
ANY OTHER CHANGE IN OWNERSHIP, MAY TRIGGER A TAXABLE EVENT.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your representative.
YEAR 2000 COMPLIANCE
THE YEAR 2000 ISSUE
The Year 2000 issue is best understood as a computer hardware and software
problem involving the way dates are stored and processed in computer systems.
The services provided to you as a purchaser of Discovery Choice depend on the
smooth functioning of these computer systems. Many computer systems in use today
are programmed to recognize only the last two digits of a date as the year. As a
result, any systems using this kind of programming can not distinguish a date
using "00" and may treat it as 1900 instead of 2000. This problem may impact
computer systems that store business information, but it could also affect other
equipment used in our business such as telephones, fax machines and elevators.
If this problem is not corrected, the "Year 2000" issue could affect the
accuracy and integrity of business records. Prudential's
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DISCOVERY CHOICE VARIABLE ANNUITY
regular business operations could be interrupted as well as those of other
companies that deal with us.
In addition, the operations of the mutual funds associated with the Discovery
Choice contract could experience problems resulting from the Year 2000 issue.
Please refer to the mutual fund prospectus for information regarding their
approach to Year 2000 concerns.
To address this potential problem Prudential as the parent company of Pruco Life
of New Jersey has organized its Year 2000 efforts around the following three
areas:
o Business Applications - Computer programs directly used to support our
business.
o Infrastructure - Computers and other business equipment such as telephones
and fax machines.
o Business Partners - Year 2000 readiness of essential business partners.
Business Applications. The business applications component includes a wide range
of computer programs that directly support Prudential's business operations
including applications used for insurance product administration, securities
trading, personnel record keeping and general accounting systems. All business
applications have been analyzed to determine whether each computer program with
a Year 2000 problem should be retired, replaced or renovated. Renovation,
replacement, and retirement of business applications are now substantially
complete. Newly developed or purchased programs are being tested prior to their
use.
Infrastructure. As with business applications, we have established a specific
methodology and process for addressing infrastructure issues. The infrastructure
effort includes mainframe computer system hardware and operating system
software, mid-range systems and servers, telecommunications equipment and
systems, buildings and facilities systems, personal computers and vendor
hardware and software. With the exception of personal computers, which are
scheduled for completion in the third quarter of 1999, infrastructure systems
are substantially complete.
Business Partners. - Early in the Year 2000 program, Prudential recognized the
importance of determining the Year 2000 readiness of external business
relationships, especially those that involve electronic data transfer services
and products that impact our essential business processes. We first classified
each business partner as a "priority" or "non-priority" to our business and then
began to develop risk assessment and contingency plans to address the
possibility that a business partner could experience a Year 2000 failure. All
priority and non-priority business partner relationships have been assessed and
contingency planning is complete. We will continue to assess our risk, review
and update our contingency planning and assess any new business partners until
2000 in an effort to minimize risk.
Prudential believes that its Year 2000 project is substantially on schedule. A
small number of the projects may not meet their targeted completion date but we
expect that these projects will be completed by September, 1999. Should there be
any delays, they will not significantly impact the timing of the project as a
whole.
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DISCOVERY CHOICE VARIABLE ANNUITY
THE COST OF YEAR 2000 READINESS
Prudential is funding the Year 2000 program from internal operating budgets, and
estimates that its total costs to address the Year 2000 issue will be
approximately $232 million. Because these expenses were part of the operating
budget, they do not impact the management of the Discovery Choice. During the
course of the Year 2000 program, some optional computer projects have been
delayed, but these delays have not had any material effect on Discovery Choice.
YEAR 2000 RISKS AND CONTINGENCY PLANNING
Prudential believes that it is well positioned to lessen the impact of the Year
2000 problem. However, given the nature of this issue, we cannot be 100% certain
of Year 2000 readiness of third parties. As a result, we are unable to determine
at this time whether the consequences of Year 2000 failures may have a material
adverse effect on the results of Prudential's operations, liquidity or financial
condition. In the worst case, it is possible that a Year 2000 technology
failure, whether internal or external, could have a material impact on
Prudential's results of operations, liquidity, or financial position. If
Prudential is unable to achieve Year 2000 compliance on a timely basis, we may
have difficulty in responding to your incoming phone calls, calculating your
unit values or processing withdrawals and purchase payment. It is also possible
that the mutual funds associated with Discovery Choice will be unable to value
their securities, in turn creating difficulties in purchasing or selling shares
of the mutual fund and calculating corresponding unit asset values. The
objective of Prudential's Year 2000 program is to reduce these risks as much as
possible.
Most of the operations of Discovery Choice involve such a large number of
individual transactions that they can only be handled with the help of
computers. As a result, our current contingency plans include responses to the
failure of specific business applications or infrastructure components.
Prudential will continue to review and update its contingency plans until 2000
in an effort to reduce the level of uncertainty about the effect of the Year
2000 issue and further minimize risk. Prudential believes that with the
completion of its Year 2000 program as scheduled, the possibility of significant
interruptions of normal operations will be reduced.
FINANCIAL STATEMENTS
The financial statements of the separate account associated with Discovery
Choice are included in the Statement of Additional Information.
STATEMENT OF ADDITIONAL INFORMATION
CONTENTS:
Company
Experts
Litigation
Legal Opinions
Principal Underwriter
Determination of Accumulation Unit Values
Performance Information
Comparative Performance Information
Federal Tax Status
Financial Information
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DISCOVERY CHOICE VARIABLE ANNUITY
STATEMENT OF ADDITIONAL INFORMATION
____________, 1999
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The Discovery Choice Annuity Contract (the "contract") is an individual variable
annuity contract issued by the Pruco Life Insurance Company of New Jersey
("Pruco Life of New Jersey"), a stock life insurance company that is a
wholly-owned subsidiary of the Prudential Insurance Company of America
("Prudential") and is funded through the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (the "Account"). The contract is purchased by
making an initial purchase payment of $10,000 or more; subsequent payments must
be $1,000 or more.
This statement of additional information is not a prospectus and should be read
in conjunction with the Discovery Choice prospectus, dated _________, 1999. To
obtain a copy of the prospectus, without charge, you can write to the Prudential
Annuity Service Center, P.O. Box 14215, New Brunswick, New Jersey 08906, or by
telephoning (888) PRU-2888.
TABLE OF CONTENTS
PAGE
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COMPANY.......................................................................2
EXPERTS.......................................................................2
LITIGATION....................................................................2
LEGAL OPINIONS................................................................2
PRINCIPAL UNDERWRITER.........................................................2
DETERMINATION OF SUBACCOUNT UNIT VALUES.......................................2
PERFORMANCE INFORMATION.......................................................3
COMPARATIVE PERFORMANCE INFORMATION...........................................4
FEDERAL TAX STATUS............................................................4
FINANCIAL STATEMENTS..........................................................4
ADDITIONAL FINANCIAL INFORMATION..............................................A1
PRUCO LIFE OF NEW JERSEY INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
213 WASHINGTON STREET P.O. BOX 14215
NEWARK, NEW JERSEY 07102-2992 NEW BRUNSWICK, NEW JERSEY 08906
TELEPHONE: (888) PRU-2888
SAI-1
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DISCOVERY CHOICE VARIABLE ANNUITY
COMPANY
Pruco Life of New Jersey Insurance Company ("Pruco Life of New Jersey") is a
stock life insurance company organized in 1982 under the laws of the State of
New Jersey. Pruco Life of New Jersey is licensed to sell life insurance and
annuities in the 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 is a wholly-owned subsidiary of the Prudential Insurance Company
of America ("Prudential"), a mutual life insurance company founded in 1875 under
the laws of the State of New Jersey.
EXPERTS
The financial statements of the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account as of December 31, 1998 and for each of the two years
in the period then ended and the financial statements of Pruco Life of New
Jersey as of December 31, 1998 and 1997 and for each of the three years in the
period ended December 31, 1998 have been so included in reliance on the reports
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting. PricewaterhouseCoopers
LLP's, principal business address is 1177 Avenue of the Americas, New York, New
York, 10036.
LITIGATION
Several actions have been brought against Pruco Life of New Jersey alleging that
Pruco Life of New Jersey and its agents engaged in improper life insurance sales
practices. Prudential has agreed to indemnify Pruco Life of New Jersey for
losses, if any resulting from such litigation. No other significant litigation
is being brought against Pruco Life of New Jersey that would have a material
effect on its financial position.
LEGAL OPINIONS
Shea & Gardner of Washington, D.C., has provided advice on certain matters
relating to the federal securities laws in connection with the contracts.
PRINCIPAL UNDERWRITER
Prudential Investment Management Services LLC ("PIMS"),a subsidiary of
Prudential offers the contracts on a continuous basis in those states in which
contracts may be lawfully sold. It may also offer the contract through licensed
insurance brokers and agents, or through appropriately registered direct or
indirect subsidiary(ies) of Prudential, provided clearances to do so are
obtained in any jurisdiction where such clearances may be necessary.
Prudential may pay trail commissions to registered representatives who maintain
an ongoing relationship with a contractholder. Typically, a trail commission is
a compensation that is paid periodically to a representative, the amount of
which is linked to the value of the contract and the amount of time that the
contract has been in effect.
DETERMINATION OF ACCUMULATION UNIT VALUES
The value for each accumulation unit is computed as of the end of each
"valuation period" (also referred to in this section as "business day"). On any
given business day the value of a Unit in each subaccount will be determined by
multiplying the value of a Unit of that subaccount for the preceding business
day by the net investment factor for that subaccount for the current business
day. The net investment factor for any business day is determined by dividing
the value of the assets of the subaccount for that day by the value of the
assets of the subaccount for the preceding business day (ignoring, for this
purpose, changes resulting from new purchase payments and withdrawals), and
subtracting from the result the daily equivalent of the 1.35% or 1.65%
(depending on death benefit option elected) annual charge for administrative
expenses and mortality and expense risks. (See WHAT ARE THE EXPENSES ASSOCIATED
WITH THE DISCOVERY CHOICE VARIABLE ANNUITY and CALCULATING CONTRACT VALUE in the
prospectus.) The value of the assets of a subaccount is determined by
multiplying the number of shares of The Prudential Series Fund, Inc. (the
"Series Fund") or other Fund held by that subaccount by the net asset value of
each share and adding the value of dividends declared by the Series Fund or
other Fund but not yet paid.
SAI-2
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
PERFORMANCE INFORMATION
The tables that follow provide performance information for each subaccount
through June 30, 1999. The performance information is based on historical
experience and does not indicate or represent future performance.
AVERAGE ANNUAL TOTAL RETURN
Although DISCOVERY CHOICE Annuity is a new contract it uses subaccounts that
have been registered with the Securities Exchange Commission for sometime. The
returns shown below were calculated using historical investment returns of the
Funds. All fees, expenses and charges associated with the DISCOVERY CHOICE
Annuity and the Funds have been reflected in these returns, as if the contract
had existed from the initial registration date of the respective subaccounts.
The tables below show the average annual rates of total return on hypothetical
investments of $1,000 for periods ended June 30, 1999 in each subaccount other
than the Money Market Subaccount. These figures assume withdrawal of the
investments at the end of the period other than to effect an annuity under the
Contract. The tables assume deferred sales charges. Table 1 shows performance
assuming that the Basic Death Benefit was elected. Table 2 shows the performance
assuming that the Enhanced Death Benefit was elected.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN-BASIC DEATH BENEFIT
<TABLE>
<CAPTION>
FIVE TEN FROM SEC
SEC ONE YEAR YEARS YEARS REGISTRATION
FUND REGISTRATION ENDED ENDED ENDED THROUGH
PORTFOLIO DATE 6/30/99 6/30/99 6/30/99 6/30/99
--------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
The Prudential Series Fund
Diversified Bond Portfolio 11/95 -0.49% N/A N/A 3.84%
Diversified Conservative Growth Portfolio 5/99 N/A N/A N/A 0.35%
High Yield Bond Portfolio 11/95 -5.29% N/A N/A 5.61%
Stock Index Portfolio 11/95 20.84% N/A N/A 25.86%
Equity Income Fund 11/95 3.59% N/A N/A 18.31%
Equity Portfolio 11/95 N/A N/A N/A N/A
Prudential Jennison Portfolio 11/95 29.42% N/A N/A 25.64%
Global Portfolio 11/95 13.42% N/A N/A 15.54%
Small Capitalization Stock Portfolio 9/98 N/A N/A N/A 4.47%
20/20 Focus Portfolio 5/99 N/A N/A N/A 5.24%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund 10/96 26.07% N/A N/A 25.10%
AIM V.I. Value Fund 10/96 26.15% N/A N/A 26.42%
American Century Variable Portfolios, Inc.
American Century VP Value 9/98 N/A N/A N/A 0.19%
Janus Aspen Series
Growth Portfolio 10/96 30.83% N/A N/A 26.23%
International Growth Portfolio 10/96 4.02% N/A N/A 17.51%
MFS Variable Insurance Trust
Emerging Growth Series 10/96 22.79% N/A N/A 21.28%
Research Series 10/96 10.04% N/A N/A 18.18%
OCC Accumulation Trust (Note 2)
Managed Portfolio 10/96 -3.09% N/A N/A 11.85%
Small Cap Portfolio 10/96 -6.83% N/A N/A 5.77%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio 10/96 6.02% N/A N/A 3.51%
T. Rowe Price International Series, Inc.
International Stock Portfolio 10/96 4.24% N/A N/A 8.28%
Templeton Variable Products Series Fund
Franklin Small Cap Investments Fund - Class 2 9/98 N/A N/A N/A 15.45%
Warburg Pincus Trust
Post-Venture Capital Portfolio 10/96 4.59% N/A N/A 9.03%
</TABLE>
TABLE 2
AVERAGE ANNUAL TOTAL RETURN-ENHANCED DEATH BENEFIT
<TABLE>
<CAPTION>
FIVE TEN FROM SEC
SEC ONE YEAR YEARS YEARS REGISTRATION
FUND REGISTRATION ENDED ENDED ENDED THROUGH
PORTFOLIO DATE 6/30/99 6/30/99 6/30/99 6/30/99
--------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
The Prudential Series Fund
Diversified Bond Portfolio 11/95 -0.79% N/A N/A 3.57%
Diversified Conservative Growth Portfolio 5/99 N/A N/A N/A 0.30%
High Yield Bond Portfolio 11/95 -5.56% N/A N/A 5.34%
Stock Index Portfolio 11/95 20.48% N/A N/A 25.53%
Equity Income Fund 11/95 3.27% N/A N/A 18.00%
Equity Portfolio 11/95 N/A N/A N/A N/A
Prudential Jennison Portfolio 11/95 29.03% N/A N/A 25.30%
Global Portfolio 11/95 13.08% N/A N/A 15.23%
Small Capitalization Stock Portfolio 9/98 N/A N/A N/A 4.32%
20/20 Focus Portfolio 5/99 N/A N/A N/A 5.19%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund 10/96 25.85% N/A N/A 25.02%
AIM V.I. Value Fund 10/96 25.79% N/A N/A 26.05%
American Century Variable Portfolios, Inc.
American Century VP Value 9/98 N/A N/A N/A 0.06%
Janus Aspen Series
Growth Portfolio 10/96 30.44% N/A N/A 25.86%
International Growth Portfolio 10/96 3.71% N/A N/A 17.17%
MFS Variable Insurance Trust
Emerging Growth Series 10/96 22.42% N/A N/A 20.93%
Research Series 10/96 9.72% N/A N/A 17.83%
OCC Accumulation Trust (Note 2)
Managed Portfolio 10/96 -3.38% N/A N/A 11.52%
Small Cap Portfolio 10/96 -7.10% N/A N/A 5.46%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio 10/96 5.71% N/A N/A 3.21%
T. Rowe Price International Series, Inc.
International Stock Portfolio 10/96 3.92% N/A N/A 7.96%
Templeton Variable Products Series Fund
Franklin Small Cap Investments Fund - Class 2 9/98 N/A N/A N/A 15.29%
Warburg Pincus Trust
Post-Venture Capital Portfolio 10/96 4.27% N/A N/A 8.70%
</TABLE>
For each subaccount other than the Money Market Subaccount, Table 3 and 4 below
show the historical average annual rates of total return on hypothetical
investments of $1,000 for periods ended June 30, 1999 based on the inception
date of the Fund rather than the initial registration date of the subaccount.
Table 3 shows performance assuming that the Basic Death Benefit is elected and
Table 4 shows performance assuming that the Enhanced Death Benefit was elected.
TABLE 3
HISTORICAL AVERAGE ANNUAL TOTAL RETURN- BASIC DEATH BENFIT
<TABLE>
<CAPTION>
FIVE TEN DATE PORTFOLIO
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 6/30/99 6/30/99 6/30/99 6/30/99
--------- ----------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
The Prudential Series Fund
Diversified Bond Portfolio 6/83 -0.54% 6.09% 6.51% 7.54%
Diversified Conservative Growth Portfolio 5/99 N/A N/A N/A 0.34%
High Yield Bond Portfolio 2/87 -5.35% 6.56% 8.00% 6.69%
Stock Index Portfolio 10/87 20.77% 25.59% 14.44% 17.44%
Equity Income Fund 2/88 3.53% 17.33% 13.38% 14.27%
Equity Portfolio 6/83 N/A N/A N/A N/A
Prudential Jennison Portfolio 5/95 29.35% N/A N/A 28.07%
Global Portfolio 9/88 13.36% 13.36% 8.45% 10.29%
Small Capitalization Stock Portfolio 5/95 4.49% N/A N/A 14.65%
20/20 Focus Portfolio 5/99 N/A N/A N/A 5.23%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund 5/94 26.02% 23.04% N/A 21.64%
AIM V.I. Value Fund 6/93 26.09% 23.67% N/A 20.72%
American Century Variable Portfolios, Inc.
American Century VP Value 5/96 10.38% N/A N/A 16.20%
Janus Aspen Series
Growth Portfolio 9/93 30.82% 23.56% N/A 20.44%
International Growth Portfolio 5/94 4.04% 18.98% N/A 17.45%
MFS Variable Insurance Trust
Emerging Growth Series 7/95 22.73% N/A N/A 24.93%
Research Series 7/95 11.38% N/A N/A 20.30%
OCC Accumulation Trust (Note 2)
Managed Portfolio 8/88 1.92% 18.73% 16.57% 17.26%
Small Cap Portfolio 8/88 -6.22% 9.41% 11.69% 11.08%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio 3/94 13.59% 19.92% N/A 19.20%
T. Rowe Price International Series, Inc.
International Stock Portfolio 3/94 4.19% 8.21% N/A 7.95%
Templeton Variable Products Series Fund
Franklin Small Cap Investments Fund - Class 2 9/98 N/A N/A N/A 18.01%
Warburg Pincus Trust
Post-Venture Capital Portfolio 9/96 4.54% N/A N/A 9.80%
</TABLE>
SAI-3
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
TABLE 4
HISTORICAL AVERAGE ANNUAL TOTAL RETURN- ENHANCED DEATH BENEFIT
<TABLE>
<CAPTION>
FIVE TEN FROM SEC
SEC ONE YEAR YEARS YEARS REGISTRATION
FUND REGISTRATION ENDED ENDED ENDED THROUGH
PORTFOLIO DATE 6/30/99 6/30/99 6/30/99 6/30/99
--------- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
The Prudential Series Fund
Diversified Bond Portfolio 6/83 -0.54% 6.66% 6.64% 7.50%
Diversified Conservative Growth Portfolio 5/99 N/A N/A N/A 0.29%
High Yield Bond Portfolio 2/87 -5.35% 6.89% 8.01% 6.63%
Stock Index Portfolio 10/87 20.77% 25.95% 14.43% 17.38%
Equity Income Fund 2/88 3.53% 17.64% 13.36% 14.21%
Equity Portfolio 6/83 N/A N/A N/A N/A
Prudential Jennison Portfolio 5/95 29.35% N/A N/A 27.89%
Global Portfolio 9/88 13.36% 13.61% 8.41% 10.23%
Small Capitalization Stock Portfolio 5/95 4.49% N/A N/A 14.45%
20/20 Focus Portfolio 5/99 N/A N/A N/A 5.18%
AIM Variable Insurance Funds, Inc.
AIM V.I. Growth and Income Fund 5/94 26.02% 22.77% N/A 21.37%
AIM V.I. Value Fund 6/93 26.09% 23.39% N/A 20.44%
American Century Variable Portfolios, Inc.
American Century VP Value 5/96 10.29% N/A N/A 15.94%
Janus Aspen Series
Growth Portfolio 9/93 30.82% 23.29% N/A 20.16%
International Growth Portfolio 5/94 4.04% 18.72% N/A 17.19%
MFS Variable Insurance Trust
Emerging Growth Series 7/95 22.73% N/A N/A 24.68%
Research Series 7/95 11.38% N/A N/A 20.07%
OCC Accumulation Trust (Note 2)
Managed Portfolio 8/88 1.92% 18.47% 16.27% 16.95%
Small Cap Portfolio 8/88 -6.22% 9.17% 11.40% 10.80%
T. Rowe Price Equity Series, Inc.
Equity Income Portfolio 3/94 13.59% 19.65% N/A 18.93%
T. Rowe Price International Series, Inc.
International Stock Portfolio 3/94 4.19% 7.98% N/A 7.70%
Templeton Variable Products Series Fund
Franklin Small Cap Investments Fund - Class 2 9/98 N/A N/A N/A 18.01%
Warburg Pincus Trust
Post-Venture Capital Portfolio 9/96 4.54% N/A N/A 9.61%
</TABLE>
Note 1: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
The average annual rates of total return shown above are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance with
the following formula: P(1+T)(n)=ERV. In the formula, P is a hypothetical
investment of $1,000; T is the average annual total return; "n" is the number of
years; and ERV is the withdrawal value at the end of the periods shown. These
figures assume deduction of the maximum withdrawal charge that may be applicable
to a particular period.
MONEY MARKET SUBACCOUNT YIELD
The "yield" and "effective yield" figures for the Money Market Subaccount shown
below were calculated using historical investment returns of the Money Market
Portfolio of the Prudential Series Fund. All fees, expenses and charges
associated with the DISCOVERY CHOICE Annuity and the Series Fund have been
reflected.
The "yield" and "effective yield" of the Money Market Subaccount for the seven
days ended June 30, 1999 were 2.77% and 2.81%, respectively, assuming election
of the Enhanced Death Benefit the "yield" and "effective yield" were 2.53%
and 2.56%, respectively.
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the Money Market Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the difference by the value of the subaccount at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7), with the resulting figure carried
to the nearest ten-thousandth of 1%.
The deduction referred to above consists of the 1.35% charge for insurance risks
for the Basic Death Benefit and 1.65% for the Enhanced Death Benefit.
The effective yield is obtained by taking the base period return, adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula: Effective Yield--([base period
return + 1] 365/7)-1.
The yields on amounts held in the Money Market Subaccount will fluctuate on a
daily basis. Therefore, the stated yields for any given period are not an
indication of future yields.
COMPARATIVE PERFORMANCE INFORMATION
Reports or advertising may include comparative performance information,
including, but not limited to: (1) comparisons to market indices such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line
Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the
Lehman Brothers bond indices; (2) comparisons to other investments, such as
certificates of deposit; (3) performance rankings assigned by services such as
Morningstar, Inc. and Variable Annuity Research and Data Services (VARDS), and
Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow
Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in
publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune,
Money Magazine, and Financial World.
FEDERAL TAX STATUS
X. OTHER TAX RULES.
1. DIVERSIFICATION.
The Internal Revenue 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 Statement of Additional Information for the Prudential Series Fund. Pruco
Life of New Jersey believes the underlying variable investment options for the
Contract meet these diversification requirements.
2. INVESTOR CONTROL.
Treasury Department regulations do not provide guidance concerning the
extent to which you may direct your investment in the particular investment
options without causing you, instead of Pruco Life of New Jersey, to be
considered the owner of the underlying assets. Because of this uncertainty,
Pruco Life of New Jersey 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 contractowners and will be
made with such notice to affected contractowners as is feasible under the
circumstances.
3. ENTITY OWNERS.
Where a contract is held by a non-natural person (e.g., a corporation),
other than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract will be subject to tax.
4. PURCHASE PAYMENTS MADE BEFORE AUGUST 14, 1982.
If your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982, favorable tax rules may apply to certain
withdrawals from the contract. Generally, withdrawals are treated as a recovery
of your investment in the contract first until purchase payments made before
August 14, 1982 are withdrawn. Moreover, any income allocable to purchase
payments made before August 14, 1982, is not subject to the 10% penalty tax.
5. WITHHOLDING OF TAX FROM DISTRIBUTIONS.
Taxable amounts distributed from annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. The rate of withholding on annuity payments will be determined on the
basis of the withholding certificate you file with Pruco Life of New Jersey.
These elections must be made on the appropriate Pruco Life of New Jersey forms.
Absent these elections, Pruco Life of New Jersey will withhold the tax amounts
required by the applicable tax regulations. You may be subject to penalties
under the estimated tax payment rules if your withholding and estimated tax
payments are not sufficient.
6. NONRESIDENT ALIENS.
Special tax withholding rules apply to nonresident aliens.
FINANCIAL STATEMENTS
The following financial statements describe the sub-accounts of the Pruco Life
of New Jersey Flexible Premium Variable Annuity Account associated with the
Discovery Select Variable Annuity, another variable annuity contract offered by
Pruco Life. This information is provided because the sub-accounts associated
with Discovery Select are also used by the Discovery Choice variable annuity
contract. Financial information specific to the Discovery Choice variable
annuity contract will be available following the completion of the initial
accounting period for this contract.
SAI-4
<PAGE>
DISCOVERY CHOICE VARIABLE ANNUITY
FINANCIAL STATEMENTS OF SEPARATE ACCOUNT AND DEPOSITOR
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY MARKET DIVERSIFIED BOND HIGH YIELD BOND STOCK INDEX EQUITY INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------------- ---------------- ----------- ----------------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments in The Prudential Series Fund, Inc.
Portfolios and non-Prudential administered
funds, at net asset value [Note 3] ......... $ 18,435,774 $ 34,045,791 $ 28,841,374 $ 48,057,625 $ 40,486,580
--------------- --------------- ----------------- ------------ ---------------
Net Assets ................................... $ 18,435,774 $ 34,045,791 $ 28,841,374 $ 48,057,625 $ 40,486,580
=============== =============== ================= ============ ===============
NET ASSETS, representing:
Equity of contract owners .................. $ 18,435,774 $ 34,045,791 $ 28,841,374 $ 48,057,625 $ 40,486,580
--------------- --------------- ----------------- ------------ ---------------
$ 18,435,774 $ 34,045,791 $ 28,841,374 $ 48,057,625 $ 40,486,580
=============== =============== ================= ============ ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A1
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- --------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN
PRUDENTIAL PRUDENTIAL PRUDENTIAL AIM V.I. JANUS ASPEN INTERNATIONAL
EQUITY JENNISON GLOBAL GROWTH AND AIM V.I. GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO INCOME FUND VALUE FUND PORTFOLIO PORTFOLIO
- --------------- ------------------ -------------- ---------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
$ 44,644,003 $ 39,285,619 $ 4,844,702 $ 9,129,905 $ 11,069,271 $ 10,034,910 $ 10,661,915
------------- ----------------- ------------- --------------- ------------- ---------------- ---------------
$ 44,644,003 $ 39,285,619 $ 4,844,702 $ 9,129,905 $ 11,069,271 $ 10,034,910 $ 10,661,915
============= ================= ============= =============== ============= ================ ===============
$ 44,644,003 $ 39,285,619 $ 4,844,702 $ 9,129,905 $ 11,069,271 $ 10,034,910 $ 10,661,915
------------- ----------------- ------------- --------------- ------------- ---------------- ---------------
$ 44,644,003 $ 39,285,619 $ 4,844,702 $ 9,129,905 $ 11,069,271 $ 10,034,910 $ 10,661,915
============= ================= ============= =============== ============= ================ ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A2
<PAGE>
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------------
OCC OCC
ACCUMULATION ACCUMULATION T. ROWE PRICE
MFS EMERGING MFS TRUST MANAGED TRUST SMALL CAP EQUITY INCOME
GROWTH SERIES RESEARCH SERIES PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------- ------------------ --------------------------------
ASSETS
<S> <C> <C> <C> <C> <C>
Investments in The Prudential Series Fund, Inc.
