<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 2000
1933 ACT REGISTRATION NO. _________
1940 ACT REGISTRATION NO. 811-07975
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 [X ]
POST-EFFECTIVE AMENDMENT NO.___ [ ]
(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
(973) 802-5740
(Address and telephone number of depositor's principal executive offices)
THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(973) 802-4708
(Name and address of agent for service)
Copies to:
<TABLE>
<S> <C>
CHRISTOPHER E. PALMER WILLIAM V. HEALEY
MICHAEL K. ISENMAN
SHEA & GARDNER CHIEF LEGAL OFFICER - PRUDENTIAL INVESTMENTS
1800 MASSACHUSETTS AVENUE, N.W. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
WASHINGTON, D.C. 20036 100 MULBERRY STREET
(202) 828-2093 NEWARK, NEW JERSEY 07102-4077
(973) 367-1388
</TABLE>
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
1
<PAGE> 2
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 that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission may determine.
2
<PAGE> 3
STRATEGIC PARTNERS
ANNUITY ONE(SM)
VARIABLE ANNUITY
--------------------------------------------------------------------------------
PROSPECTUS: OCTOBER __, 2000
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF NEW JERSEY). PRUCO
LIFE OF NEW JERSEY IS AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
THE FUNDS
--------------------------------------------------------------------------------
Strategic Partners Annuity One offers a wide variety of investment choices,
including 25 variable investment options that invest in mutual funds managed by
these leading asset managers:
PRUDENTIAL INVESTMENTS
JENNISON ASSOCIATES
AIM ADVISORS
ALLIANCE CAPITAL MANAGEMENT
BANKERS TRUST, PART OF DEUTSCHE ASSET MANAGEMENT
DAVIS SELECT ADVISERS
FIDELITY MANAGEMENT AND RESEARCH
INVESCO
JANUS CAPITAL
MFS
PIMCO
You may choose between two versions of Strategic Partners Annuity One. One
version, the Contract With Credit, provides for a bonus credit that we add to
each purchase payment you make. If you choose this version of Annuity One, some
charges and expenses may be higher than if you choose the version without the
credit. Those higher charges could exceed the amount of the credit under some
circumstances, particularly if you withdraw purchase payments within a few
years of making those purchase payments.
PLEASE READ THIS PROSPECTUS
--------------------------------------------------------------------------------
Please read this prospectus before purchasing a Strategic Partners Annuity One
variable annuity contract, and keep it for future reference. Current
prospectuses for 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 as well.
TO LEARN MORE ABOUT STRATEGIC PARTNERS ANNUITY ONE
1
<PAGE> 4
--------------------------------------------------------------------------------
To learn more about the Strategic Partners Annuity One variable annuity, you
can request a copy of the Statement of Additional Information (SAI) dated
September 18, 2000. 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 Strategic Partners Annuity One
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 47 of this prospectus.
FOR A FREE COPY OF THE SAI CALL US AT:
--------------------------------------------------------------------------------
(888) PRU-2888 or write to us at:
Prudential Annuity Service Center
P.O. Box 7960
Philadelphia, PA 19101
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
STRATEGIC PARTNERS ANNUITY ONE IS NOT A BANK DEPOSIT AND IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
2
<PAGE> 5
CONTENTS
--------------------------------------------------------------------------------
PART I: STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
SUMMARY
Glossary.............................................
Summary..............................................
Summary of Contract Expenses.........................
Expense Examples.....................................
PART II: STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
SECTIONS 1--9
Section 1: What is the Strategic Partners Annuity One
Variable Annuity?.......................................
Short Term Cancellation Right or "Free Look".........
Section 2: What Investment Options Can I Choose?..........
Variable Investment Options..........................
Fixed Interest Rate Options..........................
Transfers Among Options..............................
Other Available Features.............................
Voting Rights........................................
Substitution.........................................
Section 3: What Kind of Payments Will I Receive During
the Income Phase? (Annuitization).......................
Option 1: Annuity Payments for a Fixed
Period.............................................
Option 2: Life Annuity with 120 Payments (10
Years) Certain.....................................
Other Annuity Options............................
Section 4: What is the Death Benefit?.....................
Beneficiary..........................................
Calculation of the Death Benefit.....................
Payout Options.......................................
Section 5: How Can I Purchase a Strategic Partners
Annuity One Contract?...................................
Purchase Payments....................................
Allocation of Purchase Payments......................
Credits..............................................
Calculating Contract Value...........................
Section 6: What are the Expenses Associated with the
Strategic Partners Annuity One Contract?................
Insurance and Administrative Charge..................
Annual Contract Fee..................................
Withdrawal Charge....................................
Premium Taxes........................................
Transfer Fee.........................................
Company Taxes........................................
Section 7: How Can I Access My Money?.....................
Withdrawals During the Accumulation Phase............
Automated Withdrawals................................
Suspension of Payments or Transfers..................
Section 8: What are the Tax Considerations Associated
with the Strategic Partners Annuity One Contract?.......
Contracts Owned by Individuals (Not Associated with
Tax Favored Retirement Plans)......................
3
<PAGE> 6
Contracts Held by Tax-Favored Plans..................
Section 9: Other Information..............................
Pruco Life Insurance Company of New Jersey...........
The Separate Account.................................
Sale and Distribution of the Contract................
Assignment...........................................
Financial Statements.................................
Statement of Additional Information..................
IRA Disclosure Statement.............................
PART III: PROSPECTUSES
VARIABLE INVESTMENT OPTIONS
THE PRUDENTIAL SERIES FUND, INC.
JANUS ASPEN SERIES
4
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5
<PAGE> 8
PART I SUMMARY
--------------------------------------------------------------------------------
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
6
<PAGE> 9
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 (which we define 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.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus, if
you have chosen the Contract With Credit, any credit that has not yet vested.
ANNUITANT
The person whose life determines the amount of income payments that we will
pay.
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 on which we credit your initial purchase payment. We will credit the
initial purchase payment to your contract within two business days from the day
on which we receive your 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.
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of
your investment in each investment option you have chosen. Your contract value
will go up or down based on the performance of the investment options you
choose.
CONTRACT WITH CREDIT
7
<PAGE> 10
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make, has higher withdrawal charges and a longer
withdrawal charge period, and has no fixed rate investment options available.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit, has lower
withdrawal charges and a shorter withdrawal charge period, and offers two fixed
rate investment options: a one-year fixed rate option and a dollar cost
averaging fixed rate option.
CREDIT
If you choose the Contract With Credit (which we previously defined), this is
the bonus amount that we allocate to your account each time you make a purchase
payment. The amount of the credit is a percentage of the purchase payment. The
credit is subject to a vesting schedule, which means that if you withdraw all
or part of a purchase payment within a certain period, or you begin the income
phase or we pay a death benefit during that period, we may take back all or
part of the credit. See "How Can I Purchase A Strategic Partners Annuity One
Contract" on page 35.
DEATH BENEFIT
If the owner dies, the beneficiary you designate will receive, at a minimum,
the total amount invested or a potentially greater amount related to market
appreciation. A guaranteed minimum death benefit is available for an additional
charge.
FIXED INTEREST RATE OPTIONS
Under the Contract Without Credit (which we previously defined), these are
investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options (dollar cost averaging fixed
rate option). The fixed interest rate options are available only with the
Contract Without Credit.
GUARANTEED MINIMUM DEATH BENEFIT
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain
"protected value". Currently, the protected value for the guaranteed minimum
death benefit equals the "step-up value," which we define below.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity
options.
INCOME PHASE
The period in which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
NET PURCHASE PAYMENTS
Your total purchase payments (which we define below) less any withdrawals you
have made.
PROTECTED VALUE
8
<PAGE> 11
If you choose the guaranteed minimum death benefit, the guaranteed amount of
that benefit. Currently, the protected value of the guaranteed minimum death
benefit equals the "step-up value," which we define below.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
888-PRU-2888.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. With some
restrictions, you can make additional purchase payments at any time during the
accumulation phase.
SEPARATE ACCOUNT
We hold your purchase payments allocated to the variable investment options 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.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Annuity One variable annuity. We have filed the Statement of
Additional Information with the Securities and Exchange Commission and it is
legally a part of this prospectus. To learn how to obtain a copy of the
Statement of Additional Information, see the front cover of this prospectus.
STEP-UP VALUE
The highest value of the contract on any contract anniversary date, subject to
certain age restrictions. Between anniversary dates, the step-up value is only
increased by additional purchase payments and reduced proportionally by
withdrawals. Depending upon the terms of your contract and what options you
choose, we may use the step-up value to compute the protected value of the
guaranteed minimum death benefit.
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. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless whether they invest in annuity contracts. See
"What Are the Tax Considerations Associated with the Strategic Partners Annuity
One Contract," page 41.
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.
9
<PAGE> 12
SUMMARY FOR SECTIONS 1--9
--------------------------------------------------------------------------------
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN PART II OF THE PROSPECTUS.
SECTION 1
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY?
The Strategic Partners Annuity One 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). The contract allows you to invest
on a tax- deferred basis in one or more of 25 variable investment options. The
contract is intended for retirement savings or other long-term investment
purposes and provides for a death benefit.
There are two versions of the Strategic Partners Annuity One variable
annuity.
Contract With Credit. One version of the contract:
- provides for a bonus credit that we add to each purchase payment that you
make,
- has higher withdrawal charges and a longer withdrawal charge period, and
- has no fixed rate investment options available.
We call this version the "Contract With Credit."
Contract Without Credit. The other version of the contract:
- does not provide a credit,
- has lower withdrawal charges and a shorter withdrawal charge period, and
- offers two fixed rate investment options: a one-year fixed rate option and a
dollar cost averaging fixed rate option.
We call this version the "Contract Without Credit."
Unless we state otherwise, when we use the word contract, it applies to
both versions.
The variable investment options available under the contract 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.
The fixed interest rate options available under the Contract Without Credit
offer a guaranteed interest rate. While your money is allocated to one of these
options, your principal amount will not decrease and we guarantee that your
money will earn at least 3% in interest annually. Payments you allocate to the
fixed interest rate options become part of Pruco Life of New Jersey's general
assets.
10
<PAGE> 13
You can invest your money in any or all of the variable investment options
and (under the Contract Without Credit) the fixed interest rate options. You
may make up to 12 free transfers each contract year among the variable
investment options. For the Contract Without Credit, certain restrictions apply
to transfers involving the fixed interest rate options.
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 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 select.
The contract offers a choice of death benefit options.
If you change your mind about owning Strategic Partners Annuity One, you
may cancel your contract within 10 days after receiving it. We call this the
"Free Look" period.
SECTION 2
WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any or all of the following variable investment
options:
THE PRUDENTIAL SERIES FUND
Prudential Global Portfolio
Prudential Jennison Portfolio
Prudential Money Market Portfolio
Prudential Stock Index Portfolio
SP Aggressive Growth Asset Allocation Portfolio
SP AIM Aggressive Growth Portfolio
SP AIM Growth and Income Portfolio
SP Alliance Large Cap Growth Portfolio
SP Alliance Technology Portfolio
SP Balanced Asset Allocation Portfolio
SP Conservative Asset Allocation Portfolio
SP Davis Value Portfolio
SP Deutsche International Equity Portfolio
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SP Growth Asset Allocation Portfolio
SP INVESCO Small Company Growth Portfolio
SP Jennison International Growth Portfolio
SP Large Cap Value Portfolio
SP MFS Capital Opportunities Portfolio
SP MFS Mid Cap Growth Portfolio
SP PIMCO High Yield Portfolio
SP PIMCO Total Return Portfolio
SP Prudential U.S. Emerging Growth Portfolio
SP Small/Mid Cap Value Portfolio
SP Strategic Partners Focused Growth Portfolio
JANUS ASPEN SERIES
Growth Portfolio -- Service Shares
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
performance of the mutual fund portfolios used by the variable investment
options that you choose. Performance information for the variable investment
options appears in the Statement of Additional Information (SAI). Past
performance is not a guarantee of future results.
If you choose the Contract Without Credit, two guaranteed fixed interest
rate options are also available:
- The one-year fixed rate option offers an interest rate that is guaranteed
by us for one year and will always be at least 3% per year.
- The dollar cost averaging fixed rate option offers an interest rate that is
guaranteed by us for a selected period during which we make periodic
transfers from this option to the variable investment options you select.
We guarantee that the interest rate for dollar cost averaging fixed rate
option will always be at least 3% per year.
SECTION 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.
SECTION 4
WHAT IS THE DEATH BENEFIT?
If the 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 greater of (i) the contract value, (ii) either the base death benefit or,
for a higher insurance charge, a potentially larger guaranteed minimum death
benefit. The base death benefit equals the total amount invested adjusted for
withdrawals. The guaranteed minimum death benefit is equal to a "protected
value" equal to the highest value of the contract on any contract anniversary,
which we call the "step-up value."
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SECTION 5
HOW CAN I PURCHASE A STRATEGIC PARTNERS ANNUITY ONE CONTRACT?
Under most circumstances, you can purchase this contract with a minimum initial
purchase payment of $10,000. Generally, you can make additional purchase
payments of $1,000 or more at any time during the accumulation phase of the
contract. Your representative can help you fill out the proper forms. The
Contract With Credit provides for the allocation of a credit with each purchase
payment.
SECTION 6
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY ONE
CONTRACT?
The contract has insurance features and investment features, both of which have
related cost and charges.
- Each year we may deduct a contract maintenance charge. Currently, if your
contract value is $50,000 or more, we do not deduct such a charge. If your
contract value is less than $50,000, we deduct a charge equal to $30 or, if
your contract value is less than $1,500, equal to 2% of your contract
value.
- For insurance and administrative costs, we also deduct a daily charge based
on the average daily value of all assets allocated to the variable
investment options, depending on the death benefit option that you choose.
The daily charge is equivalent to an annual charge of:
-- 1.40% if you do not choose the guaranteed minimum death benefit, or
-- 1.60% if you choose the guaranteed minimum death benefit option.
- The mutual funds in which the variable investment options invest also incur
fees and expenses. These daily charges currently range on an annual basis
from 0.39% to 1.30% of a fund's average daily net assets.
- If, after making a purchase payment, you withdraw money (or you begin the
income phase) less than:
-- nine years later, if you purchase the Contract With Credit, or
-- seven years later, if you purchase the Contract Without Credit,
then you may have to pay a withdrawal charge on all or part of the
withdrawal. This charge ranges from 1-7%.
For more information, including details about other possible charges under
the contract, see "Summary of Contract Expenses" on page 13 and "What Are The
Expenses Associated With The Strategic Partners Annuity One Contract?" on page
37.
SECTION 7
HOW CAN I ACCESS MY MONEY?
You may withdraw money at any time during the accumulation phase. If you do so,
however, you may be subject to income tax and, if you make a withdrawal prior
to age 59 1/2, an additional tax penalty as well. If you withdraw money less
than nine years (for the Contract With Credit) or seven years (for the Contract
Without Credit) after making a purchase payment, we may impose a withdrawal
charge. In addition, if you purchase a Contract With Credit, we may take back
any credit that has not vested that corresponds to the purchase payment(s) you
withdraw.
SECTION 8
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY
ONE CONTRACT?
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<PAGE> 16
Your earnings are generally not taxed until you withdraw them. If you take
money out during the accumulation phase, the tax laws treat the withdrawal as
first a withdrawal of earnings, which are taxed as income. If you are younger
than age 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 a return of your
original investment and therefore will not be taxable as income. Generally, all
amounts withdrawn from an Individual Retirement Annuity (IRA) contracts prior
to age 59 1/2 are taxable and subject to the 10% penalty.
SECTION 9
OTHER INFORMATION
This contract is issued by Pruco Life of New Jersey, an indirect subsidiary of
the Prudential Insurance Company of America, and sold by registered
representatives.
14
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SUMMARY OF CONTRACT EXPENSES
--------------------------------------------------------------------------------
THE PURPOSE OF THIS SUMMARY IS TO HELP YOU TO UNDERSTAND THE COSTS AND EXPENSES
YOU WILL PAY FOR STRATEGIC PARTNERS ANNUITY ONE. THIS SUMMARY INCLUDES THE 1999
EXPENSES OF THE MUTUAL FUNDS USED BY THE VARIABLE INVESTMENT OPTIONS (OR FOR
THOSE FUNDS THAT DID NOT BEGIN OPERATING UNTIL AFTER 1999, ESTIMATED EXPENSES).
The chart below summarizes maximum charges for Strategic Partners Annuity One.
For more detailed information, including additional information about current
and maximum charges, see "What Are The Expenses Associated With The Strategic
Partners Annuity One Contract?" on page 37. For more detailed expense
information about the mutual funds, please refer to the individual fund
prospectuses, which you will find attached at the back of this prospectus.
<TABLE>
<CAPTION>
WITHDRAWAL CHARGE (SEE NOTE 1 ON PAGE 14)
----------------------------------------------------------
NUMBER OF CONTRACT CONTRACT CONTRACT
ANNIVERSARIES SINCE WITH WITHOUT
PURCHASE PAYMENT CREDIT CREDIT
-------------------- ------------------- -------------
<S> <C> <C>
0 7% 7%
1 7% 6%
2 7% 5%
3 6% 4%
4 5% 3%
5 4% 2%
6 3% 1%
7 2% 0%
8 1% 0%
9 0% 0%
-- --
</TABLE>
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<PAGE> 18
<TABLE>
<CAPTION>
ALL
MAXIMUM TRANSFER FEE CONTRACTS
-------------------- ---------
<S> <C>
first 12 transfers per contract year $ 0
each transfer after the first 12 in a contract year
(see Note 2 below) $ 25
MAXIMUM ANNUAL CONTRACT FEE AND CONTRACT CHARGE UPON FULL
WITHDRAWAL (SEE NOTE 3 BELOW)
------------------------------- $ 60
INSURANCE AND ADMINISTRATIVE EXPENSES
-------------------------------------
AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE ALLOCATED
TO VARIABLE INVESTMENT OPTIONS
Base Death Benefit: 1.40%
Guaranteed Minimum Death Benefit Option: 1.60%
</TABLE>
NOTE 1: Each contract year, you may withdraw up to 10% of your net purchase
payments without paying a withdrawal charge. We will waive the withdrawal fee
if we pay a death benefit. See "Withdrawal Charge" on page 38.
NOTE 2: We will not charge you for transfers made in connection with Dollar
Cost Averaging and Auto-Rebalancing and do not count them toward the limit of
12 free transfers per year.
NOTE 3: As shown in the table above, we have the right to assess a fee of up to
$60 annually and at the time of full withdrawal. Currently, we do not assess
this fee if your contract value is at least $50,000. If your contract value is
at least $1,500 but less than $50,000, we currently assess a fee of $30. If
your contract value is less than $1,500, we currently assess a lower fee, equal
to 2% of your contract value. Although we could raise these fees up to the
maximum of $60, we have no current intention to do so.
NOTES FOR ANNUAL MUTUAL FUND EXPENSES
(APPEARING ON PAGE 15)
These are the historical fund expenses for the year ended December 31, 1999,
except as indicated. Fund expenses are not fixed or guaranteed by the Strategic
Partners Annuity One contract and will vary from year to year.
(1) THE PRUDENTIAL SERIES FUND:
Because this is the first year of operation for all "SP" Portfolios, other
expenses are estimated based on management's projection of non-advisory fee
expenses. Each "SP" Portfolio has expense reimbursements in effect, and the
table shows total expenses both with and without these expense reimbursements.
These expense reimbursements are voluntary and may be terminated at any time.
(2) Each Asset Allocation Portfolio of The Prudential Series Fund invests in a
combination of underlying portfolios of The Prudential Series Fund. The Total
Expenses and Total Expenses After Expense Reimbursement for each Asset
Allocation Portfolio are calculated as a blend of the advisory fees of the
underlying portfolios, plus a 0.05% advisory fee payable to the investment
adviser, Prudential Investments Fund Management LLC.
(3) JANUS ASPEN SERIES GROWTH PORTFOLIO -- SERVICE SHARES:
Expenses are based on the estimated expenses that the new Service Shares Class
of the Growth Portfolio expects to incur in its first fiscal year. Janus Aspen
Series maintains a distribution plan, or "12b-1 Plan", for this class of shares
under which an annual fee of 0.25% of the class's average daily net assets is
paid to the class distributor. This fee is discussed in the Janus Aspen Series
prospectus.
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<PAGE> 19
ANNUAL MUTUAL FUND EXPENSES (AFTER REIMBURSEMENT, IF ANY):
AS A PERCENTAGE OF EACH FUND'S AVERAGE DAILY NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL EXPENSES AFTER
INVESTMENT OTHER EXPENSE
ADVISORY FEES EXPENSES TOTAL EXPENSES REIMBURSEMENT*
THE PRUDENTIAL SERIES FUND(1)
---------------------------------------------
<S> <C> <C> <C> <C>
Prudential Global Portfolio 0.75% 0.09% 0.84% 0.84%
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
Prudential Money Market Portfolio 0.40% 0.02% 0.42% 0.42%
Prudential Stock Index Portfolio 0.35% 0.04% 0.39% 0.39%
SP Aggressive Growth Asset Allocation Portfolio(2) 0.84% 0.64% 1.48% 1.04%
SP AIM Aggressive Growth Portfolio 0.95% 0.50% 1.45% 1.07%
SP AIM Growth and Income Portfolio 0.85% 0.38% 1.23% 1.00%
SP Alliance Large Cap Growth Portfolio 0.90% 0.30% 1.20% 1.10%
SP Alliance Technology Portfolio 1.15% 0.47% 1.62% 1.30%
SP Balanced Asset Allocation Portfolio(2) 0.75% 0.51% 1.26% 0.92%
SP Conservative Asset Allocation Portfolio(2) 0.71% 0.60% 1.31% 0.87%
SP Davis Value Portfolio 0.75% 0.31% 1.06% 0.83%
SP Deutsche International Equity Portfolio 0.90% 0.77% 1.67% 1.10%
SP Growth Asset Allocation Portfolio(2) 0.80% 0.51% 1.31% 0.97%
SP INVESCO Small Company Growth Portfolio 0.95% 0.59% 1.54% 1.15%
SP Jennison International Growth Portfolio 0.85% 0.99% 1.84% 1.24%
SP Large Cap Value Portfolio 0.80% 0.34% 1.14% 0.90%
SP MFS Capital Opportunities Portfolio 0.75% 0.39% 1.14% 1.00%
SP MFS Mid Cap Growth Portfolio 0.80% 0.52% 1.32% 1.00%
SP PIMCO High Yield 0.60% 0.77% 1.37% 0.82%
SP PIMCO Total Return Portfolio 0.60% 0.57% 1.17% 0.76%
SP Prudential U.S. Emerging Growth Portfolio 0.60% 0.52% 1.12% 0.90%
SP Small/Mid Cap Value Portfolio 0.90% 0.68% 1.58% 1.05%
SP Strategic Partners Focused Growth Portfolio 0.90% 0.42% 1.32% 1.01%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY 12b-1 OTHER
FEES FEE(2) EXPENSES TOTAL EXPENSES
JANUS ASPEN SERIES(3)
-------------------------------------
<S> <C> <C> <C> <C>
Growth Portfolio--Service Shares 0.65% 0.25% 0.02% 0.92%
</TABLE>
* Reflects fee waivers and reimbursement of expenses, if any. See notes on
previous page.
