As filed with the SEC on ______________. Registration No. 2-81243
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM S-6
Post-Effective Amendment No. 22
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
------------
PRUCO LIFE OF NEW JERSEY
VARIABLE INSURANCE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 Washington Street
Newark, New Jersey 07102-2992
(800) 437-4016, Ext. 46
(Address and telephone number of principal executive offices)
------------
Thomas C. Castano
Assistant Secretary
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
(Name and address of agent for service)
Copy to:
Jeffrey C. Martin
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
------------
Variable Life Insurance Contracts--The Registrant has registered an indefinite
amount of securities pursuant to Rule 24f-2 under the Investment Company Act of
1940. The Rule 24f-2 notice for fiscal year 1994 was filed on February 27, 1995.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1995 pursuant to paragraph (b) of Rule 485
(date)
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on _________________ pursuant to paragraph (a) of Rule 485
(date)
<PAGE>
CROSS REFERENCE SHEET
(as required by Form N-8B-2)
N-8B-2 Item Number Location
- ------------------ --------
1. Cover Page
2. Cover Page
3. Not Applicable
4. Sale of the Contract and Sales Commissions
5. Pruco Life of New Jersey Variable Insurance Account
6. Pruco Life of New Jersey Variable Insurance Account
7. Not Applicable
8. Not Applicable
9. Litigation
10. Brief Description of Contract; Short-Term
Cancellation Right, or "Free Look"; Premiums;
Premium Adjustment; Allocation of Premiums;
Transfers; Charges and Expenses; How a Contract's
Death Benefit Will Vary; How a Contract's Cash Value
Will Vary; Withdrawal of a Portion of a Contract's
Net Cash Value; Surrender of a Contract for its Net
Cash Value; When Proceeds are Paid; Right to
Exchange a Contract for a Fixed-Benefit Whole-Life
Policy; Lapse and Reinstatement; Options on Lapse;
Riders; Other General Contract Provisions; Voting
Rights; Substitution of Series Fund Shares
11. Brief Description of the Contract; Pruco Life of New
Jersey Variable Insurance Account
12. Cover Page; Brief Description of the Contract; The
Prudential Series Fund, Inc.; Sale of the
Contract and Sales Commissions
13. Brief Description of the Contract; The Prudential
Series Fund, Inc.; Charges and Expenses; Sale of the
Contract and Sales Commissions
14. Brief Description of the Contract; Requirements for
Issuance of a Contract
15. Brief Description of the Contract; Allocation of
Premiums; Transfers
16. Brief Description of the Contract; Detailed
Information for Prospective Contract Owners
17. When Proceeds are Paid
18. Pruco Life of New Jersey Variable Insurance Account
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
<PAGE>
N-8B-2 Item Number Location
- ------------------ --------
25. Pruco Life Insurance Company of New Jersey
26. Brief Description of the Contract; The Prudential
Series Fund, Inc.; Charges and Expenses
27. Pruco Life Insurance Company of New Jersey; The
Prudential Series Fund, Inc.
28. Pruco Life Insurance Company of New Jersey;
Directors and Officers
29. Pruco Life Insurance Company of New Jersey
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Pruco Life Insurance Company of New Jersey
36. Not Applicable
37. Not Applicable
38. Sale of the Contract and Sales Commissions
39. Sale of the Contract and Sales Commissions
40. Not Applicable
41. Sale of the Contract and Sales Commissions
42. Not Applicable
43. Not Applicable
44. Brief Description of the Contract; The Prudential
Series Fund, Inc.; How a Contract's Death Benefit
Will Vary; How a Contract's Cash Value Will Vary
45. Not Applicable
46. Brief Description of the Contract; Pruco Life of New
Jersey Variable Insurance Account; The Prudential
Series Fund, Inc.
47. Pruco Life of New Jersey Variable Insurance Account;
The Prudential Series Fund, Inc.
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Series Fund Shares
53. Tax Treatment of Contract Benefits
54. Not Applicable
55. Not Applicable
56. Not Applicable
<PAGE>
N-8B-2 Item Number Location
- ------------------ --------
57. Not Applicable
58. Not Applicable
59. Financial Statements; Financial Statements of Pruco
Life of New Jersey Variable Insurance Account;
Financial Statements of Pruco Life Insurance Company
of New Jersey
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PROSPECTUS
May 1, 1995
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
VARIABLE INSURANCE ACCOUNT
VARIABLE
LIFE INSURANCE
CONTRACTS
This prospectus describes a variable life insurance contract (the "Contract")
issued by 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 ("The Prudential"). As
of January 1, 1992, these Contracts are no longer available for sale. These
Contracts provide whole-life insurance protection. That is, they provide
lifetime insurance coverage, as long as premiums are paid. They also provide a
cash value for the owner if the Contract is terminated during the insured's
lifetime. A Contract's death benefit varies monthly with the investment
performance of the subaccounts of the Pruco Life of New Jersey Variable
Insurance Account (the "Account") to which the owner allocates the net premiums.