Portfolios and non-Prudential administered
funds, at net asset value [Note 3] ......... $ 12,416,397 $ 6,784,944 $ 29,176,808 $ 7,742,780 $ 13,721,549
--------------- --------------- ----------------- ------------ ---------------
Net Assets ................................... $ 12,416,397 $ 6,784,944 $ 29,176,808 $ 7,742,780 $ 13,721,549
=============== =============== ================= ============ ===============
NET ASSETS, representing:
Equity of contract owners .................. $ 12,416,397 $ 6,784,944 $ 29,176,808 $ 7,742,780 $ 13,721,549
--------------- --------------- ----------------- ------------ ---------------
$ 12,416,397 $ 6,784,944 $ 29,176,808 $ 7,742,780 $ 13,721,549
=============== =============== ================= ============ ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A3
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -------------------------------------------------------------------------------------------
T. ROWE PRICE WARBURG PINCUS PRUDENTIAL FRANKLIN
INTERNATIONAL POST-VENTURE SMALL CAPITALIZATION AMERICAN SMALL CAP
STOCK CAPITAL STOCK CENTURY VP GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO VALUE FUND
- ---------------- ------------------- ------------------- --------------- ----------------
<S> <C> <C> <C> <C>
$ 3,167,726 $ 1,757,173 $ 644,378 $ 144,134 $ 315,362
-------------- ----------------- ------------------ ------------- --------------
$ 3,167,726 $ 1,757,173 $ 644,378 $ 144,134 $ 315,362
============== ================= ================== ============= ==============
$ 3,167,726 $ 1,757,173 $ 644,378 $ 144,134 $ 315,362
-------------- ----------------- ------------------ ------------- --------------
$ 3,167,726 $ 1,757,173 $ 644,378 $ 144,134 $ 315,362
============== ================= ================== ============= ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A4
<PAGE>
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY DIVERSIFIED HIGH YIELD STOCK
MARKET BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------- ---------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividend income...................................... $ 530,791 $ 1,400,639 $ 2,197,294 $ 434,269
-------------- -------------- -------------- --------------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Notes 5A and 5B].................. 142,233 260,157 271,171 434,767
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)......................... 388,558 1,140,482 1,926,123 (498)
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received................. 0 55,251 0 685,310
Realized gain (loss) on shares redeemed.............. 0 (1,277) (66,919) (15,648)
Net change in unrealized gain (loss) on investments.. 0 (220,174) (3,362,203) 6,220,619
-------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS....................... 0 (166,200) (3,429,122) 6,890,281
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS......................... $ 388,558 $ 974,282 $ (1,502,999) $ 6,889,783
=============== =============== =============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A5
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL
EQUITY PRUDENTIAL PRUDENTIAL PRUDENTIAL AIM V.I. JANUS ASPEN
INCOME EQUITY JENNISON GLOBAL GROWTH AMI V.I. GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO INCOME FUND VALUE FUND PORTFOLIO
- ------------------- ---------------- --------------- --------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 863,460 $ 653,936 $ 48,122 $ 51,484 $ 35,325 $ 50,912 $ 213,798
-------------- ------------- ------------- ------------- ------------ -------------- -------------
401,996 435,118 299,941 46,045 87,246 99,461 83,955
-------------- ------------- ------------- ------------- ------------ -------------- -------------
461,464 218,818 (251,819) 5,439 (51,921) (48,549) 129,843
-------------- ------------- ------------- ------------- ------------ -------------- -------------
2,112,014 4,709,227 522,676 196,136 87,186 450,290 171,381
(132,522) (23,763) (23,766) (4,864) 4,610 (535) (5,570)
(5,326,474) (3,841,284) 6,793,178 455,299 1,461,242 1,671,765 1,674,117
-------------- ------------- ------------- ------------- ------------ -------------- -------------
(3,346,982) 844,180 7,292,088 646,571 1,553,038 2,121,520 1,839,928
-------------- ------------- ------------- ------------- ------------ -------------- -------------
$ (2,885,518) $ 1,062,998 $ 7,040,269 $ 652,010 $ 1,501,117 $ 2,072,971 $ 1,969,771
============== ============== ============== ============== ============== ============== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A6
<PAGE>
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------
OCC
JANUS ASPEN MFS ACCUMULATION
INTERNATIONAL EMERGING MFS TRUST
GROWTH GROWTH RESEARCH MANAGED
PORTFOLIO SERIES SERIES PORTFOLIO
--------------- --------------- ---------------- ---------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividend income...................................... $ 140,074 $ 0 $ 6,843 $ 96,191
-------------- ------------ --------------- -------------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Notes 5A and 5B]................... 111,330 99,739 67,097 297,511
-------------- ------------ --------------- -------------
NET INVESTMENT INCOME (LOSS)......................... 28,744 (99,739) (60,254) (201,320)
-------------- ------------ --------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received................. 20,343 48,546 89,748 390,487
Realized gain (loss) on shares redeemed.............. 15,256 17,411 8,037 (33,042)
Net change in unrealized gain (loss) on investments.. 803,166 2,185,347 848,009 262,512
-------------- ------------ --------------- -------------
NET GAIN (LOSS) ON INVESTMENTS....................... 838,765 2,251,304 945,794 619,957
-------------- ------------ --------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.......................... $ 867,509 $ 2,151,565 $ 885,540 $ 418,637
============== ============ =============== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A7
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
Occ Prudential
Accumulation T. Rowe Price T. Rowe Price Warburg Small Franklin
Trust Equity International Post-venture Capitalization American Small Cap
Small Cap Income Stock Capital Stock Century Vp Growth
Portfolio Portfolio Portfolio Portfolio Portfolio* Value* Fund*
- ------------------- ---------------- --------------- --------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 12,175 $ 227,349 $ 36,132 $ 0 $ 1,112 $ 0 $ 0
--------- --------- --------- --------- --------- --------- ---------
82,183 142,074 32,233 17,026 1,090 270 491
--------- --------- --------- --------- --------- --------- ---------
(70,008) 85,275 3,899 (17,026) 22 (270) (491)
--------- --------- --------- --------- --------- --------- ---------
132,949 402,942 12,753 0 28,379 0 0
(87,824) 920 (1,816) (9,485) 1,244 109 (141)
(726,536) 113,818 258,507 78,797 35,630 3,508 30,781
--------- --------- --------- --------- --------- --------- ---------
(681,411) 517,680 269,444 69,312 65,253 3,617 30,640
--------- --------- --------- --------- --------- --------- ---------
$(751,419) $ 602,955 $ 273,343 $ 52,286 $ 65,275 $ 3,347 $ 30,149
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
*Commenced Operations on September 1, 1998
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A8
<PAGE>
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 24,1997** through December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY MARKET DIVERSIFIED BOND HIGH YIELD BOND
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
------------ ------------ ----------- ------------ ------------ ------------
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) .................. $ 388,558 $ 86,282 $ 1,140,482 $ 158,186 $1,926,123 $ 294,982
Capital gains distributions received .......... 0 0 55,251 36,843 0 0
Realized gain (loss) on shares redeemed........ 0 0 (1,277) 1,268 (66,919) 632
Net change in unrealized gain (loss) on
investments ................................... 0 0 (220,174) (87,951) (3,362,203) (27,151)
----------- ----------- ----------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ..................... 388,558 86,282 974,282 108,346 (1,502,999) 268,463
----------- ----------- ----------- ---------- ----------- -----------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments ................. 18,308,790 8,199,777 26,338,579 4,748,888 23,904,670 7,044,786
Surrenders, Withdrawals and Death Benefits .. (590,456) (35,679) (754,090) (42,482) (654,641) (56,437)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Options ......... (5,502,058) (2,418,500) 2,425,538 241,601 271,531 (461,981)
Administrative and Other Charges ............ (906) 0 (2,759) 0 (3,313) 0
----------- ----------- ----------- ---------- ----------- -----------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS...................... 12,215,370 5,745,598 28,007,268 4,948,007 23,518,247 6,526,368
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7]............... (262,762) 262,728 (102,106) 109,994 (15,650) 46,945
----------- ----------- ----------- ---------- ----------- -----------
TOTAL INCREASE IN NET ASSETS .................... 12,341,166 6,094,608 28,879,444 5,166,347 21,999,598 6,841,776
NET ASSETS
Beginning of year................................ 6,094,608 0 5,166,347 0 6,841,776 0
----------- ----------- ----------- ---------- ----------- -----------
End of year...................................... $18,435,774 $6,094,608 $34,045,791 $5,166,347 $28,841,374 $6,841,776
=========== ========== =========== =========== =========== ==========
</TABLE>
**Commenced Operations
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A9
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL
STOCK INDEX EQUITY INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------- ----------------------------- ------------------------------
1998 1997 1998 1997 1998 1997
- ------------- -------------- ------------- -------------- ------------- ---------------
<S><C> <C> <C> <C> <C> <C>
$ (498) $ 31,172 $ 461,464 $ 56,244 $ 218,818 $ 80,142
685,310 342,433 2,112,014 733,657 4,709,227 613,254
(15,648) 8,889 (132,522) 0 (23,763) 12,529
6,220,619 640,205 (5,326,474) (105,243) (3,841,284) (86,245)
- ------------ ------------ ------------ ------------ ------------ ------------
6,889,783 1,022,699 (2,885,518) 684,658 1,062,998 619,680
- ------------ ------------ ------------ ------------ ------------ ------------
29,771,169 11,537,843 33,802,922 9,092,591 30,494,085 12,608,951
(1,266,564) (91,204) (1,336,359) (34,592) (1,135,559) (76,063)
(125,011) 260,453 867,586 192,312 699,976 312,812
(7,572) 0 (5,784) 0 (8,237) 0
- ------------ ------------ ------------ ------------ ------------ ------------
28,372,022 11,707,092 33,328,365 9,250,311 30,050,265 12,845,700
34,044 31,985 109,447 (683) 70,773 (5,413)
- ------------ ------------ ------------ ------------ ------------ ------------
35,295,849 12,761,776 30,552,294 9,934,286 31,184,036 13,459,967
12,761,776 0 9,934,286 0 13,459,967 0
- ------------ ------------ ------------ ------------ ------------ ------------
$ 48,057,625 $ 12,761,776 $ 40,486,580 9,934,286 44,644,003 13,459,967
============ ============ ============ ============ ============ ============
<CAPTION>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------------------------------
PRUDENTIAL
PRUDENTIAL JENNISON GLOBAL
PORTFOLIO PORTFOLIO
----------------------------- ----------------------------
1998 1997 1998 1997
------------- -------------- ------------- -------------
<C> <C> <C> <C>
$ (251,819) $ (23,019) $ 5,439 $ 3,621
522,676 319,882 196,136 72,144
(23,766) 14,031 (4,864) (2,314)
6,793,178 16,226 455,299 (140,267)
------------ ------------ ------------ ------------
7,040,269 327,120 652,010 (66,816)
------------ ------------ ------------ ------------
24,608,849 6,026,720 2,481,167 1,977,078
(650,657) (42,111) (217,230) (29,052)
1,768,266 137,529 (24,347) 65,358
(4,533) 0 (948) 0
------------ ------------ ------------ ------------
25,721,925 6,122,138 2,238,642 2,013,384
76,083 (1,916) 6,656 826
------------ ------------ ------------ ------------
32,838,277 6,447,342 2,897,308 1,947,394
6,447,342 0 1,947,394 0
------------ ------------ ------------ ------------
39,285,619 6,447,342 4,844,702 1,947,394
============ ============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A10
<PAGE>
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 24,1997** through December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------
AIM V.I.
GROWTH AND AIM V.I. JANUS ASPEN
INCOME FUND VALUE FUND GROWTH PORTFOLIO
------------------------ ------------------------- --------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ------------ ----------- ------------- -----------
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ................. $ (51,921) $ (15,396) $ (48,549) $ 7,524 $ 129,843 $ 4,589
Capital gains distributions received ......... 87,186 2,228 450,290 88,873 171,381 17,098
Realized gain (loss) on shares redeemed ...... 4,610 0 (535) 371 (5,570) 0
Net change in unrealized gain (loss) on
investments .................................. 1,461,242 182,008 1,671,765 116,794 1,674,117 171,601
----------- ----------- ------------ ----------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... 1,501,117 168,840 2,072,971 213,562 1,969,771 193,288
----------- ----------- ------------ ----------- ------------ -----------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments ................ 4,951,267 2,781,009 5,515,714 3,159,930 4,882,924 2,628,766
Surrenders, Withdrawals and Death Benefits . (132,626) (11,469) (202,116) (24,406) (108,984) (21,537)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Options ........ (311,867) 174,382 218,523 101,636 390,842 83,586
Administrative and Other Charges ........... (1,439) 0 (1,821) 0 (1,601) 0
----------- ----------- ------------ ----------- ------------ -----------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS .................... 4,505,335 2,943,922 5,530,300 3,237,160 5,163,181 2,690,815
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7] ............. (66,268) 76,959 5,014 10,264 (19,268) 37,123
----------- ----------- ------------ ----------- ------------ -----------
TOTAL INCREASE IN NET ASSETS ................... 5,940,184 3,189,721 7,608,285 3,460,986 7,113,684 2,921,226
NET ASSETS
Beginning of year .............................. 3,189,721 0 3,460,986 0 2,921,226 0
----------- ----------- ------------ ----------- ------------ -----------
End of year .................................... $ 9,129,905 $ 3,189,721 $ 11,069,271 $ 3,460,986 $ 10,034,910 $ 2,921,226
----------- ----------- ------------ ----------- ------------ -----------
</TABLE>
**Commenced Operations
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A11
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS
- ------------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN
INTERNATIONAL OCC OCC
GROWTH MFS EMERGING MFS ACCUMULATION TRUST ACCUMULATION TRUST
PORTFOLIO GROWTH SERIES RESEARCH SERIES MANAGED PORTFOLIO SMALL CAP PORTFOLIO
- ------------------------- -------------------------- ------------------------ -------------------------- -------------------------
1998 1997 1998 1997 1998 1997 1998 1997 1998 1997
- ----------- ------------ ------------ ----------- ----------- ----------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 28,744 $ (12,338) $ (99,739) $ (18,721) $ (60,254) $ (16,301) $ (201,320) $ (49,797) $ (70,008) $ (16,425)
20,343 2,428 48,546 0 89,748 0 390,487 794 132,949 1,010
15,256 0 17,411 0 8,037 0 (33,042) 0 (87,824) 0
803,166 63,890 2,185,347 258,606 848,009 164,625 262,512 511,431 (726,536) 148,654
- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
867,509 53,980 2,151,565 239,885 885,540 148,324 418,637 462,428 (751,419) 133,239
- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
5,187,370 4,363,549 6,934,305 2,769,659 3,284,005 2,441,201 19,620,342 8,773,973 5,267,682 3,028,743
(270,571) (38,474) (149,038) (6,029) (156,768) (25,514) (685,019) (59,475) (429,739) (15,236)
404,030 89,832 420,695 36,872 137,403 69,380 498,744 81,504 323,120 189,461
(2,669) 0 (1,900) 0 (1,267) 0 (5,090) 0 (1,432) 0
- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
5,318,160 4,414,907 7,204,062 2,800,502 3,263,373 2,485,067 19,428,977 8,796,002 5,159,631 3,202,968
(81,593) 88,952 (12,836) 33,219 (12,594) 15,234 65,279 5,485 (26,238) 24,599
- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
6,104,076 4,557,839 9,342,791 3,073,606 4,136,319 2,648,625 19,912,893 9,263,915 4,381,974 3,360,806
4,557,839 0 3,073,606 0 2,648,625 0 9,263,915 0 3,360,806 0
- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
$10,661,915 $ 4,557,839 $ 12,416,397 $ 3,073,606 $ 6,784,944 $ 2,648,625 $ 29,176,808 $ 9,263,915 $ 7,742,780 $ 3,360,806
- ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A12
<PAGE>
FINANCIAL STATEMENTS OF THE
PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the period January 24,1997** through December 31, 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------------
T. ROWE PRICE T. ROWE PRICE WARBURG PINCUS
EQUITY INCOME INTERNATIONAL STOCK POST-VENTURE CAPITAL
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
------------ ------------ ----------- ------------ ------------ ------------
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ................... $ 85,275 $ 33,286 $ 3,899 $ 3,958 $ (17,026) $ (4,029)
Capital gains distributions received ........... 402,942 138,220 12,753 17,767 0 0
Realized gain (loss) on shares redeemed ........ 920 0 (1,816) 0 (9,485) 0
Net change in unrealized gain (loss) on
investments .................................. 113,818 308,579 258,507 (84,403) 78,797 51,292
---------- ----------- ----------- ----------- ----------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................... 602,955 480,085 273,343 (62,678) 52,286 47,263
---------- ----------- ----------- ----------- ----------- ---------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments .................. 8,126,207 4,463,509 1,445,262 1,316,610 1,012,106 579,387
Surrenders, Withdrawals and Death Benefits ... (253,996) (37,721) (30,350) (10,790) (12,105) (2,648)
Net Transfers From (To) Other
Subaccounts or Fixed Rate Options ........... 98,585 223,911 121,453 117,939 35,849 45,694
Administrative and Other Charges ............. (2,839) 0 (655) 0 (520) 0
---------- ----------- ----------- ----------- ----------- ---------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS ...................... 7,967,957 4,649,699 1,535,710 1,423,759 1,035,330 622,433
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7] ............... (55,800) 76,653 (44,233) 41,825 (36,828) 36,689
----------- ----------- ----------- ----------- ----------- ---------
TOTAL INCREASE IN NET ASSETS ..................... 8,515,112 5,206,437 1,764,820 1,402,906 1,050,788 706,385
NET ASSETS
Beginning of year ................................ 5,206,437 0 1,402,906 0 706,385 0
----------- ----------- ----------- ----------- ----------- ---------
End of year...................................... $13,721,549 $ 5,206,437 $ 3,167,726 $ 1,402,906 $ 1,757,173 $ 706,385
=========== =========== =========== =========== =========== =========
</TABLE>
**Commenced Operations
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A13
<PAGE>
SUBACCOUNTS (CONTINUED)
- -----------------------------------------------
PRUDENTIAL
SMALL FRANKLIN
CAPITALIZATION AMERICAN SMALL CAP
STOCK CENTURY VP GROWTH
PORTFOLIO*** VALUE*** FUND***
--------- --------- ---------
1998 1998 1998
--------- --------- ---------
$ 22 $ (270) $ (491)
28,379 0 0
1,244 109 (141)
35,630 3,508 30,781
--------- --------- ---------
65,275 3,347 30,149
--------- --------- ---------
516,286 131,048 224,651
(593) (384) (99)
64,252 10,141 60,831
0 0 (4)
--------- --------- ---------
579,945 140,805 285,379
(842) (18) (166)
--------- --------- ---------
644,378 144,134 315,362
0 0 0
--------- --------- ---------
$ 644,378 $ 144,134 $ 315,362
--------- --------- ---------
***Investment option commenced operations on September 1, 1998
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A15 THROUGH A21
A14
<PAGE>
NOTES TO FINANCIAL STATEMENTS
OF THE PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
DECEMBER 31, 1998
NOTE 1: GENERAL
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 of Pruco Life Insurance Company of
New Jersey ("Pruco Life of New Jersey") which is a wholly-owned
subsidiary of Pruco Life Insurance Company (an Arizona domiciled
company) and is indirectly wholly-owned by the Prudential Insurance
Company of America ("Prudential"). The assets of the Account are
segregated from Pruco Life of New Jersey's other assets.
The Account is registered under the Investment Company Act of 1940,
as amended, as a unit investment trust. The Account is a funding
vehicle for individual variable annuity contracts. There are
twenty-two subaccounts within the account, each of which invests in a
corresponding portfolio of The Prudential Series Fund, Inc. (the
"Series Fund"), or any of the non-Prudential administered funds shown
in Note 3. The Series Fund is a diversified open-end management
investment company, and is managed by Prudential.
The Discovery Select Variable Annuity subaccounts of the Pruco Life
of New Jersey Flexible Premium Variable Annuity Account commenced
operations on January 24, 1997.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles ("GAAP"). The preparation of
the financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts
and disclosures. Actual results could differ from those estimates.
Investments--The investments in shares of the Series Fund or the
non-Prudential administered funds are stated at the net asset value
of the respective portfolio.
Security Transactions--Realized gains and losses on security
transactions are reported on an average cost basis. Purchase and sale
transactions are recorded as of the trade date of the security being
purchased or sold.
Distributions Received--Dividend and capital gain distributions
received are reinvested in additional shares of the Series Fund or
the non-Prudential administered funds and are recorded on the
ex-dividend date.
A15
<PAGE>
NOTE 3: INVESTMENT INFORMATION FOR THE PRUCO LIFE OF NEW JERSEY FLEXIBLE
PREMIUM VARIABLE ANNUITY ACCOUNT
The net asset value per share (rounded) for each portfolio of the
Series Fund or the non-Prudential administered funds, the number of
shares of each portfolio held by the subaccounts of the Account and
the aggregate cost of investments in such shares at December 31, 1998
were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
---------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY DIVERSIFIED HIGH YIELD STOCK EQUITY
MARKET BOND BOND INDEX INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Number of shares: 1,843,577 3,077,956 4,001,356 1,273,387 2,021,043
Net asset value per
share (rounded): $ 10.00 $ 11.06 $ 7.21 $ 37.74 $ 20.03
Cost: $ 18,435,774 $ 34,353,916 $ 32,230,728 $ 41,196,801 $ 45,918,297
<CAPTION>
PORTFOLIOS (CONTINUED)
---------------------------------------------------------------------------------------------
AIM V.I.
PRUDENTIAL PRUDENTIAL PRUDENTIAL GROWTH AND AIM V.I.
EQUITY JENNISON GLOBAL INCOME VALUE
PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND
---------------- ---------------- ---------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Number of shares: 1,506,371 1,643,278 228,989 384,417 421,687
Net asset value per
share (rounded): $ 29.64 $ 23.91 $ 21.16 $ 23.75 $ 26.25
Cost: $ 48,571,532 $ 32,476,215 $ 4,529,670 $ 7,486,655 $ 9,280,712
<CAPTION>
PORTFOLIOS (CONTINUED)
---------------------------------------------------------------------------------------------
JANUS ASPEN MFS OCC
JANUS INTERNATIONAL EMERGING MFS ACCUMULATION
ASPEN GROWTH GROWTH GROWTH RESEARCH TRUST MANAGED
PORTFOLIO PORTFOLIO SERIES SERIES PORTFOLIO
---------------- ---------------- ---------------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Number of shares: 426,298 501,265 578,314 356,165 667,051
Net asset value per
share (rounded):
$ 23.54 $ 21.27 $ 21.47 $ 19.05 $ 43.74
Cost: $ 8,189,192 $ 9,794,859 $ 9,972,444 $ 5,772,310 $ 28,402,865
<CAPTION>
PORTFOLIOS (CONTINUED)
---------------------------------------------------------------------------------------------
WARBURG PRUDENTIAL
OCC T. ROWE PRICE T. ROWE PRICE PINCUS SMALL
ACCUMULATION EQUITY INTERNATIONAL POST-VENTURE CAPITALIZATION
TRUST SMALL INCOME STOCK CAPITAL STOCK
CAP PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- ---------------- --------------- ----------------------
<S> <C> <C> <C> <C> <C>
Number of shares: 335,185 712,808 218,163 148,661 43,804
Net asset value per
share (rounded): $ 23.10 $ 19.25 $ 14.52 $ 11.82 $ 14.71
Cost: $ 8,320,662 $ 13,299,152 $ 2,993,622 $ 1,627,084 $ 608,748
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------
FRANKLIN
AMERICAN SMALL CAP
CENTURY GROWTH
VP VALUE FUND
---------------- ----------------
<S> <C> <C>
Number of shares: 21,417 34,167
Net asset value per
share (rounded): $ 6.73 $ 9.23
Cost: $ 140,626 $ 284,581
</TABLE>
A16
<PAGE>
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding contract owner units, unit values and total value of
contract owner equity at December 31, 1998 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY DIVERSIFIED HIGH YIELD STOCK EQUITY
MARKET BOND BOND INDEX INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding 16,317,010 28,376,932 23,777,679 25,489,353 25,310,440
Unit Value.................... $ 1.12985 $ 1.19977 $ 1.21296 $ 1.88540 $ 1.59960
-------------- -------------- --------------- -------------- ---------------
TOTAL CONTRACT OWNER EQUITY... $ 18,435,774 $ 34,045,791 $ 28,841,374 $ 48,057,625 $ 40,486,580
============== ============== =============== ============== ===============
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------
AIM V.I.
PRUDENTIAL PRUDENTIAL PRUDENTIAL GROWTH AND AIM V.I.
EQUITY JENNISON GLOBAL INCOME VALUE
PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND
-------------- --------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding 27,877,412 19,579,080 3,115,243 5,636,579 6,623,349
Unit Value.................... $ 1.60144 $ 2.00651 $ 1.55516 $ 1.61976 $ 1.67125
-------------- --------------- --------------- -------------- --------------
TOTAL CONTRACT OWNER EQUITY... $ 44,644,003 $ 39,285,619 $ 4,844,702 $ 9,129,905 $ 11,069,271
============== =============== =============== ============== ==============
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
JANUS MFS OCC
JANUS INTERNATIONAL EMERGING MFS ACCUMULATION
ASPEN GROWTH GROWTH GROWTH RESEARCH MANAGED
PORTFOLIO PORTFOLIO SERIES SERIES PORTFOLIO
-------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding 6,145,905 7,490,614 8,147,991 4,582,935 21,770,163
Unit Value.................... $ 1.63278 $ 1.42337 $ 1.52386 $ 1.48048 $ 1.34022
-------------- --------------- --------------- -------------- ---------------
TOTAL CONTRACT OWNER EQUITY... $ 10,034,910 $ 10,661,915 $ 12,416,397 $ 6,784,944 $ 29,176,808
============== =============== =============== ============== ===============
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
PRUDENTIAL
OCC T. ROWE PRICE T. ROWE PRICE WARBURG PINCUS SMALL
ACCUMULATION EQUITY INTERNATIONAL POST-VENTURE CAPITALIZATION
TRUST SMALL INCOME STOCK CAPITAL STOCK
CAP PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding 6,811,750 9,576,938 2,623,440 1,563,182 514,051
Unit Value.................... $ 1.13668 $ 1.43277 $ 1.20747 $ 1.12410 $ 1.25353
-------------- --------------- --------------- -------------- ---------------
TOTAL CONTRACT OWNER EQUITY... $ 7,742,780 $ 13,721,549 $ 3,167,726 $ 1,757,173 $ 644,378
============== =============== =============== ============== ===============
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------
FRANKLIN
AMERICAN SMALL CAP
CENTURY GROWTH
VP VALUE FUND
-------------- ---------------
<S> <C> <C>
Contract Owner Units Outstanding 122,871 253,350
Unit Value.................... $ 1.17305 $ 1.24477
-------------- ---------------
TOTAL CONTRACT OWNER EQUITY... $ 144,134 $ 315,362
============== ===============
</TABLE>
NOTE 5: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges, at an effective annual
rate of 1.25%, are applied daily against the net assets representing
equity of contract owners held in each subaccount. Mortality risk is
that annuitants may live longer than estimated and expense risk is
that the cost of issuing and administering the policies may exceed
the related charges by Pruco Life of New Jersey.