The "Expense Examples" on the following pages are calculated using the figures
in the "Total Actual Expenses After Expense Reimbursement" column in the above
table.
17
<PAGE> 20
This page intentionally left blank
18
<PAGE> 21
EXPENSE EXAMPLES
--------------------------------------------------------------------------------
THESE EXAMPLES WILL HELP YOU COMPARE THE FEES AND EXPENSES OF THE DIFFERENT
VARIABLE INVESTMENT OPTIONS OFFERED BY STRATEGIC PARTNERS ANNUITY ONE. YOU CAN
ALSO USE THE EXAMPLES TO COMPARE THE COST OF STRATEGIC PARTNERS ANNUITY ONE
WITH OTHER VARIABLE ANNUITY CONTRACTS.
Example 1a: Contract Without Credit, Base Death Benefit, and You Withdraw All
Your Assets
This example assumes that:
- You invest $10,000 in the Contract Without Credit;
- You do not choose the Guaranteed Minimum Death Benefit Option;
- You allocate all of your assets to only one of the variable investment
options;
- The investment has a 5% return each year;
- The mutual fund's operating expenses remain the same each year; and
- You withdraw all your assets the end of the indicated period.
Example 1b: Contract Without Credit, Base Death Benefit, and You Do Not
Withdraw Your Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
Example 2a: Contract Without Credit, Guaranteed Minimum Death Benefit Option,
and You Withdraw All Your Assets
This example assumes that:
- You invest $10,000 in the Contract Without Credit;
- You choose the Guaranteed Minimum Death Benefit Option;
- You allocate all of your assets to only one of the variable investment
options;
- The investment has a 5% return each year;
- The mutual fund's operating expenses remain the same each year; and
- You withdraw all your assets the end of the indicated period.
19
<PAGE> 22
Example 2b: Contract Without Credit, Guaranteed Minimum Death Benefit Option,
and You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you do not withdraw any of your assets at the end of the indicated
period.
Example 3a: Contract With Credit, Base Death Benefit, and You Withdraw All Your
Assets
This example makes exactly the same assumptions as Example 1a except that it
assumes that you invest in the Contract With Credit.
Example 3b: Contract With Credit, Base Death, and You Do Not Withdraw Your
Assets
This example makes exactly the same assumptions as Example 1b except that it
assumes that you invest in the Contract With Credit
Example 4a: Contract With Credit, Guaranteed Minimum Death Benefit Option, and
You Withdraw All Your Assets
This example makes exactly the same assumptions as Example 2a except that it
assumes that you invest in the Contract With Credit.
Example 4b: Contract With Credit, Guaranteed Minimum Death Benefit Option, and
You Do Not Withdraw Your Assets
This example makes exactly the same assumptions as Example 2b except that it
assumes that you invest in the Contract With Credit.
Your actual costs may be higher or lower, but examples of what your costs would
be based on these assumptions appear on the following page.
NOTES FOR EXPENSE EXAMPLES:
THESE EXAMPLES DO NOT SHOW PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
HIGHER OR LOWER.
These examples assume that the current expense reimbursements remain in effect
during the life of the contract. If the expense reimbursements terminated,
expenses could increase.
The charges shown in the 10 year column are the same for Example 1a and Example
1b, the same for Example 2a and 2b, the same for Example 3a and 3b, and the
same for Example 4a and 4b. This is because if 10 years have elapsed since your
last purchase payment, we would no longer deduct withdrawal charges when you
make a withdrawal or begin the income phase of your contract.
If your contract value is less than $50,000 on your contract anniversary (or
upon a full withdrawal), we deduct $30 or, if your contract value is less than
$1,500, a lower amount equal to 2% of your contract value. The examples use an
average annual contract fee, which we calculated based on our estimate of the
total contract fees we expect to collect in the initial year of this contract.
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 among the investment options.
20
<PAGE> 23
CONTRACT WITHOUT CREDIT:
BASE DEATH BENEFIT
<TABLE>
<CAPTION>
EXAMPLE 1a: EXAMPLE 1b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
THE PRUDENTIAL SERIES FUND
--------------------------
Prudential Global Portfolio $ 862 $ 1165 $ 1495 $ 2626 $ 232 $ 715 $ 1225 $ 2626
Prudential Jennison Portfolio $ 841 $ 1102 $ 1389 $ 2410 $ 211 $ 652 $ 1119 $ 2410
Prudential Money Market Portfolio $ 820 $ 1038 $ 1281 $ 2190 $ 190 $ 588 $ 1011 $ 2190
Prudential Stock Index Portfolio $ 817 $ 1029 $ 1265 $ 2159 $ 187 $ 579 $ 995 $ 2159
SP Aggressive Growth Asset Allocation Portfolio $ 882 $ 1226 $ 1596 $ 2826 $ 252 $ 776 $ 1326 $ 2826
SP AIM Aggressive Growth Portfolio $ 885 $ 1235 $ 1610 $ 2856 $ 255 $ 785 $ 1340 $ 2856
SP AIM Growth and Income Portfolio $ 878 $ 1214 $ 1576 $ 2786 $ 248 $ 764 $ 1306 $ 2786
SP Alliance Large Cap Growth Portfolio $ 888 $ 1243 $ 1625 $ 2885 $ 258 $ 793 $ 1355 $ 2885
SP Alliance Technology Portfolio $ 908 $ 1303 $ 1724 $ 3080 $ 278 $ 853 $ 1454 $ 3080
SP Balanced Asset Allocation Portfolio $ 870 $ 1189 $ 1535 $ 2706 $ 240 $ 739 $ 1265 $ 2706
SP Conservative Asset Allocation Portfolio $ 870 $ 1190 $ 1537 $ 2713 $ 240 $ 740 $ 1267 $ 2713
SP Davis Value Portfolio $ 861 $ 1162 $ 1490 $ 2615 $ 231 $ 712 $ 1220 $ 2615
SP Deutsche International Equity Portfolio $ 888 $ 1243 $ 1625 $ 2885 $ 258 $ 793 $ 1355 $ 2885
SP Growth Asset Allocation Portfolio $ 875 $ 1205 $ 1561 $ 2756 $ 245 $ 755 $ 1291 $ 2756
SP INVESCO Small Company Growth Portfolio $ 893 $ 1258 $ 1650 $ 2934 $ 263 $ 808 $ 1380 $ 2934
SP Jennison International Growth Portfolio $ 902 $ 1285 $ 1695 $ 3022 $ 272 $ 835 $ 1425 $ 3022
SP Large Cap Value Portfolio $ 868 $ 1183 $ 1525 $ 2686 $ 238 $ 733 $ 1255 $ 2686
SP MFS Capital Opportunities Portfolio $ 878 $ 1214 $ 1576 $ 2786 $ 248 $ 764 $ 1306 $ 2786
SP MFS Mid Cap Growth Portfolio $ 878 $ 1214 $ 1576 $ 2786 $ 248 $ 764 $ 1306 $ 2786
SP PIMCO High Yield Portfolio $ 860 $ 1159 $ 1485 $ 2605 $ 230 $ 709 $ 1215 $ 2605
SP PIMCO Total Return Portfolio $ 854 $ 1141 $ 1455 $ 2544 $ 224 $ 691 $ 1185 $ 2544
SP Prudential U.S. Emerging Growth Portfolio $ 868 $ 1183 $ 1525 $ 2686 $ 238 $ 733 $ 1255 $ 2686
SP Small/Mid Cap Value Portfolio $ 883 $ 1229 $ 1601 $ 2836 $ 253 $ 779 $ 1331 $ 2836
SP Strategic Partners Focused Growth Portfolio $ 879 $ 1217 $ 1581 $ 2796 $ 249 $ 767 $ 1311 $ 2796
JANUS ASPEN SERIES ------
------------------
Growth Portfolio--Service Shares $ 870 $ 1189 $ 1535 $ 2706 $ 240 $ 739 $ 1265 $ 2706
</TABLE>
These examples do not show past or future expenses. Actual expenses may be
higher or lower.
21
<PAGE> 24
CONTRACT WITHOUT CREDIT: GUARANTEED MINIMUM
DEATH BENEFIT OPTION
<TABLE>
<CAPTION>
EXAMPLE 2a: EXAMPLE 2b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
---------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE PRUDENTIAL SERIES FUND
--------------------------
Prudential Global Portfolio $882 $1226 $1596 $2826 $252 $776 $1326 $2826
Prudential Jennison Portfolio $861 $1162 $1490 $2615 $231 $712 $1220 $2615
Prudential Money Market Portfolio $840 $1099 $1384 $2400 $210 $649 $1114 $2400
Prudential Stock Index Portfolio $837 $1090 $1368 $2369 $207 $640 $1098 $2369
SP Aggressive Growth Asset Allocation Portfolio $902 $1285 $1695 $3022 $272 $835 $1425 $3022
SP AIM Aggressive Growth Portfolio $905 $1294 $1710 $3051 $275 $844 $1440 $3051
SP AIM Growth and Income Portfolio $898 $1273 $1675 $2983 $268 $823 $1405 $2983
SP Alliance Large Cap Growth Portfolio $908 $1303 $1724 $3080 $278 $853 $1454 $3080
SP Alliance Technology Portfolio $928 $1363 $1822 $3271 $298 $913 $1552 $3271
SP Balanced Asset Allocation Portfolio $890 $1249 $1635 $2905 $260 $799 $1365 $2905
SP Conservative Asset Allocation Portfolio $890 $1250 $1637 $2912 $260 $800 $1367 $2912
SP Davis Value Portfolio $881 $1223 $1591 $2816 $251 $773 $1321 $2816
SP Deutsche International Equity Portfolio $908 $1303 $1724 $3080 $278 $853 $1454 $3080
SP Growth Asset Allocation Portfolio $895 $1264 $1660 $2954 $265 $814 $1390 $2954
SP INVESCO Small Company Growth Portfolio $913 $1318 $1749 $3128 $283 $868 $1479 $3128
SP Jennison International Growth Portfolio $922 $1345 $1793 $3214 $292 $895 $1523 $3214
SP Large Cap Value Portfolio $888 $1243 $1625 $2885 $258 $793 $1355 $2885
SP MFS Capital Opportunities Portfolio $898 $1273 $1675 $2983 $268 $823 $1405 $2983
SP MFS Mid Cap Growth Portfolio $898 $1273 $1675 $2983 $268 $823 $1405 $2983
SP PIMCO High Yield Portfolio $880 $1220 $1586 $2806 $250 $770 $1316 $2806
SP PIMCO Total Return Portfolio $874 $1201 $1724 $3080 $244 $751 $1285 $2746
SP Prudential U.S. Emerging Growth Portfolio $888 $1243 $1625 $2885 $258 $793 $1355 $2885
SP Small/Mid Cap Value Portfolio $903 $1288 $1700 $3032 $273 $838 $1430 $3032
SP Strategic Partners Focused Growth Portfolio $899 $1276 $1680 $2993 $269 $826 $1410 $2993
JANUS ASPEN SERIES
------------------
Growth Portfolio--Service Shares $890 $1249 $1635 $2905 $260 $799 $1365 $2905
</TABLE>
These examples do not show past or future expenses. Actual expenses may be
higher or lower.
22
<PAGE> 25
CONTRACT WITH CREDIT:
BASE DEATH BENEFIT
<TABLE>
<CAPTION>
EXAMPLE 3a: EXAMPLE 3b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
-----------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE PRUDENTIAL SERIES FUND
--------------------------
Prudential Global Portfolio $ 1271 $ 1700 $ 1972 $ 2731 $ 241 $ 744 $ 1274 $ 2731
Prudential Jennison Portfolio $ 1249 $ 1633 $ 1861 $ 2507 $ 219 $ 678 $ 1163 $ 2507
Prudential Money Market Portfolio $ 1228 $ 1567 $ 1749 $ 2278 $ 198 $ 611 $ 1051 $ 2278
Prudential Stock Index Portfolio $ 1224 $ 1557 $ 1733 $ 2245 $ 194 $ 602 $ 1035 $ 2245
SP Aggressive Growth Asset Allocation
Portfolio $ 1292 $ 1762 $ 2077 $ 2939 $ 262 $ 807 $ 1379 $ 2939
SP AIM Aggressive Growth Portfolio $ 1295 $ 1771 $ 2092 $ 2970 $ 265 $ 816 $ 1394 $ 2970
SP AIM Growth and Income Portfolio $ 1288 $ 1750 $ 2056 $ 2898 $ 258 $ 794 $ 1358 $ 2898
SP Alliance Large Cap Growth Portfolio $ 1298 $ 1781 $ 2108 $ 3001 $ 268 $ 825 $ 1410 $ 3001
SP Alliance Technology Portfolio $ 1319 $ 1843 $ 2211 $ 3203 $ 289 $ 887 $ 1513 $ 3203
SP Balanced Asset Allocation Portfolio $ 1280 $ 1725 $ 2014 $ 2814 $ 250 $ 769 $ 1316 $ 2814
SP Conservative Asset Allocation Portfolio $ 1280 $ 1725 $ 2016 $ 2822 $ 250 $ 770 $ 1318 $ 2822
SP Davis Value Portfolio $ 1270 $ 1696 $ 1967 $ 2720 $ 240 $ 741 $ 1269 $ 2720
SP Deutsche International Equity Portfolio $ 1298 $ 1781 $ 2108 $ 3001 $ 268 $ 825 $ 1410 $ 3001
SP Growth Asset Allocation Portfolio $ 1285 $ 1740 $ 2040 $ 2867 $ 255 $ 785 $ 1342 $ 2867
SP INVESCO Small Company Growth Portfolio $ 1304 $ 1796 $ 2133 $ 3052 $ 274 $ 841 $ 1435 $ 3052
SP Jennison International Growth Portfolio $ 1313 $ 1824 $ 2180 $ 3143 $ 283 $ 869 $ 1482 $ 3143
SP Large Cap Value Portfolio $ 1278 $ 1718 $ 2004 $ 2794 $ 248 $ 763 $ 1306 $ 2794
SP MFS Capital Opportunities Portfolio $ 1288 $ 1750 $ 2056 $ 2898 $ 258 $ 794 $ 1358 $ 2898
SP MFS Mid Cap Growth Portfolio $ 1288 $ 1750 $ 2056 $ 2898 $ 258 $ 794 $ 1358 $ 2898
SP PIMCO High Yield Portfolio $ 1269 $ 1693 $ 1962 $ 2709 $ 239 $ 738 $ 1264 $ 2709
SP PIMCO Total Return Portfolio $ 1263 $ 1674 $ 1930 $ 2646 $ 233 $ 719 $ 1232 $ 2646
SP Prudential U.S. Emerging Growth
Portfolio $ 1278 $ 1718 $ 2004 $ 2794 $ 248 $ 763 $ 1306 $ 2794
SP Small/Mid Cap Value Portfolio $ 1293 $ 1765 $ 2082 $ 2949 $ 263 $ 810 $ 1384 $ 2949
SP Strategic Partners Focused Growth
Portfolio $ 1289 $ 1753 $ 2061 $ 2908 $ 259 $ 797 $ 1363 $ 2908
JANUS ASPEN SERIES
------------------
Growth Portfolio--Service Shares $ 1280 $ 1725 $ 2014 $ 2814 $ 250 $ 769 $ 1316 $ 2814
</TABLE>
These examples do not show past or future expenses. Actual expenses may be
higher or lower.
23
<PAGE> 26
CONTRACT WITH CREDIT: GUARANTEED MINIMUM
DEATH BENEFIT OPTION
<TABLE>
<CAPTION>
EXAMPLE 4a: EXAMPLE 4b:
IF YOU WITHDRAW YOUR ASSETS IF YOU DO NOT WITHDRAW YOUR ASSETS
--------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THE PRUDENTIAL SERIES FUND
--------------------------
Prudential Global Portfolio $1292 $1762 $2077 $2979 $262 $807 $1379 $2939
Prudential Jennison Portfolio $1270 $1696 $1967 $2760 $240 $741 $1269 $2720
Prudential Money Market Portfolio $1248 $1630 $1856 $2536 $218 $675 $1158 $2496
Prudential Stock Index Portfolio $1245 $1621 $1840 $2504 $215 $665 $1142 $2464
SP Aggressive Growth Asset Allocation $1313 $1824 $2180 $3183 $283 $869 $1482 $3143
Portfolio
SP AIM Aggressive Growth Portfolio $1316 $1834 $2195 $3213 $286 $878 $1497 $3173
SP AIM Growth and Income Portfolio $1309 $1812 $2159 $3143 $279 $856 $1461 $3130
SP Alliance Large Cap Growth Portfolio $1319 $1843 $2211 $3243 $289 $887 $1513 $3203
SP Alliance Technology Portfolio $1340 $1905 $2313 $3442 $310 $949 $1615 $3402
SP Balanced Asset Allocation Portfolio $1301 $1787 $2118 $3061 $271 $831 $1420 $3021
SP Conservative Asset Allocation Portfolio $1301 $1788 $2120 $3069 $271 $832 $1422 $3029
SP Davis Value Portfolio $1291 $1759 $2071 $2969 $261 $803 $1373 $2929
SP Deutsche International Equity Portfolio $1319 $1843 $2211 $3243 $289 $887 $1513 $3203
SP Growth Asset Allocation Portfolio $1306 $1803 $2144 $3112 $283 $869 $1482 $3143
SP INVESCO Small Company Growth Portfolio $1324 $1858 $2236 $3293 $294 $903 $1538 $3253
SP Jennison International Growth Portfolio $1334 $1886 $2282 $3383 $304 $931 $1584 $3343
SP Large Cap Value Portfolio $1298 $1781 $2108 $3041 $268 $825 $1410 $3001
SP MFS Capital Opportunities Portfolio $1309 $1812 $2159 $3143 $279 $856 $1461 $3103
SP MFS Mid Cap Growth Portfolio $1309 $1812 $2159 $3143 $279 $856 $1461 $3103
SP PIMCO High Yield Portfolio $1290 $1756 $2066 $2958 $260 $800 $1368 $2918
SP PIMCO Total Return Portfolio $1284 $1737 $2035 $2896 $254 $782 $1337 $2856
SP Prudential U.S. Emerging Growth $1298 $1781 $2108 $3041 $268 $825 $1410 $3001
Portfolio
SP Small/Mid Cap Value Portfolio $1314 $1827 $2185 $3193 $284 $872 $1487 $3153
SP Strategic Partners Focused Growth $1310 $1815 $2164 $3153 $280 $859 $1466 $3113
Portfolio
JANUS ASPEN SERIES
------------------
Growth Portfolio--Service Shares $1301 $1787 $2118 $3061 $271 $831 $1420 $3021
</TABLE>
These examples do not show past or future expenses. Actual expenses may be
higher or lower.
24
<PAGE> 27
PART II SECTIONS 1--9
--------------------------------------------------------------------------------
STRATEGIC PARTNERS ANNUITY ONE PROSPECTUS
25
<PAGE> 28
1:
WHAT IS THE STRATEGIC PARTNERS ANNUITY ONE
VARIABLE ANNUITY?
--------------------------------------------------------------------------------
THE STRATEGIC PARTNERS ANNUITY ONE VARIABLE ANNUITY IS A CONTRACT BETWEEN YOU,
THE OWNER, AND US, PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY (PRUCO LIFE OF
NEW JERSEY, WE OR US).
Under our contract, in exchange for your payment to us, we promise to pay you a
guaranteed income stream that can begin any time on or after the first 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. (If you hold the annuity contract
in a tax-favored plan such as an IRA, that plan generally provides tax deferral
even without investing in an annuity contact.)
There are two versions of Strategic Partners Annuity One.
Contract With Credit. One version of the contract:
- provides for a bonus credit that we add to each purchase payment that you
make and that vests over time,
- has higher withdrawal charges and a longer withdrawal charge period, and
- has no fixed rate investment options available.
We call this version the "Contract With Credit."
Contract Without Credit. The other version of the contract:
- does not provide a credit,
- has lower withdrawal charges and a shorter withdrawal charge period, and
- offers two fixed rate investment options: a one-year fixed rate option and
a dollar cost averaging fixed rate option.
We call this version the "Contract Without Credit."
Unless we state otherwise, when we use the word contract, it applies to
both versions.
You may prefer the Contract With Credit if:
26
<PAGE> 29
- You anticipate that you will not need to withdraw purchase payments any
earlier than four to seven years after making them, AND
- You do not wish to allocate purchase payments to the fixed interest rate
options.
If you wish to have the option of allocating part of your contract value to
the fixed interest rate options, you may prefer the Contract Without Credit.
Because of the higher withdrawal charges, if you choose the Contract With
Credit and you withdraw a purchase payment earlier than four to seven contract
anniversaries after making that purchase payment, depending upon the
performance of the investment options you choose, you may be worse off than if
you had chosen the Contract Without Credit. We do not recommend purchase of
either version of Strategic Partners Annuity One if you anticipate having to
withdraw a significant amount of your purchase payments within a few years of
making those purchase payments.
Strategic Partners Annuity One is a variable annuity contract. This means
that during the accumulation phase, you can allocate your assets among 25
variable investment options and, if you choose the Contract Without Credit, two
guaranteed fixed interest rate options as well. If you select 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 funds associated with those variable investment options. 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 mentioned above, if you choose the Contract Without Credit, two
guaranteed fixed interest rate options are available:
- The one-year fixed rate option offers an interest rate that is guaranteed
by us for one year and will always be at least 3% per year.
- The dollar cost averaging fixed rate option offers an interest rate that is
guaranteed by us for a selected period during which periodic transfers are
made to selected variable investment options.
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 whose life is used to determine how much and
how long the annuity payments will continue once the annuity phase begins. On
and after the annuity date, the annuitant is the owner and may not be changed.
The beneficiary is the person(s) or entity you designate to receive any
death benefit. 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 Strategic Partners Annuity One, you may
cancel your contract within 10 days after receiving it. 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 the amount your contract is
worth as of the day your request is mailed to us, plus any fees or charges we
have deducted. This amount may be more or less than your original payment. If
you have purchased the Contract With Credit, we will deduct any credit we had
added to your contract value.
27
<PAGE> 30
2:
WHAT INVESTMENT OPTIONS
CAN I CHOOSE?
--------------------------------------------------------------------------------
THE CONTRACT GIVES YOU THE CHOICE OF ALLOCATING YOUR PURCHASE PAYMENTS TO ANY
ONE OR MORE OF 25 VARIABLE INVESTMENT OPTIONS.
The 25 variable investment options invest in mutual funds managed by leading
investment advisers. Separate prospectuses for these funds are attached to this
prospectus. You should read a mutual fund's 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 separate investment objective.
THE PRUDENTIAL SERIES FUND
- Prudential Global Portfolio
- Prudential Jennison Portfolio (domestic equity)
- Prudential Money Market Portfolio
- Prudential Stock Index Portfolio
- SP Aggressive Growth Asset Allocation Portfolio
- SP AIM Aggressive Growth Portfolio
- SP AIM Growth and Income Portfolio
- SP Alliance Large Cap Growth Portfolio
- SP Alliance Technology Portfolio
- SP Balanced Asset Allocation Portfolio
- SP Conservative Asset Allocation Portfolio
- SP Davis Value Portfolio
28
<PAGE> 31
- SP Deutsche International Equity Portfolio
- SP Growth Asset Allocation Portfolio
- SP INVESCO Small Company Growth Portfolio
- SP Jennison International Growth Portfolio
- SP Large Cap Value Portfolio
- SP MFS Capital Opportunities Portfolio
- SP MFS Mid Cap Growth Portfolio
- SP PIMCO High Yield Portfolio
- SP PIMCO Total Return Portfolio
- SP Prudential U.S. Emerging Growth Portfolio
- SP Small/Mid Cap Value Portfolio
- SP Strategic Partners Focused Growth Portfolio
The Prudential Global Portfolio, Prudential Jennison Portfolio, Prudential
Money Market Portfolio, and Prudential Stock Index Portfolio are managed by The
Prudential Insurance Company of America ("Prudential"). The remaining
portfolios of the Prudential Series Fund are managed by Prudential Investments
Fund Management LLC ("PIFM"), a subsidiary of Prudential. In addition, the
portfolios listed below also have subadvisers, which are listed below and which
have day-to-day responsibility for managing the portfolio, subject to the
oversight of Prudential or PIFM.
Prudential Money Market Portfolio and Prudential Stock Index Portfolio:
Prudential Investment Corporation
Prudential Jennison Portfolio, SP Jennison International Growth Portfolio, and
SP Prudential U.S. Focused Growth Portfolio: Jennison Associates LLC
SP Strategic Partners Focused Growth Portfolio: Jennison Associates LLC. and
Alliance Capital Management L.P.
SP AIM Aggressive Growth Portfolio and SP AIM Growth and Income Portfolio: AIM
Advisors, Inc.
SP Alliance Large Cap Growth Portfolio and SP Alliance Technology Portfolio:
Alliance Capital Management L.P.
SP Davis Value Portfolio: Davis Select Advisers, LP
SP Deutsche International Equity Portfolio: Bankers Trust Company, part of
Deutsche Asset Management and a wholly-owned subsidiary of Deutsche
International Bank A.G.
SP INVESCO Small Company Growth Portfolio: INVESCO
SP Large Cap Value Portfolio and SP Small/Mid Cap Value Portfolio: Fidelity
Management and Research Company
SP MFS Capital Opportunities Portfolio and SP MFS Mid Cap Growth Portfolio:
Massachusetts Financial Services Company
SP PIMCO High Yield Portfolio and PIMCO Total Return Portfolio: Pacific
Investment Management Company
29
<PAGE> 32
JANUS ASPEN SERIES
- Growth Portfolio -- Service Shares
Janus Capital Corporation serves as investment adviser to the Growth
Portfolio--Service Shares of Janus Aspen Series.
FIXED INTEREST RATE OPTIONS
If you choose the Contract Without Credit, we offer two fixed interest rate
options:
- a one-year fixed rate option, and
- a dollar cost averaging fixed rate option ("DCA Fixed Rate Option").
We set a one year guaranteed annual interest rate that is always available
for the one-year fixed rate option. For the DCA Fixed Rate Option, the interest
rate is guaranteed for the applicable period of time for which transfers are
made. Neither fixed interest rate option is available if you choose the
Contract With Credit.
When you select one of these options, your payment will earn interest at
the established rate for the applicable interest rate period. A new interest
rate period is established every time you allocate or transfer money into a
fixed interest rate option. (You may not transfer amounts from other investment
options into the DCA Fixed Rate Option.) You may have money allocated in more
than one interest rate period at the same time. This could result in your money
earning interest at different rates and each interest rate period maturing at a
different time. While these interest rates may change from time to time, the
minimum rate will never be less than 3%.
DCA Fixed Rate Option With the Contract Without Credit, you may allocate
all or part of any purchase payment to the DCA Fixed Rate Option. Under this
option, you automatically transfer amounts over a stated period (currently, six
or twelve months) from the DCA Fixed Rate Option to the variable investment
options you select. We will invest the assets you allocate to the DCA Fixed
Rate Option in our general account until they are transferred. You may not
transfer from other investment options to the DCA Fixed Rate Option.
If you choose to allocate all or part of a purchase payment to the DCA
Fixed Rate Option, the minimum amount of the purchase payment you may allocate
is $5,000. Purchase payments of less than $5,000 may not be allocated to the
DCA Fixed Rate Option. The first periodic transfer will occur on the date you
allocate your purchase payment to the DCA Fixed Rate Option. Subsequent
transfers will occur on the monthly anniversary of the first transfer.
Currently, you may choose to have the purchase payment allocated to the DCA
Fixed Rate Option transfer to the selected variable investment options in
either six or twelve monthly installments, and you may not change that number
of monthly installments after you have chosen the DCA Fixed Rate Option. You
may allocate to both the six-month and twelve-month options, but the minimum
amount of a purchase payment that may be allocated to one or the other is
$5,000. (In the future, we may make available other numbers of transfers and
other transfer schedules--for example, quarterly as well as monthly.) If you
choose a six-payment transfer schedule, each transfer generally will equal
1/6th of the amount you allocated to the DCA Fixed Rate Option, and if you
choose a twelve-payment transfer schedule, each transfer generally will equal
1/12th of the amount you allocated to the DCA Fixed Rate Option. In either
case, the final transfer amount generally will also include the credited
interest. You may change at any time the variable investment options into which
the DCA Fixed Rate Option assets are transferred. Transfers from the DCA Fixed
Rate Option do not count toward the maximum number of free transfers allowed
under the contract.
If you make a withdrawal or have a fee assessed from your contract, and all
or part of that withdrawal or fee comes out of the DCA Fixed Rate Option, we
will recalculate the periodic transfer amount to reflect the change. This
recalculation may include some or all of the interest credited to the date of
the next scheduled transfer. If a withdrawal or fee assessment reduces the
monthly transfer amount below $100, we will transfer the remaining balance in
the DCA Fixed Rate Option on the next scheduled transfer date.
By investing amounts on a regular basis instead of investing the total
amount at one time, the DCA Fixed Rate Option may decrease the effect of market
fluctuation on the investment of your purchase payment. Of course, dollar cost
averaging cannot ensure a profit or protect against loss in a declining market.
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<PAGE> 33
TRANSFERS AMONG OPTIONS
You can transfer money among the variable investment options and, if you have
chosen the Contract Without Credit, the fixed interest rate options as well.
You may make your transfer request by telephone or in writing to the Prudential
Annuity Service Center. You may make up to two telephone transfer requests per
month. You must make any additional transfer requests during that month 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 reasonably believe to be genuine. Your
transfer request will take effect at the end of the business day on which we
receive it. Our business day generally closes at 4:00 p.m. Eastern time, and
requests received after that time will take effect at the end of the next
business day.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST-RATE OPTION, OTHER THAN THE
DCA OPTION, ONLY DURING THE 30-DAY PERIOD FOLLOWING THE END OF THE ONE YEAR
INTEREST RATE PERIOD. TRANSFERS FROM THE DCA OPTION ARE MADE ON A PERIODIC
BASIS FOR THE PERIOD THAT YOU SELECT.
During the contract accumulation phase, you can make up to 12 transfers
each contract year without charge. We will charge you $25 for each transfer
after the twelfth in a contract year. (Dollar Cost Averaging and
Auto-Rebalancing transfers are always free, and do not count toward the 12 free
transfers per year.)
OTHER AVAILABLE FEATURES
DOLLAR COST AVERAGING
The dollar cost averaging (DCA) feature (which is distinct from the DCA Fixed
Rate Option) allows you to systematically transfer either a fixed dollar amount
or a percentage out of any variable investment option and into one or more
other variable investment options. You can have these automatic transfers occur
monthly, quarterly, semiannually or annually. By investing amounts on a regular
basis instead of investing the total amount at one time, dollar cost averaging
may decrease the effect of market fluctuation on the investment of your
purchase payment. Of course, dollar cost averaging cannot ensure a profit or
protect against loss in a declining market.
Each dollar cost averaging transfer must be at least $100. Transfers will
be made automatically on the schedule you choose until the entire amount you
chose to have transferred has been transferred or until you tell us to
discontinue the transfers. If the remaining amount to be transferred drops
below $100, the entire remaining balance will be transferred on the next
transfer date. You can allocate additional amounts to be transferred at any
time.
Your transfers will occur 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 dollar cost averaging transfers you make do not count toward the 12
free transfers you are allowed each contract year. The dollar cost averaging
feature is available only during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having advice when deciding how to allocate your
purchase payments among the investment options. 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. We
will prepare your asset allocation based on your answers to the questionnaire.
We will not charge you for this service and you are not obligated to
participate or to invest according to program recommendations.
AUTO-REBALANCING
Once you have allocated your money 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
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<PAGE> 34
you desire. You can direct us to automatically rebalance your assets to return
to your original allocation or to change allocations by selecting the
Auto-Rebalancing feature. If you also participate in the DCA feature, then the
variable investment option from which you make the DCA transfers will not be
rebalanced.
You may choose to have your rebalancing occur monthly, quarterly,
semiannually, or annually. The rebalancing will occur 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 that occur as a result of the Auto-Rebalancing feature do not
count toward the 12 free transfers you are allowed per year. The
auto-rebalancing 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 currently vote the shares of the mutual funds
according to voting instructions we receive from contract owners. When a vote
is required, we will mail you a form that you can complete and return to us to
tell us how you wish us to vote. When we receive those instructions, we will
vote all of the shares we own on your behalf in accordance with those
instructions. We will vote fund shares for which we do not receive
instructions, and any other shares that we own, in the same proportion as
shares for which we do receive instructions from contract owners. We may change
the way your voting instructions are calculated if federal law requires or
permits it.
SUBSTITUTION
We may substitute one or more of the mutual funds used by the variable
investment options. We would not do this without the approval of the Securities
and Exchange Commission and applicable state insurance departments. We would
give you specific notice in advance of any substitution we intended to make. We
may also stop allowing investments in existing funds.
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3:
WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE
INCOME PHASE? (ANNUITIZATION)
--------------------------------------------------------------------------------
The annuitant can begin receiving annuity payments any time after the first
contract anniversary. 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. We call these plans "annuity options" or "settlement options."
During the income phase, all of the annuity options under this contract are
fixed annuity options. This means that you no longer invest in the variable
investment options--that is, in the underlying mutual funds--on or after the
annuity date. If you have not selected another annuity option by the annuity
date, you will automatically select the Life Income Annuity Option (Option 2,
described below) unless prohibited by applicable law. GENERALLY, ONCE THE
ANNUITY PAYMENTS BEGIN, YOU CANNOT CHANGE THE ANNUITY OPTION.
OPTION 1
ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for a period you choose, from
five years to 25 years. We will make these payments monthly, quarterly,
semiannually, or annually, as you choose, for the fixed period. If the
annuitant dies during the income phase, we will continue payments to the
beneficiary for the remainder of the fixed period or, if the beneficiary so
chooses, we will make a single lump-sum payment. We calculate the amount of the
lump sum payment as present value of the unpaid future payments based upon the
interest rate used to compute the actual payments. That interest rate 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 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 us to continue to pay the
remaining monthly annuity payments. We calculate the present value of the
remaining annuity payments using the interest rate used to compute the amount
of the original 120 payments. That interest rate will always be at least 3% a
year. If you have not selected an annuity option by the annuity date, you will
automatically select this option, unless prohibited by applicable law.
OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options. At the time you choose
to receive your annuity payments, we may make available to you any of the fixed
annuity options then offered.
Applicable state law may limit some of these options.
If you have purchased the Contract With Credit, we will take back any
credits that have not vested when you begin the income phase. See "Credits," on
page 35.
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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. You name the beneficiary at the time the contract is issued, unless
you change it at a later date. Unless you name an irrevocable beneficiary,
during the accumulation period you can change the beneficiary at any time
before the owner dies.
CALCULATION OF THE DEATH BENEFIT
If the owner dies during the accumulation phase, we will, upon receiving
appropriate proof of death, pay a death benefit to the beneficiary designated
by the owner. If death is prior to age 80, the beneficiary will receive the
greater of the following:
1) The current value of your contract (as of the time we receive appropriate
proof of death). If you have purchased the Contract With Credit, we will
first deduct any non-vested credit corresponding to a purchase payment made
later than one year prior to death.
2) Either the base death benefit or, if you have chosen it, the guaranteed
minimum death benefit's protected value.
The base death benefit equals the total purchase payments you have made,
proportionally reduced by the effect of withdrawals on your contract value. For
example, if a withdrawal reduces your contract value by 10%, then your base
death benefit would be reduced by the same percentage.
The protected value of the guaranteed minimum death benefit equals the "step-up
value." The step-up value equals the highest value of the contract on any
contract anniversary date--that is, on each contract anniversary, the new
step-up value becomes the higher of the previous step-up value and the current
contract value. Between anniversary dates, the step-up value is only increased
by additional purchase payments and reduced proportionally by the effect of
withdrawals on your contract value.
If you have chosen the base death benefit and death occurs on or after age
80, we will still calculate the death benefit as described above. If you have
chosen the guaranteed minimum death benefit option and death occurs on or after
age 80, the beneficiary will receive the greater of: 1) the current contract
value as of the date that due proof of death is received, and 2) the death
benefit as of age 80, reduced proportionally by any withdrawals. For this
purpose, an owner is deemed to reach age 80 on the contract anniversary on or
following the owner's actual 80th birthday.
Here is an example of a proportional reduction of the step-up value:
If an owner withdrew 50% of a contract valued at $100,000 and if the
protected value was $80,000, the new protected value following the withdrawal
would be $40,000 or 50% of what it had been prior to the withdrawal.
Special rules apply if the beneficiary is the spouse of the owner. In that
case, upon the death of the owner, the spouse will have the choice of the
following:
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- The contract can continue, and the spouse will become the new owner of the
contract; or
- The spouse can receive the death benefit. If the spouse does wish to
receive the death benefit, he or she must make that choice within the first
60 days following our receipt of proof of death. Otherwise, the contract
will continue with the spouse as owner.
If ownership of the contract changes as a result of the owner assigning it to
someone else, we will reset the value of the death benefit to equal the
contract value on the date the change of ownership occurs, and for purposes of
computing the future death benefit, we will treat that contract value as a
purchase payment occurring on that date.
PAYOUT OPTIONS
The beneficiary may, within 60 days of providing proof of death, choose to take
the death benefit under one of several death benefit payout options listed
below.
The death benefit payout options are:
Choice 1. Lump sum payment of the death benefit. If the beneficiary does
not choose a payout option within sixty days, the beneficiary will receive
this payout option.
Choice 2. The payment of the entire death benefit within 5 years of the
date of death of the owner.
Choice 3. Payment of the death benefit under an annuity or annuity
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 owner.
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5:
HOW CAN I PURCHASE A STRATEGIC PARTNERS
ANNUITY ONE CONTRACT?
--------------------------------------------------------------------------------
PURCHASE PAYMENTS
The initial purchase payment is the amount of money you first pay us to
purchase the contract. The minimum initial purchase payment is $10,000. With
some restrictions, you can make additional purchase payments of $1,000 or more
at any time during the accumulation phase. However, no purchase payments may be
made on or after the earliest of the 80th birthday of (i) the owner or (ii) the
annuitant.
Currently, the maximum aggregate purchase payments you may make is $7
million. We limit the maximum total purchase payments in any contract year
other than the first to $2 million.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your invested purchase payment
among the variable investment options based on the percentages you choose. The
percentage of your allocation to a particular investment option can range in
whole percentages from 0% to 100%.
You may change your allocation of future invested purchase payments at any
time. Contact the Annuity Service Center for details.
If you make an additional purchase payment without allocation instructions,
we will allocate the invested purchase payment in the same proportion as your
most recent purchase payment, unless you directed us in connection with that
purchase payment to make that allocation on a one-time-only basis.
If you purchase the Contract Without Credit and you allocated all or part
of your initial purchase payment to the DCA Fixed Rate Option, we will treat
your transfer allocation instructions for the DCA Fixed Rate Option as part of
your allocation instructions for subsequent purchase payments until you direct
us otherwise.
We will credit the initial purchase payment to your contract within two
business days from the day on which we receive your payment at the Prudential
Annuity Service Center. If, however, your first payment is made without enough
information for us to set up your contract, we may need to contact you to
obtain the required information. If we are not able to obtain this information
within five business days, we will within that five business day period either
return your purchase payment or obtain your consent to continue holding it
until we receive the necessary information. We will generally credit each
subsequent purchase payment as of the business day we receive it in good order.
Our business day generally closes at 4:00 p.m. Eastern time. We will generally
credit subsequent purchase payments received in good order after the close of a
business day on the following business day.
CREDITS
If you purchase the Contract With Credit, we will add a credit amount to your
contract value with each purchase payment you make. The credit is allocated to
the variable investment options in the same percentages as the purchase
payment.
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The credit percentage is currently equal to 4% of each purchase payment.
With the approval of the Securities and Exchange Commission, we can change that
credit percentage, but we guarantee it will never be less than 3%.
Each credit is subject to its own vesting schedule, which is shown below.
If you make a withdrawal of all or part of a purchase payment, or you begin the
income phase of the contract, we will take back the non-vested portion of the
credit attributable to that purchase payment. Withdrawals of purchase payments
occur on a first-in first-out basis. This credit that we take back is in
addition to any withdrawal charges that may apply.
<TABLE>
<CAPTION>
NUMBER OF CONTRACT ANNIVERSARIES
SINCE DATE OF EACH PURCHASE PAYMENT VESTED PERCENTAGE
----------------------------------------------------------
<S> <C>
0 0%
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 100%
</TABLE>
If you exercise your right to cancel the contract, we will take back the entire
credit. If we pay a death benefit under the contract, we will take back the
non-vested portion of any credit we applied one year prior to the date of death
or later.
CALCULATING CONTRACT VALUE
The value of your contract will go up or down depending on the investment
performance of the variable investment options 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 for the investment options you choose.
We determine the number of accumulation units credited to your contract by
dividing the amount of the purchase payment, plus (if you have purchased the
Contract With Credit) any applicable credit, 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.
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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6:
WHAT ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE CONTRACT?
--------------------------------------------------------------------------------
THERE ARE CHARGES AND OTHER EXPENSES ASSOCIATED WITH THE CONTRACT THAT REDUCE
THE RETURN ON YOUR INVESTMENT. WE DESCRIBE THESE CHARGES AND EXPENSES BELOW.
INSURANCE AND ADMINISTRATIVE CHARGE
Each day, we make a deduction for the insurance and administrative charge. This
charge covers our expenses for mortality and expense risk, administration,
marketing and distribution. If you choose a guaranteed minimum death benefit
option, the insurance and administrative charge also includes a charge to cover
our assumption of the associated risk. The mortality risk portion of the charge
is for our assumption of 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 our assumption of the risk 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 compensates us for the expenses associated with
the administration of the contract. This includes 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 guaranteed minimum death benefit risk
portion of the charge, if applicable, covers our assumption of the risk that
the protected value of the contract will be larger than the base death benefit
if the contract owner dies during the accumulation phase.
If the insurance and administrative charge is not sufficient to cover our
expenses, then we will bear the loss. We do, however, expect to profit from
this charge. The insurance and administrative charge for your contract cannot
be increased. We may use any profits from this charge to pay for the costs of
distributing the contracts. If you choose the Contract With Credit, we will
also use any profits from this charge to recoup our costs of providing the
credit.
We calculate the insurance and administrative charge based on the average
daily value of all assets allocated to the variable investment options. The
amount of the charge depends on the death benefit option that you choose. The
charge is equal to 1.40% on an annual basis if you choose the base death
benefit, and 1.60% on an annual basis if you choose the guaranteed minimum
death benefit option.
ANNUAL CONTRACT FEE
Currently, we do not deduct an annual contract fee for administrative expenses
while your contract value is $50,000 or more. If your contract value is less
than $50,000 on a contract anniversary during the accumulation phase or when
you make a full withdrawal, we will deduct $30 (or if your contract value is
less than $1,500, then a lower amount equal to 2% of your contract value) for
administrative expenses. We may increase this charge up to a maximum of $60 per
year. Also, we may raise the level of the contract value at which we waive this
fee. We will deduct this charge proportionately from each of your contract's
investment options.
WITHDRAWAL CHARGE
A withdrawal charge may apply if you make a full or partial withdrawal during
the withdrawal charge period for a purchase payment. The amount and duration of
the withdrawal charge depends on whether you choose the Contract With Credit or
the Contract Without Credit. The withdrawal charge varies with the number of
contract anniversaries that have elapsed since each purchase payment was made,
and is a percentage, shown below, of the amount withdrawn.
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<TABLE>
<CAPTION>
NUMBER OF CONTRACT
ANNIVERSARIES SINCE THE
DATE OF EACH CONTRACT WITH CREDIT CONTRACT WITHOUT CREDIT
PURCHASE PAYMENT WITHDRAWAL CHARGE WITHDRAWAL CHARGE
----------------------- -------------------- ---------------------
<S> <C> <C>
0 7% 7%
1 7% 6%
2 7% 5%
3 6% 4%
4 5% 3%
5 4% 2%
6 3% 1%
7 2% 0%
8 1% 0%
9 0% 0%
</TABLE>
If a withdrawal is effective on the day before a contract anniversary, the
withdrawal charge percentage as of the following contract anniversary will
apply.
If you request a withdrawal, we will:
- deduct an amount from the contract value that is sufficient to pay the
withdrawal charge,
- if you have chosen the Contract With Credit, take back any credit that has
not vested under the vesting schedule, and
- provide you with the amount requested.
If you request a full withdrawal, we will provide you with the full amount
of the contract value after making these deductions.
Each contract year, you may withdraw up to 10% of your net purchase
payments without paying a withdrawal charge. For purposes of determining the
withdrawal charge, withdrawals of this 10% "charge-free" amount will come first
from purchase payments, on a first-in first-out basis. Withdrawals in excess of
the charge-free amount will come first from purchase payments, also on a
first-in first-out basis, and will be subject to withdrawal charges, if
applicable, even if earnings are available on that date. Once you have
withdrawn all purchase payments, further withdrawals will come from any
remaining earnings. Earnings are not subject to withdrawal charges.