A17
<PAGE>
NOTE 5: CHARGES AND EXPENSES (CONTINUED)
B. Administration Charge
A deferred sales charge is imposed upon withdrawals of certain
purchase payments to compensate Prudential for sales and other
marketing expenses. The administration charge at an effective annual
rate of .15% is applied daily against the net assets representing
equity of contract owners held in each subaccount. Administration
charges include costs associated with issuing the contract,
establishing and maintaining records, and providing reports to
contract owners.
C. Withdrawal Charge
A withdrawal charge may be made upon full or partial contract owner
redemptions. 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.
NOTE 6: TAXES
Pruco Life of New Jersey is taxed as a "life insurance company" as
defined by the Internal Revenue Code and the results of operations of
the Account form a part of Prudential's consolidated federal tax
return. Under current federal law, no federal income taxes are
payable by the Account. As such, no provision for tax liability has
been recorded in these financial statements.
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RETAINED IN THE ACCOUNT
The increase (decrease) in net assets retained in the Account
represents the net contributions (withdrawals) of Pruco Life of New
Jersey to (from) the Account. Effective October 13, 1998, Pruco Life
of New Jersey no longer maintains a position in the account.
Previously, Pruco Life of New Jersey maintained a position in the
Account for liquidity purposes including unit purchases and
redemptions, fund share transactions and expense processing.
NOTE 8: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) for the
period January 24, 1997* through December 31, 1997 and the year ended
December 31, 1998 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------
PRUDENTIAL MONEY MARKET PRUDENTIAL DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
--------------------------------- ----------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 22,847,069 5,435,980 26,289,325 4,500,473
Contract Owner Redemptions: (11,896,512) (69,527) (2,363,752) (49,045)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------
PRUDENTIAL HIGH YIELD BOND PRUDENTIAL STOCK INDEX
PORTFOLIO PORTFOLIO
--------------------------------- ----------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 20,814,498 5,453,214 19,792,548 8,626,854
Contract Owner Redemptions: (2,434,026) (56,008) (2,847,138) (82,951)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------
PRUDENTIAL EQUITY INCOME PRUDENTIAL EQUITY
PORTFOLIO PORTFOLIO
--------------------------------- ----------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 21,415,860 6,034,726 20,939,711 9,211,888
Contract Owner Redemptions: (2,083,915) (56,231) (2,125,152) (149,016)
</TABLE>
A18
<PAGE>
NOTE 8: UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
PRUDENTIAL JENNISON PRUDENTIAL GLOBAL
PORTFOLIO PORTFOLIO
----------------------------------- -----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 16,411,856 4,405,058 2,051,714 1,575,148
Contract Owner Redemptions: (1,188,911) (48,943) (481,053) (30,566)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
AIM V.I. GROWTH AIM V.I.
AND VALUE
INCOME FUND FUND
----------------------------------- -----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 3,927,853 2,423,634 4,507,581 2,708,560
Contract Owner Redemptions: (705,704) (9,205) (572,109) (20,683)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
JANUS ASPEN GROWTH JANUS ASPEN INTERNATIONAL
PORTFOLIO GROWTH PORTFOLIO
----------------------------------- -----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 4,136,299 2,381,042 4,602,117 3,660,400
Contract Owner Redemptions: (351,019) (20,418) (738,443) (33,461)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
MFS EMERGING MFS RESEARCH
GROWTH SERIES SERIES
----------------------------------- -----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 6,101,761 2,643,271 2,848,755 2,189,366
Contract Owner Redemptions: (590,675) (6,366) (425,082) (30,104)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
OCC ACCUMULATION TRUST OCC ACCUMULATION TRUST
MANAGED PORTFOLIO SMALL CAP PORTFOLIO
----------------------------------- -----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 16,105,759 7,464,664 5,096,373 2,675,189
Contract Owner Redemptions: (1,637,607) (162,668) (915,114) (44,698)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
T. ROWE PRICE EQUITY T. ROWE PRICE INTERNATIONAL
INCOME PORTFOLIO STOCK PORTFOLIO
----------------------------------- -----------------------------------
1998 1997 1998 1997
----------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 6,462,462 3,884,774 1,496,184 1,296,132
Contract Owner Redemptions: (731,820) (38,509) (159,534) (9,342)
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------
PRUDENTIAL
WARBURG PINCUS POST-VENTURE SMALL CAPITALIZATION
CAPITAL PORTFOLIO STOCK PORTFOLIO*
----------------------------------- -----------------------------------
1998 1997 1998
----------------- ---------------- ----------------
<S> <C> <C> <C>
Contract Owner Contributions: 1,091,791 633,040 517,841
Contract Owner Redemptions: (153,538) (8,111) (3,791)
</TABLE>
*Commenced Operations on September 1, 1998
A19
<PAGE>
NOTE 8: UNIT ACTIVITY (CONTINUED)
SUBACCOUNTS (CONTINUED)
----------------------------------
AMERICAN FRANKLIN
CENTURY SMALL CAP
VP VALUE* GROWTH FUND*
----------------------------------
1998 1998
----------------- ---------------
Contract Owner Contributions: 126,750 253,707
Contract Owner Redemptions: (3,879) (357)
* Commenced Operations on September 1, 1998
NOTE 9: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of
investments in the Series Fund and the non-Prudential administered
funds for the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY MARKET DIVERSIFIED BOND HIGH YIELD BOND STOCK INDEX EQUITY INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Purchases...................... $ 18,211,448 $ 28,444,318 $ 24,117,444 $ 29,455,131 $ 34,590,205
Sales.......................... $ (6,401,073) $ (799,313) $ (886,019) $ (1,483,832) $ (998,970)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------
AIM V.I.
PRUDENTIAL PRUDENTIAL PRUDENTIAL GROWTH AIM V.I.
EQUITY JENNISON GLOBAL AND INCOME VALUE
PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Purchases...................... $ 30,742,320 $ 26,234,294 $ 2,961,364 $ 4,760,969 $ 5,595,881
Sales.......................... $ (750,068) $ (372,877) $ (497,326) $ (409,148) $ (160,028)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------
JANUS OCC
ASPEN MFS ACCUMULATION
JANUS INTERNATIONAL EMERGING MFS TRUST
ASPEN GROWTH GROWTH GROWTH RESEARCH MANAGED
PORTFOLIO PORTFOLIO SERIES SERIES PORTFOLIO
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Purchases..................... $ 5,160,376 $ 5,555,687 $ 7,326,127 $ 3,454,739 $ 20,042,129
Sales......................... $ (100,418) $ (430,451) $ (234,640) $ (271,057) $ (675,952)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------
WARBURG
OCC T. ROWE PRICE T. ROWE PRICE PINCUS PRUDENTIAL
ACCUMULATION EQUITY INTERNATIONAL POST-VENTURE SMALL
TRUST SMALL INCOME STOCK CAPITAL CAPITALIZATION
CAP PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO*
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Purchases..................... $ 5,662,402 $ 8,051,550 $ 1,588,202 $ 1,069,169 $ 608,714
Sales......................... $ (611,193) $ (281,465) $ (128,958) $ (87,694) $ (30,570)
</TABLE>
* Commenced Operations on September 1, 1998
A20
<PAGE>
NOTE 9: PURCHASES AND SALES OF INVESTMENTS (CONTINUED)
SUBACCOUNTS (CONTINUED)
---------------------------------
AMERICAN FRANKLIN
CENTURY SMALL CAP
VP VALUE* GROWTH FUND*
----------------- --------------
Purchases..................... $ 165,542 $ 295,891
Sales......................... $ (24,920) $ (11,121)
* Commenced Operations on September 1, 1998
A21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of the
Pruco Life of New Jersey Flexible Premium Variable Annuity Account
and the Board of Directors of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of the subaccounts (Prudential Money
Market Portfolio, Prudential Diversified Bond Portfolio, Prudential High Yield
Bond Portfolio, Prudential Stock Index Portfolio, Prudential Equity Income
Portfolio, Prudential Equity Portfolio, Prudential Jennison Portfolio,
Prudential Global Portfolio, AIM V.I. Growth and Income Fund, AIM V.I. Value
Fund, Janus Aspen Growth Portfolio, Janus Aspen International Growth Portfolio,
MFS Emerging Growth Series, MFS Research Series, OCC Accumulation Trust Managed
Portfolio, OCC Accumulation Trust Small Cap Portfolio, T. Rowe Price Equity
Income Portfolio, T. Rowe Price International Stock Portfolio, Warburg Pincus
Post-Venture Capital Portfolio, Prudential Small Capitalization Stock Portfolio,
American Century VP Value, and Franklin Small Cap Growth Fund) of the Pruco Life
of New Jersey Flexible Premium Variable Annuity Account at December 31, 1998,
the results of each of their operations for the year then ended (for the period
September 1, 1998 through December 31, 1998 for Prudential Small Capitalization
Stock Portfolio, American Century VP Value and Franklin Small Cap Growth Fund)
and the changes in each of their net assets for the year ended December 31, 1998
and for the period January 24, 1997 through December 31, 1997 for Prudential
Money Market Portfolio, Prudential Diversified Bond Portfolio, Prudential High
Yield Bond Portfolio, Prudential Stock Index Portfolio, Prudential Equity Income
Portfolio, Prudential Equity Portfolio, Prudential Jennison Portfollio,
Prudential Global Portfolio, AIM V.I. Growth and Income Fund, AIM V.I. Value
Fund, Janus Aspen Growth Portfolio, Janus Aspen International Growth Portfolio,
MFS Emerging Growth Series, MFS Research Series, OCC Accumulation Trust Managed
Portfolio, OCC Accumulation Trust Small Cap Portfolio, T. Rowe Price Equity
Income Portfolio, T. Rowe Price International Stock Portfolio and Warburg Pincus
Post-Venture Capital Portfolio and for the period September 1, 1998 through
December 31, 1998 for Prudential Small Capitalization Stock Portfolio, American
Century VP Value and Franklin Small Cap Growth Fund in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of Pruco Life Insurance Company of New Jersey's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of fund shares owned at
December 31, 1998, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
March 19, 1999
A22
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
<TABLE>
Pruco Life Insurance Company of New Jersey
Statements of Financial Position
December 31, 1998 and 1997 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 1998: $617,758; and
1997: $585,109) $ 622,990 $ 592,361
Policy loans 139,443 127,306
Short-term investments 53,761 52,464
---------- ----------
Total investments 816,194 772,131
Cash 45 3
Deferred policy acquisition costs 113,923 101,625
Accrued investment income 12,209 14,075
Other assets 15,379 4,037
Separate Account assets 1,453,407 1,110,561
---------- ----------
TOTAL ASSETS $2,411,157 $2,002,432
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances $ 413,848 $ 402,601
Future policy benefits and other policyholder liabilities 90,530 85,220
Cash collateral for loaned securities 34,424 33,663
Securities sold under agreements to repurchase 27,210 --
Income taxes payable 1,610 12,963
Net deferred income tax liability 23,715 22,188
Payable to affiliate 3,492 4,307
Other liabilities 19,489 17,103
Separate Account liabilities 1,450,986 1,108,994
---------- ----------
Total liabilities 2,065,304 1,687,039
Contingencies - (See Note 10) ---------- ----------
Stockholder's Equity
Common stock, $5 par value;
400,000 shares, authorized;
issued and outstanding at
December 31, 1998 and 1997 2,000 2,000
Paid-in-capital 125,000 125,000
Retained earnings 217,260 185,437
Accumulated other comprehensive income 1,593 2,956
---------- ----------
Total stockholder's equity 345,853 315,393
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,411,157 $2,002,432
========== ==========
</TABLE>
See Notes to Financial Statements
B-1
<PAGE>
<TABLE>
Pruco Life Insurance Company of New Jersey
Statements of Operations
Years Ended December 31, 1998, 1997, and 1996 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Premiums $ 1,345 $ 1,105 $ 1,345
Policy charges and fee income 56,247 56,382 58,571
Net investment income 47,032 46,324 43,784
Realized investment gains, net 8,446 1,707 1,221
Other income 5,755 5,286 4,047
--------- --------- ---------
Total revenues 118,825 110,804 108,968
--------- --------- ---------
BENEFITS AND EXPENSES
Policyholders' benefits 28,342 33,999 28,653
Interest credited to policyholders' account balances 18,985 19,372 20,069
General, administrative and other expenses 22,105 27,236 12,848
--------- --------- ---------
Total benefits and expenses 69,432 80,607 61,570
--------- --------- ---------
Income from operations before income taxes 49,393 30,197 47,398
--------- --------- ---------
Income taxes
Current 15,309 13,279 12,682
Deferred 2,261 (2,305) 2,929
--------- --------- ---------
Total income taxes 17,570 10,974 15,611
--------- --------- ---------
NET INCOME $ 31,823 $ 19,223 $ 31,787
========= ========= =========
Net unrealized investment gains (losses) on securities,
net of reclassification adjustment (1,363) 924 (4,556)
--------- --------- ---------
TOTAL COMPREHENSIVE INCOME $ 30,460 $ 20,147 $ 27,231
========= ========= =========
</TABLE>
See Notes to Financial Statements
B-2
<PAGE>
<TABLE>
Pruco Life Insurance Company of New Jersey
Statements of Changes in Stockholder's Equity
Years Ended December 31, 1998, 1997, and 1996 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
Accumulated
other Total
Common Paid-in- Retained comprehensive stockholder's
stock capital earnings income equity
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1996 $ 2,000 $ 125,000 $ 134,427 $ 6,588 $ 268,015
Net income -- -- 31,787 -- 31,787
Change in net unrealized
investment gains, net of
reclassification adjustment -- -- -- (4,556) (4,556)
--------- --------- --------- --------- ---------
Balance, December 31, 1996 2,000 125,000 166,214 2,032 295,246
Net income -- -- 19,223 -- 19,223
Change in net unrealized
investment gains, net of
reclassification adjustment -- -- -- 924 924
--------- --------- --------- --------- ---------
Balance, December 31, 1997 2,000 125,000 185,437 2,956 315,393
Net income -- -- 31,823 -- 31,823
Change in net unrealized
investment gains, net of
reclassification adjustment -- -- -- (1,363) (1,363)
--------- --------- --------- --------- ---------
Balance, December 31, 1998 $ 2,000 $ 125,000 $ 217,260 $ 1,593 $ 345,853
========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements
B-3
<PAGE>
<TABLE>
Pruco Life Insurance Company of New Jersey
Statements of Cash Flows
Years Ended December 31, 1998, 1997, and 1996 (In Thousands)
- --------------------------------------------------------------------------------
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 31,823 $ 19,223 $ 31,787
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Policy charges and fee income (10,871) (7,841) (9,963)
Interest credited to policyholders' account balances 18,985 19,372 20,069
Realized investment gains, net (8,446) (1,707) (1,221)
Amortization and other non-cash items 2,491 (1,046) 10,065
Change in:
Future policy benefits and other policyholders' liabilities 5,310 8,981 7,461
Accrued investment income 1,866 (1,167) (1,329)
Policy loans (12,137) (13,388) (15,724)
Separate Accounts (854) 1,629 (1,335)
Payable to affiliates (815) (1,752) 4,300
Deferred policy acquisition costs (12,298) 5,340 (10,934)
Income taxes payable (11,353) 10,993 1,970
Deferred income tax liability 1,527 (1,987) 366
Other, net (8,955) 2,812 4,669
----------- ----------- -----------
Cash Flows (Used in) From Operating Activities (3,727) 39,462 40,181
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 1,001,096 645,355 901,775
Payments for the purchase of:
Fixed maturities:
Available for sale (1,029,988) (679,709) (956,483)
Cash collateral for loaned securities, net 761 33,663 --
Securities sold under agreements to repurchase, net 27,210 -- --
Short term investments, net (1,297) (35,461) 28,306
----------- ----------- -----------
Cash Flows Used in Investing Activities (2,218) (36,152) (26,402)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 300,536 134,020 16,754
Withdrawals (294,549) (141,255) (26,605)
----------- ----------- -----------
Cash Flows From (Used in) Financing Activities 5,987 (7,235) (9,851)
----------- ----------- -----------
Net increase (decrease) in Cash 42 (3,925) 3,928
Cash, beginning of year 3 3,928 --
----------- ----------- -----------
CASH, END OF PERIOD $ 45 $ 3 $ 3,928
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 27,083 $ 1,896 $ 11,673
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
B-4
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. BUSINESS
Pruco Life Insurance Company of New Jersey (the Company) is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
It is licensed to sell individual life insurance, variable life insurance,
variable annuities, and fixed annuities (the Contracts) only in the states of
New Jersey and New York.
The Company is a wholly owned subsidiary of Pruco Life Insurance Company (Pruco
Life), a stock life insurance company organized in 1971 under the laws of the
state of Arizona. Pruco Life, in turn, is a wholly owned subsidiary of The
Prudential Insurance Company of America (Prudential), a mutual insurance company
founded in 1875 under the laws of the state of New Jersey. Pruco Life intends to
make additional capital contributions to the Company, as needed, to enable it to
comply with its reserve requirements and fund expenses in connection with its
business. Generally, Pruco Life is under no obligation to make such
contributions and its assets do not back the benefits payable under the
Contracts.
The Company is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
engaged in marketing insurance products, and individual annuities. There are
approximately 1,620 stock, mutual and other types of insurers in the life
insurance business in the United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements include the accounts of the Company, a stock life
insurance company. The financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP").
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
Investments
Fixed maturities classified as "available for sale" are carried at estimated
fair value. The amortized cost of fixed maturities is written down to estimated
fair value if a decline in value is considered to be other than temporary.
Unrealized gains and losses on fixed maturities "available for sale" including
the effect on deferred policy acquisition costs and participating annuity
contracts that would result from the realization of unrealized gains and losses,
net of income taxes, are included in a separate component of equity,
"Accumulated other comprehensive income."
Policy loans are carried at unpaid principal balances.
Short-term investments, consists primarily of highly liquid debt instruments
purchased with an original maturity of twelve months or less and are carried at
amortized cost, which approximates fair value.
Realized investment gains, net, are computed using the specific identification
method. Costs of fixed maturity are adjusted for impairments considered to be
other than temporary.
Cash
Cash includes cash on hand, amounts due from banks, and money market
instruments.
Deferred Policy Acquisition Costs
The costs which vary with and that are related primarily to the production of
new insurance business are deferred to the extent that they are deemed
recoverable from future profits. Such costs include certain commissions, costs
of policy issuance and underwriting, and certain variable field office expenses.
Deferred policy acquisition costs are subject to recoverability testing at the
time of policy issue and loss recognition testing at the end of each accounting
period. Deferred policy acquisition costs are adjusted for the impact of
unrealized gains or losses on investments as if these gains or losses had been
realized, with corresponding credits or charges included in equity.
B-5
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Acquisition costs related to interest-sensitive life products and
investment-type contracts are deferred and amortized in proportion to total
estimated gross profits arising principally from investment results, mortality
and expense margins and surrender charges based on historical and anticipated
future experience. Amortization periods range from 15 to 30 years. Deferred
policy acquisition costs are analyzed to determine if they are recoverable from
future income, including investment income. If such costs are determined to be
unrecoverable, they are expensed at the time of determination. The effect of
revisions to estimated gross profits on unamortized deferred acquisition costs
is reflected in earnings in the period such estimated gross profits are revised.
Securities loaned
Securities loaned are treated as financing arrangements and are recorded at the
amount of cash received as collateral. The Company obtains collateral in an
amount equal to 102% of the fair value of the securities. The Company monitors
the market value of securities loaned on a daily basis with additional
collateral obtained as necessary. Non-cash collateral received is not reflected
in the statements of financial position. Substantially all of the Company's
securities loaned are with large brokerage firms.
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase are treated as financing
arrangements and are carried at the amounts at which the securities will be
subsequently reacquired, including accrued interest, as specified in the
respective agreements. The Company's policy is to take possession of securities
purchased under agreements to resell. The market value of securities to be
repurchased is monitored and additional collateral is requested, where
appropriate, to protect against credit exposure.
Securities lending and securities repurchase agreements are used to generate net
investment income and facilitate trading activity. These instruments are
short-term in nature (usually 30 days or less). Securities loaned are
collateralized principally by U.S. Government and mortgage-backed securities.
Securities sold under repurchase agreements are collateralized principally by
cash. The carrying amounts of these instruments approximate fair value because
of the relatively short period of time between the origination of the
instruments and their expected realization.
Separate Account Assets and Liabilities
Separate Account assets and liabilities are reported at estimated fair value and
represent segregated funds which are invested for certain policyholders and
other customers. Separate Account assets include common stocks, fixed
maturities, real estate related securities, and short-term investments. The
assets of each account are legally segregated and are not subject to claims that
arise out of any other business of the Company. Investment risks associated with
market value changes are borne by the customers, except to the extent of minimum
guarantees made by the Company with respect to certain accounts. The investment
income and gains or losses for Separate Accounts generally accrue to the
policyholders and are not included in the Statement of Operations. Mortality,
policy administration and surrender charges on the accounts are included in
"Policy charges and fee income."
Separate Accounts represent funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
policyholders, with the exception of the Pruco Life of New Jersey Modified
Guaranteed Annuity Account. The Pruco Life of New Jersey Modified Guaranteed
Annuity Account is a non-unitized Separate Account, which funds the Modified
Guaranteed Annuity Contract and the Market Value Adjustment Annuity Contract.
Owners of the Pruco Life of New Jersey Modified Guaranteed Annuity and the
Market Value Adjustment Annuity Contracts do not participate in the investment
gain or loss from assets relating to such accounts. Such gain or loss is borne,
in total, by the Company.
Insurance Revenue and Expense Recognition
Premiums from insurance policies are generally recognized when due. Benefits are
recorded as an expense when they are incurred. For traditional life insurance
contracts, a liability for future policy benefits is recorded using the net
level premium method. For individual annuities in payout status, a liability for
future policy benefits is recorded for the present value of expected future
payments based on historical experience.
B-6
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Amounts received as payment for interest sensitive life, investment contracts
and variable annuities are reported as deposits to "Policyholders' account
balances." Revenues from these contracts are reflected as "Policy charges and
fee income" and consist primarily of fees assessed during the period against the
policyholders' account balances for mortality charges, policy administration
charges, and surrender charges. In addition, interest earned from the investment
of these account balances is reflected in "Net investment income." Benefits and
expenses for these products include claims in excess of related account
balances, expenses of contract administration, interest credited and
amortization of deferred policy acquisition costs.
Other Income
Other income consists primarily of asset management fees which are received by
the Company from Prudential for services Prudential provides to the Prudential
Series Fund, an underlying investment option of the Separate Accounts.
Derivative Financial Instruments
Derivatives are financial instruments whose values are derived from interest
rates, foreign exchange rates, various financial indices, or the value of
securities or commodities. Derivative financial instruments used by the Company
are futures and can be exchange-traded or contracted in the over-the-counter
market. The Company uses derivative financial instruments to hedge market risk
from changes in interest rates and to alter interest rate or currency exposures
arising from mismatches between assets and liabilities. All derivatives used by
the Company are for other than trading purposes.
To qualify as a hedge, derivatives must be designated as hedges for existing
assets, liabilities, firm commitments, or anticipated transactions which are
identified and probable to occur, and effective in reducing the market risk to
which the Company is exposed. The effectiveness of the derivatives must be
evaluated at the inception of the hedge and throughout the hedge period.
When derivatives qualify as hedges, the changes in the fair value or cash flows
of the derivatives and the hedged items are recognized in earnings in the same
period. If the Company's use of other than trading derivatives does not meet the
criteria to apply hedge accounting, the derivatives are recorded at fair value
in "Other liabilities" in the Statements of Financial Position, and changes in
their fair value are recognized in earnings in "Realized investment gains, net"
without considering changes in the hedged assets or liabilities. Cash flows from
other than trading derivative assets and liabilities are reported in the
operating activities section in the Statements of Cash Flows.
Income Taxes
The Company is a member of the consolidated federal income tax return of
Prudential and files separate company state and local tax returns. Pursuant to
the tax allocation arrangement, total federal income tax expense is determined
on a separate company basis. Members with losses record tax benefits to the
extent such losses are recognized in the consolidated federal tax provision.
Deferred income taxes are generally recognized, based on enacted rates, when
assets and liabilities have different values for financial statement and tax
reporting purposes. A valuation allowance is recorded to reduce a deferred tax
asset to that portion that is expected to be realized.
New Accounting Pronouncements
In June 1996, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
("SFAS 125"). The statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities
and provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. SFAS 125
became effective January 1, 1997 and was applied prospectively. Subsequent to
June 1996, FASB issued SFAS No. 127 "Deferral of the Effective Date of Certain
Provisions of SFAS 125" ("SFAS 127"). SFAS 127 delays the implementation of SFAS
125 for one year for certain transactions, including repurchase agreements,
dollar rolls, securities lending and similar transactions. Adoption of SFAS 125
did not have a material impact on the Company's results of operations, financial
position and liquidity.
On January 1, 1999, the Company adopted the American Institute of Certified
Public Accountants ("AICPA") Statement of Position 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments" ("SOP 97-3").
This statement provides guidance for determining when an insurance company or
other enterprise should recognize a liability for guaranty-fund assessments as
well as guidance for measuring the liability. The adoption of SOP 97-3 is not
expected to have a material effect on the Company's financial position or
results of operations.
B-7
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires that companies recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. SFAS No. 133 provides, if certain conditions
are met, that a derivative may be specifically designated as (1) a hedge of the
exposure to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment (fair value hedge), (2) a hedge of the exposure to
variable cash flows of a forecasted transaction (cash flow hedge), or (3) a
hedge of the foreign currency exposure of a net investment in a foreign
operation, an unrecognized firm commitment, an available-for-sale security or a
foreign-currency-denominated forecasted transaction (foreign currency hedge).
SFAS No. 133 does not apply to most traditional insurance contracts. However,
certain hybrid contracts that contain features which can affect settlement
amounts similarly to derivatives may require separate accounting for the "host
contract" and the underlying "embedded derivative" provisions. The latter
provisions would be accounted for as derivatives as specified by the statement.
Under SFAS No. 133, the accounting for changes in fair value of a derivative
depends on its intended use and designation. For a fair value hedge, the gain or
loss is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item. For a cash flow hedge, the effective
portion of the derivative's gain or loss is initially reported as a component of
other comprehensive income and subsequently reclassified into earnings when the
forecasted transaction affects earnings. For a foreign currency hedge, the gain
or loss is reported in other comprehensive income as part of the foreign
currency translation adjustment. For all other items not designated as hedging
instruments, the gain or loss is recognized in earnings in the period of change.
The Company is required to adopt this statement by the first quarter of 2000 and
is currently assessing the effect of the new standard.
In October, 1998, the AICPA issued Statement of Position 98-7, "Deposit
Accounting: Accounting for Insurance and Reinsurance Contracts That Do Not
Transfer Insurance Risk," ("SOP 98-7"). This statement provides guidance on how
to account for insurance and reinsurance contracts that do not transfer
insurance risk. SOP 98-7 is effective for fiscal years beginning after June 15,
1999. The adoption of this statement is not expected to have a material effect
on the Company's financial position or results of operations.
Reclassifications
Certain amounts in the prior years have been reclassified to conform to current
year presentations.