We will take back any credits that have not vested under the vesting
schedule. If you choose the Contract With Credit and make a withdrawal that is
subject to a withdrawal charge, we may use part of that withdrawal charge to
recoup our costs of providing the credit.
Withdrawal charges will never be greater than permitted by applicable law.
PREMIUM TAXES
Some states and municipalities charge premium taxes or similar taxes. New York
does not, however, currently charge premium taxes. If, in the future, we are
charged for taxes that are based on purchase payments, we will pass that charge
on to contract owners.
TRANSFER FEE
You can make 12 free transfers every contract year. We measure a contract year
from the date we issue your contract, which is the 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 $25 for each additional
transfer. We will deduct the transfer fee proportionately from all the
investment options involved in the transfer.
COMPANY TAXES
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We will pay the taxes on the earnings of the separate account. We do not
currently charge you for these taxes. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
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7:
HOW CAN I
ACCESS MY MONEY?
--------------------------------------------------------------------------------
YOU CAN ACCESS YOUR MONEY BY:
- MAKING A WITHDRAWAL (EITHER PARTIAL OR FULL); OR
- CHOOSING TO RECEIVE ANNUITY PAYMENTS DURING THE INCOME PHASE.
WITHDRAWALS DURING THE ACCUMULATION PHASE
When you make a full withdrawal, you will receive the value of your contract on
the day you made the withdrawal, minus any applicable fees and, if you have
purchased the Contract With Credit, after we have taken back any credits that
have not yet vested. 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, we will take any partial withdrawal
proportionately from all of the variable investment options in which you have
invested. For a partial withdrawal, we will deduct any applicable fees and, if
you have purchased the Contract With Credit, take back any credit corresponding
to the purchase payments you are withdrawing, from the assets in your contract.
The minimum amount you may withdraw is $250. If, after a withdrawal, your
contract value is less than $2,000, we have the right 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.
INCOME TAXES, TAX PENALTIES, AND CERTAIN RESTRICTIONS MAY APPLY TO ANY
WITHDRAWAL YOU MAKE. FOR MORE INFORMATION, SEE SECTION 8, "WHAT ARE THE TAX
CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY ONE CONTRACT," ON
PAGE 41 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.
SUSPENSION OF PAYMENTS OR TRANSFERS
The Securities and Exchange Commission may require us to suspend or postpone
payments made in connection with withdrawals or transfers for any period when:
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- The New York Stock Exchange is closed (other than customary weekend and
holiday closings);
- Trading on the New York Stock Exchange is restricted;
- 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
- The Securities and Exchange Commission, by order, permits suspension or
postponement of payments for the protection of owners.
We expect to pay the amount of any withdrawal or transfer made from the
fixed interest rate options promptly upon request.
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8:
WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE STRATEGIC
PARTNERS ANNUITY ONE CONTRACT?
--------------------------------------------------------------------------------
The tax considerations associated with the Strategic Partners Annuity One
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. You should consult with a qualified tax adviser for complete
information and advice.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
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.
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.
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 you transfer the contract
incident to divorce.
It is our position that the guaranteed minimum death benefit isan integral
part of the annuity contract and accordingly that the charges made against the
annuity contract's cash value for the benefit should not be treated as
distributions subject to income tax. It is possible, however, that the Internal
Revenue Service could take the position that such charges should be treated as
distributions.
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.
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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:
- the amount is paid on or after you reach age 59 1/2 or die;
- the amount received is attributable to your becoming disabled;
- 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 described above would also apply to amounts
received by your beneficiary. Choosing 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 choose not to have tax withheld from your
payments. You must make that choice on the appropriate forms that we provide.
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 we, 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, 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, that 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 contract owners and you will be
given notice to the extent feasible under the circumstances.
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ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- You are a nonresident alien.
- You transfer your contract to, or designate, a beneficiary who is either 37
1/2 years younger than you or a grandchild.
- You wish additional information on withholding taxes.
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans. 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 Tax Code. This description
assumes that you have satisfied the requirements for eligibility for these
products.
YOU SHOULD BE AWARE THAT TAX FAVORED PLANS SUCH AS IRAS GENERALLY PROVIDE
TAX DEFERRAL REGARDLESS WHETHER THEY INVEST IN ANNUITY CONTRACTS. THIS MEANS
THAT WHEN A TAX FAVORED PLAN INVESTS IN AN ANNUITY CONTRACT, IT GENERALLY DOES
NOT RESULT IN ANY ADDITIONAL TAX DEFERRAL BENEFITS.
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 and contract. The "IRA Disclosure Statement" on page 48 contains
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 Tax 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:
- 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);
- Your rights as owner are non-forfeitable;
- You cannot sell, assign or pledge the contract, other than to Pruco Life of
New Jersey;
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- The annual premium you pay cannot be greater than $2,000 (which does not
include any rollover amounts);
- 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
- 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:
- A 10% "early distribution penalty" (described below);
- Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- Failure to take a minimum distribution (also generally described below).
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 beginning
annuity payments or making a withdrawal of 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%), 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 Tax 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:
- 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
- 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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ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Tax 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
Strategic Partners Annuity One Contract" starting on page 37.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale and Distribution of the Contract" on page 45.
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.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the "IRA Disclosure Statement" on page 48.
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9:
OTHER
INFORMATION
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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. Pruco Life of New
Jersey is licensed to sell life insurance and annuities in the states of New
Jersey and New York and is subject to the insurance laws and regulations of
those states. Pruco Life of New Jersey is a wholly-owned subsidiary Pruco Life
Insurance Company, which is itself 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.
Prudential is currently considering reorganizing itself into a publicly
traded stock company through a process known as "demutualization." On February
10, 1998, Prudential's Board of Directors authorized management to take the
preliminary steps necessary to allow Prudential 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 Prudential's Board of Directors, a public hearing, voting by
qualified policyholders and regulatory approval. Prudential is working toward
completing this process in 2001 and currently expects adoption by the Board of
Directors to take place in the latter part of 2000. However, there is no
certainty that the demutualization will be completed in this timeframe or that
the necessary approvals will be obtained. Also, it is possible that after
careful review, Prudential could decide not to demutualize or could decide to
delay its plans.
The plan of reorganization, which hasn't been fully 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, provided that their
policies were in force on the date Prudential's Board of Directors adopted a
plan of reorganization, while mutual fund customers and customers of
Prudential'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. This does not constitute a proposal, offer,
solicitation or recommendation regarding any plan of reorganization that may be
proposed or a recommendation regarding the ownership of any stock that could be
issued in connection with any such demutualization.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account (the "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, appears in the Statement of
Additional Information.
SALE AND DISTRIBUTION OF THE CONTRACT
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Prudential Investment Management Services LLC ("PIMS"), 100 Mulberry Street,
Newark, New Jersey 07102-4077, 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, and do not reduce the amount of your
investment. Registered representatives of independent broker-dealers may be
paid on a different basis than those affiliated with PIMS.
ASSIGNMENT
You can assign the contract at any time during your lifetime. If you do so, we
will reset the death benefit to equal the contract value on the date the
assignment occurs. For details, see "What is the Death Benefit," on page 33. 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.
FINANCIAL STATEMENTS
The financial statements of the separate account associated with Strategic
Partners Annuity One 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 and Advertising
- Federal Tax Status
- Directors and Officers
- Financial Statements
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IRA DISCLOSURE STATEMENT
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This statement is designed to help you understand the requirements of federal
tax law which apply to your individual retirement annuity (IRA), your Roth IRA,
your simplified employee pension IRA (SEP) for employer contributions, your
Savings Incentive Match Plan for Employees (SIMPLE) IRA, or to one you purchase
for your spouse. You can obtain more information regarding your IRA either from
your sales representative or from any district office of the Internal Revenue
Service. Those are federal tax law rules; state tax laws may vary.
FREE LOOK PERIOD
The annuity contract offered by this prospectus gives you the opportunity to
return the contract for a full refund within 10 days (or whatever period is
required by applicable state law) after it is delivered. This is a more liberal
provision than is required in connection with IRAs. To exercise this
"free-look" provision, return the contract to the representative who sold it
you or to the Prudential Annuity Service Center at the address shown on the
first page of this prospectus.
ELIGIBILITY REQUIREMENTS
IRAs are intended for all persons with earned compensation whether or not they
are covered under other retirement programs. Additionally, if you have a
non-working spouse (and you file a joint tax return), you may establish an IRA
on behalf of your non-working spouse. A working spouse may establish his or her
own IRA. A divorced spouse receiving taxable alimony (and no other income) may
also establish an IRA.
CONTRIBUTIONS AND DEDUCTIONS
Contributions to your IRA will be deductible if you are not an "active
participant" in an employer maintained qualified retirement plan or you have
"Adjusted Gross Income" (as defined under Federal tax laws) which does not
exceed the "applicable dollar limit." IRA (or SEP) contributions must be made
by no later than the time you file your income tax return for that year. For a
single taxpayer, the applicable dollar limitation is $30,000, with the amount
of IRA contribution which may be deducted reduced proportionately for Adjusted
Gross Income between $30,000 -- $40,000. For married couples filing jointly,
the applicable dollar limitation is $50,000, with the amount of IRA
contribution which may be deducted reduced proportionately for Adjusted Gross
Income between $50,000-$60,000. There is no deduction allowed for IRA
contributions when Adjusted Gross Income reaches $40,000 for individuals and
$60,000 for married couples filing jointly.
Contributions made by your employer to your SEP are excludable from your
gross income for tax purposes in the calendar year for which the amount is
contributed. Certain employees who participate in a SEP will be entitled to
elect to have their employer make contributions to their SEP on their behalf or
to receive the contributions in cash. If the employee elects to have
contributions made on the employee's behalf to the SEP, those funds are not
treated as current taxable income to the employee. Elective deferrals under a
SEP are subject to an inflation-adjusted limit, which is $10,500 in 2000.
Salary-reduction SEPs (also called "SARSEPs") are available only if at least
50% of the employees elect to have amounts contributed to the SARSEP and if the
employer has 25 or fewer employees at all times during the preceding year. New
SARSEPs may not be established after 1996.
The IRA maximum annual contribution and your tax deduction is limited to
the lesser of: (1) $2,000 or (2) 100% of your earned compensation.
Contributions in excess of the deduction limits may be subject to penalty. See
below.
Under a SEP agreement, the maximum annual contribution which your employer
may make on your behalf to a SEP contract that is excludable from your income
is the lesser of 15% of your salary or $24,000. An employee who is a
participant in a SEP agreement may make after-tax contributions to the SEP
contract, subject to the contribution limits applicable to IRAs in general.
Those employee contributions will be deductible subject to the deductibility
rules described above.
The maximum tax deductible annual contribution that a divorced spouse with
no other income may make to an IRA is the lesser of (1) $2,000 or (2) 100% of
taxable alimony.
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If you or your employer should contribute more than the maximum
contribution amount to your IRA or SEP, the excess amount will be considered an
"excess contribution." You are permitted to withdraw an excess contribution
from your IRA or SEP before your tax filing date without adverse tax
consequences. If, however, you fail to withdraw any such excess contribution
before your tax filing date, a 6% excise tax will be imposed on the excess for
the tax year of contribution.
Once the 6% excise tax has been imposed, an additional 6% penalty for the
following tax year can be avoided if the excess is (1) withdrawn before the end
of the following year, or (2) treated as a current contribution for the
following year. (See Premature Distributions below for penalties imposed on
withdrawal when the contribution exceeds $2,000.)
IRA FOR NON-WORKING SPOUSE
If you establish an IRA for yourself, you may also be eligible to establish an
IRA for your "non-working" spouse. In order to be eligible to establish such a
spousal IRA, you must file a joint tax return with your spouse and, if your
non-working spouse has compensation, his/her compensation must be less than
your compensation for the year. Contributions of up to $2,000 each may be made
to your IRA and the spousal IRA if the combined compensation of you and your
spouse is at least equal to the amount contributed. If requirements for
deductibility (including income levels) are met, you will be able to deduct an
amount equal to the least of (i) the amount contributed to the IRAs; (ii)
$4,000; or (iii) 100% of your combined gross income.
Contributions in excess of the contribution limits may be subject to
penalty. See above under "Contributions and Deductions." If you contribute more
than the allowable amount, the excess portion will be considered an excess
contribution. The rules for correcting it are the same as discussed above for
regular IRAs.
Other than the items mentioned in this section, all of the requirement
generally applicable to IRAs are also applicable to IRAs established for
non-working spouses.
ROLLOVER CONTRIBUTION
Once every year, you are permitted to withdraw any portion of the value of your
IRA or SEP and reinvest it in another IRA or bond. Withdrawals may also be made
from other IRAs and contributed to this contract. This transfer of funds from
one IRA to another is called a "rollover" IRA. To qualify as a rollover
contribution, the entire portion of the withdrawal must be reinvested in
another IRA within 60 days after the date it is received. You will not be
allowed a tax-deduction for the amount of any rollover contribution.
A similar type of rollover to an IRA can be made with the proceeds of a
qualified distribution from a qualified retirement plan or tax-sheltered
annuity. Properly made, such a distribution will not be taxable until you
receive payments from the IRA created with it. Unless you were a self-employed
participant in the distributing plan, you may later roll over such a
contribution to another qualified retirement plan as long as you have not mixed
it with IRA (or SEP) contributions you have deducted from your income. (You may
roll less than all of a qualified distribution into an IRA, but any part of it
not rolled over will be currently includable in your income without any capital
gains treatment.)
DISTRIBUTIONS
(a) PREMATURE DISTRIBUTIONS
At no time can your interest in your IRA or SEP be forfeited. To insure that
your contributions will be used for retirement, the federal tax law does not
permit you to use your IRA or SEP as security for a loan. Furthermore, as a
general rule, you may not sell or assign your interest in your IRA or SEP to
anyone. Use of an IRA (or SEP) as security or assignment of it to another will
invalidate the entire annuity. It then will be includable in your income in the
year it is invalidated and will be subject to a 10% penalty tax if you are not
at least age 59 1/2 or totally disabled. (You may, however, assign your IRA or
SEP without penalty to your former spouse in accordance with the terms of a
divorce decree.)
You may surrender any portion of the value of your IRA (or SEP). In the
case of a partial surrender which does not qualify as a rollover, the amount
withdrawn will be includable in your income and subject to the 10% penalty if
you are not at least age 59 1/2 or totally disabled unless you comply with
special rules requiring distributions to be made at least annually over your
life expectancy.
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The 10% penalty tax does not apply to the withdrawal of an excess
contribution as long as the excess is withdrawn before the due date of your tax
return. Withdrawals of excess contributions after the due date of your tax
return will generally be subject to the 10% penalty unless the excess
contribution results from erroneous information from a plan trustee making an
excess rollover contribution or unless you are over age 59 1/2 or are disabled.
(b) DISTRIBUTION AT AFTER AGE 59 1/2
Once you have attained age 59 1/2 (or have become totally disabled), you may
elect to receive a distribution of your IRA (or SEP) regardless of when you
actually retire. In addition, you must commence distributions from your IRA by
April 1 following the year you attain age 70 1/2. You may elect to receive the
distribution under any one of the periodic payment options available under the
contract. The distributions from your IRA under any one of the period payment
options or in one sum will be treated as ordinary income as you receive them to
the degree that you have made deductible contributions. If you have made both
deductible and nondeductible contributions, a portion of the distribution
attributable to the nondeductible contribution will be tax-free.
(c) INADEQUATE DISTRIBUTIONS--50% TAX
Your IRA or SEP is intended to provide retirement benefits over your lifetime.
Thus, federal tax law requires that you either (1) receive a lump-sum
distribution of your IRA by April 1 of the year following the year in which you
attain age 70 1/2 or (2) start to receive periodic payments by that date. If
you elect to receive periodic payments, those payments must be sufficient to
pay out the entire value of your IRA during your life expectancy (or over the
joint life expectancies of you and your spouse). If the payments are not
sufficient to meet these requirements, an excise tax of 50% will be imposed on
the amount of any underpayment.
(d) DEATH BENEFITS
If you, (or your surviving spouse) die before receiving the entire value of
your IRA (or SEP), the remaining interest must be distributed to your
beneficiary (or your surviving spouse's beneficiary) in one lump-sum within 5
years of death, or applied to purchase an immediate annuity for the
beneficiary. This annuity must be payable over the life expectancy of the
beneficiary beginning within one year after your or your spouse's death. If
your spouse is the designated beneficiary, he or she is treated as the owner of
the IRA. If minimum required distributions have begun, the entire amount must
be distributed at least as rapidly as if the owner had survived. A distribution
of the balance of your IRA upon your death will not be considered a gift for
federal tax purposes, but will be included in your gross estate for purposes of
federal estate taxes.
ROTH IRAS
Section 408A of the Tax Code permits eligible individuals to contribute to a
type of IRA known as a "Roth IRA." Contributions may be made to a Roth IRA by
taxpayers with adjusted gross incomes of less than $160,000 for married
individuals filing jointly and less than $100,000 for single individuals.
Married individuals filing separately are not eligible to contribute to a Roth
IRA. The maximum amount of contributions allowable for any taxable year to all
Roth IRAs maintained by an individual is generally the lesser of $2,000 and
100% of compensation for that year (the $2,000 limit is phased out for incomes
between $150,000 and $160,000 for married and between $95,000 and $110,000 for
singles). The contribution limit is reduced by the amount of any contributions
made to a non-Roth IRA. Contributions to a Roth IRA are not deductible.
For taxpayers with adjusted gross income of $100,000 or less, all or part
of amounts in a non-Roth IRA may be converted, transferred or rolled over to a
Roth IRA. Some or all of the IRA value will typically be includable in the
taxpayer's gross income. If such a rollover, transfer or conversion occurred
before January 1, 1999, the portion of the amount includable in gross income
must be included in income ratably over the next four years beginning with the
year in which the transaction occurred. Provided a rollover contribution meets
the requirements of IRAs under Section 408(d)(3) of the Code, a rollover may be
made from a Roth IRA to another Roth IRA.
UNDER SOME CIRCUMSTANCES, IT MAY NOT BE ADVISABLE TO ROLL OVER, TRANSFER OR
CONVERT ALL OR PART OF A NON-ROTH IRA TO A ROTH IRA. PERSONS CONSIDERING A
ROLLOVER, TRANSFER OR CONVERSION SHOULD CONSULT THEIR OWN TAX ADVISOR.
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"Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two requirements:
(1) the distribution must be made (a) after the owner of the IRA attains age 59
1/2; (b) after the owner's death; (c) due to the owner's disability; or (d) for
a qualified first time homebuyer distribution within the meaning of Section
72(t)(2)(F) of the Code; and (2) the distribution must be made in the year that
is at least five years after the first year for which a contribution was made
to any Roth IRA established for the owner or five years after a rollover,
transfer, or conversion was made from a non-Roth IRA to a Roth IRA.
Distributions from a Roth IRA that are not qualified distributions will be
treated as made first from contributions and then from earnings, and taxed
generally in the same manner as distributions from a non-Roth IRA.
Distributions from a Roth IRA need not commence at age 70 1/2. However, if
the owner dies before the entire interest in a Roth IRA is distributed, any
remaining interest in the contract must be distributed by December 31 of the
calendar year containing the fifth anniversary of the owner's death subject to
certain exceptions.
REPORTING TO THE IRS
Whenever you are liable for one of the penalty taxes discussed above (6% for
excess contributions, 10% for premature distributions or 50% for
underpayments), you must file Form 5329 with the Internal Revenue Service. The
form is to be attached to your federal income tax return for the tax year in
which the penalty applies. Normal contributions and distributions must be shown
on your income tax return for the year to which they relate.
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54
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PART III PROSPECTUSES
-------------------------------------------------------------------------------
VARIABLE INVESTMENT OPTIONS
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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 (which we define 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.
ADJUSTED CONTRACT VALUE
When you begin receiving income payments, the value of your contract minus, if
you have chosen the Contract With Credit, any credit that has not yet vested.
ANNUITANT
The person whose life determines the amount of income payments that we will
pay.
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 on which we credit your initial purchase payment. We will credit the
initial purchase payment to your contract within two business days from the day
on which we receive your 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.
CONTRACT OWNER, OWNER, OR YOU
The person entitled to the ownership rights under the contract.
CONTRACT VALUE
This is the total value of your contract, equal to the sum of the values of
your investment in each investment option you have chosen. Your contract value
will go up or down based on the performance of the investment options you
choose.
CONTRACT WITH CREDIT
58
<PAGE> 61
A version of the annuity contract that provides for a bonus credit with each
purchase payment that you make, has higher withdrawal charges and a longer
withdrawal charge period, and has no fixed rate investment options available.
CONTRACT WITHOUT CREDIT
A version of the annuity contract that does not provide a credit, has lower
withdrawal charges and a shorter withdrawal charge period, and offers two fixed
rate investment options: a one-year fixed rate option and a dollar cost
averaging fixed rate option.
CREDIT
If you choose the Contract With Credit (which we previously defined), this is
the bonus amount that we allocate to your account each time you make a purchase
payment. The amount of the credit is a percentage of the purchase payment. The
credit is subject to a vesting schedule, which means that if you withdraw all
or part of a purchase payment within a certain period, or you begin the income
phase or we pay a death benefit during that period, we may take back all or
part of the credit. See "How Can I Purchase A Strategic Partners Annuity One
Contract" on page 35.
DEATH BENEFIT
If the owner dies, the beneficiary you designate will receive, at a minimum,
the total amount invested or a potentially greater amount related to market
appreciation. A guaranteed minimum death benefit is available for an additional
charge.
FIXED INTEREST RATE OPTIONS
Under the Contract Without Credit (which we previously defined), these are
investment options that offer a fixed rate of interest for either a one-year
period (fixed rate option) or a selected period during which periodic transfers
are made to selected variable investment options (dollar cost averaging fixed
rate option). The fixed interest rate options are available only with the
Contract Without Credit.
GUARANTEED MINIMUM DEATH BENEFIT
An optional feature available for an additional charge that guarantees that the
death benefit that the beneficiary receives will be no less than a certain
"protected value". Currently, the protected value for the guaranteed minimum
death benefit equals the "step-up value," which we define below.
INCOME OPTIONS
Options under the contract that define the frequency and duration of income
payments. In your contract, we also refer to these as payout or annuity
options.
INCOME PHASE
The period in which you receive income payments under the contract.
INVESTED PURCHASE PAYMENTS
Your purchase payments (which we define below) less any deduction we make for
any tax charge.
NET PURCHASE PAYMENTS
Your total purchase payments (which we define below) less any withdrawals you
have made.
PROTECTED VALUE
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<PAGE> 62
If you choose the guaranteed minimum death benefit, the guaranteed amount of
that benefit. Currently, the protected value of the guaranteed minimum death
benefit equals the "step-up value," which we define below.