B-8
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS
Fixed Maturities
The following tables provide additional information relating to fixed maturities
as of December 31:
<TABLE>
<CAPTION>
1998
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 51,663 $ 260 $ 318 $ 51,605
Foreign government bonds 34,744 887 236 35,395
Corporate Securities 531,351 7,273 2,634 535,990
-------- -------- -------- --------
Total fixed maturities available for sale $617,758 $ 8,420 $ 3,188 $622,990
======== ======== ======== ========
<CAPTION>
1997
-----------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 42,885 $ 340 $ 3 $ 43,222
Foreign government bonds 38,332 551 -- 38,883
Corporate securities 503,892 6,545 181 510,256
-------- -------- -------- --------
Total fixed maturities available for sale $585,109 $ 7,436 $ 184 $592,361
======== ======== ======== ========
</TABLE>
B-9
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The amortized cost and estimated fair value of fixed maturities, categorized by
contractual maturities at December 31, 1998, are shown below:
Available for Sale
---------------------------
Amortized Estimated
Cost Fair Value
-------- ----------
(In Thousands)
Due in one year or less $ 13,645 $ 13,767
Due after one year through five years 269,252 271,525
Due after five years through ten years 255,280 257,992
Due after ten years 79,581 79,706
-------- --------
Total $617,758 $622,990
======== ========
Actual maturities will differ from contractual maturities because, in certain
circumstances, issuers have the right to call or prepay obligations.
Proceeds from the sale of fixed maturities available for sale during 1998, 1997,
and 1996 were $990.7 million, $635.4 million and $854.8 million, respectively.
Gross gains of $8.8 million, $2.9 million, and $3.9 million and gross losses of
$1.8 million, $1.2 million, and $3.8 million were realized on those sales during
1998, 1997, and 1996, respectively. Proceeds from maturities of fixed maturities
available for sale during 1998, 1997, and 1996 were $10.4 million, $10.0
million, and $47.0 million, respectively.
Writedowns for impairments of fixed maturities which were deemed to be other
than temporary were $.6 million for 1998. There were no impairments of fixed
maturities for the years 1997 and 1996.
The following table describes the credit quality of the fixed maturity
portfolio, based on ratings assigned by the National Association of Insurance
Commissioners ("NAIC") or Standard & Poor's Corporation, an independent rating
agency as of December 31, 1998:
Available for Sale
-------------------------------
Amortized Estimated
Cost Fair Value
--------- ----------
NAIC Standard & Poor's (In Thousands)
1 AAA to AA- $ 303,209 $ 306,693
2 BBB+ to BBB- 286,640 287,888
3 BB+ to BB- 27,134 27,692
4 B+ to B- 704 638
5 CCC or lower 71 79
6 In or near default -- --
--------- ---------
Total $ 617,758 $ 622,990
========= =========
B-10
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The fixed maturity portfolio consists largely of investment grade assets (rated
"1" or "2" by the NAIC), with such investments accounting for 95% and 96% of the
portfolio at December 31, 1998 and 1997, respectively, based on fair value. As
of both of those dates, no fixed maturities in the portfolio were rated "6" by
the NAIC, defined as public and private placement securities which are currently
non-performing or believed subject to default in the near-term.
The Company continually reviews fixed maturities and identifies potential
problem assets which require additional monitoring. The Company defines
"problem" fixed maturities as those for which principal and/or interest payments
are in default. The Company defines "potential problem" fixed maturities as
assets which are believed to present default risk associated with future debt
service obligations and therefore require more active management. No problem or
potential problem fixed maturities were identified in 1998 or 1997.
Special Deposits
Fixed maturities of $.5 million at both December 31, 1998 and 1997,
respectively, were on deposit with governmental authorities or trustees as
required by certain insurance laws.
Investment Income and Investment Gains and Losses
Net investment income arose from the following sources for the years ended
December 31:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities - available for sale $ 39,478 $ 37,563 $ 36,193
Policy loans 7,350 6,596 5,761
Short-term investments 3,502 3,023 2,504
Other (842) 333 28
-------- -------- --------
Gross investment income 49,488 47,515 44,486
Less investment expenses (2,456) (1,191) (702)
-------- -------- --------
Net investment income $ 47,032 $ 46,324 $ 43,784
======== ======== ========
</TABLE>
Realized investment gains, net, including charges for other than temporary
reductions in value, for the years ended December 31, were as follows:
1998 1997 1996
-------- -------- --------
(In Thousands)
Realized investment gains $ 17,957 $ 2,898 $ 5,232
Realized investment losses (9,511) (1,191) (4,011)
-------- -------- --------
Realized investment gains, net $ 8,446 $ 1,707 $ 1,221
======== ======== ========
B-11
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
3. INVESTMENTS (continued)
Net Unrealized Investment Gains
Net unrealized investment gains on fixed maturities available for sale are
included in the Statements of Financial Position as a component of accumulated
other comprehensive income. Changes in these amounts include adjustments to
avoid double-counting in comprehensive income, items that are included as part
of net income for a period that also have been part of other comprehensive
income in earlier periods. The amounts for the years ended December 31, net of
tax, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
(In Thousands)
<S> <C> <C> <C>
Net unrealized investment gains, beginning of year $ 2,956 $ 2,032 $ 6,588
Changes in net unrealized investment gains attributable to:
Investments:
Net unrealized investment gains on investments arising during the period 3,227 3,228 (6,403)
Reclassification adjustment for gains included in net income 4,539 1,109 860
------- ------- -------
Change in net unrealized investment gains, net of adjustments (1,312) 2,119 (7,263)
Impact of net unrealized investment gains on:
Future policy benefits 57 216 (776)
Deferred policy acquisition costs (108) (1,411) 3,483
------- ------- -------
Change in net unrealized investment gains (1,363) 924 (4,556)
------- ------- -------
Net unrealized investment gains, end of year $ 1,593 $ 2,956 $ 2,032
======= ======= =======
</TABLE>
Unrealized gains (losses) on investments arising during the periods reported in
the above table are net of income tax expense (benefit) of $1.7 million, $1.7
million and $(3.6) million for the years ended December 31, 1998, 1997, and
1996, respectively.
Reclassification adjustments reported in the above table for the years ended
December 31, 1998, 1997, and 1996 are net of income tax expense of $(2.4)
million, $(.6) million and $(.5) million, respectively.
The future policy benefits reported in the above table are net of income tax
expense (benefit) of $.03 million, $0, and $(.4) million for the years ended
December 31, 1998, 1997 and 1996, respectively.
Deferred policy acquisition costs in the above tables for the years ended
December 31, 1998, 1997 and 1996 are net of income tax expense (benefit) of
$(.06) million, $(.8) million and $2.0 million, respectively.
4. POLICYHOLDERS' LIABILITIES
Future policy benefits and other policyholder liabilities at December 31 are as
follows:
1998 1997
------- -------
(In Thousands)
Life insurance $85,523 $80,464
Annuities 5,007 4,756
------- -------
$90,530 $85,220
======= =======
Life insurance liabilities include reserves for death and endowment policy
benefits. Annuity liabilities include reserves for immediate annuities.
B-12
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
4. POLICYHOLDERS' LIABILITIES (continued)
The following table highlights the key assumptions generally utilized in
calculating these reserves:
<TABLE>
<CAPTION>
Product Mortality Interest Rate Estimation Method
- ---------------------- ----------------------- ---------------------- ---------------------------
<S> <C> <C> <C>
Life insurance Generally rates 2.5% to 7.5% Net level premium based
guaranteed in on non-forfeiture
calculating interest rate
cash surrender values
Individual immediate 1983 Individual Annuity 6.25% to 8.75% Present value of
annuities Mortality Table with expected future payment
certain modifications based on historical experience
</TABLE>
Policyholders' account balances at December 31, are as follows:
1998 1997
-------- --------
(In Thousands)
Individual annuities $148,327 $145,120
Interest-sensitive life contracts 265,521 257,481
-------- --------
$413,848 $402,601
======== ========
Policyholders' account balances for interest-sensitive life, individual
annuities, and guaranteed investment contracts are equal to policy account
values plus unearned premiums. The policy account values represent an
accumulation of gross premium payments plus credited interest less withdrawals,
expenses, mortality charges.
Certain contract provisions that determine the policyholder account balances are
as follows:
<TABLE>
<CAPTION>
Product Interest Rate Withdrawal / Surrender Charges
------- ------------- ------------------------------
<S> <C> <C>
Interest sensitive life contracts 4.0% to 5.4% Various up to 10 years
Individual annuities 3.0% to 5.6% 0% to 8% for up to 8 years
</TABLE>
B-13
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
5. REINSURANCE
The Company participates in reinsurance, with Prudential and other companies, in
order to provide greater diversification of business, provide additional
capacity for future growth and limit the maximum net loss potential arising from
large risks. Reinsurance ceded arrangements do not discharge the Company or the
insurance subsidiaries as the primary insurer, except for cases involving a
novation. Ceded balances would represent a liability to the Company in the event
the reinsurers were unable to meet their obligations to the Company under the
terms of the reinsurance agreements. The likelihood of a material reinsurance
liability reassumed by the Company is considered to be remote.
Reinsurance amounts included in the Statement of Operations for the year ended
December 31 are below.
1998 1997 1996
------- ------- -------
(In Thousands)
Direct Premiums $ 1,373 $ 1,117 $ 1,345
Reinsurance ceded-affiliated (28) (12) --
------- ------- -------
Premiums $ 1,345 $ 1,105 $ 1,345
======= ======= =======
Policyholders' benefits ceded $ 15 $ 14 $ 13
======= ======= =======
Reinsurance recoverables, included in "Other assets" in the Company's Statements
of Financial Position, at December 31 include amounts recoverable on unpaid and
paid losses and were as follows:
1998 1997
---- ----
(In Thousands)
Life insurance - affiliated $31 $30
--- ---
$31 $30
=== ===
B-14
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
6. INCOME TAXES
The components of income taxes for the years ended December 31, are as follows:
1998 1997 1996
-------- -------- --------
(In Thousands)
Current tax expense (benefit):
U.S. $ 14,786 $ 12,880 $ 13,589
State and local 523 399 (907)
-------- -------- --------
Total 15,309 13,279 12,682
-------- -------- --------
Deferred tax expense (benefit):
U.S. 2,198 (2,305) 2,848
State and local 63 -- 81
-------- -------- --------
Total 2,261 (2,305) 2,929
-------- -------- --------
Total income tax expense $ 17,570 $ 10,974 $ 15,611
======== ======== ========
The Company's income tax expense for the years ended December 31, differs from
the amount computed by applying the expected federal income tax rate of 35% to
income from operations before income taxes for the following reasons:
1998 1997 1996
-------- -------- --------
(In Thousands)
Expected federal income tax expense $ 17,288 $ 10,569 $ 16,589
State and local income taxes 381 259 (537)
Other (99) 146 (441)
-------- -------- --------
Total income tax expense $ 17,570 $ 10,974 $ 15,611
======== ======== ========
Deferred tax assets and liabilities at December 31, resulted from the items
listed in the following table:
1998 1997
------- -------
(In Thousands)
Deferred income tax assets:
Insurance reserves $10,016 $ 6,907
Other -- --
------- -------
Deferred tax assets $10,016 $ 6,907
------- -------
Deferred income tax liabilities:
Deferred acquisition costs 28,509 24,725
Net investment gains 2,847 4,284
Other 2,375 86
------- -------
Deferred tax liabilities 33,731 29,095
------- -------
Net deferred federal tax liability $23,715 $22,188
======= =======
B-15
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
6. INCOME TAXES (continued)
Management believes that based on its historical pattern of taxable income, the
Company will produce sufficient income in the future to realize its deferred tax
assets after valuation allowance. Adjustments to the valuation allowance will be
made if there is a change in management's assessment of the amount of the
deferred tax asset that is realizable. At December 31, 1998 and 1997,
respectively, the Company had no federal or state operating loss carryforwards
for tax purposes.
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns through 1989. The Service has examined
the years 1990 through 1992. Discussions are being held with the Service with
respect to proposed adjustments. Management, however, believes there are
adequate defenses against, or sufficient reserves to provide for, such
adjustments. The Service has begun their examination of the years 1993 through
1995.
B-16
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
7. EQUITY
Reconciliation of Statutory Surplus and Net Income
Accounting practices used to prepare statutory financial statements for
regulatory purposes differ in certain instances from GAAP. The following table
reconciles the Company's statutory net income and surplus as of and for the
years ended December 31, determined in accordance with accounting practices
prescribed or permitted by the New Jersey Department of Banking and Insurance
with net income and equity determined using GAAP.
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Statutory net income $ 18,704 $ 18,306 $ 24,774
Adjustments to reconcile to net income on a GAAP basis:
Deferred acquisition costs 12,464 (3,170) 5,656
Deferred premium 534 198 221
Insurance liabilities (808) 2,324 4,784
Deferred taxes (2,261) 2,305 (2,929)
Valuation of investments 3,794 (143) (765)
Other, net (604) (597) 46
-------- -------- --------
GAAP net income $ 31,823 $ 19,223 $ 31,787
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1998 1997
--------- ---------
(In Thousands)
<S> <C> <C>
Statutory surplus $ 252,530 $ 235,958
Adjustments to reconcile to equity on a GAAP basis:
Valuation of investments 20,799 18,540
Deferred acquisition costs 113,923 101,625
Deferred premium (1,473) (2,007)
Insurance liabilities (18,141) (19,120)
Deferred taxes (23,715) (22,188)
Other, net 1,930 2,585
--------- ---------
GAAP stockholder's equity $ 345,853 $ 315,393
========= =========
</TABLE>
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values presented below have been determined using available
information and valuation methodologies. Considerable judgment is applied in
interpreting data to develop the estimates of fair value. Accordingly, such
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 approximates estimated
fair value).
Fixed maturities
Estimated fair values for fixed maturities are based on quoted market prices or
estimates from independent pricing services.
Policy loans
Estimated fair value of policy loans is calculated using a discounted cash flow
model based upon current U.S. Treasury rates and historical loan repayments.
B-17
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
8. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Policyholders' account balances
Estimated fair values of policyholders' account balances are derived by using
discounted projected cash flows, based on interest rates being offered for
similar contracts, with maturities consistent with those remaining for the
contracts being valued.
Derivative financial instruments
The fair value of futures is estimated based on market quotes for transactions
with similar terms. The following table discloses the carrying amounts and
estimated fair values of the Company's financial instruments at December 31,:
<TABLE>
<CAPTION>
1998 1997
--------------------------- ---------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
---------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities available for sale $ 622,990 $ 622,990 $ 592,361 $ 592,361
Policy loans 139,443 146,504 127,306 126,262
Short-term investments 53,761 53,761 52,464 52,464
Cash 45 45 3 3
Separate Accounts assets 1,453,407 1,453,407 1,110,561 1,110,561
Financial Liabilities:
Policyholders'
account balances $ 413,848 $ 414,602 $ 402,601 $ 401,267
Cash collateral for loaned
securities 61,634 61,634 33,663 33,663
Separate Accounts liabilities 1,450,986 1,450,986 1,108,994 1,108,994
Derivatives -- -- 83 83
</TABLE>
9. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS
Futures
The Company uses exchange-traded Treasury futures to reduce market risks from
changes in interest rates, to alter mismatches between the duration of assets in
a portfolio and the duration of liabilities supported by those assets, and to
hedge against changes in the value of securities it owns or anticipates
acquiring. The Company enters into exchange-traded futures with regulated
futures commissions merchants who are members of a trading exchange. The fair
value of futures is estimated based on market quotes for a transaction with
similar terms.
Under exchange-traded futures, the Company agrees to purchase a specified number
of contracts with other parties and to post variation margin on a daily basis in
an amount equal to the difference in the daily market values of those contracts.
Futures are typically used to hedge duration mismatches between assets and
liabilities by replicating Treasury performance. Treasury futures move
substantially in value as interest rates change and can be used to either
generate new or hedge existing interest rate risk. This strategy protects
against the risk that cash flow requirements may necessitate liquidation of
investments at unfavorable prices resulting from increases in interest rates.
This strategy can be a more cost effective way of temporarily reducing the
Company's exposure to a market decline than selling fixed income securities and
purchasing a similar portfolio when such a decline is believed to be over.
B-18
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
9. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)
For futures that meet hedge accounting criteria, changes in their fair value are
deferred and recognized as an adjustment to the carrying value of the hedged
item. Deferred gains or losses from the hedges for interest-bearing financial
instruments are amortized as a yield adjustment over the remaining lives of the
hedged item. Futures that do not qualify as hedges are carried at fair value
with changes in value reported in current period earnings. The fair value of
futures contracts was immaterial at December 31, 1998 and 1997.
Credit Risk
The current credit exposure of the Company's derivative contracts is limited to
the fair value at the reporting date. Credit risk is managed by entering into
transactions with creditworthy counterparties and obtaining collateral where
appropriate and customary. The Company also attempts to minimize its exposure to
credit risk through the use of various credit monitoring techniques. All of the
net credit exposure for the Company from derivative contracts is with
investment-grade counterparties.
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.
In the normal course of business, the Company is subject to various claims and
assessments. Management believes the settlement of these matters would not have
a material effect on the financial position or results of operations of the
Company.
11. DIVIDENDS
The Company is subject to New Jersey law which requires any shareholder dividend
or distribution must be filed with the New Jersey Commissioner of Insurance.
Cash dividends may only be paid out of surplus derived from realized net
profits.
12. RELATED PARTY TRANSACTIONS
Service Agreements
Prudential and Pruco Life of New Jersey operate under service and lease
agreements whereby services of officers and employees, supplies, use of
equipment and office space are provided by Prudential. The net cost of these
services allocated to the Company were $23.5 million, $16.2 million, and $12.2
million for the years ended December 31, 1998, 1997, and 1996, respectively.
These costs are treated in a manner consistent with the Company's policy on
deferred acquisition costs.
Prudential and Pruco Life of New Jersey have an agreement with respect to
administrative services for the Prudential Series Fund. The Company invests in
the various portfolios of the Series Fund through the Separate Accounts. Under
this agreement, Prudential pays compensation to Pruco Life of New Jersey in the
amount equal to a portion of the gross investment advisory fees paid by the
Prudential Series Fund. The Company received from Prudential its allocable
shares of such compensation in the amount of $5.6 million, $5.0 million, and
$3.5 million during 1998, 1997, and 1996 respectively, recorded in "Other
income."
B-19
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements
- --------------------------------------------------------------------------------
12. RELATED PARTY TRANSACTIONS (continued)
Reinsurance
The Company currently has a reinsurance agreement in place with Prudential (the
reinsurer). The reinsurance agreement is a yearly renewable term agreement in
which the Company may offer and the reinsurer may accept reinsurance on any life
in excess of the Company's maximum limit of retention. The Company is not
relieved of its primary obligation to the policyholder as a result of these
reinsurance transactions. These agreements had no material effect on net income
for the years ended December 31, 1998, 1997, and 1996.
Debt Agreements
In July 1998, the Company established a revolving line of credit facility with
Prudential Funding Corporation, a wholly-owned subsidiary of Prudential. There
is no outstanding debt relating to this credit facility as of December 31, 1998.
B-20
<PAGE>
Report of Independent Accountants
---------------------------------
To the Board of Directors of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statements of financial position and the
related statements of operations, of changes in stockholder's equity and of cash
flows present fairly, in all material respects, the financial position of Pruco
Life Insurance Company of New Jersey at December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
New York, New York
February 26, 1999
B-21
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) Financial Statements of the Discovery Select Variable Annuity Subaccounts
of Pruco Life of New Jersey Flexible Premium Variable Annuity Account
(Registrant) consisting of the Statements of Net Assets as of December
31, 1998; the Statements of Operations for the period ended December 31,
1998; the Statements of Changes in Net Assets for the periods ended
December 31, 1998 and December 31, 1997; and the Notes relating thereto
appear in the Statement of Additional Information (Part B of the
Registration Statement) (Note 1).
(2) Statements of Pruco Life of New Jersey (Depositor) consisting of the
Consolidated Statements of Financial Position as of December 31, 1998 and
1997; and the related Consolidated Statements of Operations, Changes in
Stockholder's Equity and Cash Flows for the years ended December 31,
1998, 1997 and 1996; and the Notes to the Consolidated Financial
Statements appear in the Statement of Additional Information (Part B of
the Registration Statement). (Note 1)
(b) EXHIBITS
(1) Resolution of the Board of Directors of Pruco Life Insurance Company of
New Jersey establishing the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account (Note 3)
(2) Agreements for custody of securities and similar investments--Not
Applicable.
(3) (a) Form of Distribution Agreement between Prudential Investment
Management Services, Inc. "PIMS" (Underwriter) and Pruco Life
Insurance Company of New Jersey (Depositor) (Note 2)
(b) Form of Selected Broker Agreement used by PIMS (Note 2)
(4) (a) Form of The DISCOVERY Choice Contract V-FLX-99 C-ROP-NY (Note 1)
(b) Form of The DISCOVERY Choice Contract V-FLX-99 C-GMDB-NY (Note 1)
(5) (a) Application form for the Contract. (Note 1)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company of New
Jersey, as amended February 12, 1998. (Note 7)
(b) By-laws of Pruco Life Insurance Company of New Jersey, as amended
August 4, 1999. (Note 8)
(7) Contract of reinsurance in connection with variable annuity contract--Not
Applicable.
(8) Other material contracts performed in whole or in part after the date the
registration statement is filed:
(a) Form of Fund Participation Agreement. (Note 4)
(9) Opinion of Counsel as to legality of the securities being registered.
(Note 1)
(10) Written consent of PricewaterhouseCoopers LLP, independent accountants.
(Note 1)
(11) All financial statements omitted from Item 23, Financial Statements-- Not
Applicable.
(12) Agreements in consideration for providing initial capital between or
among Registrant, Depositor, Underwriter, or initial Contract owners--Not
Applicable.
(13) Schedule of Performance Computations. (Note 1)
(14) Powers of Attorney.
(a) William M. Bethke, Ira J. Kleinman, Esther H. Milnes and I. Edward
Price (Note 3)
(b) James J. Avery Jr. (Note 5)
(c) Dennis G. Sullivan (Note 6)
C-1
<PAGE>
- ----------
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Post-Eeffective Amendment No. 4 to Form
N-4 Registration No. 333-18117, filed April 16, 1999, on behalf of
the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account.
(Note 3) Incorporated by reference to Form N-4, Registration No. 333-18113,
filed December 18, 1996 on behalf of the Pruco Life of New Jersey
Flexible Premium Variable Annuity Account.
(Note 4) Incorporated by reference to Form N-4, Registration No. 333-06701,
filed June 26, 1996 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 10 to Form
S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 11 to Form
S-1, Registration No. 33-20018, filed on April 15, 1999 on behalf of
the Pruco Life of New Jersey Variable Contract Real Property
Account.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 26 to Form
S-6, Registration No. 2-89780, filed April 28, 1997 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
(Note 8) Incorporated by reference to Form S-6, filed August 13, 1999 on
behalf of the Pruco Life of New Jersey Variable Appreciable Account.
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
See Part A: Directors and Officers.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE DEPOSITOR OR REGISTRANT
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey"), a
corporation organized under the laws of New Jersey, is an indirect, wholly-owned
subsidiary of The Prudential Insurance Company of America, ("Prudential"), a
mutual life insurance company organized under the laws of New Jersey. The
subsidiaries of Prudential and short descriptions of each are set forth on the
following pages.
Pruco Life of New Jersey may be deemed to control the following separate
accounts which are registered as unit investment trusts under the Investment
Company Act of 1940: the Pruco Life of New Jersey Variable Appreciable Account,
the Pruco Life of New Jersey Variable Insurance Account, the Pruco Life of New
Jersey Single Premium Variable Life Account, the Pruco Life of New Jersey Single
Premium Variable Annuity Account, the Pruco Life of New Jersey Flexible Premium
Variable Annuity Account (Registrant), the Pruco Life of New Jersey Modified
Guaranteed Annuity Account and the Pruco Life of New Jersey Variable Real
Property Account (separate accounts of Pruco Life of New Jersey)
The above-referenced separate accounts, along with Prudential and certain of
Prudential's separate accounts, hold all the shares of The Prudential Series
Fund, Inc., a Maryland corporation. In addition, The Prudential holds all the
shares of Prudential's Gibraltar Fund, a Maryland Corporation, in three of its
separate accounts. The Prudential Series Fund, Inc. and Prudential's Gibraltar
Fund are registered as open-end diversified, management investment companies
under the Investment Company Act of 1940. Additionally, the aforementioned
separate accounts of Prudential are registered as unit investment trusts under
the Investment Company Act of 1940.
In addition, Pruco Life of New Jersey may also be deemed to be under common
control with The Prudential Variable Contract Account-2, The Prudential Variable
Contract Account-10, and The Prudential Variable Contract Account-11, separate
accounts of Prudential, all of which are registered as open-end, diversified,
management investment companies under the Investment Company Act of 1940 and
with the Prudential Variable Contract Account-24, a registered unit investment
trust.
The subsidiaries of Prudential and short descriptions of each are listed under
Item 25 of Post-Effective Amendment No. 34 to the Form N-1A Registration
Statement for The Prudential Series Fund, Inc., Registration No. 2-80896, filed
April 24, 1998, the text of which is hereby incorporated.
ITEM 27. NUMBER OF CONTRACT OWNERS
Not Applicable.
C-2
<PAGE>
ITEM 28. INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
New Jersey, being the state of organization of Pruco Life Insurance Company of
New Jersey ("PLNJ"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of PLNJ's By-law, Article
V, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit 3(ii) to its form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Prudential Investment Management Services LLC (PIMS)
PIMS is distributor for Cash Accumulation Trust, Command Money Fund,
Command Government Fund, Command Tax-Free Fund, The Global Total Return Fund,
Inc., Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund), Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential Distressed Securities Fund, Inc.,
Prudential Diversified Bond Fund, Inc., Prudential Emerging Growth Fund, Inc.,
Prudential Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe
Growth Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential Global
Limited Maturity Fund, Inc., Prudential Government Income Fund, Inc., Prudential
Government Securities Trust, Prudential High Yield Fund, Inc., Prudential High
Yield Total Return Fund, Inc., Prudential Index Series Fund, Prudential
Institutional Liquidity Portfolio, Inc., Prudential Intermediate Global Income
Fund, Inc., Prudential International Bond Fund, Inc., The Prudential Investment
Portfolios, Inc., Prudential Mid-Cap Value Fund, Prudential MoneyMart Assets,
Inc., Prudential Mortgage Income Fund, Inc., Prudential Municipal Bond Fund,
Prudential Municipal Series Fund, Prudential National Municipals Fund, Inc.,
Prudential Natural Resources Fund, Inc., Prudential Pacific Growth Fund, Inc.,
Prudential Real Estate Securities Fund, Prudential Small-Cap Quantum Fund, Inc.,
Prudential Small Company Value Fund, Inc., Prudential Special Money Market Fund,
Inc., Prudential Structured Maturity Fund, Inc., Prudential Tax-Free Money Fund,
Inc., Prudential 20/20 Focus Fund, Prudential Utility Fund, Inc., Prudential
World Fund, Inc. and The Target Portfolio Trust.
(b) Information concerning the officers and directors of PIMS is set forth
below.
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME (1) WITH UNDERWRITER REGISTRANT
- ------- --------------------- -------------
Robert F. Gunia............ President None
Kevin B. Frawley .......... Senior Vice President and Chief
Compliance Officer None
Jean D. Hamilton........... Executive Vice President None
John R. Strangfeld ........ Executive Vice President None
Mark D. Smith.............. Senior Vice President and Chief
Operating Officer None
William V. Healey ......... Senior Vice President, Secretary
and Chief Legal Officer None
Margaret M. Deverell ...... Senior Vice President, Comptroller
and Chief Financial Officer None
C. Edward Chaplin ......... Treasurer None
- ------------------------
(1) The address of each person named is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102 unless otherwise noted.
(c) Not applicable
C-3
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section 31
(a) of the 1940 Act and the rules promulgated thereunder are maintained by the
Registrant through The Prudential Insurance Company of America, 751 Broad
Street, Newark, New Jersey 07102-3777.
ITEM 31. MANAGEMENT SERVICES
Summary of any contract not discussed in Part A or Part B of the registration
statement under which management-related services are provided to the
Registrant--Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this
Registrant Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes to include either (1) as part of any application to
purchase a contract offered by the prospectus, a space that an applicant
can check to request a statement of additional information, or (2) a
postcard or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a statement of
additional information.
(c) Registrant undertakes to deliver any statement of additional information
and any financial statements required to be made available under this Form
promptly upon written or oral request.
(d) Restrictions on withdrawal under Section 403(b) Contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the
Chief of the Office of Insurance Products and Legal Compliance of the U.S.
Securities and Exchange Commission to the American Council of Life
Insurance on November 28, 1988.
(e) Pruco Life of New Jersey hereby represents that the fees and charges
deducted under the Contract, in the aggregate, are reasonable in relation
to the services rendered, the expenses expected to be incurred and the
risks assumed by Pruco Life of New Jersey.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets the
requirements of the Securities Act Rule 485(b) for effectiveness of this
Registration Statement and has caused this Post-effective Amendment No. 4 to the
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, and its seal hereunto affixed and attested, all in the City of
Newark and the State of New Jersey, on this 27th day of August, 1999.
THE PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
(Registrant)
BY: PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Depositor)
Attest: /s/ CLIFFORD E. KIRSCH /s/ ESTHER H. MILNES
- --------------------------------------------- ----------------------
CLIFFORD E. KIRSCH ESTHER H. MILNES
CHIEF LEGAL OFFICE AND SECRETARY PRESIDENT
C-5
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 4 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
SIGNATURE AND TITLE
------------------
*
- ---------------------------------------------
ESTHER MILNES Date August 27, 1999
PRESIDENT AND DIRECTOR
*
- ---------------------------------------------
JAMES J. AVERY JR
CHAIRMAN OF THE BOARD AND DIRECTOR
* *By: CLIFFORD E. KIRSCH
- --------------------------------------------- ------------------------
DENNIS G. SULLIVAN CLIFFORD E. KIRSCH
VICE PRESIDENT AND CHIEF (ATTORNEY-IN-FACT)
ACCOUNTING OFFICER (PRINCIPAL
FINANCIAL OFFICER AND CHIEF
ACCOUNTING OFFICER
*
- ---------------------------------------------
WILLIAM M. BETHKE
DIRECTOR
*
- ---------------------------------------------
IRA J. KLEINMAN
DIRECTOR
*
- ---------------------------------------------
I. EDWARD PRICE
DIRECTOR
C-6
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Newark, New Jersey 07102
A STOCK COMPANY SUBSIDIARY OF
The Prudential Insurance Company of America
This is an annuity contract. Subject to the provisions of the Contract, and
in consideration of any Purchase Payments you make and we accept, we will
make Annuity Payments starting on the Annuity Date shown on the Contract Data
pages.
Please read the Contract carefully; it is a legal contract between you and
Pruco Life Insurance Company. Expense charges applicable to the Contract are
shown on the Contract Data pages. If you have a question about the Contract,
or a claim, see one of our representatives or contact the Annuity Service
Center.
10 DAY RIGHT TO CANCEL CONTRACT
This Contract may be returned within 10 days after you receive it. It can be
mailed or delivered to either us, at the Annuity Service Center, or the
representative who sold it to you. Return of this Contract by mail is
effective on being postmarked, properly addressed and postage prepaid. The
returned Contract will be canceled upon our receipt, and we will return an
amount equal to the sum of (i) the difference between Purchase Payments
received, including any fees or other charges, and the amount(s) allocated to
the Allocation Options under the Contract, and (ii) the Contract Value as of
the date we receive the Contract back. Under certain circumstances, we have
the right to allocate Purchase Payment(s) to the Money Market Subaccount
until the expiration of the Right to Cancel period. If we so allocate
Purchase Payment(s), we will refund the Purchase Payment(s), less any
withdrawals, in the event of cancellation under the terms of this paragraph.
READ YOUR CONTRACT CAREFULLY
Signed for Pruco Life Insurance Company of New Jersey,
a New Jersey Corporation.
- ------------------------------------ -------------------------------------
Secretary President
INDIVIDUAL DEFERRED VARIABLE
ANNUITY CONTRACT
NON-PARTICIPATING
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
VFLX--99 C-ROP--NY [(A)]
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Newark, New Jersey 07102
A STOCK COMPANY SUBSIDIARY OF
The Prudential Insurance Company of America
This is an annuity contract. Subject to the provisions of the Contract, and in
consideration of any Purchase Payments you make and we accept, we will make
Annuity Payments starting on the Annuity Date shown on the Contract Data pages.
Please read the Contract carefully; it is a legal contract between you and Pruco
Life Insurance Company. Expense charges applicable to the Contract are shown on
the Contract Data pages. If you have a question about the Contract, or a claim,
see one of our representatives or contact the Annuity Service Center.
10 Day Right to CANCEL CONTRACT
This Contract may be returned within 10 days after you receive it. It can be
mailed or delivered to either us, at the Annuity Service Center, or the
representative who sold it to you. Return of this Contract by mail is effective
on being postmarked, properly addressed and postage prepaid. The returned
Contract will be canceled upon our receipt, and we will return an amount equal
to the sum of (i) the difference between Purchase Payments received, including
any fees or other charges, and the amount(s) allocated to the Allocation Options
under the Contract, and (ii) the Contract Value as of the date we receive the
Contract back. Under certain circumstances, we have the right to allocate
Purchase Payment(s) to the Money Market Subaccount until the expiration of the
Right to Cancel period. If we so allocate Purchase Payment(s), we will refund
the Purchase Payment(s), less any withdrawals, in the event of cancellation
under the terms of this paragraph.
READ YOUR CONTRACT CAREFULLY
Signed for Pruco Life Insurance Company of New Jersey,
a New Jersey Corporation.
- ------------------------------------ -------------------------------------
Secretary President
INDIVIDUAL DEFERRED VARIABLE
ANNUITY CONTRACT
NON-PARTICIPATING
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
VFLX--99 C-ROP--NY [(A)]
<PAGE>
TABLE OF CONTENTS
CONTRACT DATA PAGES ...................................................... 3
DEFINITIONS .............................................................. 4
PURCHASE PAYMENTS ........................................................ 6
CONTRACT VALUE ........................................................... 7
VARIABLE SEPARATE ACCOUNT ................................................ 7
CONTRACT MAINTENANCE CHARGE .............................................. 7
TRANSFERS ................................................................ 8
WITHDRAWALS .............................................................. 8
DEATH BENEFIT ............................................................ 9
ANNUITY AND SETTLEMENT OPTIONS ........................................... 11
BENEFICIARY .............................................................. 12
SUSPENSION OR DEFERRAL OF PAYMENTS OR
TRANSFERS FROM THE SEPARATE ACCOUNT.................................... 13
GENERAL PROVISIONS ....................................................... 14
VALUES AND BENEFITS ...................................................... 15
ANNUITY OPTION PAYMENT TABLES............................................. 15
VFLX--99 C-ROP Page 2 C-ROP
<PAGE>
CONTRACT NUMBER E0112917
CONTRACT DATA
OWNER: ANTON K. EBERHARD
JOINT OWNER: NONE AGE AT ISSUE:
ANNUITANT: ANTON K. EBERHARD AGE AT ISSUE: 57
CO-ANNUITANT: NONE AGE AT ISSUE:
CONTRACT NUMBER: EO112917 CONTRACT DATE: April 23,1999
PLAN TYPE: CUSTODIAL ROTH ANNUITY DATE: APRIL 23, 2032
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: $18,045.45.
MINIMUM SUBSEQUENT PURCHASE PAYMENT: $1,000. For IRA contracts, the Minimum
Subsequent Purchase Payment is $1 ,000. We may allow a lower Minimum
Subsequent Purchase Payment for payroll deduction plans or other automatic
purchase plans.
ANNUAL PURCHASE PAYMENT LIMITS: The total of all Purchase Payments made
into this Contract in the first Contract Year may not exceed $10,000,000.
The total of all Purchase Payments made into this Contract in any Contract
Year after the first Contract Year may not exceed $2,000,000. Purchase
Payments of greater value may be allowed with our prior approval.
AGGREGATE PURCHASE PAYMENT LIMIT: The total of all Purchase Payments made
into this Contract may not exceed $10,000,000. Purchase Payments of greater
value may be allowed with our prior approval.
BENEFICIARY:
As designated by Owner at Contract Date unless changed in accordance with
the Contract provisions.
VFLX--99 C-ROP Page 3A [(A)]
<PAGE>
CONTRACT MAINTENANCE CHARGE:
If your Contract Value is less than $50,000, we will charge a Contract
Maintenance Charge of the lesser of 2% of the Contract Value or $30. This
charge is deducted on the Contract Anniversary and when a surrender of the
Contract occurs, if the Contract Value at the time is then less than
$50,000. The Contract Maintenance Charge will be deducted on a pro-rata
basis from all Allocation Options to which your Contract Value is
allocated. During the Annuity Period, we reserve the right to assess an
annual Contract Maintenance Charge of $30. The decision to assess this
charge may depend on the Annuity or Settlement Option selected. We reserve
the right to increase the Contract Maintenance Charge, but it will not
exceed $60 per Contract Year, and to raise the Contract Value amount over
which we will waive the Contract Maintenance Charge.
INSURANCE CHARGE:
This charge is deducted daily from the assets in each of the Subaccounts.
The maximum daily charge is .00367395%, which is equivalent to an annual
rate of 1.35%.
ALLOCATION OPTIONS:
VARIABLE INVESTMENT OPTIONS:
The following variable investment options are available through allocation
to subaccounts of the Pruco Life Flexible Premium Variable Annuity Account.
We reserve the right to limit the availability of the below options, if
necessary, in order to comply with federal, state or local law.
THE PRUDENTIAL SERIES FUND, INC.
Diversified Bond Portfolio
Diversified Conservative Growth Portfolio
Equity Income Portfolio
Equity Portfolio
Global Portfolio
High Yield Bond Portfolio
Money Market Portfolio
Prudential Jennison Portfolio
Small Capitalization Stock Portfolio
Stock Index Portfolio
20/20 Focus Portfolio
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Value Portfolio
VFLX--99 C-ROP Page 3B [(A)]
<PAGE>
JANUS ASPEN SERIES
Growth Portfolio
International Growth Portfolio
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series
Research Series
0CC ACCUMULATION TRUST
Managed Portfolio
Small Cap Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap Investments Portfolio
--Class 2
T.ROWE PRICE EQUITY SERIES, INC.
Equity Income Portfolio
T. ROWE PRICE INTERNATIONAL SERIES, INC.
International Stock Portfolio
WARBURG PINCUS TRUST
Post-Venture Capital Portfolio
INTEREST RATE OPTIONS:
The following interest rate options are currently available. We may add
other options in the future.
NONE
ALLOCATION GUIDELINES: Currently, you may select any Allocation Option
which is available at the time the Purchase Payment or transfer is made.
However, an amount of at least 1% of the Invested Purchase Payment must be
allocated to any Allocation Option. Allocations made pursuant to automatic
rebalancing or dollar cost-averaging are not subject to these limitations.
VFLX--99 C-ROP--NY Page 3C [(A)]
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TRANSFERS:
NUMBER OF TRANSFERS PERMITTED: Currently, there are no limits on the number
of transfers that can be made among Subaccounts. We reserve the right to
change this, but the Owner will always be allowed at least 12 transfers
among Subaccounts in a Contract Year.
TRANSFER CHARGE: The Transfer Charge for each transfer after the first 12
in a Contract Year is $10. The charge is taken pro-rata from the Allocation
Options from which the transfer is made. Transfers made due to automatic
rebalancing or dollar cost-averaging will not be counted for purposes of
the transfer charge. We reserve the right to increase this charge, but it
will not exceed $30.
MINIMUM AMOUNT TO BE TRANSFERRED: Subject to the restrictions contained in
the Contract on transfers, the minimum transfer amount is $250 or your
entire interest in any Allocation Option, if less. This requirement is
waived if the transfer is pursuant to automatic rebalancing or dollar
cost-averaging.
WITHDRAWALS:
Minimum Amount Which May Be Withdrawn: The minimum amount which may be
withdrawn is $250. The minimum amount which may be withdrawn under a
systematic withdrawal plan is $100.
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN THE CONTRACT AFTER A
WITHDRAWAL: The minimum Contract Value which must remain in the Contract in
order to keep the Contract inforce after a withdrawal is $2,000.
ENDORSEMENTS:
Individual Retirement Annuity Endorsement
ANNUITY SERVICE CENTER:
PRUDENTIAL
P.O. Box 1234
Any Town, PA
VFLX--99 C-ROP Page 3D [(A)]
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DEFINITIONS
ACCUMULATION PERIOD: The period from, and including, the Contract Date to, but
excluding, the Annuity Date.
ADJUSTED CONTRACT VALUE: The Contract Value as of the Annuity Date less any
applicable charges for any type of tax (or component thereof) measured by or
based on the amount of Purchase Payment we receive. The applicable Annuity table
is applied to this amount to determine the initial Annuity Payment.
ALLOCATION OPTIONS: Those allocation choices available under the Contract as of
any given time, including the Variable Investment Options to which Contract
Value may be allocated. Allocation Options as of the Contract Date are shown on
the Contract Data pages.
ANNUITANT: The person named on the Contract Data pages upon whose continuation
of life any Annuity Payment involving life contingencies depends. If the
Annuitant dies before the Annuity Date, the Co-Annuitant, if applicable, becomes
the Annuitant. If there is no surviving Co-Annuitant, and the Annuitant was not
the Owner, the Owner becomes the Annuitant. You then have 60 days from the date
we receive due proof of death of the Annuitant or Co-Annuitant to name a new
Annuitant. If no new Annuitant is named during that 60 day period, the Owner
will remain the Annuitant.
ANNUITY DATE: The date the first Annuity or Settlement Payment to the Payee is
due. The Annuity Date is shown on the original Contract Data pages. You may
change the Annuity Date; however, any such changed Annuity Date must be earlier
than the date shown on the Contract Data pages, cannot precede the second
Contract Anniversary and must be consistent with applicable law at the time. If
there is a new Annuitant due to the death of the Annuitant or the assignment of
the Contract, and the new Annuitant is older than the prior Annuitant, the
Annuity Date will be based on the age of the new Annuitant; however any such
changed Annuity Date must be earlier than the date shown on the Contract Data
pages, cannot be later than the Contract Anniversary next following the new
Annuitant's 90th birthday and must be consistent with applicable law at the
time.
ANNUITY OR SETTLEMENT PAYMENTS: The series of payments made to you or any named
payee after the Annuity Date as described under the annuity or settlement option
selected.
ANNUITY PERIOD: The period of time, beginning on the Annuity Date, during which
Annuity or Settlement Payments are made.
ANNUITY SERVICE CENTER: The office indicated on the Contract Data pages to which
notices, requests and Purchase Payments must be sent. All sums payable to us
under the Contract must be sent to the Annuity Service Center. The Annuity
Service Center address may be changed at any time. You will be notified in
advance and in writing of any change in address.
BENEFICIARY: The person(s) or entity(ies) who has the right to receive the death
benefit when payable. The Owner must be the primary Beneficiary of the Joint
Owner, and the Joint Owner must be the primary Beneficiary of the Owner.
BUSINESS DAY: Any day the New York Stock Exchange and the Company are open for
business.
CO-ANNUITANT: The person shown on the Contract Data pages who becomes the
Annuitant upon the death of the Annuitant before the Annuity Date. No
Co-Annuitant may be designated if the Owner is a non-natural person.
COMPANY: Pruco Life Insurance Company of New Jersey, a New Jersey corporation.
CONTRACT ANNIVERSARY: The same day and month as the Contract Date in each later
year.
CONTRACT DATE: The date shown on the Contract Data pages on which the first
Contract Year begins.
CONTRACT SURRENDER VALUE: The Contract Value less any applicable Contract
Maintenance Charge or charge for any type of tax (or component thereof) measured
by or based on the amount of Purchase Payment we receive.
VFLX--99 C-ROP--NY Page 4 [(A)]
<PAGE>
CONTRACT VALUE: The dollar value as of any Business Day prior to the Annuity
Date of all amounts accumulated under this Contract.
CONTRACT YEAR: A year which starts on the Contract Date or on a Contract
Anniversary.
EARNINGS: The excess of the Contract Value over the sum of all Purchase Payments
made and not yet withdrawn.
GENERAL ACCOUNT: Our general investment account which contains all of our assets
with the exception of the Variable Separate Account and other segregated asset
accounts.
GOOD ORDER: An instruction received at the Annuity Service Center, utilizing
such forms, signatures and datings as we require, that is sufficiently complete
and clear that we do not need to exercise any discretion to follow such
instructions. We will notify you if an instruction is not in Good Order.
INTEREST RATE OPTION(S): Those interest rate option(s) available under the
Contract as of any given time. Interest Rate Option(s) as of the Contract Date
are shown on the Contract Data pages.
INVESTED PURCHASE PAYMENTS: The balance of each Purchase Payment after we make
any applicable deduction for charges for any type of tax (or component thereof)
measured by or based on the amount of Purchase Payment we receive.
JOINT OWNER: The person, if named on the Contract Data pages as the Joint Owner,
who shares ownership rights with the Owner as defined under this Contract. You
may add, change or remove a Joint Owner, subject to our underwriting rules. The
Contract may never have more than one Joint Owner. No Joint Owner is permitted
for IRA's or other qualified contracts.
OWNER: The person or entity named on the Contract Data pages who has ownership
rights as defined under the Contract provided that, if a Joint Owner is named,
the Owner shares ownership rights with the Joint Owner. You may change the Owner
subject to our underwriting rules. Any change of an Owner will be effective when
we process the request.
PAYEE: The person who has a right to receive Annuity or Settlement Payments
under the Annuity and Settlement Options provision of this Contract. The Payee
can be designated as revocable or irrevocable at your discretion. If you do not
designate a Payee at least 5 Business Days before the Annuity Date, the Owner
will become the Payee.
PURCHASE PAYMENT: A payment you make to this Contract.
SUBACCOUNT: Variable Separate Account assets are divided into Subaccounts.
Assets of each Subaccount will be invested in shares of a Variable Investment
Option.
VARIABLE INVESTMENT OPTION: Those investment options available under the
Contract through the Subaccounts as of any given time. Variable Investment
Options as of the Contract Date are shown on the Contract Data pages.
VARIABLE SEPARATE ACCOUNT: A segregated asset account maintained by us to
support this and certain other contracts. The segregated asset account(s)
available as of the Contract Date is shown on the Contract Data pages.
WE, OUR AND US: Pruco Life Insurance Company of New Jersey, a New Jersey
corporation.
YOU AND YOUR: The Owner of the Contract if there is no Joint Owner; if there is
a Joint Owner, the Owner and Joint Owner acting jointly. If we receive written
authorization from both the Owner and Joint Owner in Good Order, then, upon our
consent, we will allow either to represent the entire ownership interest in the
Contract, until that authorization has been revoked by either party. This
Contract will treat the Owner as having contributed 100% of the Purchase
Payments. Therefore, we will treat the Owner as the taxpayer with respect to all
distributions made under the Contract while he or she is the Owner, whether or
not a Joint Owner is also named. Unmarried persons who wish to own the Contract
jointly should consult with their tax advisor.
VFLX--99 C-ROP--NY Page 5 [(A)]
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PURCHASE PAYMENTS
PURCHASE PAYMENTS: The initial Purchase Payment must be paid on the Contract
Date. In general, subsequent Purchase Payments may be made at any time before
the Annuity Date. However, no Purchase Payments may be made on or after the sole
or older of the Owner's or Joint Owner's, or Annuitant's, 85th birthday, and we
reserve the right to decline any Purchase Payment. The Minimum Subsequent
Purchase Payment, Annual Purchase Payment Limits and Aggregate Purchase Payment
Limit are shown on the Contract Data pages.
ALLOCATION OF PURCHASE PAYMENTS: Invested Purchase Payments are allocated to one
or more of the Allocation Options in accordance with your selection. The
allocation of the initial Invested Purchase Payment is made in accordance with
your selection made on the Contract Date. Unless you inform us otherwise,
subsequent Invested Purchase Payments will be allocated in the same manner,
subject to availability, as the initial Invested Purchase Payment. Assuming that
all other requirements are received in Good Order, we reserve the right to
allocate your initial Invested Purchase Payment to the Money Market Subaccount
until we receive your allocation selection. In addition, the Company has
reserved the right to allocate the initial Invested Purchase Payment to the
Money Market Subaccount under the 10 Day Right to Cancel Contract provision set
forth on the face page of this Contract. All allocations of Invested Purchase
Payments are subject to the Allocation Guidelines shown on the Contract Data
pages.
Currently, you may select as many of the available Allocation Options as you
wish. However, we reserve the right to limit this in the future. If the Purchase
Payment and forms required to issue a Contract are in Good Order, the initial
Invested Purchase Payment will be credited to your Contract within two (2)
business days after receipt at the Annuity Service Center. Additional Invested
Purchase Payments will be credited to your Contract as of the Business Day they
are received.
VFLX--99 C-ROP Page 6 C-ROP
<PAGE>
CONTRACT VALUE
Your Contract Value is the total of all amounts credited to your Contract as of
any Business Day as a result of your initial Invested Purchase Payment and the
increases and decreases described below.
On the Contract Date, the Contract Value is equal to the initial Invested
Purchase Payment. After that, the Contract Value as of any Business Day is
determined by starting with the Contract Value at the end of the previous day
and adjusting it for items that increase it or decrease it.
Items that increase the Contract Value are: Invested Purchase Payments; and
positive investment performance in a Subaccount.
Items that decrease the Contract Value are: withdrawals; negative investment
performance in a Subaccount; Insurance Charge; any applicable Contract
Maintenance Charge; Transfer Charge; and charges for any type of tax (or
component thereof) measured by or based on the amount of Purchase Payment we
receive.
Investment results are credited daily and the Insurance Charge is deducted
daily. The Contract Maintenance Charge is deducted annually as of the Contract
Anniversary and upon a total withdrawal. Other charges are assessed only if the
appropriate event occurs.
VARIABLE SEPARATE ACCOUNT
THE VARIABLE SEPARATE ACCOUNT: The Variable Separate Account is designated on
the Contract Data pages. It consists of assets we have set aside and have kept
separate from the rest of our assets and those of our other separate accounts.
The assets of the Variable Separate Account, equal to reserves and other
liabilities of your Contract and those of other owners, will not be charged with
liabilities arising out of any other business we may conduct.
The Variable Separate Account assets are divided into Subaccounts. The assets of
the Subaccount are allocated to the Variable Investment Option(s) shown on the
Contract Data pages. We may restructure, eliminate or combine Subaccounts or add
to or eliminate Variable Investment Option(s) from those shown. You may be
permitted to transfer your Contract Value or allocate Invested Purchase Payments
to the additional Subaccount(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
Should the shares of any Variable Investment Option(s) become unavailable for
investment by the Variable Separate Account, we deem further investment in the
shares inappropriate, or if required for tax reasons, we may limit further
purchase of such shares or substitute shares of another Variable Investment
Option for shares already purchased.
VALUATION OF ASSETS: The value of the shares held by the Subaccounts in the
Variable Investment Options will be based on the net asset value of the
Investment Option on each Business Day.
INSURANCE CHARGE: Each Business Day, we deduct an Insurance Charge from the
Subaccounts of the Variable Separate Account which is equivalent, on an annual
basis, to the amount shown on the Contract Data pages.
CONTRACT MAINTENANCE CHARGE
We deduct an annual Contract Maintenance Charge shown on the Contract Data
pages. We determine your Contract Value as of your Contract Anniversary and make
any deductions required on a pro-rata basis from all Allocation Options to which
your Contract Value is allocated. If a total withdrawal is made on other than a
Contract Anniversary, we will determine your Contract Value and make a deduction
for the Contract Maintenance Charge the same as we would if it were a Contract
Anniversary.
VFLX--99 C-ROP--NY Page 7 C-ROP
<PAGE>
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD: A transfer is subject to the
following:
1. the maximum number of transfers which may be made, the maximum number
of transfers which are not subject to a Transfer Charge and the
minimum amount which may be transferred are shown on the Contract Data
pages;
2. a Transfer Charge is deducted if a transfer exceeds the maximum number
of free transfers. The Transfer Charge is shown on the Contract Data
pages;
3. a transfer will be effected as of the end of the Business Day when we
receive a request in Good Order;
4. we are not responsible for the consequences resulting from a transfer
made in accordance with your instructions;
5. your right to make transfers is subject to modification if we
determine, in our sole opinion, that the exercise of the right by one
or more Owners is, or would be, to the disadvantage of other Owners or
if required to do so by applicable laws or regulations. Restrictions
may be applied in any manner reasonably designed to prevent any use of
the transfer right which is considered by us to be to the disadvantage
of other Owners or to ensure compliance with such laws or regulations.
A modification could be applied to transfers to or from one or more of
the Subaccounts and could include, but not be limited to:
a. the requirement of a minimum time period between each
transfer;
b. not accepting a transfer request of an agent acting under a
power of attorney on behalf of more than one Owner;
c. limiting the dollar amount that may be transferred among the
Subaccounts by an Owner at any one time; or
d. restricting the number of transfers per year.
No transfers are permitted after the Annuity Date.
WITHDRAWALS
WITHDRAWALS: During the Accumulation Period, you may, upon a request in Good
Order, make a total or partial withdrawal of the Contract Surrender Value. You
may specify the Allocation Option(s) from which a withdrawal will be taken. If
you do not so specify, we will take the withdrawal on a pro-rata basis from all
Allocation Option(s) to which your Contract Value is allocated.
We will pay the amount of any withdrawal within 7 days of receipt of request in
Good Order unless the "Suspension or Deferral of Payments Provision" is in
effect. If we postpone payment of a withdrawal for more than 7 days after we
receive your withdrawal request, we will pay interest. The interest will be
calculated daily from the date we receive your request, at the rate of interest
we currently pay on amounts under the Interest Payment Settlement Option. No
interest will be paid if the amount of interest calculated is less than $25.
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Data pages. The minimum Contract Value which must remain
in the Contract after a partial withdrawal in order to keep the Contract inforce
is shown on the Contract Data pages. If the amount of the withdrawal requested
would reduce the Contract Value below this minimum, we will give you the maximum
amount available that would not reduce the Contract Value below such minimum.
Special rules may apply for IRA's.
VFLX--99 C-ROP--NY Page 8 [(A)]
<PAGE>
DEATH BENEFIT
DEATH OF LAST SURVIVOR OF OWNER OR JOINT OWNER DURING THE ACCUMULATION PERIOD:
If the sole or last survivor of the Owner or Joint Owner dies during the
Accumulation Period, the death benefit will be as described below.
Upon receipt of due proof of death and any other documentation we request
in Good Order, the Beneficiary is entitled to receive a death benefit equal
to the greater of:
1. the Contract Value as of the date we receive due proof of death and
any other documentation we need; or
2. the total Invested Purchase Payments made proportionally reduced by
the effect of withdrawals.