PRUDENTIAL ANNUITY SERVICE CENTER
For general correspondence: P.O. Box 7960, Philadelphia, PA 19101. For express
overnight mail: 2101 Welsh Road, Dresher, PA 19025. The telephone number is
888-PRU-2888.
PURCHASE PAYMENTS
The amount of money you pay us to purchase the contract. With some
restrictions, you can make additional purchase payments at any time during the
accumulation phase.
SEPARATE ACCOUNT
We hold your purchase payments allocated to the variable investment options 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.
STATEMENT OF ADDITIONAL INFORMATION
A document containing certain additional information about the Strategic
Partners Annuity One variable annuity. We have filed the Statement of
Additional Information with the Securities and Exchange Commission and it is
legally a part of this prospectus. To learn how to obtain a copy of the
Statement of Additional Information, see the front cover of this prospectus.
STEP-UP VALUE
The highest value of the contract on any contract anniversary date, subject to
certain age restrictions. Between anniversary dates, the step-up value is only
increased by additional purchase payments and reduced proportionally by
withdrawals. Depending upon the terms of your contract and what options you
choose, we may use the step-up value to compute the protected value of the
guaranteed minimum death benefit.
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. You should be aware that tax favored plans (such as IRAs) already
provide tax deferral regardless whether they invest in annuity contracts. See
"What Are the Tax Considerations Associated with the Strategic Partners Annuity
One Contract," page 41.
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.
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61
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STATEMENT OF ADDITIONAL INFORMATION
, 2000
PRUCO LIFE OF NEW JERSEY FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The Strategic Partners Annuity One(SM) annuity contract* (the "contract")
is an individual variable annuity contract issued by the Pruco Life Insurance
Company of New Jersey ("Pruco Life of New Jersey"), a stock life insurance
company that is an indirect wholly-owned subsidiary of The Prudential Insurance
Company of America ("Prudential") and is funded through the Pruco Life of New
Jersey Flexible Premium Variable Annuity Account (the "Account"). The contract
is purchased by making an initial purchase payment of $10,000 or more;
subsequent payments must be $1,000 or more.
This statement of additional information is not a prospectus and should
be read in conjunction with the Strategic Partners Annuity One prospectus, dated
, 2000. To obtain a copy of the prospectus, without charge, you can
write to the Prudential Annuity Service Center, P.O. Box 7960, Philadelphia,
Pennsylvania 19101, or by telephoning (888) PRU-2888.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPANY................................................. 2
EXPERTS................................................. 2
LITIGATION.............................................. 2
LEGAL OPINIONS.......................................... 3
PRINCIPAL UNDERWRITER................................... 3
DETERMINATION OF SUBACCOUNT UNIT VALUES................. 3
PERFORMANCE INFORMATION................................. 4
COMPARATIVE PERFORMANCE INFORMATION AND ADVERTISING..... 10
FEDERAL TAX STATUS...................................... 11
DIRECTORS AND OFFICERS.................................. 12
FINANCIAL STATEMENTS.................................... 14
</TABLE>
<TABLE>
<S> <C>
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
OF NEW JERSEY
213 WASHINGTON STREET P.O. BOX 7960
NEWARK, NEW JERSEY 07102-2992 PHILADELPHIA, PENNSYLVANIA 19101
TELEPHONE: (888) PRU-2888
</TABLE>
* STRATEGIC PARTNERS ANNUITY ONE is a service mark of Prudential.
1
<PAGE> 65
COMPANY
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey")
is a stock life insurance company organized in 1982 under the laws of the State
of New Jersey. Pruco Life of New Jersey is licensed to sell life insurance and
annuities 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 Pruco Life of New Jersey as of December 31,
1999 and 1998 and for each of the three years in the period ended December 31,
1999 and the financial statements of the Pruco Life of New Jersey Flexible
Premium Variable Annuity Account as of December 31, 1999 and for each of the two
years in the period then ended included in this Statement of Additional
Information have been so included in reliance on the report 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
We are subject to legal and regulatory actions in the ordinary course of
our businesses, including class actions. Pending legal regulatory actions
include proceedings specific to our practices and proceedings generally
applicable to business practices in the industries in which we operate. As an
example of such litigation, in March 2000, plaintiffs filed a purported class
action against us titled Olmsted v. Pruco Life Insurance Company of New Jersey
and The Prudential Insurance Company of America, alleging that certain fees and
expenses charged to the plaintiffs in connection with the sale of variable
annuities since March 1, 1997 were excessive and unreasonable. In certain of
these lawsuits, large and/or indeterminate amounts are sought, including
punitive or exemplary damages.
In particular, Pruco Life and Prudential have been subject to substantial
regulatory actions and civil litigation involving individual life insurance
sales practices. In 1996, Prudential, on behalf of itself and many of its life
insurance subsidiaries including Pruco Life, entered into settlement agreements
with relevant insurance regulatory authorities and plaintiffs in the principal
life insurance sales practices class action lawsuit covering policyholders of
individual permanent life insurance policies issued in the United States from
1982 to 1995. Pursuant to the settlements, the companies agreed to various
changes to their sales and business practices controls and a series of fines,
and are in the process of distributing final remediation relief to eligible
class members. In many instances, claimants have the right to "appeal" the
decision to an independent reviewer. The bulk of such appeals were resolved in
1999, and the balance is expected to be addressed in 2000. As of January 31,
2000, Prudential and/or Pruco Life remained a party to two putative class
actions and approximately 158 individual actions relating to permanent life
insurance policies issued in the United States between 1982 and 1995. Additional
suits may be filed by individuals who opted out of the settlements. While the
approval of the class action settlement is now final, Prudential and Pruco Life
remain subject to oversight and review by insurance regulators and other
regulatory authorities with respect to their sales practices and the conduct of
the remediation program. The U.S. District Court has also retained jurisdiction
as to all matters relating to the administration, consummation, enforcement and
interpretation of the settlements.
Prudential has indemnified Pruco Life for any liabilities incurred in
connection with sales practices litigation covering policyholders of individual
permanent life insurance policies issued in the United States from 1982 to 1995.
In 1999, 1998, 1997 and 1996, Prudential recorded provision in its
Consolidated Statements of Operation of $100 million, $1,150 million, $2,030
million and $1,125 million, respectively, to provide for estimated remediation
costs, and additional sales practices costs including related administrative
costs, regulatory fines, penalties and related payments, litigation costs and
settlements, including settlements associated with the resolution of claims of
deceptive sales practices asserted by policyholders who elected to "opt-out" of
the class action settlement and litigate their claims against Prudential
separately, and other fees and expenses associated with the resolution of sales
practices issues.
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 through corporate office
and regional home office employees 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.
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DETERMINATION OF ACCUMULATION UNIT VALUES
The value for each accumulation unit is computed as of the end of each
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 annual
charge for administrative expenses and mortality and expense risks. (See WHAT
ARE THE EXPENSES ASSOCIATED WITH THE STRATEGIC PARTNERS ANNUITY ONE CONTRACT 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.
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN
The Account may advertise average annual total return information
calculated according to a formula prescribed by the U.S. Securities and Exchange
Commission ("SEC"). Average annual total return shows the average annual
percentage increase, or decrease, in the value of a hypothetical contribution
allocated to a Subaccount from the beginning to the end of each specified period
of time. The SEC standardized version of this performance information is based
on an assumed contribution of $1,000 allocated to a Subaccount at the beginning
of each period and full withdrawal of the value of that amount at the end of
each specified period. This method of calculating performance further assumes
that (i) a $1,000 contribution was allocated to a Subaccount and (ii) no
transfers or additional payments were made. Premium taxes are not included in
the term "charges" for purposes of this calculation. Average annual total return
is calculated by finding the average annual compounded rates of return of a
hypothetical contribution that would compare the Unit Value on the first day of
the specified period to the ending redeemable value at the end of the period
according to the following formula:
P(1+T)n=ERV
Where T equals average annual total return, where ERV (the ending
redeemable value) is the value at the end of the applicable period of a
hypothetical contribution of $1,000 made at the beginning of the applicable
period, where P equals a hypothetical contribution of $1,000, and where n equals
the number of years.
NON-STANDARD TOTAL RETURN
In addition to the standardized average annual total return information
described above, we may present total return information computed on bases
different from that standardized method. The Account may also present aggregate
total return figures for various periods, reflecting the cumulative change in
value of an investment in the Account for the specified period.
The tables below provide performance information for specified periods
ending December 31, 1999 for each Subaccount that invests in a Fund that had a
performance history as of December 31, 1999. No standard total return table is
included because the Subaccounts are only commencing operations on or after the
date of this Statement of Additional Information. For the periods prior to the
date the Subaccounts commenced operations, non-standard performance information
for the Contracts will be calculated based on the performance of the Funds and
the assumption that the Subaccounts were in existence for the same periods as
those indicated for the Funds, with the level of Contract charges that were in
effect at the inception of the Subaccounts (this is referred to as "hypothetical
performance data"). Standard and non-standard average annual return calculations
include all of the fees under the Contract (i.e., the mortality and expense risk
charge and the administrative fee). This information does not indicate or
represent future performance.
3
<PAGE> 67
The following three tables assume a daily insurance and administrative
charge equal to 1.40% on an annual basis.
Table 1 below shows the average annual rates of total return on
hypothetical investments of $1,000 for periods ended June 30, 2000 in each
subaccount other than the Money Market Subaccount. These figures assume
withdrawal of the investments at the end of the period other than to effect an
annuity under the Contract. This table assumes deferred sales charges.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
FIVE TEN FROM DATE
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 12/31/1999 12/31/1999 12/31/1999 12/31/1999
------------------------------------------------ ------------ ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 09/88 40.57% 20.55% 7.51% 12.68%
Prudential Jennison Portfolio 05/95 34.60% N/A N/A 30.06%
Prudential Stock Index Portfolio 09/87 13.23% 26.07% 14.09% 15.29%
SP Aggressive Growth Asset Allocation
Portfolio 08/00 N/A N/A N/A N/A
SP AIM Aggressive Growth Portfolio 08/00 N/A N/A N/A N/A
SP AIM Growth And Income Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Large Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Technology Portfolio 08/00 N/A N/A N/A N/A
SP Balanced Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Conservative Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Davis Value Portfolio 08/00 N/A N/A N/A N/A
SP Deutsche International Equity Portfolio 08/00 N/A N/A N/A N/A
SP Growth Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Invesco Small Company Growth Portfolio 08/00 N/A N/A N/A N/A
SP Jennison International Growth Portfolio 08/00 N/A N/A N/A N/A
SP Large Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP MFS Capital Opportunities Portfolio 08/00 N/A N/A N/A N/A
SP MFS Mid Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO High Yield Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO Total Return Portfolio 08/00 N/A N/A N/A N/A
SP Prudential U.S. Emerging Growth Portfolio 08/00 N/A N/A N/A N/A
SP Small/Mid Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP Strategic Partners Focused Growth
Portfolio 08/00 N/A N/A N/A N/A
Janus Aspen Series--Growth Portfolio
Service Shares 09/93 36.34% 27.92% N/A 22.48%
</TABLE>
4
<PAGE> 68
Table 2 shows the average annual rates of return as in Table 1, but
assumes that the investments are not withdrawn at the end of the period. This
table assumes no deferred sales charges.
TABLE 2
AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FIVE TEN FROM DATE
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 12/31/1999 12/31/1999 12/31/1999 12/31/1999
------------------------------------------------ ------------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 09/88 46.17% 20.70% 11.76% 12.68%
Prudential Jennison Portfolio 05/95 40.20% N/A N/A 30.29%
Prudential Stock Index Portfolio 09/87 18.83% 26.20% 16.02% 15.29%
SP Aggressive Growth Asset Allocation
Portfolio 08/00 N/A N/A N/A N/A
SP AIM Aggressive Growth Portfolio 08/00 N/A N/A N/A N/A
SP AIM Growth And Income Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Large Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Technology Portfolio 08/00 N/A N/A N/A N/A
SP Balanced Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Conservative Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Davis Value Portfolio 08/00 N/A N/A N/A N/A
SP Deutsche International Equity Portfolio 08/00 N/A N/A N/A N/A
SP Growth Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Invesco Small Company Growth Portfolio 08/00 N/A N/A N/A N/A
SP Jennison International Growth Portfolio 08/00 N/A N/A N/A N/A
SP Large Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP MFS Capital Opportunities Portfolio 08/00 N/A N/A N/A N/A
SP MFS Mid Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO High Yield Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO Total Return Portfolio 08/00 N/A N/A N/A N/A
SP Prudential U.S. Emerging Growth Portfolio 08/00 N/A N/A N/A N/A
SP Small/Mid Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP Strategic Partners Focused Growth
Portfolio 08/00 N/A N/A N/A N/A
Janus Aspen Series--Growth Portfolio
Service Shares 09/93 41.94% 28.04% N/A 22.52%
</TABLE>
5
<PAGE> 69
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FIVE TEN FROM DATE
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 12/31/1999 12/31/1999 12/31/1999 12/31/1999
------------------------------------------------ ------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 09/88 46.17% 156.22% 203.92% 284.90%
Prudential Jennison Portfolio 05/95 40.20% N/A N/A 243.83%
Prudential Stock Index Portfolio 09/87 18.83% 220.09% 342.05% 476.01%
SP Aggressive Growth Asset Allocation
Portfolio 08/00 N/A N/A N/A N/A
SP AIM Aggressive Growth Portfolio 08/00 N/A N/A N/A N/A
SP AIM Growth And Income Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Large Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Technology Portfolio 08/00 N/A N/A N/A N/A
SP Balanced Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Conservative Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Davis Value Portfolio 08/00 N/A N/A N/A N/A
SP Deutsche International Equity Portfolio 08/00 N/A N/A N/A N/A
SP Growth Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Invesco Small Company Growth Portfolio 08/00 N/A N/A N/A N/A
SP Jennison International Growth Portfolio 08/00 N/A N/A N/A N/A
SP Large Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP MFS Capital Opportunities Portfolio 08/00 N/A N/A N/A N/A
SP MFS Mid Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO High Yield Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO Total Return Portfolio 08/00 N/A N/A N/A N/A
SP Prudential U.S. Emerging Growth Portfolio 08/00 N/A N/A N/A N/A
SP Small/Mid Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP Strategic Partners Focused Growth
Portfolio 08/00 N/A N/A N/A N/A
Janus Aspen Series--Growth Portfolio
Service Shares 09/93 41.94% 244.16% N/A 259.31%
</TABLE>
6
<PAGE> 70
The following three tables assume a daily insurance and administrative
charge equal to 1.60% on an annual basis.
Table 1 below shows the average annual rates of total return on
hypothetical investments of $1,000 for periods ended December 31, 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. This table assumes deferred sales charges.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
FIVE TEN FROM DATE
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 12/31/1999 12/31/1999 12/31/1999 12/31/1999
------------------------------------------------ ------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 09/88 40.29% 20.31% 7.29% 12.46%
Prudential Jennison Portfolio 05/95 34.33% N/A N/A 29.95%
Prudential Stock Index Portfolio 09/87 13.00% 25.82% 13.86% 14.80%
SP Aggressive Growth Asset Allocation
Portfolio 08/00 N/A N/A N/A N/A
SP AIM Aggressive Growth Portfolio 08/00 N/A N/A N/A N/A
SP AIM Growth And Income Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Large Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Technology Portfolio 08/00 N/A N/A N/A N/A
SP Balanced Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Conservative Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Davis Value Portfolio 08/00 N/A N/A N/A N/A
SP Deutsche International Equity Portfolio 08/00 N/A N/A N/A N/A
SP Growth Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Invesco Small Company Growth Portfolio 08/00 N/A N/A N/A N/A
SP Jennison International Growth Portfolio 08/00 N/A N/A N/A N/A
SP Large Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP MFS Capital Opportunities Portfolio 08/00 N/A N/A N/A N/A
SP MFS Mid Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO High Yield Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO Total Return Portfolio 08/00 N/A N/A N/A N/A
SP Prudential U.S. Emerging Growth Portfolio 08/00 N/A N/A N/A N/A
SP Small/Mid Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP Strategic Partners Focused Growth
Portfolio 08/00 N/A N/A N/A N/A
Janus Aspen Series--Growth Portfolio
Service Shares 09/93 36.06% 27.67% N/A 22.27%
</TABLE>
7
<PAGE> 71
Table 2 shows the average annual rates of return as in Table 1, but
assumes that the investments are not withdrawn at the end of the period. This
table assumes no deferred sales charges.
TABLE 2
AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FIVE TEN FROM DATE
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 12/31/1999 12/31/1999 12/31/1999 12/31/1999
------------------------------------------------ ------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 09/88 45.89% 20.47% 7.29% 12.46%
Prudential Jennison Portfolio 05/95 39.93% N/A N/A 30.04%
Prudential Stock Index Portfolio 09/87 18.60% 25.95% 13.86% 14.80%
SP Aggressive Growth Asset Allocation
Portfolio 08/00 N/A N/A N/A N/A
SP AIM Aggressive Growth Portfolio 08/00 N/A N/A N/A N/A
SP AIM Growth And Income Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Large Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Technology Portfolio 08/00 N/A N/A N/A N/A
SP Balanced Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Conservative Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Davis Value Portfolio 08/00 N/A N/A N/A N/A
SP Deutsche International Equity Portfolio 08/00 N/A N/A N/A N/A
SP Growth Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Invesco Small Company Growth Portfolio 08/00 N/A N/A N/A N/A
SP Jennison International Growth Portfolio 08/00 N/A N/A N/A N/A
SP Large Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP MFS Capital Opportunities Portfolio 08/00 N/A N/A N/A N/A
SP MFS Mid Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO High Yield Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO Total Return Portfolio 08/00 N/A N/A N/A N/A
SP Prudential U.S. Emerging Growth Portfolio 08/00 N/A N/A N/A N/A
SP Small/Mid Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP Strategic Partners Focused Growth
Portfolio 08/00 N/A N/A N/A N/A
Janus Aspen Series--Growth Portfolio
Service Shares 09/93 41.66% 27.79% N/A 22.27%
</TABLE>
8
<PAGE> 72
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
<TABLE>
<CAPTION>
FIVE TEN FROM DATE
ONE YEAR YEARS YEARS ESTABLISHED
FUND DATE ENDED ENDED ENDED THROUGH
PORTFOLIO ESTABLISHED 12/31/1999 12/31/1999 12/31/1999 12/31/1999
------------------------------------------------ ------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Prudential Global Portfolio 09/88 45.89% 153.70% 198.06% 276.32%
Prudential Jennison Portfolio 05/95 39.93% N/A N/A 240.76%
Prudential Stock Index Portfolio 09/87 18.60% 216.94% 333.37% 446.84%
SP Aggressive Growth Asset Allocation
Portfolio 08/00 N/A N/A N/A N/A
SP AIM Aggressive Growth Portfolio 08/00 N/A N/A N/A N/A
SP AIM Growth And Income Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Large Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP Alliance Technology Portfolio 08/00 N/A N/A N/A N/A
SP Balanced Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Conservative Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Davis Value Portfolio 08/00 N/A N/A N/A N/A
SP Deutsche International Equity Portfolio 08/00 N/A N/A N/A N/A
SP Growth Asset Allocation Portfolio 08/00 N/A N/A N/A N/A
SP Invesco Small Company Growth Portfolio 08/00 N/A N/A N/A N/A
SP Jennison International Growth Portfolio 08/00 N/A N/A N/A N/A
SP Large Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP MFS Capital Opportunities Portfolio 08/00 N/A N/A N/A N/A
SP MFS Mid Cap Growth Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO High Yield Portfolio 08/00 N/A N/A N/A N/A
SP PIMCO Total Return Portfolio 08/00 N/A N/A N/A N/A
SP Prudential U.S. Emerging Growth Portfolio 08/00 N/A N/A N/A N/A
SP Small/Mid Cap Value Portfolio 08/00 N/A N/A N/A N/A
SP Strategic Partners Focused Growth
Portfolio 08/00 N/A N/A N/A N/A
Janus Aspen Series--Growth Portfolio
Service Shares 09/93 41.66% 240.79% N/A 254.78%
</TABLE>
COMPARATIVE PERFORMANCE INFORMATION AND ADVERTISING
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.
Reports or advertising may also include the use of tax deferred
compounding charts and charts describing the power of tax deferred compounding
on the bonus payment.
9
<PAGE> 73
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. Each
Portfolio is required to diversify its investments each quarter so that no more
than 55% of the value of its assets is represented by any one investment, no
more than 70% is represented by any two investments, no more than 80% is
represented by any three investments, and no more than 90% is represented by any
four investments. Generally, securities of a single issuer are treated as one
investment and obligations of each U.S. Government agency and instrumentality
(such as the Government National Mortgage Association) are treated as issued by
separate issuers. In addition, any security issued, guaranteed or insured (to
the extent so guaranteed or insured) by the United States or an instrumentality
of the U.S. will be treated as a security issued by the U.S. Government or its
instrumentality, whichever is applicable. Pruco Life of New Jerssey 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.
7. TRANSFERS TO YOUNGER PERSONS.
If you transfer your contract to a person either 37 1/2 years younger
than you, or a grandchild, or designate such younger person as a beneficiary,
there may be Generation Skipping tax consequences.
10
<PAGE> 74
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with
their principal occupations during the past 5 years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
JAMES J. AVERY, JR., Chairman and Director -- President, Prudential
Individual Life Insurance since 1998; 1997 to 1998: Senior Vice President, Chief
Actuary and CFO, Prudential Individual Insurance Group; 1995 to 1997: President,
Prudential Select. Age 48.
IRA J. KLEINMAN, Director -- Executive Vice President, Prudential
International Insurance Group since 1997; 1995 to 1997: Chief Marketing and
Product Development Officer, Prudential Individual Insurance Group. Age 53.
ESTHER H. MILNES, President and Director -- Vice President and Chief
Actuary, Prudential Individual Life Insurance since 1999; prior to 1999: Vice
President and Actuary, Prudential Individual Insurance Group. Age 49.
DAVID R. ODENATH, JR., Director -- President, Prudential Investments
since 1999; prior to 1999; Senior Vice President and Director of Sales,
Investment Consulting Group, Paine Webber. Age 43.
I. EDWARD PRICE, Vice Chairman and Director -- Senior Vice President and
Actuary, Prudential Individual Life Insurance since 1998; 1995 to 1998: Senior
Vice President and Actuary, Prudential Individual Insurance Group. Age 57.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, Treasurer -- Vice President and Treasurer, Prudential
since 1995. Age 43.
JAMES C. DROZANOWSKI, Senior Vice President -- Vice President, Operations
and Systems, Prudential Individual Financial Services since 1998; 1996 to 1998:
Vice President and Operations Executive, Prudential Individual Insurance Group;
1995 to 1996: President, Credit Card Division, Chase Manhattan Bank. Age 57.
THOMAS F. HIGGINS, Senior Vice President -- Vice President, Annuity
Services, Prudential Individual Financial Services since 1999; 1998 to 1999:
Vice President, Mutual Funds, Prudential Individual Financial Services; 1995 to
1998: Principal, Mutual Fund Operations, The Vanguard Group. Age 45.
CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary -- Chief Counsel,
Variable Products, Prudential Law Department since 1995. Age 40.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary -- Vice
President and Associate Actuary, Prudential since 1996; prior to 1996: Vice
President and Assistant Actuary, Prudential Corporate Risk Management. Age 45.
WILLIAM J. ECKERT, IV Vice President and Chief Accounting Officer -- Vice
President and IFS Controller, Prudential Enterprise Financial Management since
2000; 1999 to 2000: Vice President and Individual Life Controller, Prudential
Enterprise Financial Management; 1997 to 1999: Vice President, Accounting,
Enterprise Financial Management; 1995 to 1997: Vice President, Accounting,
External Financial Reporting. Age 38.
The business address of all directors and officers of Pruco Life of New
Jersey is 213 Washington Street, Newark, New Jersey 07102-2992. Pruco Life of
New Jersey directors and officers are elected annually.
11
<PAGE> 75
FINANCIAL STATEMENTS
The following financial statements describe the sub-accounts of the
Discovery Select Variable Annuity, another variable annuity contract offered by
Pruco Life of New Jersey. This information is provided because some of the
sub-accounts associated with Discovery Select are also used by the Strategic
Partners Annuity One variable annuity contract. Financial information specific
to the Strategic Partners Annuity One variable annuity contract will be
available following the completion of the initial accounting period for this
contract.
12
<PAGE> 76
This page intentionally left blank
13
<PAGE> 77
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1999
<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>
ASSETS
Investment in The Prudential Series Fund, Inc.
Portfolios and non-Prudential administered
funds, at net asset value [Note 3] ................. $28,752,580 $53,371,206 $35,698,410 $86,939,050 $48,636,634
----------- ----------- ----------- ----------- -----------
Net Assets ........................................... $28,752,580 $53,371,206 $35,698,410 $86,939,050 $48,636,634
=========== =========== =========== =========== ===========
NET ASSETS, representing:
Equity of contract owners [Note 4] ................... $28,752,580 $53,371,206 $35,698,410 $86,939,050 $48,636,634
----------- ----------- ----------- ----------- -----------
$28,752,580 $53,371,206 $35,698,410 $86,939,050 $48,636,634
=========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A1
<PAGE> 78
<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>
$68,585,671 $105,709,375 $13,903,838 $18,117,557 $29,733,016 $31,011,122 $27,887,749
----------- ------------ ----------- ----------- ----------- ----------- -----------
$68,585,671 $105,709,375 $13,903,838 $18,117,557 $29,733,016 $31,011,122 $27,887,749
=========== ============ =========== =========== =========== =========== ===========
$68,585,671 $105,709,375 $13,903,838 $18,117,557 $29,733,016 $31,011,122 $27,887,749
----------- ------------ ----------- ----------- ----------- ----------- -----------
$68,585,671 $105,709,375 $13,903,838 $18,117,557 $29,733,016 $31,011,122 $27,887,749
=========== ============ =========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A2
<PAGE> 79
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1999
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------
MFS OCC OCC T. ROWE PRICE
EMERGING MFS ACCUMULATION ACCUMULATION EQUITY
GROWTH RESEARCH TRUST MANAGED TRUST SMALL INCOME
SERIES SERIES PORTFOLIO CAP PORTFOLIO PORTFOLIO
----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in The Prudential Series Fund, Inc.
Portfolios and non-Prudential administered
funds, at net asset value [Note 3] .................. $31,319,807 $9,982,879 $32,320,124 $8,588,764 $17,067,981
----------- ---------- ----------- ---------- -----------
Net Assets ............................................ $31,319,807 $9,982,879 $32,320,124 $8,588,764 $17,067,981
=========== ========== =========== ========== ===========
NET ASSETS, representing:
Equity of contract owners [Note 4] .................... $31,319,807 $9,982,879 $32,320,124 $8,588,764 $17,067,981
----------- ---------- ----------- ---------- -----------
$31,319,807 $9,982,879 $32,320,124 $8,588,764 $17,067,981
=========== ========== =========== ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A3
<PAGE> 80
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL
T. ROWE PRICE WARBURG PINCUS SMALL FRANKLIN DIVERSIFIED
INTERNATIONAL POST-VENTURE CAPITALIZATION AMERICAN SMALL CAP PRUDENTIAL CONSERVATIVE
STOCK CAPITAL STOCK CENTURY VP GROWTH 20/20 FOCUS GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO VALUE FUND PORTFOLIO PORTFOLIO
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$5,704,743 $3,815,026 $4,859,464 $2,400,228 $4,186,264 $5,334,334 $8,217,344
---------- ---------- ---------- ---------- ---------- ---------- ----------
$5,704,743 $3,815,026 $4,859,464 $2,400,228 $4,186,264 $5,334,334 $8,217,344
========== ========== ========== ========== ========== ========== ==========
$5,704,743 $3,815,026 $4,859,464 $2,400,228 $4,186,264 $5,334,334 $8,217,344
---------- ---------- ---------- ---------- ---------- ---------- ----------
$5,704,743 $3,815,026 $4,859,464 $2,400,228 $4,186,264 $5,334,334 $8,217,344
========== ========== ========== ========== ========== ========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A4
<PAGE> 81
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
For the period ended December 31, 1999
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY DIVERSIFIED HIGH YIELD STOCK
MARKET BOND BOND INDEX
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ........................................ $1,041,065 $ 0 $ 82,488 $ 742,606
---------- --------- ---------- -----------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Notes 5A and 5B] ..................... 295,390 630,761 448,837 918,696
---------- --------- ---------- -----------
NET INVESTMENT INCOME (LOSS) ............................. 745,675 (630,761) (366,349) (176,090)
---------- --------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received ................... 0 109,889 0 949,132
Realized gain (loss) on shares redeemed ................ 0 (35,648) (338,945) 597,412
Net change in unrealized gain (loss) on
investments .......................................... 0 (257,741) 1,670,217 10,649,026
---------- --------- ---------- -----------
NET GAIN (LOSS) ON INVESTMENTS ........................... 0 (183,500) 1,331,272 12,195,570
---------- --------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 745,675 $(814,261) $ 964,923 $12,019,480
========== ========= ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A5
<PAGE> 82
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL AIM V.I. JANUS ASPEN
EQUITY PRUDENTIAL PRUDENTIAL PRUDENTIAL GROWTH AND AIM V.I. JANUS ASPEN INTERNATIONAL
INCOME EQUITY JENNISON GLOBAL INCOME VALUE GROWTH GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND PORTFOLIO PORTFOLIO
---------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$1,060,080 $ 997,043 $ 109,529 $ 28,527 $ 89,628 $ 77,253 $ 46,406 $ 35,002
---------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
626,250 785,965 904,865 113,046 178,776 265,728 249,099 206,751
---------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
433,830 211,078 (795,336) (84,519) (89,148) (188,475) (202,693) (171,749)
---------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
5,329,219 7,676,793 4,118,355 50,018 61,885 403,982 88,325 0
(449,569) (157,198) 978,248 131,717 115,409 130,602 173,572 157,018
(957,621) (2,245,221) 21,649,324 3,919,633 3,932,741 4,885,809 7,276,124 11,553,620
---------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
3,922,029 5,274,374 26,745,927 4,101,368 4,110,035 5,420,393 7,538,021 11,710,638
---------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
$4,355,859 $ 5,485,452 $25,950,591 $4,016,849 $4,020,887 $5,231,918 $7,335,328 $11,538,889
========== =========== =========== ========== ========== ========== ========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A6
<PAGE> 83
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
For the period ended December 31, 1999
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------
OCC OCC
MFS ACCUMULATION ACCUMULATION
EMERGING MFS TRUST TRUST
GROWTH RESEARCH MANAGED SMALL CAP
SERIES SERIES PORTFOLIO PORTFOLIO
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ..................................... $ 0 $ 14,673 $ 446,506 $ 48,948
----------- ---------- ---------- ---------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk and for
administration [Notes 5A and 5B] .................. 244,459 109,520 443,425 109,857
----------- ---------- ---------- ---------
NET INVESTMENT INCOME (LOSS) .......................... (244,459) (94,847) 3,081 (60,909)
----------- ---------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received ................ 0 77,540 1,001,944 0
Realized gain (loss) on shares redeemed ............. 282,067 178,470 101,347 (107,172)
Net change in unrealized gain (loss) on
investments ....................................... 12,666,424 1,609,825 40,116 (53,970)
----------- ---------- ---------- ---------
NET GAIN (LOSS) ON INVESTMENTS ........................ 12,948,491 1,865,835 1,143,407 (161,142)
----------- ---------- ---------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................... $12,704,032 $1,770,988 $1,146,488 $(222,051)
=========== ========== ========== =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A7
<PAGE> 84
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL
T. ROWE PRICE T. ROWE PRICE WARBURG SMALL FRANKLIN PRUDENTIAL DIVERSIFIED
EQUITY INTERNATIONAL POST-VENTURE CAPITALIZATION AMERICAN SMALL CAP 20/20 CONSERVATIVE
INCOME STOCK CAPITAL STOCK CENTURY VP GROWTH FOCUS GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO VALUE FUND PORTFOLIO* PORTFOLIO*
--------- --------- --------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 302,337 $ 20,370 $ 0 $ 0 $ 2,743 $ 898 $ 8,757 $ 381,387
--------- ---------- ---------- -------- --------- ---------- -------- ---------
218,225 53,605 29,652 35,775 15,560 20,780 19,522 38,853
--------- ---------- ---------- -------- --------- ---------- -------- ---------
84,112 (33,235) (29,652) (35,775) (12,817) (19,882) (10,765) 342,534
--------- ---------- ---------- -------- --------- ---------- -------- ---------
724,724 64,020 0 23,062 25,992 9,272 1,055 0
97,954 47,077 39,525 (29,180) (4,884) 8,739 43,712 503,805
(659,400) 1,220,987 1,314,182 443,217 (170,884) 1,248,012 588,285 (397,267)
--------- ---------- ---------- -------- --------- ---------- -------- ---------
163,278 1,332,084 1,353,707 437,099 (149,776) 1,266,023 633,052 106,538
--------- ---------- ---------- -------- --------- ---------- -------- ---------
$ 247,390 $1,298,849 $1,324,055 $401,324 $(162,593) $1,246,141 $622,287 $ 449,072
========= ========== ========== ======== ========= ========== ======== =========
</TABLE>
* Became available on May 3, 1999
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A8
<PAGE> 85
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the periods ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------
PRUDENTIAL PRUDENTIAL
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
-------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...................................... $ 745,675 $ 388,558 $ (630,761) $ 1,140,482
Capital gains distributions received .............................. 0 0 109,889 55,251
Realized gain (loss) on shares redeemed ........................... 0 0 (35,648) (1,277)
Net change in unrealized gain (loss) on investments ............... 0 0 (257,741) (220,174)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ......................................... 745,675 388,558 (814,261) 974,282
----------- ----------- ----------- -----------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments ....................................... 20,587,959 18,308,790 25,513,762 26,338,579
Surrenders, Withdrawals and Death Benefits ........................ (1,560,658) (590,456) (2,622,110) (754,090)
Net Transfers From (To) Other Subaccounts or Fixed Rate Option .... (9,451,903) (5,502,058) (2,738,166) 2,425,538
Withdrawal Charge ................................................. (4,267) (906) (13,810) (2,759)
----------- ----------- ----------- -----------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS ......................................... 9,571,131 12,215,370 20,139,676 28,007,268
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7] .................................. 0 (262,762) 0 (102,106)
----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ........................................ 10,316,806 12,341,166 19,325,415 28,879,444
NET ASSETS:
Beginning of period ............................................... 18,435,774 6,094,608 34,045,791 5,166,347
----------- ----------- ----------- -----------
End of period ..................................................... $28,752,580 $18,435,774 $53,371,206 $34,045,791
=========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A9
<PAGE> 86
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
HIGH YIELD BOND STOCK INDEX EQUITY INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- --------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998 1999 1998
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (366,349) $ 1,926,123 $ (176,090) $ (498) $ 433,830 $ 461,464 $ 211,078 $ 218,818
0 0 949,132 685,310 5,329,219 2,112,014 7,676,793 4,709,227
(338,945) (66,919) 597,412 (15,648) (449,569) (132,522) (157,198) (23,763)
1,670,217 (3,362,203) 10,649,026 6,220,619 (957,621) (5,326,474) (2,245,221) (3,841,284)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
964,923 (1,502,999) 12,019,480 6,889,783 4,355,859 (2,885,518) 5,485,452 1,062,998
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
11,536,600 23,904,670 27,516,374 29,771,169 10,395,500 33,802,922 23,050,765 30,494,085
(2,796,061) (654,641) (2,569,693) (1,266,564) (2,776,500) (1,336,359) (3,369,896) (1,135,559)
(2,836,829) 271,531 1,936,162 (125,011) (3,807,475) 867,586 (1,203,966) 699,976
(11,597) (3,313) (20,898) (7,572) (17,330) (5,784) (20,687) (8,237)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
5,892,113 23,518,247 26,861,945 28,372,022 3,794,195 33,328,365 18,456,216 30,050,265
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
0 (15,650) 0 34,044 0 109,447 0 70,773
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
6,857,036 21,999,598 38,881,425 35,295,849 8,150,054 30,552,294 23,941,668 31,184,036
28,841,374 6,841,776 48,057,625 12,761,776 40,486,580 9,934,286 44,644,003 13,459,967
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$35,698,410 $28,841,374 $86,939,050 $48,057,625 $48,636,634 $40,486,580 $68,585,671 $44,644,003
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A10
<PAGE> 87
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the periods ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------
PRUDENTIAL PRUDENTIAL
JENNISON GLOBAL
PORTFOLIO PORTFOLIO
--------------------------- --------------------------
1999 1998 1999 1998
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....................................... $ (795,336) $ (251,819) $ (84,519) $ 5,439
Capital gains distributions received ............................... 4,118,355 522,676 50,018 196,136
Realized gain (loss) on shares redeemed ............................ 978,248 (23,766) 131,717 (4,864)
Net change in unrealized gain (loss) on investments ................ 21,649,324 6,793,178 3,919,633 455,299
------------ ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .......................................... 25,950,591 7,040,269 4,016,849 652,010
------------ ----------- ----------- ----------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments ........................................ 33,031,211 24,608,849 5,088,201 2,481,167
Surrenders, Withdrawals and Death Benefits ......................... (3,231,132) (650,657) (408,097) (217,230)
Net Transfers From (To) Other Subaccounts or Fixed Rate Option ..... 10,694,501 1,768,266 364,430 (24,347)
Withdrawal Charge .................................................. (21,415) (4,533) (2,247) (948)
------------ ----------- ----------- ----------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS .......................................... 40,473,165 25,721,925 5,042,287 2,238,642
------------ ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7] ................................... 0 76,083 0 6,656
------------ ----------- ----------- ----------
TOTAL INCREASE IN NET ASSETS ......................................... 66,423,756 32,838,277 9,059,136 2,897,308
NET ASSETS:
Beginning of period ................................................ 39,285,619 6,447,342 4,844,702 1,947,394
------------ ----------- ----------- ----------
End of period ...................................................... $105,709,375 $39,285,619 $13,903,838 $4,844,702
============ =========== =========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A11
<PAGE> 88
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------------
JANUS ASPEN
AIM V.I. JANUS ASPEN INTERNATIONAL
GROWTH AND AIM V.I. GROWTH GROWTH
INCOME FUND VALUE FUND PORTFOLIO PORTFOLIO
--------------------------- --------------------------- --------------------------- --------------------------
1999 1998 1999 1998 1999 1998 1999 1998
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (89,148) $ (51,921) $ (188,475) $ (48,549) $ (202,693) $ 129,843 $ (171,749) $ 28,744
61,885 87,186 403,982 450,290 88,325 171,381 0 20,343
115,409 4,610 130,602 (535) 173,572 (5,570) 157,018 15,256
3,932,741 1,461,242 4,885,809 1,671,765 7,276,124 1,674,117 11,553,620 803,166
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
4,020,887 1,501,117 5,231,918 2,072,971 7,335,328 1,969,771 11,538,889 867,509
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
5,166,436 4,951,267 12,644,254 5,515,714 10,424,660 4,882,924 6,247,580 5,187,370
(525,606) (132,626) (1,273,721) (202,116) (581,178) (108,984) (601,028) (270,571)
330,039 (311,867) 2,065,982 218,523 3,802,129 390,842 45,025 404,030
(4,104) (1,439) (4,688) (1,821) (4,727) (1,601) (4,632) (2,669)
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
4,966,765 4,505,335 13,431,827 5,530,300 13,640,884 5,163,181 5,686,945 5,318,160
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
0 (66,268) 0 5,014 0 (19,268) 0 (81,593)
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
8,987,652 5,940,184 18,663,745 7,608,285 20,976,212 7,113,684 17,225,834 6,104,076
9,129,905 3,189,721 11,069,271 3,460,986 10,034,910 2,921,226 10,661,915 4,557,839
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
$18,117,557 $9,129,905 $29,733,016 $11,069,271 $31,011,122 $10,034,910 $27,887,749 $10,661,915
=========== ========== =========== =========== =========== =========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A12
<PAGE> 89
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the periods ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------
MFS
EMERGING MFS
GROWTH SERIES RESEARCH SERIES
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...................................... $ (244,459) $ (99,739) $ (94,847) $ (60,254)
Capital gains distributions received .............................. 0 48,546 77,540 89,748
Realized gain (loss) on shares redeemed ........................... 282,067 17,411 178,470 8,037
Net change in unrealized gain (loss) on investments ............... 12,666,424 2,185,347 1,609,825 848,009
----------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ......................................... 12,704,032 2,151,565 1,770,988 885,540
----------- ----------- ---------- ----------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments ....................................... 6,302,950 6,934,305 2,112,145 3,284,005
Surrenders, Withdrawals and Death Benefits ........................ (1,002,137) (149,038) (582,758) (156,768)
Net Transfers From (To) Other Subaccounts or Fixed Rate Option .... 904,500 420,695 (100,128) 137,403
Withdrawal Charge ................................................. (5,935) (1,900) (2,312) (1,267)
----------- ----------- ---------- ----------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS ......................................... 6,199,378 7,204,062 1,426,947 3,263,373
----------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7] .................................. 0 (12,836) 0 (12,594)
----------- ----------- ---------- ----------
TOTAL INCREASE IN NET ASSETS ........................................ 18,903,410 9,342,791 3,197,935 4,136,319
NET ASSETS:
Beginning of period ............................................... 12,416,397 3,073,606 6,784,944 2,648,625
----------- ----------- ---------- ----------
End of period ..................................................... $31,319,807 $12,416,397 $9,982,879 $6,784,944
=========== =========== ========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A13
<PAGE> 90
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------------------------------
OCC OCC T. ROWE PRICE
ACCUMULATION TRUST ACCUMULATION TRUST T. ROWE PRICE INTERNATIONAL
MANAGED SMALL CAP EQUITY INCOME STOCK
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- -------------------------- ---------------------------- --------------------------
1999 1998 1999 1998 1999 1998 1999 1998
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,081 $ (201,320) $ (60,909) $ (70,008) $ 84,112 $ 85,275 $ (33,235) $ 3,899
1,001,944 390,487 0 132,949 724,724 402,942 64,020 12,753
101,347 (33,042) (107,172) (87,824) 97,954 920 47,077 (1,816)
40,116 262,512 (53,970) (726,536) (659,400) 113,818 1,220,987 258,507
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
1,146,488 418,637 (222,051) (751,419) 247,390 602,955 1,298,849 273,343
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
5,808,566 19,620,342 1,634,865 5,267,682 4,344,662 8,126,207 1,459,317 1,445,262
(1,697,629) (685,019) (372,014) (429,739) (681,456) (253,996) (99,219) (30,350)
(2,100,849) 498,744 (192,001) 323,120 (557,938) 98,585 (120,911) 121,453
(13,260) (5,090) (2,815) (1,432) (6,226) (2,839) (1,019) (655)
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
1,996,828 19,428,977 1,068,035 5,159,631 3,099,042 7,967,957 1,238,168 1,535,710
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
0 65,279 0 (26,238) 0 (55,800) 0 (44,233)
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
3,143,316 19,912,893 845,984 4,381,974 3,346,432 8,515,112 2,537,017 1,764,820
29,176,808 9,263,915 7,742,780 3,360,806 13,721,549 5,206,437 3,167,726 1,402,906
----------- ----------- ---------- ---------- ----------- ----------- ---------- ----------
$32,320,124 $29,176,808 $8,588,764 $7,742,780 $17,067,981 $13,721,549 $5,704,743 $3,167,726
=========== =========== ========== ========== =========== =========== ========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A14
<PAGE> 91
FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the periods ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------
WARBURG PINCUS PRUDENTIAL
POST-VENTURE SMALL CAPITALIZATION
CAPITAL STOCK
PORTFOLIO PORTFOLIO*
-------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ...................................... $ (29,652) $ (17,026) $ (35,775) $ 22
Capital gains distributions received .............................. 0 0 23,062 28,379
Realized gain (loss) on shares redeemed ........................... 39,525 (9,485) (29,180) 1,244
Net change in unrealized gain (loss) on investments ............... 1,314,182 78,797 443,217 35,630
---------- ---------- ----------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ......................................... 1,324,055 52,286 401,324 65,275
---------- ---------- ----------- --------
ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS
Contract Owner Net Payments ....................................... 895,813 1,012,106 5,611,087 516,286
Surrenders, Withdrawals and Death Benefits ........................ (138,965) (12,105) (73,905) (593)
Net Transfers From (To) Other Subaccounts or Fixed Rate Option .... (22,107) 35,849 (1,723,101) 64,252
Withdrawal Charge ................................................. (943) (520) (319) 0
---------- ---------- ----------- --------
TOTAL ANNUITY PAYMENTS AND
OTHER OPERATING TRANSFERS ......................................... 733,798 1,035,330 3,813,762 579,945
---------- ---------- ----------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RETAINED IN THE ACCOUNT [Note 7] .................................. 0 (36,828) 0 (842)
---------- ---------- ----------- --------
TOTAL INCREASE IN NET ASSETS ........................................ 2,057,853 1,050,788 4,215,086 644,378
NET ASSETS:
Beginning of period ............................................... 1,757,173 706,385 644,378 0
---------- ---------- ----------- --------
End of period ..................................................... $3,815,026 $1,757,173 $ 4,859,464 $644,378
========== ========== =========== ========
</TABLE>
* Became available on September 1, 1998
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A15
<PAGE> 92
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------------------------
FRANKLIN PRUDENTIAL
AMERICAN SMALL CAP PRUDENTIAL DIVERSIFIED
CENTURY VP GROWTH 20/20 FOCUS CONSERVATIVE GROWTH
VALUE* FUND* PORTFOLIO** PORTFOLIO**
------------------------------- ------------------------------- ----------- -------------------
1999 1998 1999 1998 1999 1999
---------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ (12,817) $ (270) $ (19,882) $ (491) $ (10,765) $ 342,534
25,992 0 9,272 0 1,055 0
(4,884) 109 8,739 (141) 43,712 503,805
(170,884) 3,508 1,248,012 30,781 588,285 (397,267)
---------- -------- ---------- ---------- ---------- ----------
(162,593) 3,347 1,246,141 30,149 622,287 449,072
---------- -------- ---------- ---------- ---------- ----------
2,025,894 131,048 2,090,380 224,651 3,536,510 7,341,487
(25,889) (384) (55,042) (99) (66,772) (130,748)
418,783 10,141 589,566 60,831 1,242,428 557,551
(101) 0 (143) (4) (119) (18)
---------- -------- ---------- ---------- ---------- ----------
2,418,687 140,805 2,624,761 285,379 4,712,047 7,768,272
---------- -------- ---------- ---------- ---------- ----------
0 (18) 0 (166) 0 0
---------- -------- ---------- ---------- ---------- ----------
2,256,094 144,134 3,870,902 315,362 5,334,334 8,217,344
144,134 0 315,362 0 0 0
---------- -------- ---------- ---------- ---------- ----------
$2,400,228 $144,134 $4,186,264 $ 315,362 $5,334,334 $8,217,344
========== ======== ========== ========== ========== ==========
</TABLE>
* Became available on September 1, 1998
** Became available on May 3, 1999
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A17 THROUGH A22
A16
<PAGE> 93
NOTES TO FINANCIAL STATEMENTS OF THE
DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS
OF THE PRUCO LIFE OF NEW JERSEY
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
DECEMBER 31, 1999
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. Proceeds from
the purchases of Discovery Select Variable Annuity contracts
("Discovery Select") and Discovery Choice Variable Annuity contracts
("Discovery Choice") are invested in the Account. At December 31, 1999
there were no balances pertaining to Discovery Choice in the
subaccounts investing in the Series Fund or the non-Prudential
administered funds.