Where the words "proportionally reduced by the effect of withdrawals" are used
in this Contract, the withdrawal reduces those values in the same proportion as
it reduces the Contract Value. We calculate the proportion by dividing the
Contract Value after the withdrawal by the Contract Value immediately prior to
the withdrawal. The resulting percentage is multiplied by the applicable values
(before the withdrawal) in determining the death benefit.
If the ownership of the Contract changes as a result of an assignment, the value
of the death benefit will be reset to the Contract Value as of the date of the
assignment. Such value will be treated as a Purchase Payment made on that date
for purposes of computing the death benefit.
The Beneficiary may, within 60 days of providing proof of death, elect to take
the death benefit under one of the death benefit payout options listed below,
provided that any payout option shall not include a period certain that exceeds
the life expectancy of the Beneficiary. The Beneficiary will be the sole
measuring life in determining the amount of any such payout option. If no payout
option is selected within the 60 days, the death benefit will be payable as a
lump sum.
If a Beneficiary of the Owner having priority to be paid a death benefit is the
spouse of the Owner at the time of the Owner's death, the Contract will continue
and the spouse will become the Owner. If a Beneficiary of the Joint Owner having
priority to be paid a death benefit is the spouse of the Joint Owner at the time
of the Joint Owner's death, the Contract will continue. In either case, the
spouse may, within 60 calendar days of providing proof of death, elect to take
the death benefit under any of the payout options available under this Contract.
If the spouse is the surviving Owner or Joint Owner under the Contract, the
death benefit will equal the Contract Value.
If the Owner and Joint Owner are not spouses at the time of the Owner or Joint
Owner's death, the Contract will not continue, the death benefit will equal the
Contract Value, and the Beneficiary will be required to choose one of the death
benefit payout options described below. In that event, the payout described in
Choice 2 and the beginning of the distribution described in Choice 3 will be
based on the date of death of the first to die of the Owner or Joint Owner.
VFLX--99 C-ROP--NY Page 9 C-ROP
<PAGE>
The death benefit payout options are:
CHOICE 1 -- lump sum payment of the death benefit; or
CHOICE 2 -- the payment of the entire death benefit within 5 years of the
date of death of the last to survive of the Owner or Joint Owner; or
CHOICE 3 -- payment of the death benefit under an Annuity or Settlement
Option over the lifetime of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary with distribution beginning
within one year of the date of death of the last to survive of the Owner or
Joint Owner.
Any portion of the death benefit not applied under Choice 3 within one year of
the date of the last to survive of the Owner's or Joint Owner's death, must be
distributed within five years of the date of death.
Once a death benefit becomes payable, the Payee's interest in any Annuity
Benefit under the Contract will cease.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the "Suspension or
Deferral of Payments Provision" is in effect.
DEATH OF ANNUITANT DURING THE ACCUMULATION PERIOD: If the Annuitant dies before
the Annuity Date, the Co-Annuitant, if applicable, becomes the Annuitant. If
there is no surviving Co-Annuitant, and the Annuitant was not the Owner, the
Owner becomes the Annuitant. You have the right to name a new Annuitant within
60 days. If the Owner is a non-natural person, the death of the Annuitant will
be treated as the death of the Owner, a new Annuitant may not be designated, and
the Annuitant will be deemed to be the Owner for purposes of determining the
death benefit.
DEATH OF ANNUITANT DURING THE ANNUITY PERIOD: If the Annuitant dies on or after
the Annuity Date, the Settlement Option then in effect will govern whether or
not we will continue to make any payments. The death of a non-Annuitant Owner or
Joint Owner has no effect on the payout during the Annuity Period.
PAYMENT OF DEATH BENEFIT: We will require due proof of death and any other
documentation we request in Good Order before any death benefit is paid. All
death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
SPECIAL TAX CONSIDERATIONS: The owner and Joint Owner of a Contract, who are not
spouses of each other, may incur gift and other taxes with respect to the
Contract that would not otherwise be incurred if the Joint Owner and Owner were
married to each other. Unmarried persons who wish to own the Contract jointly
should consult with their tax advisor. The Contract provides that the Owner will
be deemed to have contributed 100% of the purchase payments. Therefore, we will
treat the Owner as the taxpayer with respect to ALL distributions made under the
Contract while he or she is the Owner, whether or not a Joint Owner is also
named.
There are special tax rules that apply to IRA and other qualified contracts
during both the Accumulation Period and Annuity Period governing distributions
upon the death of the Owner. These rules are contained in provisions in the
attached endorsements and supersede any other distribution rules contained in
the Contract.
The preceding provisions regarding the death of the Owner are intended to
satisfy the distribution at death requirements of section 72(s) of the Internal
Revenue Code of 1986, as amended. We reserve the right to amend this Contract by
subsequent endorsement as necessary to comply with applicable tax requirements,
if any, which are subject to change from time to time. Such additional
endorsements, if necessary to comply with amended tax requirements, will be
mailed to you and become effective within 30 days of mailing, unless you notify
us in writing, within that time frame, that you reject the endorsement.
VFLX--99 C-ROP--NY Page 10 [(A)]
<PAGE>
ANNUITY AND SETTLEMENT OPTIONS
GENERAL: On the Annuity Date, the Adjusted Contract Value will be applied under
the Annuity or Settlement Option you have selected. If the Adjusted Contract
Value is less than $2,000, or if payment under any option selected would be less
than $20 per month, we reserve the right to pay out the Adjusted Contract Value
in a lump sum.
SELECTION OF AN ANNUITY OR SETTLEMENT OPTION: You may select an Annuity or
Settlement Option by notifying us of the selected option in Good Order. If no
Annuity or Settlement Option is selected, or if the chosen Option is not
received in Good Order, Option 2, Life Income Annuity Option, will automatically
be applied. You may, at any time prior to the Annuity Date, by a request in Good
Order 30 days in advance, select and/or change the Annuity or Settlement Option.
ANNUITY AND SETTLEMENT OPTIONS: This Contract provides for payments under one of
the Annuity or Settlement Options described below. Any other Annuity or
Settlement Option acceptable to us may be selected.
OPTION 1 -- FIXED PERIOD ANNUITY OPTION. We will make equal payments for a
period you choose up to 25 years. At your choice, we will make such payments
annually, semi-annually, quarterly or monthly. The Option 1 Table shows the
minimum amounts we will pay.
OPTION 2 -- LIFE INCOME ANNUITY OPTION. We will make payments for as long as the
Annuitant lives, with payments certain for 120 months. At your choice, we will
make such payments annually, semi-annually, quarterly or monthly. The Option 2
Table shows the minimum amounts we will pay.
OPTION 3 -- INTEREST PAYMENT SETTLEMENT OPTION. We will credit interest on the
Adjusted Contract Value at the rate of at least 3% until you request payment of
all or part of the Adjusted Contract Value. At your choice, we will pay interest
on the Adjusted Contract Value not yet withdrawn annually, semi-annually,
quarterly or monthly. You may request full or partial payment of the Adjusted
Contract Value provided, however, that if a partial payment is requested, the
amount of any Adjusted Contract Value remaining after such requested amount is
paid must be at least $1,000. This option is not available for qualified
contracts.
OTHER ANNUITY OR SETTLEMENT OPTIONS: We may offer or consent to other settlement
options, including life income annuity options with payments certain for a
period of other than 120 months. Contact the representative who sold you the
Contract or call the toll-free number listed on your quarterly statement for
information.
ANNUITY Unless you designate another Payee, you will be the Payee of the Annuity
Payments. The Adjusted Contract Value will be applied to the applicable Annuity
Table contained in this Contract based upon the Annuity Option you have
selected. The amount of the first payment for each $1,000 of Adjusted Contract
Value is shown in the Annuity Tables. If when Annuity Payments begin we are
using tables of annuity rates for these Contracts which result in larger Annuity
Payments, we will use those tables instead. Annuity Payments will depend on the
age and sex of the Annuitant, where permitted.
VFLX--99 C-ROP--NY Page 11 C-ROP
<PAGE>
BENEFICIARY
BENEFICIARY: The Beneficiary designation in effect on the Contract Date will
remain in effect until changed. The Beneficiary is entitled to receive the
benefits to be paid at the death of the last to die of the Owner or Joint Owner
(or the first to die of the Owner or Joint Owner if the Owner and Joint Owner
are not spouses at the time of the Owner's or Joint Owner's death) during the
Accumulation Period. The Owner must be the primary Beneficiary of the Joint
Owner, and the Joint Owner must be the primary Beneficiary of the Owner. Other
than primary Beneficiaries, Beneficiaries must be the same for both the Owner
and Joint Owner.
When a Beneficiary is designated, any relationship shown is to the Owner unless
otherwise specified.
To show priority among Beneficiaries, we will label the classes, so that the
class with first priority is called the primary class, the class with next
priority is called the secondary class, and so on. The following statements
apply to Beneficiaries unless the Contract Data pages, Contract endorsement or
any change request that we have processed specifies otherwise:
One who survives the last to die of the Owner and Joint Owner will have the
right to be paid only if no one In a prior class survives the last to die
of the Owner and Joint Owner.
One who has the right to be paid will be the only one paid if no one else
in the same class survives the last to die of the Owner and Joint Owner.
Two or more in the same class who have the right to be paid will be paid in
equal shares.
If no one survives the sole Owner, we will pay in one sum to the Owner's
estate.
Unless you notify us otherwise in writing received in Good Order, when
there is insufficient evidence to determine the order of death, we will
deem the Owner to be the last survivor and make payment to the Owner's
Beneficiary.
Before we make a payment, we have the right to decide what reasonable proof
we need of the identity, age or any other facts about any persons
designated as Beneficiaries. If Beneficiaries are not designated by name
and we make payment(s) based on that proof, we will not have to make the
payment(s) again.
CHANGE OF BENEFICIARY: To initiate a change of Beneficiary, call the toll-free
number listed on your statement or contact the representative who sold you the
Contract. We will send you a change request form. We may also ask you to send us
the Contract. The change of beneficiary will take effect on the date you sign
the change form, provided such request is received in Good Order. Then, any
previous Beneficiary's interest will end as of the date the change request is
signed and we receive it in Good Order, even if the Owner or Joint Owner is not
living when we process the change request.
VFLX--99 C-ROP--NY Page 12 C-ROP
<PAGE>
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT
We reserve the right to suspend or postpone payments from the Separate Account
for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend
and holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
Investment Options held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine the value
of such shares; or
4. during any other period when the Securities and Exchange Commission,
by order, so permits for the protection of Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
VFLX--99 C-ROP Page 13 C-ROP
<PAGE>
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any attached
endorsements or riders. This Contract may be changed or altered only by our
President or Secretary. Any change, modification or waiver must be made in
writing. This Contract may not be modified by us without your consent except as
may be required by applicable law or as set forth in this Contract.
ASSIGNMENT OF A CONTRACT: A request in Good Order specifying the terms of an
assignment of a Contract must be provided to the Annuity Service Center. We are
under no obligation to verify the assignment's validity or sufficiency. We will
not be liable for any payment made or action taken before we record the
assignment. If any Owner is living on the Annuity Date and an assignment is in
effect on that date, we have the right to pay the Contract Surrender Value in
one lump sum to the assignee where notice in Good Order is received. Partial
assignments, collateral or otherwise, are not allowed without our approval. We
reserve the right to restrict or refuse any assignment.
An assignment which results in a change of ownership will affect the value of
the death benefit. Please see the section of the Contract entitled "Death of
Last Survivor of Owner or Joint Owner During the Accumulation Period", for more
information.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
NON-PARTICIPATING IN SURPLUS: This Contract does not share in any distribution
of our profits or surplus.
INCONTESTABILITY: We will not contest this Contract. We consider all statements
made in the application for this Contract to be representations, not warranties.
MISSTATEMENT OF AGE OR SEX: We may require proof of age of the Annuitant before
making any life contingent Annuity Payment provided for by this Contract. If the
age or sex of the Annuitant has been misstated, the amount payable will be the
amount that the Contract Value would have provided at the true age or sex.
Once Annuity Payments have begun, any underpayments, with interest at 5%, will
be made up in one sum with the next Annuity Payment, and overpayments, with
interest at 5%, will be deducted from the future Annuity Payments until the
total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any settlement.
REPORTS: We will send you a report four times each calendar year until the
Annuity Date showing your Contract Value and other relevant information about
your Contract. You may ask for a report like this at any time. But, except for
the four reports we send you during the year, we have the right to charge a fee
for each report. We will also furnish an annual report of the Separate Account.
These reports will be sent to your last known address.
TAXES: Any taxes, including any Premium Taxes and any other type of tax (or
component thereof) measured by or based upon any portion of the Purchase Payment
we receive, paid to any governmental entity will be charged against the Contract
Value. We will, in our sole discretion, determine when taxes have resulted from:
the investment experience of the Separate Account; receipt by us of the Purchase
Payment(s); or commencement of Annuity Payments. We may, at our discretion, pay
taxes when due and deduct that amount from the Contract Value at a later date.
Payment at an earlier date does not waive any right we may have to deduct
amounts at a later date. We reserve the right to establish a provision for
federal income taxes if we determine, in our sole discretion, that we will incur
a tax as a result of the operation of the Separate Account. We will deduct for
any income taxes incurred by it as a result of the operation of the Separate
Account whether or not there was a provision for taxes and whether or not it was
sufficient. We will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Before we make a payment, we have the right to require
reasonable proof of continued life and any other documentation we need to make
the payment. We can require this proof for any person whose life or death
determines whether or to whom we must make the payment.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
payment under this Contract before they are due. To the extent permitted by law,
no payments will be subject to the debts, contracts or engagements of any
Beneficiary or to any judicial process to levy upon or attach the same for
payment thereof.
VFLX--99 C-ROP--NY Page 14 C-ROP
<PAGE>
VALUES AND BENEFITS
Any values and death benefits that may be available under this Contract are not
less than the minimum benefits required by the law of any state in which this
Contract is delivered.
ANNUITY OPTION PAYMENT TABLES
AMOUNTS PAYABLE: For Options 1 and 2, we will use the tables below to compute
the minimum amount of the Annuity Option Payment.
If the Annuity Date is not a Contract Anniversary, we will adjust the amounts
accordingly.
The annuity payments in the Option 2 Table are based on the Annuitant's Adjusted
Age and sex. The Adjusted Age is the Annuitant's age last birthday when the
first Annuity payment is due, adjusted as shown in the Option 2 Table.
When we computed the amounts we show in the Option 2 Table, we adjusted the
Annuity 2000 Mortality Table to an age last birthday basis, less two years, and
we used an interest rate of 3% per year. If the age is over 80, the rate for age
80 will be used.
OPTION 1 TABLE
- --------------------------
| MINIMUM AMOUNT OF |
| MONTHLY PAYMENT FOR | OPTION 2 TABLE
| EACH $1,000, THE FIRST | Amount of Annuity Payment for
| PAYABLE IMMEDIATELY | each $1 ,000 applied on the Annuity Date
| ---------------------- | ---------------------------------------------------
| Number | Monthly | | Adjusted Adjusted |
| of Years | Payment | | Age Male Female Age Male Female |
| ----------|---------- | |-------------------------------------------------|
| 1 | $84.47 | | 41 $3.51 $3.35 61 $4.83 $4.49 |
| 2 | 42.86 | | 42 3.55 3.39 62 4.94 4.58 |
| 3 | 28.99 | | 43 3.59 3.43 63 5.05 4.68 |
| 4 | 22.06 | | 44 3.64 3.46 64 5.17 4.79 |
| 5 | 17.91 | | 45 3.69 3.50 65 5.29 4.90 |
| | | | 46 3.74 3.54 66 5.42 5.01 |
| 6 | 15.14 | | 47 3.79 3.59 67 5.55 5.14 |
| 7 | 13.16 | | 48 3.84 3.63 68 5.69 5.27 |
| 8 | 11.68 | | 49 3.90 3.68 69 5.84 5.40 |
| 9 | 10.53 | | 50 3.96 3.73 70 5.99 5.55 |
| 10 | 9.61 | | 51 4.02 3.79 71 6.15 5.70 |
| | | | 52 4.08 3.84 72 6.31 5.86 |
| 11 | 8.86 | | 53 4.15 3.90 73 6.48 6.03 |
| 12 | 8.24 | | 54 4.22 3.96 74 6.65 6.20 |
| 13 | 7.71 | | 55 4.29 4.02 75 6.82 6.38 |
| 14 | 7.26 | | 56 4.37 4.09 76 6.99 6.57 |
| 15 | 6.87 | | 57 4.45 4.16 77 7.17 6.77 |
| | | | 58 4.54 4.24 78 7.34 6.96 |
| 16 | 6.53 | | 59 4.63 4.32 79 7.52 7.16 |
| 17 | 6.23 | | 60 4.73 4.40 80 7.69 7.36 |
| 18 | 5.96 | |-------------------------------------------------|
| 19 | 5.73 | | Calendar Year in Which |
| 20 | 5.51 | | First Payment is Done Adjusted Age |
| | | | ----------------------- ------------ |
| 21 | 5.32 | | Prior to 2010 Actual Age |
| 22 | 5.15 | | 2010 Through 2019 Actual Age minus 1 |
| 23 | 4.99 | | 2020 Through 2029 Actual Age minus 2 |
| 24 | 4.84 | | 2030 Through 2039 Actual Age minus 3 |
| 25 | 4.71 | | After 2039 Actual Age minus 4 |
| -----------------------| ---------------------------------------------------
| Multiply the monthly |
| amount by |
| 2.993 for quarterly, |
| 5.963 for semi-annual |
| or 11.839 for annual |
- --------------------------
VFLX--99 C-ROP Page 15 C-ROP
<PAGE>
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT. ANNUITY PAYMENTS AND VALUES
PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
VFLX--99 C-ROP Page 16 C-ROP
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Newark, New Jersey 07102
A STOCK COMPANY SUBSIDIARY of
The Prudential Insurance Company of America
This is an annuity contract. Subject to the provisions of the Contract, and in
consideration of any Purchase Payments you make and we accept, we will make
Annuity Payments starting on the Annuity Date shown on the Contract Data pages.
Please read the Contract carefully; it is a legal contract between you and Pruco
Life Insurance Company. Expense charges applicable to the Contract are shown on
the Contract Data pages. If you have a question about the Contract, or a claim,
see one of our representatives or contact the Annuity Service Center.
10 DAY RIGHT TO CANCEL CONTRACT
This Contract may be returned within 1 0 days after you receive it. It can be
mailed or delivered to either us, at the Annuity Service Center, or the
representative who sold it to you. Return of this Contract by mail is effective
on being postmarked, properly addressed and postage prepaid. The returned
Contract will be canceled upon our receipt, and we will return an amount equal
to the sum of (i) the difference between Purchase Payments received, including
any fees or other charges, and the amount(s) allocated to the Allocation Options
under the Contract, and (ii) the Contract Value as of the date we receive the
Contract back. Under certain circumstances, we have the right to allocate
Purchase Payment(s) to the Money Market Subaccount until the expiration of the
Right to Cancel period. If we so allocate Purchase Payment(s), we will refund
the Purchase Payment(s), less any withdrawals, in the event of cancellation
under the terms of this paragraph.
READ YOUR CONTRACT CAREFULLY
Signed for Pruco Life Insurance Company of New Jersey,
a New Jersey Corporation.
- ---------------------------- --------------------------
Secretary President
INDIVIDUAL DEFERRED VARIABLE
ANNUITY CONTRACT
NON-PARTICIPATING
ANNUITY PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE
INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT
GUARANTEED AS TO DOLLAR AMOUNT.
VFLX-99 C-GMDB-NY [(A)]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
CONTRACT DATA PAGES ...................................................................... 3
DEFINITIONS .............................................................................. 4
PURCHASE PAYMENTS ........................................................................ 6
CONTRACT VALUE ........................................................................... 7
VARIABLE SEPARATE ACCOUNT ................................................................ 7
CONTRACT MAINTENANCE CHARGE .............................................................. 7
TRANSFERS ................................................................................ 8
WITHDRAWALS .............................................................................. 8
DEATH BENEFIT ............................................................................ 9
ANNUITY AND SETTLEMENT OPTIONS ........................................................... 11
BENEFICIARY .............................................................................. 12
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS FROM THE SEPARATE ACCOUNT ................ 13
GENERAL PROVISIONS ....................................................................... 14
VALUES AND BENEFITS ...................................................................... 15
ANNUITY OPTION PAYMENT TABLES ............................................................ 15
</TABLE>
VFLX-99 C-GMDB Page 2 C-GMDB
<PAGE>
CONTRACT NUMBER E0112917
CONTRACT DATA
OWNER: ANTON K. EBERHARD
JOINT OWNER: NONE AGE AT ISSUE:
ANNUITANT: ANTON K. EBERHARD AGE AT ISSUE: 57
CO-ANNUITANT: NONE AGE AT ISSUE:
CONTRACT NUMBER: E0112917 CONTRACT DATE: April 23,1999
PLAN TYPE: CUSTODIAL ROTH ANNUITY DATE: April 23, 2032
PURCHASE PAYMENTS:
INITIAL PURCHASE PAYMENT: $18,045.45.
MINIMUM SUBSEQUENT PURCHASE PAYMENT: $1 ,000. For IRA contracts, the
Minimum Subsequent Purchase Payment is $1 ,000. We may allow a lower Minimum
Subsequent Purchase Payment for payroll deduction plans or other automatic
purchase plans.
ANNUAL PURCHASE PAYMENT LIMITS: The total of all Purchase Payments made
into this Contract in the first Contract Year may not exceed
$10,000,000. The total of all Purchase Payments made into this Contract
in any Contract Year after the first Contract Year may not exceed
$2,000,000. Purchase Payments of greater value may be allowed with our
prior approval.
AGGREGATE PURCHASE PAYMENT LIMIT: The total of all Purchase Payments
made into this Contract may not exceed $10,000,000. Purchase Payments of
greater value may be allowed with our prior approval.
BENEFICIARY:
As designated by Owner at Contract Date unless changed in accordance
with the Contract provisions.
Page 3A
VFLX-99 GMDB [(A)]
<PAGE>
CONTRACT MAINTENANCE CHARGE:
If your Contract Value is less than $50,000, we will charge a Contract
Maintenance Charge of the lesser of 2% of the Contract Value or $30.
This charge is deducted on the Contract Anniversary and when a surrender
of the Contract occurs, if the Contract Value at the time is then less
than $50,000. The Contract Maintenance Charge will be deducted on a
pro-rata basis from all Allocation Options to which your Contract Value
is allocated. During the Annuity Period, we reserve the right to assess
an annual Contract Maintenance Charge of $30. The decision to assess
this charge may depend on the Annuity or Settlement Option selected. We
reserve the right to increase the Contract Maintenance Charge, but it
will not exceed $60 per Contract Year, and to raise the Contract Value
amount over which we will waive the Contract Maintenance Charge.
INSURANCE CHARGE:
This charge is deducted daily from the assets in each of the Subaccounts. The
maximum daily charge is .00448376%, which is equivalent to an annual rate of
1.65%.
ALLOCATION OPTIONS:
VARIABLE INVESTMENT OPTIONS:
The following variable investment options are available through allocation to
subaccounts of the Pruco Life Flexible Premium Variable Annuity Account. We
reserve the right to limit the availability of the below options, if
necessary, in order to comply with federal, state or local law.
THE PRUDENTIAL SERIES FUND, INC.
Diversified Bond Portfolio
Diversified Conservative Growth Portfolio
Equity Income Portfolio
Equity Portfolio
Global Portfolio
High Yield Bond Portfolio
Money Market Portfolio
Prudential Jennison Portfolio
Small Capitalization Stock Portfolio
Stock Index Portfolio
20/20 Focus Portfolio
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Value Portfolio
Page 3B
VFLX-99 GMDB [(A)]
<PAGE>
JANUS ASPEN SERIES
Growth Portfolio
International Growth Portfolio
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series
Research Series
0CC ACCUMULATION TRUST
Managed Portfolio
Small Cap Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap Investments Portfolio
-Class 2
T.ROWE PRICE EQUITY SERIES, INC.
Equity Income Portfolio
T.ROWE PRICE INTERNATIONAL SERIES, INC.
International Stock Portfolio
WARBURG PINCUS TRUST
Post-Venture Capital Portfolio
INTEREST RATE OPTIONS:
The following interest rate options are currently available. We may add
other options in the future.
NONE
ALLOCATION GUIDELINES: Currently, you may select any Allocation Option which
is available at the time the Purchase Payment or transfer is made. However,
an amount of at least lOb of the Invested Purchase Payment must be allocated
to any Allocation Option. Allocations made pursuant to automatic rebalancing
or dollar cost- averaging are not subject to these limitations.
Page 3C
VFLX-99 GMDB-NY [(A)]
<PAGE>
TRANSFERS:
NUMBER OF TRANSFERS PERMITTED: Currently, there are no limits on the
number of transfers that can be made among Subaccounts. We reserve the
right to change this, but the Owner will always be allowed at least 12
transfers among Subaccounts in a Contract Year.
TRANSFER CHARGE: The Transfer Charge for each transfer after the first 12
in a Contract Year is $10. The charge is taken pro-rata from the
Allocation Options from which the transfer is made. Transfers made due to
automatic rebalancing or dollar cost-averaging will not be counted for
purposes of the Transfer Charge. We reserve the right to increase this
charge, but it will not exceed $30.
MINIMUM AMOUNT TO BE TRANSFERRED: Subject to the restrictions contained
in the Contract on transfers, the minimum transfer amount is $250 or your
entire interest in any Allocation Option, if less. This requirement is
waived if the transfer is pursuant to automatic rebalancing or dollar
cost-averaging.
WITHDRAWALS:
MINIMUM AMOUNT WHICH MAY BE WITHDRAWN: The minimum amount which may be
withdrawn is $250. The minimum amount which may be withdrawn under a
systematic withdrawal plan is $100.
MINIMUM CONTRACT VALUE WHICH MUST REMAIN IN THE CONTRACT AFTER A
WITHDRAWAL: The minimum contract value which must remain in the Contract
in order to keep the Contract in force after a withdrawal is $2,000.
ENDORSEMENTS:
Individual Retirement Annuity Endorsement
ANNUITY SERVICE CENTER:
PRUDENTIAL
P.O. Box 1234
Any Town, PA
Page 3D
VFLX-99 GMDB [(A)]
<PAGE>
DEFINITIONS
ACCUMULATION PERIOD: The period from, and including, the Contract Date to, but
excluding, the Annuity Date.
ADJUSTED CONTRACT VALUE: The Contract Value as of the Annuity Date less any
applicable charges for any type of tax (or component thereof) measured by or
based on the amount of Purchase Payment we receive. The applicable Annuity table
is applied to this amount to determine the initial Annuity Payment.
ALLOCATION OPTIONS: Those allocation choices available under the Contract as of
any given time, including the Variable Investment Options, to which Contract
Value may be allocated. Allocation Options as of the Contract Date are shown on
the Contract Data pages.
ANNUITANT: The person named on the Contract Data pages upon whose continuation
of life any Annuity Payment involving life contingencies depends. If the
Annuitant dies before the Annuity Date, the Co-Annuitant, if applicable, becomes
the Annuitant. If there is no surviving Co-Annuitant, and the Annuitant was not
the Owner, the Owner becomes the Annuitant. You then have 60 days from the date
we receive due proof of death of the Annuitant or Co-Annuitant to name a new
Annuitant. If no new Annuitant is named during that 60 day period, the Owner
will remain the Annuitant.