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-four
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 and Discovery Choice Variable Annuity subaccounts
of the Pruco Life of New Jersey Flexible Premium Variable Annuity
Account became available on January 24, 1997 and May 1, 1999,
respectively.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with
accounting principles generally accepted in the United States
("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.
A17
<PAGE> 94
NOTE 3: INVESTMENT INFORMATION FOR THE PRUCO LIFE OF NEW JERSEY FLEXIBLE
PREMIUM VARIABLE ANNUITY ACCOUNT
The net asset value per share for each portfolio of the Series Fund or
the non-Prudential administered funds, the number of shares (rounded)
of each portfolio held by the subaccounts of the Account and the
aggregate cost of investments in such shares at December 31, 1999 were
as follows:
<TABLE>
<CAPTION>
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 (rounded): 2,875,258 4,874,083 4,747,129 1,955,884 2,491,631
Net asset value per share: $ 10.00 $ 10.95 $ 7.52 $ 44.45 $ 19.52
Cost: $28,752,580 $53,937,072 $37,417,547 $69,429,200 $55,025,972
</TABLE>
<TABLE>
<CAPTION>
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 (rounded): 2,373,207 3,263,642 448,800 573,522 887,553
Net asset value per share: $ 28.90 $ 32.39 $ 30.98 $ 31.59 $ 33.50
Cost: $74,758,421 $77,250,647 $ 9,669,173 $12,541,566 $23,058,648
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN MFS OCC
JANUS ASPEN INTERNATIONAL EMERGING MFS ACCUMULATION
GROWTH GROWTH GROWTH RESEARCH TRUST MANAGED
PORTFOLIO PORTFOLIO SERIES SERIES PORTFOLIO
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Number of shares (rounded): 921,579 721,173 825,509 427,715 740,438
Net asset value per share: $ 33.65 $ 38.67 $ 37.94 $ 23.34 $ 43.65
Cost: $21,889,280 $15,467,073 $16,209,430 $ 7,360,420 $31,506,065
</TABLE>
<TABLE>
<CAPTION>
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 (rounded): 381,384 911,264 299,619 198,080 299,044
Net asset value per share: $ 22.52 $ 18.73 $ 19.04 $ 19.26 $ 16.25
Cost: $ 9,220,616 $17,304,984 $ 4,309,652 $ 2,370,755 $ 4,380,617
</TABLE>
<TABLE>
<CAPTION>
PRUDENTIAL
PRUDENTIAL DIVERSIFIED
AMERICAN FRANKLIN 20/20 CONSERVATIVE
CENTURY SMALL CAP FOCUS GROWTH
VP VALUE* GROWTH FUND* PORTFOLIO** PORTFOLIO**
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Number of shares (rounded): 403,400 265,964 449,018 792,415
Net asset value per share: $ 5.95 $ 15.74 $ 11.88 $ 10.37
Cost: $ 2,567,604 $ 2,907,471 $ 4,746,049 $ 8,614,611
</TABLE>
* Became available on September 1, 1998
** Became available on May 3, 1999
A18
<PAGE> 95
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding contract owner units (rounded), unit values and total
value of contract owner equity at December 31, 1999 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
(rounded) .................................... 24,579,687 45,438,932 28,531,566 38,786,276 27,398,451
Unit Value ................................... $ 1.16977 $ 1.17457 $ 1.25119 $ 2.24149 $ 1.77516
----------- ------------ ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY .................... $28,752,580 $ 53,371,206 $35,698,410 $86,939,050 $48,636,634
=========== ============ =========== =========== ===========
</TABLE>
<TABLE>
<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
(rounded) .................................... 38,608,928 37,559,381 6,113,646 8,448,068 13,887,703
Unit Value ................................... $ 1.77642 $ 2.81446 $ 2.27423 $ 2.14458 $ 2.14096
----------- ------------ ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY .................... $68,585,671 $105,709,375 $13,903,838 $18,117,557 $29,733,016
=========== ============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------
JANUS MFS OCC
JANUS ASPEN INTERNATIONAL EMERGING MFS ACCUMULATION
GROWTH GROWTH GROWTH RESEARCH MANAGED
PORTFOLIO PORTFOLIO SERIES SERIES PORTFOLIO
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding
(rounded) .................................... 13,375,166 10,899,400 11,792,762 5,510,866 23,288,748
Unit Value ................................... $ 2.31856 $ 2.55865 $ 2.65585 $ 1.81149 $ 1.38780
----------- ------------ ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY .................... $31,011,122 $ 27,887,749 $31,319,807 $ 9,982,879 $32,320,124
=========== ============ =========== =========== ===========
</TABLE>
<TABLE>
<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
(rounded) .................................... 7,804,349 11,645,491 3,593,199 2,104,691 3,488,013
Unit Value ................................... $ 1.10051 $ 1.46563 $ 1.58765 $ 1.81263 $ 1.39319
----------- ------------ ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY .................... $ 8,588,764 $ 17,067,981 $ 5,704,743 $ 3,815,026 $ 4,859,464
=========== ============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------
PRUDENTIAL
PRUDENTIAL DIVERSIFIED
AMERICAN FRANKLIN 20/20 CONSERVATIVE
CENTURY SMALL CAP FOCUS GROWTH
VP VALUE* GROWTH FUND* PORTFOLIO** PORTFOLIO**
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Contract Owner Units Outstanding
(rounded) .................................... 2,092,340 1,955,833 4,526,683 7,816,513
Unit Value ................................... $ 1.14715 $ 2.14040 $ 1.17842 $ 1.05128
----------- ------------ ----------- -----------
TOTAL CONTRACT OWNER EQUITY .................... $ 2,400,228 $ 4,186,264 $ 5,334,334 $ 8,217,344
=========== ============ =========== ===========
</TABLE>
* Became available on September 1, 1998
** Became available on May 3, 1999
A19
<PAGE> 96
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.
B. Administration Charge
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.
A20
<PAGE> 97
NOTE 8: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts) for the
years ended December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY DIVERSIFIED HIGH YIELD
MARKET BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 33,897,097 22,847,069 25,761,635 26,289,325 11,763,945 20,814,498
Contract Owner Redemptions: (25,634,420) (11,896,512) (8,699,635) (2,363,752) (7,010,058) (2,434,026)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL
STOCK INDEX EQUITY INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 18,376,082 19,792,548 7,863,227 21,415,860 15,834,124 20,939,711
Contract Owner Redemptions: (5,079,159) (2,847,138) (5,775,217) (2,083,915) (5,102,608) (2,125,152)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------------------
AIM V.I.
PRUDENTIAL PRUDENTIAL GROWTH AND
JENNISON GLOBAL INCOME
PORTFOLIO PORTFOLIO FUND
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 24,417,751 16,411,856 3,721,323 2,051,714 3,639,248 3,927,853
Contract Owner Redemptions: (6,437,450) (1,188,911) (722,920) (481,055) (827,759) (705,704)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------------------
AIM V.I. JANUS ASPEN JANUS ASPEN
VALUE GROWTH INTERNATIONAL
FUND PORTFOLIO GROWTH PORTFOLIO
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 8,587,786 4,507,581 8,238,129 4,136,299 4,827,570 4,602,117
Contract Owner Redemptions: (1,323,432) (572,109) (1,008,870) (351,019) (1,418,784) (738,443)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------------------
MFS OCC
EMERGING MFS ACCUMULATION
GROWTH RESEARCH TRUST MANAGED
SERIES SERIES PORTFOLIO
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 5,128,422 6,101,761 1,681,969 2,848,755 5,334,023 16,105,759
Contract Owner Redemptions: (1,483,651) (590,675) (754,038) (425,082) (3,815,439) (1,637,607)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------------------
OCC T. ROWE PRICE T. ROWE PRICE
ACCUMULATION EQUITY INTERNATIONAL
TRUST SMALL CAP INCOME STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 2,444,933 5,096,373 3,692,979 6,462,462 1,432,991 1,496,184
Contract Owner Redemptions: (1,452,334) (915,114) (1,624,397) (731,820) (463,232) (159,534)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------------------
PRUDENTIAL
WARBURG PINCUS SMALL
POST-VENTURE CAPITALIZATION AMERICAN
CAPITAL STOCK CENTURY
PORTFOLIO PORTFOLIO VP VALUE*
---------------------------- ----------------------------- ------------------------
1999 1998 1999 1998 1999 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner Contributions: 922,360 1,091,791 4,762,945 517,841 2,093,750 126,750
Contract Owner Redemptions: (375,563) (153,538) (1,788,983) (3,791) (124,281) (3,879)
</TABLE>
* Became available on September 1, 1998
A21
<PAGE> 98
NOTE 8: UNIT ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL
FRANKLIN 20/20 DIVERSIFIED
SMALL CAP FOCUS CONSERVATIVE
GROWTH FUND* PORTFOLIO** GROWTH PORTFOLIO**
---------------------------- ----------- ------------------
1999 1998 1999 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Contract Owner Contributions: 1,819,593 253,707 4,691,336 7,998,404
Contract Owner Redemptions: (117,111) (357) (164,653) (181,891)
</TABLE>
* Became available on September 1, 1998
** Became available on May 3, 1999
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, 1999 were as follows:
<TABLE>
<CAPTION>
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>
Purchases ..... $ 27,904,150 $ 22,307,229 $ 9,722,804 $ 29,724,824 $ 8,074,632
Sales ......... $ (18,628,409) $ (2,798,314) $ (4,279,528) $ (3,781,575) $ (4,906,687)
</TABLE>
<TABLE>
<CAPTION>
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>
Purchases ..... $ 20,000,549 $ 44,896,974 $ 5,817,008 $ 5,318,239 $ 13,909,004
Sales ......... $ (2,330,298) $ (5,328,676) $ (887,767) $ (530,250) $ (742,905)
</TABLE>
<TABLE>
<CAPTION>
JANUS ASPEN MFS OCC
JANUS ASPEN INTERNATIONAL EMERGING MFS ACCUMULATION
GROWTH GROWTH GROWTH RESEARCH TRUST MANAGED
PORTFOLIO PORTFOLIO SERIES SERIES PORTFOLIO
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Purchases ..... $ 14,189,045 $ 6,511,134 $ 6,934,050 $ 2,502,062 $ 5,019,838
Sales ......... $ (797,261) $ (1,030,940) $ (979,130) $ (1,184,635) $ (3,466,436)
</TABLE>
<TABLE>
<CAPTION>
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>
Purchases ..... $ 2,014,304 $ 4,344,601 $ 1,724,215 $ 1,013,868 $ 5,829,971
Sales ......... $ (1,056,126) $ (1,463,784) $ (539,652) $ (309,721) $ (2,051,985)
</TABLE>
<TABLE>
<CAPTION>
PRUDENTIAL
PRUDENTIAL DIVERSIFIED
AMERICAN FRANKLIN 20/20 CONSERVATIVE
CENTURY SMALL CAP FOCUS GROWTH
VP VALUE GROWTH FUND PORTFOLIO** PORTFOLIO**
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Purchases ..... $ 2,504,097 $ 2,684,499 $ 14,566,429 $ 57,104,087
Sales ......... $ (100,969) $ (80,518) $ (10,288,093) $ (49,086,434)
</TABLE>
** Became available on May 3, 1999
NOTE 10: SUBSEQUENT EVENT
As of May 1, 2000 the Warburg Pincus Post-Venture Capital Portfolio's
name is being changed to the Global Post-Venture Capital Portfolio.
This will have no effect on the contract owner's account or the
related unit value.
A22
<PAGE> 99
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of the Discovery Select Subaccounts of
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, Franklin Templeton Small Cap Growth Fund, Prudential
20/20 Focus Portfolio and Prudential Diversified Conservative Growth Portfolio)
of the Discovery Select Subaccounts of Pruco Life of New Jersey Flexible Premium
Variable Annuity Account at December 31, 1999, the results of each of their
operations for the period then ended (for the period May 3, 1999 through
December 31, 1999 for Prudential 20/20 Focus Portfolio and Prudential
Diversified Conservative Growth Portfolio) and the changes in each of their net
assets for the period ended December 31, 1999 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 and for
the period May 3, 1999 for Prudential 20/20 Focus Portfolio and Prudential
Diversified Conservative Growth Portfolio in conformity with accounting
principles generally accepted in the United States. 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 auditing standards generally accepted in the
United States 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, 1999,
provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
March 17, 2000
A23
<PAGE> 100
CONSOLIDATED FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Financial Position
December 31, 1999 and 1998 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
----------------- ---------------
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 1999: $604,223; and $ 585,271 $ 622,990
1998: $617,758)
Held to maturity, at amortized cost (fair value, 1999: $6,938) 7,470 -
Policy loans 143,815 139,443
Short-term investments 27,473 53,761
Other long-term investments 2,520 2,421
----------------- ---------------
Total investments 766,549 818,615
Cash 117 45
Deferred policy acquisition costs 129,184 113,923
Accrued investment income 12,492 12,209
Receivables from affiliate 16,231 -
Other assets 474 15,379
Separate Account assets 1,827,484 1,450,986
----------------- ---------------
TOTAL ASSETS $2,752,531 $2,411,157
================= ===============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances $ 414,917 $ 414,546
Future policy benefits and other policyholder liabilities 105,861 89,832
Cash collateral for loaned securities 17,900 34,424
Securities sold under agreements to repurchase - 27,210
Income taxes payable 27,829 25,325
Payables to affiliate - 3,492
Other liabilities 7,571 19,489
Separate Account liabilities 1,827,484 1,450,986
----------------- ---------------
Total liabilities 2,401,562 2,065,304
----------------- ---------------
Contingencies - (See Footnote 11)
Stockholder's Equity
Common stock, $5 par value;
400,000 shares, authorized;
issued and outstanding at
December 31, 1999 and 1998 2,000 2,000
Paid-in-capital 125,000 125,000
Retained earnings 230,057 217,260
Accumulated other comprehensive (loss) income (6,088) 1,593
----------------- ---------------
Total stockholder's equity 350,969 345,853
----------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,752,531 $2,411,157
================= ===============
</TABLE>
See Notes to Financial Statements
B1
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Operations and Comprehensive Income
Years Ended December 31, 1999, 1998, and 1997 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ----------------- ----------------
<S> <C> <C> <C>
REVENUES
Premiums $ 6,742 $ 7,282 $ 6,832
Policy charges and fee income 52,714 53,152 56,687
Net investment income 47,600 47,032 46,324
Realized investment (losses) gains, net (5,013) 8,446 1,707
Asset management fees 7,407 5,641 5,287
Other income 386 114 -
---------------- ----------------- ----------------
Total revenues 109,836 121,667 116,837
---------------- ----------------- ----------------
BENEFITS AND EXPENSES
Policyholders' benefits 26,237 30,679 39,727
Interest credited to policyholders' account 18,846 19,038 19,372
balances
General, administrative and other expenses 45,065 22,557 27,541
---------------- ----------------- ----------------
Total benefits and expenses 90,148 72,274 86,640
---------------- ----------------- ----------------
Income from operations before income taxes 19,688 49,393 30,197
---------------- ----------------- ----------------
Income tax provision 6,891 17,570 10,974
---------------- ----------------- ----------------
NET INCOME $ 12,797 $ 31,823 $ 19,223
================ ================= ================
Net unrealized investment (losses) gains on
securities, net of reclassification adjustment and
taxes (7,681) (1,363) 924
---------------- ----------------- ----------------
TOTAL COMPREHENSIVE INCOME $ 5,116 $ 30,460 $ 20,147
================ ================= ================
</TABLE>
See Notes to Financial Statements
B2
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Changes in Stockholder's Equity
Years Ended December 31, 1999, 1998, and 1997 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated
other Total
Common Paid - in - Retained comprehensive stockholder's
stock capital earnings income (loss) equity
------------ ----------- --------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 2,000 $ 125,000 $ 166,214 $ 2,032 $ 295,246
Net income - - 19,223 - 19,223
Change in net unrealized
investment (losses) gains,
net of reclassification
and taxes 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 (losses) gains,
net of reclassification
and taxes - - - (1,363) (1,363)
--------- --------- --------- --------- ---------
Balance, December 31, 1998 2,000 125,000 217,260 1,593 345,853
Net income - - 12,797 - 12,797
Change in net unrealized
investment (losses) gains,
net of reclassification
and taxes - - - (7,681) (7,681)
--------- --------- --------- --------- ---------
Balance, December 31, 1999 $ 2,000 $ 125,000 $ 230,057 $ (6,088) $ 350,969
========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements
B3
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Cash Flows
Years Ended December 31, 1999, 1998, and 1997 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,797 $ 31,823 $ 19,223
Adjustments to reconcile net income to net cash (used in)
provided by
operating activities:
Policy charges and fee income (11,399) (5,180) (7,841)
Interest credited to policyholders' account balances 18,846 19,038 19,372
Realized investment losses (gains), net 5,013 (8,446) (1,707)
Amortization and other non-cash items 18,092 2,497 (342)
Change in:
Future policy benefits and other policyholders' 16,029 5,304 8,277
liabilities
Accrued investment income (283) 1,866 (1,167)
Policy loans (4,372) (12,137) (13,388)
Payable to affiliates (19,723) (815) (1,752)
Deferred policy acquisition costs (15,261) (12,298) 5,340
Income taxes payable 2,504 (9,826) 9,006
Other, net 2,987 (8,954) 2,812
----------- ----------- -----------
Cash Flows From Operating Activities 25,230 2,872 37,833
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 702,380 1,001,096 645,355
Payments for the purchase of:
Fixed maturities:
Available for sale (695,198) (1,029,988) (679,709)
Held to maturity (7,470) -- --
Other long term investments, net 99 (854) 1,629
Cash collateral for loaned securities, net (16,524) 761 33,663
Securities sold under agreements to repurchase, net (27,210) 27,210 --
Short term investments, net 26,296 (1,297) (35,461)
----------- ----------- -----------
Cash Flows Used in Investing Activities (17,627) (3,072) (34,523)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 256,842 298,391 134,020
Withdrawals (264,373) (298,149) (141,255)
----------- ----------- -----------
Cash Flows (Used in) From Financing Activities (7,531) 242 (7,235)
----------- ----------- -----------
Net increase (decrease) in Cash 72 42 (3,925)
Cash, beginning of year 45 3 3,928
----------- ----------- -----------
CASH, END OF PERIOD $ 117 $ 45 $ 3
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 480 $ 27,083 $ 1,896
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
B4
<PAGE>
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. Prudential is currently considering reorganizing itself into a
publicly traded stock company through a process known as "demutualization."
On February 10, 1998, Prudential's Board of Directors authorized management
to take the preliminary steps necessary to allow Prudential 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 Prudential's Board of Directors, a
public hearing, approval by two-thirds of the qualified policyholders who
vote on the plan review and approval by the New Jersey Department of Banking
and Insurance. Prudential's management is in the process of developing a
proposed plan of demutualization, although there can be no assurance that
Prudential's Board of Directors will approve such a plan. Prudential's
decision whether to demutualize is not expected to have a material effect on
the Company's operations.
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.
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 accounting principles generally accepted in the United States ("GAAP").
The Company has extensive transactions and relationships with Prudential and
other affiliates, as more fully described in Footnote 13. Due to these
relationships, it is possible that the terms of those transactions are not
the same as those that would result from transactions among wholly unrelated
parties.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, in particular deferred policy acquisition costs
("DAC") and future policy benefits, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the period. Actual results could differ from
those estimates.
Investments
Fixed maturities classified as "available for sale" are carried at estimated
fair value. 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 DAC and policyholders' account balances 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, including 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 (losses), net, are computed using the specific
identification method. Costs of fixed maturities are adjusted for impairments
considered to be other than temporary.
Cash
Cash includes cash on hand, amounts due from banks, and money market
instruments.
B5
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Policy acquisition costs related to interest-sensitive products and certain
investment-type products are deferred and amortized over the expected life of
the contracts (periods ranging from 15 to 30 years) in proportion to
estimated gross profits arising principally from investment results,
mortality and expense margins, and surrender charges based on historical and
anticipated future experience, which is updated periodically. The effect of
changes to estimated gross profits on unamortized deferred acquisition costs
is reflected in "General and administrative expenses" in the period such
estimated gross profits are revised.
Securities loaned
Securities loaned are treated as financing arrangements and are recorded at
the amount of cash received as collateral. The Company obtains collateral in
an amount equal to 102% and 105% of the fair value of the domestic and
foreign securities, respectively. The Company monitors the market value of
securities loaned on a daily basis with additional collateral obtained as
necessary. Non-cash collateral received is not reflected in the statements of
financial position because the debtor typically has the right to redeem the
collateral on short notice. Substantially all of the Company's securities
loaned are with large brokerage firms.
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase are treated as financing
arrangements and are carried at the amounts at which the securities will be
subsequently reacquired, including accrued interest, as specified in the
respective agreements. Assets to be repurchased are the same, or
substantially the same, as the assets transferred and the transferor, through
right of substitution, maintains the right and ability to redeem the
collateral on short notice. The market value of securities to be repurchased
is monitored and additional collateral is obtained, where appropriate, to
protect against credit exposure.