ANNUITY DATE: The date the first Annuity or Settlement Payment to the Payee is
due. The Annuity Date is shown on the original Contract Data pages. You may
change the Annuity Date; however, any such changed Annuity Date must be earlier
than the date shown on the Contract Data pages, cannot precede the second
Contract Anniversary and must be consistent with applicable law at the time. If
there is a new Annuitant due to the death of the Annuitant or the assignment of
the Contract, and the new Annuitant is older than the prior Annuitant, the
Annuity Date will be based on the age of the new Annuitant; however any such
changed Annuity Date must be earlier than the date shown on the Contract Data
pages, cannot be later than the Contract Anniversary next following the new
Annuitant's 90th birthday and must be consistent with applicable law at the
time.
ANNUITY OR SETTLEMENT PAYMENTS: The series of payments made to you or any named
payee after the Annuity Date as described under the annuity or settlement option
selected.
ANNUITY PERIOD: The period of time, beginning on the Annuity Date, during which
Annuity or Settlement Payments are made.
ANNUITY SERVICE CENTER: The office indicated on the Contract Data pages to which
notices, requests and Purchase Payments must be sent. All sums payable to us
under the Contract must be sent to the Annuity Service Center. The Annuity
Service Center address may be changed at any time. You will be notified in
advance and in writing of any change in address.
BENEFICIARY: The person(s) or entity(ies) who has the right to receive the death
benefit when payable. The Owner must be the primary Beneficiary of the Joint
Owner, and the Joint Owner must be the primary Beneficiary of the Owner.
BUSINESS DAY: Any day the New York Stock Exchange and the Company are open for
business.
CO-ANNUITANT: The person shown on the Contract Data pages who becomes the
Annuitant upon the death of the Annuitant before the Annuity Date. No
Co-Annuitant may be designated if the Owner is a non-natural person.
COMPANY: Pruco Life Insurance Company of New Jersey, a New Jersey corporation.
CONTRACT ANNIVERSARY: The same day and month as the Contract Date in each later
year.
CONTRACT DATE: The date shown on the Contract Data pages on which the first
Contract Year begins.
CONTRACT SURRENDER VALUE: The Contract Value less any applicable Contract
Maintenance Charge or charge for any type of tax (or component thereof) measured
by or based on the amount of Purchase Payment we receive.
Page 4
VFLX-99 GMDB-NY [(A)]
<PAGE>
CONTRACT VALUE: The dollar value as of any Business Day prior to the Annuity
Date of all amounts accumulated under this Contract.
CONTRACT YEAR: A year which starts on the Contract Date or on a Contract
Anniversary.
EARNINGS: The excess of the Contract Value over the sum of all Purchase Payments
made and not yet withdrawn.
GENERAL ACCOUNT: Our general investment account which contains all of our assets
with the exception of the Variable Separate Account and other segregated asset
accounts.
GOOD ORDER: An instruction received at the Annuity Service Center, utilizing
such forms, signatures and datings as we require, that is sufficiently complete
and clear that we do not need to exercise any discretion to follow such
instructions. We will notify you if an instruction is not in Good Order.
INTEREST RATE OPTION(S): Those interest rate option(s) available under the
Contract as of any given time. Interest Rate Option(s) as of the Contract Date
are shown on the Contract Data pages.
INVESTED PURCHASE PAYMENTS: The balance of each Purchase Payment after we make
any applicable deduction for charges for any type of tax (or component thereof)
measured by or based on the amount of Purchase Payment we receive.
JOINT OWNER: The spouse of the owner, if named on the Contract Data pages as the
Joint Owner, who shares ownership rights with the Owner as defined under this
Contract. You may add, change or remove a Joint Owner, subject to our
underwriting rules. The Contract may never have more than one Joint Owner. No
Joint Owner is permitted for IRA's or other qualified contracts.
OWNER: The person or entity named on the Contract Data pages who has ownership
rights as defined under the Contract provided that, if a Joint Owner is named,
the Owner shares ownership rights with the Joint Owner. You may change the Owner
subject to our underwriting rules. Any change of an Owner will be effective when
we process the request.
PAYEE: The person who has a right to receive Annuity or Settlement Payments
under the Annuity and Settlement Options provision of this Contract. The Payee
can be designated as revocable or irrevocable at your discretion. If you do not
designate a Payee at least 5 Business Days before the Annuity Date, the Owner
will become the Payee.
PURCHASE PAYMENT: A payment you make to this Contract.
SUBACCOUNT: Variable Separate Account assets are divided into Subaccounts.
Assets of each Subaccount will be invested in shares of a Variable Investment
Option.
VARIABLE INVESTMENT OPTION: Those investment options available under the
Contract through the Subaccounts as of any given time. Variable Investment
Options as of the Contract Date are shown on the Contract Data pages.
VARIABLE SEPARATE ACCOUNT: A segregated asset account maintained by us to
support this and certain other contracts. The segregated asset account(s)
available as of the Contract Date is shown on the Contract Data pages.
WE, OUR AND US: Pruco Life Insurance Company of New Jersey, a New Jersey
corporation.
YOU AND YOUR: The Owner of the Contract if there is no Joint Owner; if there is
a Joint Owner, the Owner and Joint Owner acting jointly. If we receive written
authorization from both the Owner and Joint Owner in Good Order, then, upon our
consent, we will allow either to represent the entire ownership interest in the
Contract, until that authorization has been revoked by either party. This
Contract will treat the Owner as having contributed 100% of the Purchase
Payments. Therefore, we will treat the Owner as the taxpayer with respect to all
distributions made under the Contract while he or she is the Owner, whether or
not a Joint Owner is also named.
Page 5
VFLX-99 GMDB-NY [(A)]
<PAGE>
PURCHASE PAYMENTS
PURCHASE PAYMENTS: The initial Purchase Payment must be paid on the Contract
Date. In general, subsequent Purchase Payments may be made at any time before
the Annuity Date. However, no Purchase Payments may be made on or after the sole
or older of the Owner's or Joint Owner's, or Annuitant's, 85th birthday, and we
reserve the right to decline any Purchase Payment. The Minimum Subsequent
Purchase Payment, Annual Purchase Payment Limits and Aggregate Purchase Payment
Limit are shown on the Contract Data pages.
ALLOCATION OF PURCHASE PAYMENTS: Invested Purchase Payments are allocated to one
or more of the Allocation Options in accordance with your selection. The
allocation of the initial Invested Purchase Payment is made in accordance with
your selection made on the Contract Date. Unless you inform us otherwise,
subsequent Invested Purchase Payments will be allocated in the same manner,
subject to availability, as the initial Invested Purchase Payment. Assuming that
all other requirements are received in Good Order, we reserve the right to
allocate your initial Invested Purchase Payment to the Money Market Subaccount
until we receive your allocation selection. In addition, the Company has
reserved the right to allocate the initial invested Purchase Payment to the
Money Market Subaccount under the 10 Day Right to Cancel Contract provision set
forth on the face page of this Contract. All allocations of Invested Purchase
Payments are subject to the Allocation Guidelines shown on the Contract Data
pages.
Currently, you may select as many of the available Allocation Options as you
wish. However, we reserve the right to limit this in the future. If the Purchase
Payment and forms required to issue a Contract are in Good Order, the initial
Invested Purchase Payment will be credited to your Contract within two (2)
business days after receipt at the Annuity Service Center. Additional Invested
Purchase Payments will be credited to your Contract as of the Business Day they
are received.
Page 6
VFLX-99 C-GMDB C-GMDB
<PAGE>
CONTRACT VALUE
Your Contract Value is the total of all amounts credited to your Contract as of
any Business Day as a result of your initial Invested Purchase Payment and the
increases and decreases described below.
On the Contract Date, the Contract Value is equal to the initial Invested
Purchase Payment. After that, the Contract Value as of any Business Day is
determined by starting with the Contract Value at the end of the previous day
and adjusting it for items that increase it or decrease it.
Items that increase the Contract Value are: Invested Purchase Payments; and
positive investment performance in a Subaccount.
Items that decrease the Contract Value are: withdrawals; negative investment
performance in a Subaccount; Insurance Charge; any applicable Contract
Maintenance Charge; Transfer Charge; and charges for any type of tax (or
component thereof) measured by or based on the amount of Purchase Payment we
receive.
Investment results are credited daily and the Insurance Charge is deducted
daily. The Contract Maintenance Charge is deducted annually as of the Contract
Anniversary and upon a total withdrawal. Other charges are assessed only if the
appropriate event occurs.
VARIABLE SEPARATE ACCOUNT
THE VARIABLE SEPARATE ACCOUNT: The Variable Separate Account is designated on
the Contract Data pages. it consists of assets we have set aside and have kept
separate from the rest of our assets and those of our other separate accounts.
The assets of the Variable Separate Account, equal to reserves and other
liabilities of your Contract and those of other owners, will not be charged with
liabilities arising out of any other business we may conduct.
The Variable Separate Account assets are divided into Subaccounts. The assets of
the Subaccount are allocated to the Variable Investment Option(s) shown on the
Contract Data pages. We may restructure, eliminate or combine Subaccounts or add
to or eliminate Variable Investment Option(s) from those shown. You may be
permitted to transfer your Contract Value or allocate Invested Purchase Payments
to the additional Subaccount(s). However, the right to make such transfers or
allocations will be limited by any terms and conditions we may impose.
Should the shares of any Variable investment Option(s) become unavailable for
investment by the Variable Separate Account, we deem further investment in the
shares inappropriate, or if required for tax reasons, we may limit further
purchase of such shares or substitute shares of another Variable Investment
Option for shares already purchased.
VALUATION OF ASSETS: The value of the shares held by the Subaccounts in the
Variable Investment Options will be based on the net asset value of the
Investment Option on each Business Day.
INSURANCE CHARGE: Each Business Day, we deduct an Insurance Charge from the
Subaccounts of the Variable Separate Account which is equivalent, on an annual
basis, to the amount shown on the Contract Data pages.
CONTRACT MAINTENANCE CHARGE
We deduct an annual Contract Maintenance Charge shown on the Contract Data
pages. We determine your Contract Value as of your Contract Anniversary and make
any deductions required on a pro-rata basis from all Allocation Options to which
your Contract Value is allocated. If a total withdrawal is made on other than a
Contract Anniversary, we will determine your Contract Value and make a deduction
for the Contract Maintenance Charge the same as we would if it were a Contract
Anniversary.
Page 7
VFLX-99 C-GMDB-NY C-GMDB
<PAGE>
TRANSFERS
TRANSFERS DURING THE ACCUMULATION PERIOD: A transfer is subject to the
following:
1. the maximum number of transfers which may be made, the maximum number of
transfers which are not subject to a Transfer Charge and the minimum
amount which may be transferred are shown on the Contract Data pages;
2. a Transfer Charge is deducted if a transfer exceeds the maximum number of
free transfers. The Transfer Charge is shown on the Contract Data pages;
3. a transfer will be effected as of the end of the Business Day when we
receive a request in Good Order,
4. we are not responsible for the consequences resulting from a transfer
made in accordance with your instructions;
5. your right to make transfers is subject to modification if we determine,
in our sole opinion, that the exercise of the right by one or more Owners
is, or would be, to the disadvantage of other Owners or if required to do
so by applicable laws or regulations. Restrictions may be applied in any
manner reasonably designed to prevent any use of the transfer right which
is considered by us to be to the disadvantage of other Owners or to
ensure compliance with such laws or regulations. A modification could be
applied to transfers to or from one or more of the Subaccounts and could
include, but not be limited to:
a. the requirement of a minimum time period between each transfer;
b. not accepting a transfer request of an agent acting under a power of
attorney on behalf of more than one Owner;
c. limiting the dollar amount that may be transferred among the
Subaccounts by an Owner at any one time; or
d. restricting the number of transfers per year.
No transfers are permitted after the Annuity Date.
WITHDRAWALS
WITHDRAWALS: During the Accumulation Period, you may, upon a request in Good
Order, make a total or partial withdrawal of the Contract Surrender Value. You
may specify the Allocation Option(s) from which a withdrawal will be taken. If
you do not so specify, we will take the withdrawal on a pro-rata basis from all
Allocation Option(s) to which your Contract Value is allocated.
We will pay the amount of any withdrawal within 7 days of receipt of request in
Good Order unless the "Suspension or Deferral of Payments Provision" is in
effect. If we postpone payment of a withdrawal for more than 7 days after we
receive your withdrawal request, we will pay interest. The interest will be
calculated daily from the date we receive your request, at the rate of interest
we currently pay on amounts under the Interest Payment Settlement Option. No
interest will be paid if the amount of interest calculated is less than $25.
Each partial withdrawal must be for an amount which is not less than the amount
shown on the Contract Data pages. The minimum Contract Value which must remain
in the Contract after a partial withdrawal in order to keep the Contract in
force is shown on the Contract Data pages. If the amount of the withdrawal
requested would reduce the Contract Value below this minimum, we will give you
the maximum amount available that would not reduce the Contract Value below such
minimum. Special rules may apply for IRA's.
Page 8
VFLX-99 C-GMDB-NY [(A)]
<PAGE>
DEATH BENEFIT
DEATH OF LAST SURVIVOR OF OWNER OR JOINT OWNER DURING THE ACCUMULATION PERIOD:
If the sole or last survivor of the Owner or Joint Owner dies during the
Accumulation Period, the death benefit will be as described below.
On or prior to the Contract Anniversary coinciding with or next following
the 80th birthday of the sole or older of the Owner or Joint Owner, upon
receipt of due proof of death and any other documentation we request in Good
Order, the Beneficiary is entitled to receive a death benefit equal to the
greater of:
1. the Contract Value as of the date we receive due proof of death and any
other documentation we need; or
2. the Guaranteed Minimum Death Benefit ("GMDB") as of the date we receive
due proof of death and any other documentation we need. The GMDB is
calculated daily and is equal to the "Step-Up". Before the first
Contract Anniversary, the Step-Up is the initial Invested Purchase
Payment increased by subsequent Invested Purchase Payments and
proportionally reduced by the effect of withdrawals. The Step-Up for each
subsequent annual Contract Anniversary will be reset to the greater of
the previous Step-Up and the Contract Value as of such Contract
Anniversary. Between such Contract Anniversaries, the Step-Up will be
increased by Invested Purchase Payments and proportionally reduced by the
effect of withdrawals.
After the Contract Anniversary coinciding with or next following the 80th
birthday of the sole or older of the Owner or Joint Owner, upon receipt of
due proof of death and any other documentation we request in Good Order, the
Beneficiary is entitled to receive a death benefit equal to the greater of:
1. the Contract Value as of the date we receive due proof of death and any
other documentation we need; or
2. the GMDB as of the Contract Anniversary coinciding with or next following
the sole or older of the Owner or Joint Owner's 80th birthday increased
by subsequent Invested Purchase Payments since such Contract Anniversary
and proportionally reduced by the effect of withdrawals since such
Contract Anniversary.
Where the words "proportionally reduced by the effect of withdrawals" are used
in this Contract, the withdrawal reduces those values in the same proportion as
it reduces the Contract Value. We calculate the proportion by dividing the
Contract Value after the withdrawal by the Contract Value immediately prior to
the withdrawal. The resulting percentage is multiplied by the applicable values
(before the withdrawal) in determining the death benefit.
If the ownership of the Contract changes as a result of an assignment, the value
of the death benefit will be reset to the Contract Value as of the date of the
assignment. Such value will be treated as a Purchase Payment made on that date
for purposes of computing the death benefit.
Page 9
VFLX-99 C-GMDB-NY [(A)]
<PAGE>
The Beneficiary may, within 60 days of providing proof of death, elect to take
the death benefit under one of the death benefit payout options listed below,
provided that any payout option shall not include a period certain that exceeds
the life expectancy of the Beneficiary. The Beneficiary will be the sole
measuring life in determining the amount of any such payout option. If no payout
option is selected within the 60 days, the death benefit will be payable as a
lump sum.
If a Beneficiary of the Owner having priority to be paid a death benefit is the
spouse of the Owner at the time of the Owner's death, the Contract will continue
and the spouse will become the Owner. If a Beneficiary of the Joint Owner having
priority to be paid a death benefit is the spouse of the Joint Owner at the time
of the Joint Owner's death, the Contract will continue. In either case, the
spouse may, within 60 calendar days of providing proof of death, elect to take
the death benefit under any of the payout options available under this Contract.
If the spouse is the surviving Owner or Joint Owner under the Contract, the
death benefit will equal the Contract Value.
If the Owner and Joint Owner are not spouses at the time of the Owner or Joint
Owner's death, the Contract will not continue, the death benefit will equal the
Contract Value, and the Beneficiary will be required to choose one of the death
benefit payout options described below. In that event, the payout described in
Choice 2 and the beginning of the distribution described in Choice 3 will be
based on the date of death of the first to die of the Owner or Joint Owner.
The death benefit payout options are:
Choice 1 -- lump sum payment of the death benefit; or
Choice 2 -- the payment of the entire death benefit within 5 years of the
date of death of the last to survive of the Owner or Joint Owner; or
Choice 3 -- payment of the death benefit under an Annuity or Settlement
Option over the lifetime of the Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary with distribution beginning
within one year of the date of death of the last to survive of the Owner or
Joint Owner.
Any portion of the death benefit not applied under Choice 3 within one year of
the date of the last to survive of the Owner's or Joint Owner's death, must be
distributed within five years of the date of death.
Once a death benefit becomes payable, the Payee's interest in any Annuity
Benefit under the Contract will cease.
If a lump sum payment is requested, the amount will be paid within seven (7)
days of receipt of proof of death and the election, unless the "Suspension or
Deferral of Payments Provision" is in effect.
DEATH OF ANNUITANT DURING THE ACCUMULATION PERIOD: If the Annuitant dies before
the Annuity Date, the Co-Annuitant, if applicable, becomes the Annuitant. If
there is no surviving Co-Annuitant, and the Annuitant was not the Owner, the
Owner becomes the Annuitant. You have the right to name a new Annuitant within
60 days. If the Owner is a non-natural person, the death of the Annuitant will
be treated as the death of the Owner, a new Annuitant may not be designated, and
the Annuitant will be deemed to be the Owner for purposes of determining the
death benefit.
DEATH OF ANNUITANT DURING THE ANNUITY PERIOD: If the Annuitant dies on or after
the Annuity Date, the Settlement Option then in effect will govern whether or
not we will continue to make any payments. The death of a non-Annuitant Owner or
Joint Owner has no effect on the payout during the Annuity Period.
Page 10
VFLX-99 C-GMDB-NY C-GMDB
<PAGE>
PAYMENT OF DEATH BENEFIT: We will require due proof of death and any other
documentation we request in Good Order before any death benefit is paid. All
death benefits will be paid in accordance with applicable law or regulations
governing death benefit payments.
SPECIAL TAX CONSIDERATIONS: There are special tax rules that apply to IRA and
other qualified contracts during both the Accumulation Period and Annuity Period
governing distributions upon the death of the Owner. These rules are contained
in provisions in the attached endorsements and supersede any other distribution
rules contained in the Contract.
The preceding provisions regarding the death of the Owner are intended to
satisfy the distribution at death requirements of section 72(s) of the Internal
Revenue Code of 1986, as amended. We reserve the right to amend this Contract by
subsequent endorsement as necessary to comply with applicable tax requirements,
if any, which are subject to change from time to time. Such additional
endorsements, if necessary to comply with amended tax requirements, will be
mailed to you and become effective within 30 days of mailing, unless you notify
us in writing, within that time frame, that you reject the endorsement.
ANNUITY AND SETTLEMENT OPTIONS
GENERAL: On the Annuity Date, the Adjusted Contract Value will be applied under
the Annuity or Settlement Option you have selected. If the Adjusted Contract
Value is less than $2,000, or if payment under any option selected would be less
than $20 per month, we reserve the right to pay out the Adjusted Contract Value
in a lump sum.
SELECTION OF AN ANNUITY OR SETTLEMENT OPTION: You may select an Annuity or
Settlement Option by notifying us of the selected option in Good Order. If no
Annuity or Settlement Option is selected, or if the chosen Option is not
received in Good Order, Option 2, Life Income Annuity Option, will automatically
be applied. You may, at any time prior to the Annuity Date, by a request in Good
Order 30 days in advance, select and/or change the Annuity or Settlement Option.
ANNUITY AND SETTLEMENT OPTIONS: This Contract provides for payments under one of
the Annuity or Settlement Options described below. Any other Annuity or
Settlement Option acceptable to us may be selected.
OPTION 1 - FIXED PERIOD ANNUITY OPTION. We will make equal payments for a period
you choose up to 25 years. At your choice, we will make such payments annually,
semi-annually, quarterly or monthly. The Option 1 Table shows the minimum
amounts we will pay.
OPTION 2 - LIFE INCOME ANNUITY OPTION. We will make payments for as long as the
Annuitant lives, with payments certain for 120 months. At your choice, we will
make such payments annually, semi-annually, quarterly or monthly. The Option 2
Table shows the minimum amounts we will pay.
OPTION 3 - INTEREST PAYMENT SETTLEMENT OPTION. We will credit interest on the
Adjusted Contract Value at the RATE of at least 3% until you request payment of
all or part of the Adjusted Contract Value. At your choice, we will pay interest
on the Adjusted Contract Value not yet withdrawn annually, semi-annually,
quarterly or monthly. You may request full or partial payment of the Adjusted
Contract Value provided, however, that if a partial payment is requested, the
amount of any Adjusted Contract Value remaining after such requested amount is
paid must be at least $1 ,000. This option is not available for qualified
contracts.
OTHER ANNUITY OR SETTLEMENT OPTIONS: We may offer or consent to other settlement
options, including life income annuity options with payments certain for a
period of other than 120 months. Contact the representative who sold you the
Contract or call the toll-free number listed on your quarterly statement for
information.
ANNUITY: Unless you designate another Payee, you will be the Payee of the
Annuity Payments. The Adjusted Contract Value will be applied to the applicable
Annuity Table contained in this Contract based upon the Annuity Option you have
selected. The amount of the first payment for each $1 ,000 of Adjusted Contract
Value is shown in the Annuity Tables. If when Annuity Payments begin we are
using tables of annuity rates for these Contracts which result in larger Annuity
Payments, we will use those tables instead. Annuity Payments will depend on the
age and sex of the Annuitant, where permitted.
Page 11
VFLX-99 C-GMDB-NY C-GMDB
<PAGE>
BENEFICIARY
BENEFICIARY: The Beneficiary designation in effect on the Contract Date will
remain in effect until changed. The Beneficiary is entitled to receive the
benefits to be paid at the death of the last to die of the Owner or Joint Owner
(or the first to die of the Owner or Joint Owner if the Owner and Joint Owner
are not spouses at the time of the Owner's or Joint Owner's death) during the
Accumulation Period. The Owner must be the primary Beneficiary of the Joint
Owner, and the Joint Owner must be the primary Beneficiary of the Owner. Other
than primary Beneficiaries, Beneficiaries must be the same for both the Owner
and Joint Owner.
When a Beneficiary is designated, any relationship shown is to the Owner unless
otherwise specified.
To show priority among Beneficiaries, we will label the classes, so that the
class with first priority is called the primary class, the class with next
priority is called the secondary class, and so on. The following statements
apply to Beneficiaries unless the Contract Data pages, Contract endorsement or
any change request that we have processed specifies otherwise:
One who survives the last to die of the Owner and Joint Owner will
have the right to be paid only if no one in a prior class survives
the last to die of the Owner and Joint Owner.
One who has the right to be paid will be the only one paid if no
one else in the same class survives the last to die of the Owner
and Joint Owner.
Two or more in the same class who have the right to be paid will
be paid in equal shares.
If no one survives the sole Owner, we will pay in one sum to the Owner's
estate.
Unless you notify us otherwise in writing received in Good Order, when there
is insufficient evidence to determine the order of death, we will deem the
Owner to be the last survivor and make payment to the Owner's Beneficiary.
Before we make a payment, we have the right to decide what reasonable proof
we need of the identity, age or any other facts about any persons designated
as Beneficiaries. If Beneficiaries are not designated by name and we make
payment(s) based on that proof, we will not have to make the payment(s)
again.
CHANGE OF BENEFICIARY: To initiate a change of Beneficiary, call the toll-free
number listed on your statement or contact the representative who sold you the
Contract. We will send you a change request form. We may also ask you to send us
the Contract. The change of beneficiary will take effect on the date you sign
the change form, provided such request is received in Good Order. Then, any
previous Beneficiary's interest will end as of the date the change request is
signed and we receive it in Good Order, even if the Owner or Joint Owner is not
living when we process the change request.
Page 12
VFLX-99 C-GMDB-NY C-GMDB
<PAGE>
SUSPENSION OR DEFERRAL OF PAYMENTS OR TRANSFERS
FROM THE SEPARATE ACCOUNT
We reserve the right to suspend or postpone payments from the Separate Account
for a withdrawal or transfer for any period when:
1. the New York Stock Exchange is closed (other than customary weekend and
holiday closings);
2. trading on the New York Stock Exchange is restricted;
3. an emergency exists as a result of which disposal of shares of the
Investment Options held in the Separate Account is not reasonably
practicable or it is not reasonably practicable to determine the value of
such shares; or
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Owners;
provided that applicable rules and regulations of the Securities and Exchange
Commission will govern as to whether the conditions described in (2) and (3)
exist.
Page 13
VFLX-99 C-GMDB C-GMDB
<PAGE>
GENERAL PROVISIONS
THE CONTRACT: The entire Contract consists of this Contract, and any attached
endorsements or riders. This Contract may be changed or altered only by our
President or Secretary. Any change, modification or waiver must be made in
writing. This Contract may not be modified by us without your consent except as
may be required by applicable law or as set forth in this Contract.
ASSIGNMENT OF A CONTRACT: A request in Good Order specifying the terms of an
assignment of a Contract must be provided to the Annuity Service Center. We are
under no obligation to verify the assignment's validity or sufficiency. We will
not be liable for any payment made or action taken before we record the
assignment. If any Owner is living on the Annuity Date and an assignment is in
effect on that date, we have the right to pay the Contract Surrender Value in
one lump sum to the assignee where notice in Good Order is received. Partial
assignments, collateral or otherwise, are not allowed without our approval. We
reserve the right to restrict or refuse any assignment.
An assignment which results in a change of ownership will affect the value of
the death benefit. Please see the section of the Contract entitled "Death of
Last Survivor of Owner or Joint Owner During the Accumulation Period", for more
information.
We will not be responsible for the validity or tax consequences of any
assignment. Any assignment made after the death benefit has become payable will
be valid only with our consent.
If the Contract is assigned, your rights may only be exercised with the consent
of the assignee of record.
NON-PARTICIPATING IN SURPLUS: This Contract does not share in any distribution
of our profits or surplus.
INCONTESTABILITY: We will not contest this Contract. We consider all statements
made in the application for this Contract to be representations, not warranties.
MISSTATEMENT OF AGE OR SEX: We may require proof of age of the Annuitant before
making any life contingent Annuity Payment provided for by this Contract. If the
age or sex of the Annuitant has been misstated, the amount payable will be the
amount that the Contract Value would have provided at the true age or sex.
Once Annuity Payments have begun, any underpayments, with interest at 5%, will
be made up in one sum with the next Annuity Payment, and overpayments, with
interest at 5%, will be deducted from the future Annuity Payments until the
total is repaid.
CONTRACT SETTLEMENT: This Contract must be returned to us upon any settlement.
REPORTS: WE will send you a report four times each calendar year until the
Annuity Date showing your Contract Value and other relevant information about
your Contract. You may ask for a report like this at any time. But, except for
the four reports we send you during the year, we have the right to charge a fee
for each report. We will also furnish an annual report of the Separate Account.
These reports will be sent to your last known address.
TAXES: Any taxes, including any Premium Taxes and any other type of tax (or
component thereof) measured by or based upon any portion of the Purchase Payment
we receive, paid to any governmental entity will be charged against the Contract
Value. We will, in our sole discretion, determine when taxes have resulted from:
the investment experience of the Separate Account; receipt by us of the Purchase
Payment(s); or commencement of Annuity Payments. We may, at our discretion, pay
taxes when due and deduct that amount from the Contract Value at a later date.
Payment at an earlier date does not waive any right we may have to deduct
amounts at a later date. We reserve the right to establish a provision for
federal income taxes if we determine, in our sole discretion, that we will incur
a tax as a result of the operation of the Separate Account. We will deduct for
any income taxes incurred by it as a result of the operation of the Separate
Account whether or not there was a provision for taxes and whether or not it was
sufficient. We will deduct any withholding taxes required by applicable law.
EVIDENCE OF SURVIVAL: Before we make a payment, we have the right to require
reasonable proof of continued life and any other documentation we need to make
the payment. We can require this proof for any person whose life or death
determines whether or to whom we must make the payment.
PROTECTION OF PROCEEDS: No Beneficiary may commute, encumber, alienate or assign
any payments under this Contract before they are due. To the extent permitted by
law, no payments will be subject to the debts, contracts or engagements of any
Beneficiary or to any judicial process to levy upon or attach the same for
payments thereof.
Page 14
VFLX-99 C-GMDB-NY C-GMDB
<PAGE>
VALUES AND BENEFITS
Any values and death benefits that may be available under this Contract are not
less than the minimum benefits required by the law of any state in which this
Contract is delivered.
ANNUITY OPTION PAYMENT TABLES
AMOUNTS PAYABLE: For Options 1 and 2, we will use the tables below to compute
the minimum amount of the Annuity Option Payment.
If the Annuity Date is not a Contract Anniversary, we will adjust the amounts
accordingly.
The annuity payments in the Option 2 Table are based on the Annuitant's Adjusted
Age and sex. The Adjusted Age is the Annuitant's age last birthday when the
first Annuity payment is due, adjusted as shown in the Option 2 Table.
When we computed the amounts we show in the Option 2 Table, we adjusted the
Annuity 2000 Mortality Table to an age last birthday basis, less two years, and
we used an interest rate of 3% per year. If the age is over 80, the rate for age
80 will be used.
OPTION 1 TABLE
- ------------------------------
MINIMUM AMOUNT OF
MONTHLY PAYMENT FOR
EACH $1,000, THE FIRST
PAYABLE IMMEDIATELY
- ------------------------------
Number Monthly
of Years Payment
- ------------------------------
1 $84.47
2 42.86
3 28.99
4 22.06
5 17.91
6 15.14
7 13.16
8 11.68
9 10.53
10 9.61
11 8.86
12 8.24
13 7.71
14 7.26
15 6.87
16 6.53
17 6.23
18 5.96
19 5.73
20 5.51
21 5.32
22 5.15
23 4.99
24 4.84
25 4.71
- ----------------------------
Multiply the monthly amount
by 2.993 for quarterly,
5.963 for semi-annual or
11.839 for annual
OPTION 2 TABLE
Amount of Annuity Payment for
each $1,000 applied on the Annuity Date
- --------------------------------------------------------------------------------
Adjusted Adjusted
Age Male Female Age Male Female
- --------------------------------------------------------------------------------
41 $3.51 $3.35 61 $4.83 $4.49
42 3.55 3.39 62 4.94 4.58
43 3.59 3.43 63 5.05 4.68
44 3.64 3.46 64 5.17 4.79
45 3.69 3.50 65 5.29 4.90
46 3.74 3.54 66 5.42 5.01
47 3.79 3.59 67 5.55 5.14
48 3.84 3.63 68 5.69 5.27
49 3.90 3.68 69 5.84 5.40
50 3.96 3.73 70 5.99 5.55
51 4.02 3.79 71 6.15 5.70
52 4.08 3.84 72 6.31 5.86
53 4.15 3.90 73 6.48 6.03
54 4.22 3.96 74 6.65 6.20
55 4.29 4.02 75 6.82 6.38
56 4.37 4.09 76 6.99 6.57
57 4.45 4.16 77 7.17 6.77
58 4.54 4.24 78 7.34 6.96
59 4.63 4.32 79 7.52 7.16
60 4.73 4.40 80 7.69 7.36
- --------------------------------------------------------------------------------
Calendar Year in Which
First Payment is Done Adjusted Age
- --------------------------------------------------------------------------------
Prior to 2010 Actual Age
2010 Through 2019 Actual Age minus 1
2020 Through 2029 Actual Age minus 2
2030 Through 2039 Actual Age minus 3
After 2039 Actual Age minus 4
- --------------------------------------------------------------------------------
Page 15
VFLX-99C-GMDB C-GMDB
<PAGE>
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT. ANNUITY PAYMENTS AND VALUES
PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE
SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT.
Page 16
VFLX-99 C-GMDB C-GMDB
[logo] PRUDENTIAL DISCOVERY CHOICE(SM) VARIABLE ANNUITY
APPLICATION
PRUDENTIAL ANNUITY SERVICE CENTER
PO Box 14200
New Brunswick, NJ 08906-4200
Application for a Flexible Payment Variable Deferred
Annuity Contract to the Pruco Life Insurance Company
of New Jersey, Newark, NJ 07102, a stock company
subsidiary of The Prudential Insurance Company of America
PLEASE PRINT USING BLUE OR BLACK INK
================================================================================
[1]OWNER [ ]Individual [ ]Corporation [ ]Trust [ ]Other
INFORMATION ---------------
First Name/Trustee(s) MI. Last Name
--------------------- ---- -----------------------------
Name of Trust/Corporation/Other (if applicable)
--------------------------------------------------------------
Street
--------------------------------------------------------------
City State Zip Code
--------------------------------------- ---- ----- - ----
SS#/TIN(Tax Iden- Date of Birth Area Code Telephone Number
tification No.) (mo., day, year)
--------------- ---------------- ------ -------------------
U.S. Resident Non-Resident Country
Male Female Citizen Alien Alien
Check all that
apply: [ ] [ ] [ ] [ ] [ ] -----------------
================================================================================
[2]JOINT OWNER THE OWNER AND JOINT OWNER OF A CONTRACT, WHO ARE NOT SPOUSES
(if any) OF EACH OTHER, MAY INCUR GIFT AND OTHER TAXES WITH RESPECT
Not applicable TO THE CONTRACT THAT WOULD NOT OTHERWISE BE INCURRED IF THE
to IRAs. OWNER AND JOINT OWNER WERE MARRIED TO EACH OTHER. UNMARRIED
If Joint Owner PERSONS WHO WISH TO OWN THE CONTRACT JOINTLY SHOULD CONSULT
is elected, he/ WITH THEIR TAX ADVISOR.
she must be
listed as the First Name/Trustee(s) MI. Last Name
Primary Bene-
ficiary. See --------------------- ---- -----------------------------
Section 5a. Street
--------------------------------------------------------------
City State Zip Code
--------------------------------------- ---- ----- - ----
SS#/TIN(Tax Iden- Date of Birth
tification No.) (mo., day, year) Area Code Telephone Number
--------------- ---------------- ------ -------------------
U.S. Resident Non-Resident Country
Check all that Male Female Citizen Alien Alien
apply: [ ] [ ] [ ] [ ] [ ] -----------------
================================================================================
[3]ANNUITANT First Name/Trustee(s) MI. Last Name
Complete this
section if the --------------------- ---- -----------------------------
Annuitant is Street
not the Owner,
or if there is a --------------------------------------------------------------
non-natural City State Zip Code
owner (e.g.,
trust or --------------------------------------- ---- ----- - ----
corporation).
================================================================================
ORD98476-99 New York ED 10/1999
<PAGE>
================================================================================
[3]ANNUITANT SS#/TIN(Tax Iden- Date of Birth Area Code Telephone Number
(continued) tification No.) (mo., day, year)
--------------- ---------------- ------ -------------------
U.S. Resident Non-Resident Country
Male Female Citizen Alien Alien
Check all that
apply: [ ] [ ] [ ] [ ] [ ] -----------------
================================================================================
[4]CO-ANNUITANT First Name MI. Last Name
(if any)
Do not complete --------------------- ---- -----------------------------
this section if Street
opening an IRA.
--------------------------------------------------------------
City State Zip Code
--------------------------------------- ---- ----- - ----
SS#TIN(Tax Iden- Date of Birth Area Code Telephone Number
tification No.) (mo., day, year)
--------------- ---------------- ------ -------------------
U.S. Resident Non-Resident Country
Male Female Citizen Alien Alien
Check all that
apply: [ ] [ ] [ ] [ ] [ ] -----------------
================================================================================
[5a]BENEFICIARY Full Name (first, middle initial, last), or Name of Trust,
If jointly owned, Corporation or Entity
the Joint Owner
is always the --------------------------------------------------------------
sole primary Relationship To Owner SS#TIN (Tax Identifi- PRIMARY CLASS
beneficiary. cation No.) [X]
---------------------
If you need more ---------------------
space, please Full Name (first, middle initial, last), or Name of Trust,
enter the Corporation or Entity
additional
--------------------------------------------------------------
name(s) and Relationship To Owner SS#TIN (Tax Choose one: PRIMARY
relationship(s) Identifica- CLASS [ ]
in the "Client's --------------------- tion No.) SECONDARY
Additional CLASS [ ]
Remarks". See ---------------------
Section 10. Full Name (first, middle initial, last), or Name of Trust,
Corporation or Entity
--------------------------------------------------------------
Relationship To Owner SS#TIN (Tax Choose one: PRIMARY
Identifica- CLASS [ ]
--------------------- tion No.) SECONDARY
CLASS [ ]
---------------------
================================================================================
[5b]DEATH Please
BENEFIT choose one: [ ]Basic Death Benefit [ ]Enhanced Death Benefit
================================================================================
[6]TYPE OF PLAN Please choose one: [ ]Non-Qualified [ ]Traditional IRA
[ ]Roth IRA/Custodial [ ]Custodial Acct.
================================================================================
[7]SOURCE OF Amount
FUNDS
Minimum of NON-QUALIFIED: [ ]1035 Exchange $---------.--
$10,000. [ ]Check - payable to PRUDENTIAL
IRA: [ ]IRA Rollover [ ]Direct Rollover
[ ]IRA Transfer
[ ]Roth Conversion IRA (Establishment
Date* )
*This is the date you originally converted
from a traditional IRA to a Roth Conversion
IRA (if omitted, the current tax year will
be used). Required for IRA 5 - year holding
period requirement.
Estimated Amount
$----------.--
================================================================================
ORD98476-99 New York ED 10/1999
<PAGE>
================================================================================
[7]SOURCE OF
FUNDS
(continued)
[ ]IRA Regular Contribution**
[ ]Roth IRA Regular Contribution**
**If making a contribution, please choose ONLY
one:
If making regular contributions for current and/
or previous year(s):
$--------.-- Yr.---- $--------.-- Yr.----
I UNDERSTAND THAT A CONVERSION FROM A TRADITIONAL IRA TO A
ROTH CONVERSION IRA WILL RESULT IN A TAXABLE EVENT WHICH WILL
BE REPORTED TO THE IRS.
IF YOU ARE TURNING 70-1/2 THIS CALENDAR YEAR, PLEASE ENCLOSE
THE MINIMUM DISTRIBUTION UNDER AN INDIVIDUAL RETIREMENT
ANNUITY (IRA) FORM (ORD78296).
================================================================================
[8]PURCHASE MONEY MARKET PORTFOLIO
PAYMENT
ALLOCATION Prudential Money Market Portfolio (MMKT) ------%
Please write in
what % of your BOND PORTFOLIOS
payment you
want to allocate Prudential Diversified Bond Portfolio (BOND) ------%
to the following
options. The Prudential High Yield Bond Portfolio (HYLD) ------%
total must equal
100%. You must BALANCED PORTFOLIO
initial any
changes. Prudential Diversified Conservative ------%
Growth Portfolio (DCGRW)
GROWTH & INCOME PORTFOLIOS
Prudential Equity Income Portfolio (HIDV) ------%
Prudential Stock Index Portfolio (STIX) ------%
AIM V.I. Growth & Income Fund (AIMGRI) ------%
American Century VP Value (AMCVAL) ------%
T. Rowe Price Equity Income Portfolio ------%
(TREQST)
GROWTH PORTFOLIOS
Prudential 20/20 Focus Portfolio (FOCUS) ------%
Prudential Equity Portfolio (STOCK) ------%
Prudential Jennison Portfolio (GROWTH) ------%
AIM V.I. Value Fund (AIMVAL) ------%
Janus Aspen Series Growth Portfolio ------%
(JANGRW)
MFS Research Series (MFSRSR) ------%
OpCap Advisors OCC Accumulation Trust ------%
Managed Portfolio (OPPMAN)
AGGRESSIVE GROWTH PORTFOLIOS
Prudential Small Capitalization Stock ------%
Portfolio (SCAP)
Franklin Small Cap Investments Fund - ------%
Class 2 (FTSMCP)
MFS Emerging Growth Series (MFSEMG) ------%
OpCap Advisors OCC Accumulation Trust ------%
Small Cap Portfolio (OPPSMC)
Warburg Pincus Post-Venture Capital ------%
Portfolio (WARVCP)
INTERNATIONAL STOCK PORTFOLIOS
Prudential Global Portfolio (GLEQ) ------%
Janus Aspen Series International Growth ------%
Portfolio (JANINT)
T. Rowe Price International Stock Portfolio ------%
(TRINST)
TOTAL 100%
================================================================================
[9]REPLACEMENT Will the proposed contract replace any existing insurance or
AND annuity contract(s)? [ ]Yes [ ]No
AGGREGATION
This section must If yes, provide the following information for each contract(s)
be completed. and enclose all applicable Prudential disclosure and state
if you need more replacement forms:
space, please
enter the Company Name Policy/Contract Number
additional
information in ------------------------------------ ----------------------
the "Client's Year of Issue Plan
Additional
Remarks." See ------------- -----------------
Section 10.
Did you purchase a non-qualified annuity from Prudential or an
affiliated company this calendar year? If yes, list contract
number and plan: [ ]Yes [ ]No
Company Name Policy/Contract Number
------------------------------------ ----------------------
Year of Issue Plan
------------- -----------------
================================================================================
ORD98476-99 New York ED 10/1999
<PAGE>
================================================================================
[10]SIGNATURES If applying for an IRA or Roth IRA/Custodial, the Owner
acknowledges receiving a "Questions and Answers on
Individual Retirement Annuities" booklet and understands
that he or she will be given a financial disclosure
statement with the contract. The Owner understands that tax
deferral is provided by the IRA, and acknowledges that he or
she is purchasing this contract for its features other than
tax deferral, including the lifetime income payout option,
the death benefit protection, the ability to transfer among
investment options without sales or withdrawal charges and
other features as described in the prospectus.
No representative can make or change a contract or waive any
of the company's rights or requirements.
The Owner(s) believes this contract meets his/her needs and
financial objectives. The Owner(s) further (1) understands
that any amount of purchase payments allocated to a variable
investment option will reflect the investment experience of
that option and, therefore, annuity payments and surrender
values may vary and are not guaranteed as to a fixed dollar
amount; (2) acknowledges receipt of the current prospectus for
the contract applied for and the variable investment options.
[ ]If this contract has a Joint Owner, please check this box
to authorize Prudential to act on the instruction(s) of either
the Owner or Joint Owner with regard to transactions under the
contract.
If the Owner is a Trust, please complete the Non-Natural
Person Statement and Agreement Form (ORD78272).
Client's Additional Remarks
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
Signed at
--------------------------- ----------------------
City, State Date
X X
--------------------------- ----------------------
Owner's Signature (Individual, Joint Owner's Signa-
Corporation, Trust) ture (if applicable)
X X
--------------------------- ----------------------
Annuitant's Signature Co-Annuitant's Sig-
nature (if applicable)
================================================================================
[11]REPRE- Do you have, from any source, facts that any person named as
SENTATIVE'S Owner or Joint Owner above is replacing or changing any
SIGNATURE current insurance or annuity in any company? If Yes, provide
details below. [ ]No [ ]Yes
This application is submitted in the belief that the purchase
of this contract is appropriate for the applicant based on the
information furnished and as reviewed with the applicant.
The representative hereby certifies that all information
contained in this application is true to the best of his/her
knowledge.
Representative
----------------------------- Contract Number ---------------
Name (Print)
X Financial
----------------------------- Adviser Number ---------------
Signature
----------------------------- ---------------- --------------
Branch/Field Office Name Branch/Field Telephone No.
Office Code
2nd Representative/FA
----------------------------- Contract Number
--------------
Second Representative/FA Name
(if any) (Print) Pre-assigned Contract
X Number (If any.)
----------------------------- --------------
Second Representative/FA Signature
Representative's Additional Remarks
--------------------------------------------------------------
================================================================================
MAIL TO: PRUDENTIAL ANNUITY SERVICE CENTER
PO BOX 14200
NEW BRUNSWICK, NJ 08906-4200
OVERNIGHT: PRUDENTIAL ANNUITY SERVICE CENTER 30
COLUMBUS CIRCLE EDISON, NJ 08837
QUESTIONS? CLIENTS CALL (888) 778-2888 (TOLL FREE)
AGENTS CALL (800) 843-4124,
FINANCIAL ADVISORS CALL (877) 321-5463
================================================================================
ORD98476-99 New York ED 10/1999
DISCOVERY CHOICE 30-JUN-99
TABLE 1
ASSUMING NO LOAD
1.65 M&E
1 year 5 years 10 years
Ending Ending Ending Since Inception
YTD 30-Jun-99 30-Jun-99 30-Jun-99 Inception Date
------ ---------- ----------- ---------- --------- ----------
MMKT 1.56% 3.50% 4.27% 3.60% 4.78% 6/02/83
DIBOND -2.35% -0.54% 6.66% 6.64% 7.50% 6/08/83
HIYLD 2.75% -5.35% 6.89% 8.01% 6.63% 2/23/87
OPPMAN 6.44% 1.92% 18.47% 16.27% 16.95% 8/01/88 See Note
STIX 11.30% 20.77% 25.95% 14.43% 17.38% 10/19/87
EQINC 17.43% 3.53% 17.64% 13.36% 14.21% 2/19/88
AIMGRI 13.76% 26.02% 22.77% N/A 21.37% 5/02/94
TREQST 11.56% 13.59% 19.65% N/A 18.93% 3/31/94
EQUITY N/A N/A N/A N/A N/A 6/06/83
PRUJEN 14.46% 29.35% N/A N/A 27.89% 5/01/95
AIMVAL 13.62% 26.09% 23.39% N/A 20.44% 6/01/93
JANGRW 15.84% 30.82% 23.29% N/A 20.16% 9/13/93
MFSRSR 8.09% 11.38% N/A N/A 20.07% 7/24/95
MFSEMG 12.01% 22.73% N/A N/A 24.68% 7/24/95
OPPSMC 2.84% -6.22% 9.17% 11.40% 10.80% 8/01/88 See Note
WARVCP 11.93% 4.54% N/A N/A 9.61% 9/30/96
GLOBAL 8.97% 13.36% 13.61% 8.41% 10.23% 9/19/88
JANINT 9.28% 4.04% 18.72% N/A 17.19% 5/02/94
TRINST 3.05% 4.19% 7.98% N/A 7.70% 3/31/94
SMCAP 4.45% 4.49% N/A N/A 14.45% 5/01/95
AMCVAL 12.35% 10.29% N/A N/A 15.94% 5/01/96
FTSMCP 18.01% N/A N/A N/A 18.01% 9/01/98
20/20 FOCUS 5.18% N/A N/A N/A 5.18% 5/01/99
DCGRW 0.29% N/A N/A N/A 0.29% 5/01/99
Note: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had
commenced operations on August 1, 1988, then called Quest for Value
Accumulation Trust (the "Old Trust"), was effectively divided into two
investment funds - the Old Trust and the present Quest for Value
Accumulation Trust (the "Present Trust") - at which time the Present
Trust commenced Operations.
DISCOVERY CHOICE 30-JUN-99
TABLE 1
ASSUMING NO LOAD
1.35 M&E
1 year 5 years 10 years
Ending Ending Ending Since Inception
YTD 30-Jun-99 30-Jun-99 30-Jun-99 Inception Date
------ ---------- ----------- ---------- --------- ----------
MMKT 1.56% 3.50% 3.71% 3.47% 4.82% 6/02/83
DIBOND -2.35% -0.54% 6.09% 6.51% 7.54% 6/08/83
HIYLD 2.75% -5.35% 6.56% 8.00% 6.69% 2/23/87
OPPMAN 6.44% 1.92% 18.73% 16.57% 17.26% 8/01/88 See Note
STIX 11.30% 20.77% 25.59% 14.44% 17.44% 10/19/87
EQINC 17.43% 3.53% 17.33% 13.38% 14.27% 2/19/88
AIMGRI 13.76% 26.02% 23.04% N/A 21.64% 5/02/94
TREQST 11.56% 13.59% 19.92% N/A 19.20% 3/31/94
EQUITY N/A N/A N/A N/A N/A 6/06/83
PRUJEN 14.46% 29.35% N/A N/A 28.07% 5/01/95
AIMVAL 13.62% 26.09% 23.67% N/A 20.72% 6/01/93
JANGRW 15.84% 30.82% 23.56% N/A 20.44% 9/13/93
MFSRSR 8.09% 11.38% N/A N/A 20.30% 7/24/95
MFSEMG 12.01% 22.73% N/A N/A 24.93% 7/24/95
OPPSMC 2.84% -6.22% 9.41% 11.69% 11.08% 8/01/88 See Note
WARVCP 11.93% 4.54% N/A N/A 9.80% 9/30/96
GLOBAL 8.97% 13.36% 13.36% 8.45% 10.29% 9/19/88
JANINT 9.28% 4.04% 18.98% N/A 17.45% 5/02/94
TRINST 3.05% 4.19% 8.21% N/A 7.95% 3/31/94
SMCAP 4.45% 4.49% N/A N/A 14.65% 5/01/95
AMCVAL 12.35% 10.38% N/A N/A 16.20% 5/01/96
FTSMCP 18.01% N/A N/A N/A 18.01% 9/01/98
20/20 FOCUS 5.23% N/A N/A N/A 5.23% 5/01/99
DCGRW 0.34% N/A N/A N/A 0.34% 5/01/99
Note: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had
commenced operations on August 1, 1988, then called Quest for Value
Accumulation Trust (the "Old Trust"), was effectively divided into two
investment funds - the Old Trust and the present Quest for Value
Accumulation Trust (the "Present Trust") - at which time the Present
Trust commenced Operations.
<PAGE>
DISCOVERY CHOICE 30-Jun-99
TABLE 1
ASSUMING NO LOAD
1.65 M&E
1 year 5 years 10 years
Ending Ending Ending Since Inception
YTD 30-Jun-99 30-Jun-99 30-Jun-99 Inception Date
------ ---------- ----------- ---------- --------- ----------
MMKT 1.43% 3.22% N/A N/A 3.52% 11/20/95
DIBOND -2.46% -0.79% N/A N/A 3.57% 11/20/95
HIYLD 2.65% -5.56% N/A N/A 5.34% 11/20/95
OPPMAN 1.05% -3.38% N/A N/A 11.52% 10/07/96
STIX 11.17% 20.48% N/A N/A 25.53% 11/20/95
EQINC 17.29% 3.27% N/A N/A 18.00% 11/20/95
AIMGRI 13.62% 25.85% N/A N/A 25.02% 10/07/96
TREQST 3.41% 5.71% N/A N/A 3.21% 10/07/96
EQUITY N/A N/A N/A N/A N/A 11/20/95
PRUJEN 14.32% 29.03% N/A N/A 25.30% 11/20/95
AIMVAL 13.49% 25.79% N/A N/A 26.05% 10/07/96
JANGRW 15.70% 30.44% N/A N/A 25.86% 10/07/96
MFSRSR 6.61% 9.72% N/A N/A 17.83% 10/07/96
MFSEMG 11.87% 22.42% N/A N/A 20.93% 10/07/96
OPPSMC 2.00% -7.10% N/A N/A 5.46% 10/07/96
WARVCP 11.80% 4.27% N/A N/A 8.70% 10/07/96
GLOBAL 8.83% 13.08% N/A N/A 15.23% 11/20/95
JANINT 9.15% 3.71% N/A N/A 17.17% 10/07/96
TRINST 2.92% 3.92% N/A N/A 7.96% 10/07/96
SMCAP 4.32% N/A N/A N/A 4.32% 09/01/98
AMCVAL 0.06% N/A N/A N/A 0.06% 09/01/98
FTSMCP 15.29% N/A N/A N/A 15.29% 09/01/98
20/20 Focus 5.19% N/A N/A N/A 5.19% 05/03/99
DCGRW 0.30% N/A N/A N/A 0.30% 05/03/99
DISCOVERY CHOICE 30-Jun-99
TABLE 1
ASSUMING NO LOAD
1.35 M&E
1 year 5 years 10 years
Ending Ending Ending Since Inception
YDT 30-Jun-99 30-Jun-99 30-Jun-99 Inception Date
---- --------- --------- --------- ---------- ----------
MMKT 1.58% 3.52% N/A N/A 3.79% 11/20/95
DIBOND -2.31% -0.49% N/A N/A 3.84% 11/20/95
HIYLD 2.79% -5.29% N/A N/A 5.61% 11/20/95
OPPMAN 1.20% -3.09% N/A N/A 11.85% 10/07/96
STIX 11.33% 20.84% N/A N/A 25.86% 11/20/95
EQINC 17.46% 3.59% N/A N/A 18.31% 11/20/95
AIMGRI 13.78% 26.07% N/A N/A 25.10% 10/07/96
TREQST 3.56% 6.02% N/A N/A 3.51% 10/07/96
EQUITY N/A N/A N/A N/A N/A 11/20/95
PRUJEN 14.49% 29.42% N/A N/A 25.64% 11/20/95
AIMVAL 13.65% 26.15% N/A N/A 26.42% 10/07/96
JANGRW 15.87% 30.83% N/A N/A 26.23% 10/07/96
MFSRSR 6.77% 10.04% N/A N/A 18.18% 10/07/96
MFSEMG 12.03% 22.79% N/A N/A 21.28% 10/07/96
OPPSMC 2.15% -6.83% N/A N/A 5.77% 10/07/96
WARVCP 11.97% 4.59% N/A N/A 9.03% 10/07/96
GLOBAL 8.99% 13.42% N/A N/A 15.54% 11/20/95
JANINT 9.31% 4.02% N/A N/A 17.51% 10/07/96
TRINST 3.07% 4.24% N/A N/A 8.28% 10/07/96
SMCAP 4.47% N/A N/A N/A 4.47% 09/01/98
AMCVAL 0.19% N/A N/A N/A 0.19% 09/01/98
FTSMCP 15.45% N/A N/A N/A 15.45% 09/01/98
20/20 FOCUS 5.24% N/A N/A N/A 5.24% 05/03/99
DCGRW 0.35% N/A N/A N/A 0.35% 05/03/99
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this registration statement on Form N-4 (the "Registration
Statement") of our report dated March 19, 1999, relating to the financial
statements of the Discovery Select Variable Annuity Subaccounts of the Pruco
Life of New Jersey Flexible Premium Variable Annuity Account, which appears in
such Statement of Additional Information.
We also consent to the use in the Statement of Additional Information
constituting part of this Registration Statement of our report dated February
26, 1999, relating to the financial statements of Pruco Life Insurance Company
of New Jersey, which appears in such Statement of Additional Information.
We also consent to the reference to us under the heading "Experts" in the
Statement of Additional Information.
PricewaterhouseCoopers LLP
New York, New York
August 26, 1999