Securities lending and securities repurchase agreements are used to generate
net investment income and facilitate trading activity. These instruments are
short-term in nature (usually 30 days or less). Securities loaned are
collateralized principally by U.S. Government and mortgage-backed securities.
Securities sold under repurchase agreements are collateralized principally by
cash. The carrying amounts of these instruments approximate fair value
because of the relatively short period of time between the origination of the
instruments and their expected realization.
Separate Account Assets and Liabilities
Separate Account assets and liabilities are reported at estimated fair value
and represent segregated funds which are invested for certain policyholders
and other customers. 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
Consolidated Statements of Operations. Mortality, policy administration and
surrender charges on the accounts are included in "Policy charges and fee
income."
B6
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 individual annuities
in payout status, a liability for future policy benefits is recorded for the
present value of expected future payments based on historical experience.
Amounts received as payment for interest sensitive life, 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 DAC.
Asset Management Fees
The Company receives asset management fee income from Separate Account
policyholder account balances invested in the Prudential Series Fund ("PSF").
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
seek to reduce 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 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 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.
B7
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("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 does not
apply to most traditional insurance contracts. However, certain hybrid
contracts that contain features which may 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.
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).
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
derivatives 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, as amended, as of January 1, 2001 and is currently
assessing the effect of the new standard.
In October 1998, the American Institute of Certified Public Accountants
("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 presentation.
B8
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
3. INVESTMENTS
Fixed Maturities
The following tables provide additional information relating to fixed
maturities as of December 31:
<TABLE>
<CAPTION>
1999
--------------------------------------------------------------
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 $ 9,489 $ - $ 63 $ 9,426
Foreign government bonds 5,000 - 68 4,932
Corporate Securities 588,695 681 19,499 569,877
Mortgage-backed securities 1,039 - 3 1,036
--------- ------- -------- ---------
Total fixed maturities available for $ 604,223 $ 681 $ 19,633 $ 585,271
sale
Fixed Maturities held to maturity
Corporate Securities $ 7,470 $ - $ 531 $ 6,938
--------- ------- -------- ---------
Total fixed maturities held to $ 7,470 $ - $ 532 $ 6,938
maturity
========= ======== ======== =========
</TABLE>
<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 529,844 7,273 2,633 534,484
Mortgage-backed securities 1,507 - 1 1,506
--------- ------- -------- ---------
Total fixed maturities available for
sale $ 617,758 $ 8,420 $ 3,188 $ 622,990
========= ======== ======== =========
</TABLE>
B9
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The amortized cost and estimated fair value of fixed maturities, categorized
by contractual maturities at December 31, 1999, are shown below:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
------------------------------------ ---------------------------------------
Amortized Estimated Fair Amortized Estimated Fair
Cost Value Cost Value
------------------------------------ ------------------- ------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 78,150 $ 76,922 $ - $ -
Due after one year through five 187,710 183,686 - -
years
Due after five years through ten 268,224 257,241 7,470 6,938
years
Due after ten years 70,139 67,422 - -
---------- ----------- --------- ----------
Total $ 604,223 $ 585,271 $ 7,470 $ 6,938
========== =========== ========= ==========
</TABLE>
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 1999,
1998, and 1997 were $698.8 million, $990.7 million, and $635.4 million,
respectively. Gross gains of $3.5 million, $8.8 million, and $2.9 million,
and gross losses of $8.0 million, $1.8 million, and $1.2 million were
realized on those sales during 1999, 1998, and 1997, respectively. Proceeds
from maturities of fixed maturities available for sale during 1999, 1998, and
1997 were $3.6 million, $10.4 million, and $10.0 million, respectively.
During the years ended December 31, 1999, 1998, and 1997, there were no
securities classified as held to maturity that were sold.
Special Deposits
Fixed maturities of $.5 million at both December 31, 1999 and 1998
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>
1999 1998 1997
---------- ---------- -----------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities - AFS & HTM $ 39,538 $ 39,478 $ 37,563
Policy loans 7,641 7,350 6,596
Short-term investments 2,516 3,502 3,023
Other 60 (842) 333
--------- --------- ----------
Gross investment income 49,755 49,488 47,515
Less investment expenses (2,155) (2,456) (1,191)
--------- --------- ----------
Net investment income $ 47,600 $ 47,032 $ 46,324
========= ========== ==========
Realized investment gains (losses), net, including charges for other than
temporary reductions in value, for the years ended December 31, were as
follows:
1999 1998 1997
------------------ ------------------ -------------------
(In Thousands)
Realized investment gains $ 6,436 $ 17,957 $ 2,898
Realized investment losses (11,449) (9,511) (1,191)
---------- ---------- ---------
Realized investment (losses) gains, net $ (5,013) $ 8,446 $ 1,707
========== ========== =========
</TABLE>
B10
<PAGE>
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 including in "Other comprehensive income (loss)" those
items that are included as part of "net income" for a period that also had
been part of "Other comprehensive income (loss)" in earlier periods. The
amounts for the years ended December 31, net of tax, are as follows:
<TABLE>
<CAPTION>
Accumulated
other
comprehensive
income (loss)
Deferred Deferred related to net
Unrealized policy Policyholders' income tax unrealized
gains (losses) acquisition Account (liability) investment
on investments costs Balances benefit gains (losses)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 4,170 $ (1,209) $330 $ (1,259) $ 2,032
Net investment gains on investments
arising during the period 4,788 (1,676) 3,112
Reclassification adjustment for
(losses) included in net income (1,706) 597 (1,109)
Impact of net unrealized investment
(losses) on deferred policy
acquisition costs (2,170) 759 (1,411)
Impact of net unrealized investment
gains on policyholders' account
balances 519 (187) 332
--------- -------- --------- --------- --------
Balance, December 31, 1997 $ 7,252 $ (3,379) $ 849 $ (1,766) $ 2,956
Net investment gains on investments
arising during the period 4,966 (1,662) 3,304
Reclassification adjustment for
(losses) included in net income (6,985) 2,338 (4,647)
Impact of net unrealized investment
(losses) on deferred policy
acquisition costs (166) 58 (108)
Impact of net unrealized investment
gains on policyholders' account
balances 138 (50) 88
--------- -------- --------- --------- --------
Balance, December 31, 1998 $ 5,233 $(3,545) $ 987 $ (1,082) $ 1,593
Net investment (losses) on investments
arising during the period (28,794) 10,366 (18,428)
Reclassification adjustment for gains
included in net income 4,610 (1,660) 2,950
Impact of net unrealized investment
gains on deferred policy acquisition
costs 14,681 (5,285) 9,396
Impact of net unrealized investment
(losses) on policyholders' account
balances (2,499) 900 (1,599)
--------- -------- --------- --------- --------
Balance, December 31, 1999 $ (18,951) $ 11,136 $ (1,512) $ 3,239 $ (6,088)
========= ========= ========= ========= ========
</TABLE>
B11
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
4. DEFERRED POLICY ACQUISITION COSTS
The balance of and changes in deferred policy acquisition costs for the year
ended December 31, are as follows:
<TABLE>
<CAPTION>
1999
---------------------
(In Thousands)
<S> <C>
Balance, beginning of year $ 113,923
Capitalization of commissions, sales and issue 13,439
expenses
Amortization (12,859)
Change in unrealized investment losses 14,681
---------------------
Balance, end of year $ 129,184
=====================
</TABLE>
5. POLICYHOLDERS' LIABILITIES
Future policy benefits and other policyholder liabilities at December 31 are
as follows:
<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
(In Thousands)
<S> <C> <C>
Life insurance $ 100,686 $ 84,825
Annuities 5,175 5,007
------------------- -------------------
$ 105,861 $ 89,832
=================== ===================
</TABLE>
Life insurance liabilities include reserves for death and endowment policy
benefits. Annuity liabilities include reserves for immediate annuities.
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 3.5% to 8.75% Present value of
annuities Mortality Table with expected future payment
certain modifications based on historical
experience
Policyholders' account balances at December 31, are as follows:
<CAPTION>
1999 1998
------------------- -------------------
(In Thousands)
<S> <C> <C>
Individual annuities $ 150,687 $ 148,327
Interest-sensitive life contracts 264,230 266,219
------------------- -------------------
$ 414,917 $ 414,546
=================== ===================
</TABLE>
Policyholders' account balances for interest-sensitive life and individual
annuities 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.
B12
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
5. POLICYHOLDERS' LIABILITIES (continued)
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 4.0% to 5.4 % Various up to 10 years
contracts
Individual annuities 3.0% to 5.6% 0% to 8% for up to 8 years
</TABLE>
6. REINSURANCE
The Company participates in reinsurance with Prudential 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 of the Company in the event the
reinsurers were unable to meet their obligations to the Company under the
terms of the reinsurance agreements. The likelihood of a material reinsurance
liability reassumed by the Company is considered to be remote.
Reinsurance amounts included in the Statement of Operations for the year
ended December 31 are below.
<TABLE>
<CAPTION>
1999 1998 1997
------------------ ------------------ -------------------
(In Thousands)
<S> <C> <C> <C>
Reinsurance premiums ceded - affiliated $ (17) $ (28) $ (12)
================== ================== ===================
Policyholders' benefits ceded $ 0 $ 0 $ 0
================== ================== ===================
</TABLE>
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:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
(In Thousands)
<S> <C> <C>
Life insurance - affiliated $16 $ 31
============ ============
</TABLE>
B13
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
7. INCOME TAXES
The components of income taxes for the years ended December 31, are as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ---------------- -----------------
(In Thousands)
<S> <C> <C> <C>
Current tax expense (benefit):
U.S. $ 6,769 $14,786 $12,880
State and local 178 523 399
----------------- ---------------- -----------------
Total 6,947 15,309 13,279
----------------- ---------------- -----------------
Deferred tax expense (benefit):
U.S. (54) 2,198 (2,305)
State and local (2) 63 -
----------------- ---------------- -----------------
Total (56) 2,261 (2,305)
----------------- ---------------- -----------------
Total income tax expense $ 6,891 $17,570 $10,974
================= ================ =================
</TABLE>
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:
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ---------------- -----------------
(In Thousands)
<S> <C> <C> <C>
Expected federal income tax expense $6,891 $17,288 $10,569
State and local income taxes 115 381 259
Other (115) (99) 146
----------------- ---------------- -----------------
Total income tax expense $6,891 $17,570 $10,974
================= ================ =================
</TABLE>
Deferred tax assets and liabilities at December 31, resulted from the items
listed in the following table:
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
(In Thousands)
<S> <C> <C>
Deferred tax assets:
Insurance reserves $ 9,711 $10,016
Net unrealized (gains) losses on 6,823 (1,884)
securities
Investment gains 2,083 -
---------------- ----------------
Deferred tax assets $18,617 $8,132
---------------- ----------------
Deferred tax liabilities:
Deferred acquisition costs 37,174 28,509
Investment gains - 963
Other 879 2,375
---------------- ----------------
Deferred tax liabilities 38,053 31,847
---------------- ----------------
Net deferred tax liability $19,436 $23,715
================ ================
</TABLE>
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, 1999 and
1998, respectively, the Company had no federal or state operating loss
carryforwards for tax purposes.
B14
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
7. INCOME TAXES (continued)
The Internal Revenue Service (the "Service") has completed examinations of
the consolidated federal income tax returns through 1992. The Service has
begun their examination of the years 1993 through 1995.
8. 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>
1999 1998 1997
------- ------ --------
(In Thousands)
<S> <C> <C> <C>
Statutory net income $ 20,221 $ 18,704 $ 18,306
Adjustments to reconcile to net income on a GAAP basis:
Amortization and capitalization of deferred 580 12,464 (3,170)
acquisition costs
Deferred premium (314) 534 198
Insurance revenues and expenses 983 (808) 2,324
Income taxes (139) (2,973) 2,517
Valuation of investments (3,199) 5,896 1,707
Amortization of IMR (2,089) (2,102) (1,850)
Asset management fees (2,050) -- --
Other, net (1,196) 108 (809)
-------- -------- --------
GAAP net income $ 12,797 $ 31,823 $ 19,223
======== ======== ========
<CAPTION>
1999 1998
---------------- ----------------
(In Thousands)
<S> <C> <C>
Statutory surplus $274,437 $252,530
Adjustments to reconcile to equity on a GAAP basis:
Valuation of investments (9,644) 20,799
Deferred acquisition costs 129,184 113,923
Deferred premium (1,159) (1,473)
Insurance liabilities (23,889) (18,141)
Income Taxes (17,977) (21,716)
Asset management fees (2,050) -
Other, net 2,067 (69)
---------------- ----------------
GAAP stockholder's equity $350,969 $345,853
================ ================
</TABLE>
9. 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).
B15
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Fixed maturities
Estimated fair values for fixed maturities are based on quoted market prices
or estimates from independent pricing services.
Policy loans
The estimated fair value of policy loans is calculated using a discounted
cash flow model based upon current U.S. Treasury rates and historical loan
repayments.
Investment contracts
Estimated fair values of investment contracts are derived by using the
policyholder's account balance.
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>
1999 1998
---------------------------------- -----------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
---------------- ----------------- ----------------- -----------------
(In Thousands)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities:
Available for sale $ 585,271 $585,271 $622,990 $622,990
Held to maturity 7,470 6,938 - -
Policy loans 143,815 136,990 139,443 146,504
Short-term investments 27,473 27,473 53,761 53,761
Cash 117 117 45 45
Separate Accounts assets 1,827,484 1,827,484 1,450,986 1,450,986
Financial Liabilities:
Investment contracts $ 92,096 $ 92,096 $ 87,948 $ 87,948
Cash collateral for loaned 17,900 17,900 34,424 34,424
securities
Securities sold under
agreements to repurchase - - 27,210 27,210
Separate Accounts liabilities 1,827,484 1,827,484 1,450,986 1,450,986
Derivatives 597 597 - -
</TABLE>
10. 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 and to manage the duration of assets to better
match the duration of liabilities supported by those assets. 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. Treasury futures move substantially in value as interest
rates change and can be used to either modify or hedge existing interest rate
risk. This strategy protects against the risk that cash flow requirements may
necessitate liquidation of investments at unfavorable prices resulting from
increases in interest rates. This strategy can be a more cost effective way
of temporarily reducing the Company's exposure to a market decline than
selling fixed income securities and purchasing a similar portfolio when such
a decline is believed to be over.
B16
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
10. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)
If futures meet hedge accounting criteria, changes in their fair value are
deferred and recognized as an adjustment to the carrying value of the hedged
item. Deferred gains or losses from the hedges for interest-bearing financial
instruments are amortized as a yield adjustment over the remaining lives of
the hedged item. Futures that do not qualify as hedges are carried at fair
value with changes in value reported in current period earnings. The notional
and fair value of futures contracts was $46.4 million and $(.6) million at
December 31, 1999, respectively. There were no open futures contracts at
December 31, 1998.
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. As of December 31, 1999
100% of the notional consisted of interest rate derivatives.
11. CONTINGENCIES
Various lawsuits against the Company have arisen in the course of the
Company's business. In certain of these matters, large and/or indeterminate
amounts are sought.
On October 28, 1996, the Company entered into a Stipulation of Settlement
with attorneys for the plaintiffs in a consolidated class action lawsuit
pending in a Multi-District Litigation proceeding in the U.S. District Court
for the District of New Jersey. The class action suit involved alleged
improprieties in connection with the sale, servicing and operation of
permanent life insurance policies from 1982 through 1995. Pursuant to the
settlement, the Company has participated in a remediation program pursuant to
which relief was offered to policyowners who were misled when they purchased
permanent life insurance policies in the United States from 1982 to 1995.
Prudential has agreed to indemnify the Company for any liability incurred in
connection with that litigation.
The balance of the Company's litigation is subject to many uncertainties, and
given the complexity and scope, the outcomes cannot be predicted with
precision. Management believes that any ultimate liability which could result
from such litigation would not have a material adverse effect on the
Company's financial position.
12. 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 earned surplus derived from
realized net profits.
13. RELATED PARTY TRANSACTIONS
Service Agreements
Prudential and the Company operate under service and lease agreements whereby
services of officers and employees, supplies, use of equipment and office
space are provided by Prudential. Prudential periodically reviews its methods
for determining the level of administrative expenses charged to the Company.
Late in 1998, Prudential revised its allocation methodology to more closely
align allocations based on business processes, resulting in increased
allocations from 1998 levels. Management believes that the updated
methodology is reasonable and better reflects actual costs incurred by
Prudential to process transactions on behalf of the Company. The net cost of
these services allocated to the Company were $28.3 million, $23.5 million and
$16.2 million for the years ended December 31, 1999, 1998, and 1997,
respectively.
In addition, the Company received allocated distribution expenses from
Prudential's retail agency network. Beginning in 1999, market based
distribution transfer pricing was the basis for allocating costs to each
product line that distributes products through Prudential's retail agency
channels. A majority of these distribution expenses have been capitalized by
the Company as DAC.
The Company receives asset management fees from Pruco Life for its
policyholder account balances invested in the Prudential Series Fund ("PSF")
managed by Pruco Life. The Company received from Pruco Life its allocable
shares of such compensation in the amount of $7.4 million, $5.6 million, and
$5.3 million, during 1999, 1998, and 1997, respectively, recorded as "Asset
management fee income" in the Statements of Operations and Comprehensive
Income.
B17
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS (continued)
The Company pays an asset management fee to Prudential Global Asset
Management ("PGAM") for managing the Separate Account investment portfolio.
The expense for the year was $3.0 million, which is shown in general,
administrative and other expenses.
The Company has sold a Corporate Owned Life Insurance ("COLI") policy to
Prudential. The cash surrender value included in Separate Accounts at
December 31, 1999 was $199.0 million.
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, 1999,
1998, and 1997.
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, 1999.
B18
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholder 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 (an indirect, wholly-owned
subsidiary of the Prudential Insurance Company of America) at December 31,
1999 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States 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
March 21, 2000
B19
<PAGE> 101
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,
1999; the Statements of Operations for the period ended December 31, 1999;
the Statements of Changes in Net Assets for the periods ended December 31,
1999 and December 31, 1998; 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
Statements of Financial Position as of December 31, 1999 and 1998; and the
related Statements of Operations, Changes in Stockholder's Equity and Cash
Flows for the years ended December 31, 1999, 1998 and 1997; and the Notes
to the 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 Strategic Partners Variable Annuity Contract V-BON 2000-NY
(Note 1)
(b) Form of The Strategic Partners Variable Annuity Contract V-DCA 2000-NY
(Note 1)
(5) (a) Application form for the Contract. (Note 1)
(b) Application form for the Contract - PIAG (Note 1)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company of New
Jersey, as amended February 12, 1998. (Note 6)
(b) By-laws of Pruco Life Insurance Company of New Jersey, as amended
August 4, 1999. (Note 7)
(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.
1
<PAGE> 102
(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) 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)
(d) David R. Odenath, Jr. (Note 8)
(e) William J. Eckert (Note 9)
----------
(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. 12 to Form
S-1, Registration No. 33-20018, filed on April 16, 1999 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 7) Incorporated by reference to Form S-6, Registration No. 333-85117
filed August 13, 1999 on behalf of the Pruco Life of New Jersey Variable
Appreciable Account.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 13 to Form
S-1, Registration No. 33-20018, filed April 12, 2000 on behalf of the Pruco
Life of New Jersey Variable Contract Real Property Account.
(Note 9) Incorporated by reference to Form S-6 Registration No. 333-85117 filed
October 13, 2000 on behalf of the Pruco Life of New Jersey Variable
Appreciable Account.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
See Part B: 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
2
<PAGE> 103
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 the majority of 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.
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)
3
<PAGE> 104
PIMS is distributor for the following open-end management companies: Cash
Accumulation Trust, COMMAND Money Fund, COMMAND Government Fund, COMMAND
Tax-Free Fund, Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc.
(Nicholas-Applegate Growth Equity Fund), Prudential Balanced Fund, Prudential
California Municipal Fund, Prudential Diversified Bond Fund, Inc., Prudential
Diversified Funds, 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 Total Return 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 International Bond Fund, Inc., Prudential Mid-Cap
Value Fund, Prudential MoneyMart Assets, 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 Sector Funds, Inc.,
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
Tax-Managed Funds, Prudential 20/20 Focus Fund, Prudential World Fund, Inc.,
The Prudential Investment Portfolios, Inc., Strategic Partners Series, Target
Funds and The target Portfolio Trust.
PIMS is also distributor of the following unit investment trusts: Separate
Accounts: Prudential's Gibraltar Fund, Inc., The Prudential Variable Contract
Account -2, The Prudential Variable Contract Account-10, The Prudential
Variable Contract Account -11, The Prudential Variable Contract Account-24, The
Prudential Variable Contract GI-2, The Prudential Discovery Select Group
Variable Contract Account, The Pruco Life Flexible Premium Variable Annuity
Account, The Pruco Life of New Jersey Flexible Premium Variable Annuity
Account, The Prudential Individual Variable Contract Account and The Prudential
Qualified Individual Variable Contract Account.
<TABLE>
<CAPTION>
POSITIONS AND
POSITIONS AND OFFICES OFFICES WITH
NAME (1) WITH UNDERWRITER REGISTRANT
-------------------- ------------------------------ --------------
<S> <C> <C>
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
Francis O. Odubekun... 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
</TABLE>
------------------------
(1) The address of each person named is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102 unless otherwise noted.
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section 31
(a) of the 1940 Act and the rules promulgated thereunder are maintained by the
Registrant through The Prudential Insurance Company of America, 751 Broad
Street, Newark, New Jersey 07102-3777.
ITEM 31. MANAGEMENT SERVICES
4
<PAGE> 105
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.
5
<PAGE> 106
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, and its seal hereunto affixed and attested, all in the City of
Newark and the State of New Jersey, on this 3rd day of November, 2000.
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 OFFICER AND SECRETARY PRESIDENT
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
SIGNATURE AND TITLE
------------------------------------------------
*
------------------------------------
ESTHER H. MILNES Date November 3, 2000
PRESIDENT AND DIRECTOR
*
------------------------------------
JAMES J. AVERY JR
CHAIRMAN OF THE BOARD AND
DIRECTOR
*By: CLIFFORD E. KIRSCH
* -----------------------
------------------------------------- CLIFFORD E. KIRSCH
WILLIAM J. ECKERT (ATTORNEY-IN-FACT)
VICE PRESIDENT AND CHIEF
ACCOUNTING OFFICER (PRINCIPAL
FINANCIAL OFFICER AND CHIEF
ACCOUNTING OFFICER
*
------------------------------------
IRA J. KLEINMAN
DIRECTOR
*
------------------------------------
I. EDWARD PRICE
DIRECTOR
*
------------------------------------
DAVID R. ODENATH, JR.
DIRECTOR
6