Whatever the investment performance, however, it will not cause the death
benefit to be less than a guaranteed minimum amount (generally the face amount
specified in the Contract). The cash value of a Contract generally increases
with the payment of each premium, but it also varies daily with investment
performance. There is no guaranteed minimum cash value.
A Contract's net premiums and earnings on those premiums will be held in one or
more of the investment subaccounts of the Account or, pursuant to a real estate
investment option, in the Pruco Life of New Jersey Variable Contract Real
Property Account (the "Real Property Account"). The assets of each subaccount
will be invested in a corresponding portfolio of The Prudential Series Fund,
Inc. (the "Series Fund"). The attached prospectus for the Series Fund and its
statement of additional information describe the investment objectives of the
thirteen portfolios of the Series Fund in which net premiums under the Contracts
may currently be invested--the Money Market Portfolio, the Bond Portfolio, the
Government Securities Portfolio, the Conservatively Managed Flexible Portfolio,
the Aggressively Managed Flexible Portfolio, the High Yield Bond Portfolio, the
Stock Index Portfolio, the High Dividend Stock Portfolio, the Common Stock
Portfolio, the Growth Stock Portfolio, the Small Capitalization Stock Portfolio,
the Global Equity Portfolio, and the Natural Resources Portfolio. Other
subaccounts and portfolios may be added in the future. The Real Property
Account, through a partnership, invests primarily in income-producing real
property. The Real Property Account is described in a prospectus that is
attached to this one. This prospectus describes the Contract generally and the
Pruco Life of New Jersey Variable Insurance Account.
REPLACING EXISTING INSURANCE WITH A CONTRACT DESCRIBED IN THIS PROSPECTUS MAY
NOT BE TO YOUR ADVANTAGE. IF YOU CURRENTLY OWN A LIFE INSURANCE CONTRACT, THE
BENEFITS AND COSTS OF PURCHASING ADDITIONAL INSURANCE UNDER THE EXISTING POLICY
SHOULD BE COMPARED WITH THE BENEFITS AND COSTS OF PURCHASING THE CONTRACT
DESCRIBED IN THIS PROSPECTUS. IN MAKING THIS COMPARISON, YOU SHOULD CONSULT WITH
A QUALIFIED TAX ADVISOR.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ATTACHED TO
A CURRENT PROSPECTUS FOR THE PRUDENTIAL SERIES FUND, INC. AND A CURRENT
PROSPECTUS FOR THE PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY
ACCOUNT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 437-4016, Ext. 46
VLI-2 Ed 5-95
Catalog No. 646965I
<PAGE>
PROSPECTUS CONTENTS
Page
BRIEF DESCRIPTION OF THE CONTRACT ........................................ 1
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY,
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT ........................ 2
Pruco Life Insurance Company of New Jersey ............................. 2
Pruco Life of New Jersey Variable Insurance Account .................... 2
The Prudential Series Fund, Inc. ....................................... 3
Pruco Life of New Jersey Variable Contract Real Property Account ....... 4
Which Investment Option Should Be Selected ............................. 4
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS ..................... 5
Requirements for Issuance of a Contract ................................ 5
Short-Term Cancellation Right or "Free Look" ........................... 5
Premiums ............................................................... 5
Premium Adjustment ..................................................... 6
Allocation of Premiums ................................................. 6
Charges and Expenses ................................................... 6
Transfers .............................................................. 8
How a Contract's Death Benefit Will Vary ............................... 8
How a Contract's Cash Value Will Vary .................................. 10
Surrender of a Contract for its Net Cash Value ......................... 12
Withdrawal of a Portion of a Contract's Net Cash Value ................. 12
When Proceeds Are Paid ................................................. 12
Living Needs Benefit ................................................... 13
Illustrations of Cash Values, Death Benefits, and
Accumulated Premiums ................................................. 13
Contract Loans ......................................................... 15
Right to Exchange a Contract for a Fixed-Benefit Whole-Life Policy ..... 15
Sale of the Contract and Sales Commissions ............................. 16
Tax Treatment of Contract Benefits ..................................... 16
Lapse and Reinstatement ................................................ 18
Options on Lapse ....................................................... 18
Legal Considerations Relating to Sex-Distinct Premiums and Benefits .... 19
Other General Contract Provisions ...................................... 19
Riders ................................................................. 20
Voting Rights .......................................................... 20
Substitution of Series Fund Shares ..................................... 21
Reports to Contract Owners ............................................. 21
State Regulation ....................................................... 21
Experts ................................................................ 21
Litigation ............................................................. 21
Additional Information ................................................. 21
Financial Statements ................................................... 21
DIRECTORS AND OFFICERS ................................................. 22
FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY VARIABLE
INSURANCE ACCOUNT ....................................................... A1
FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY ........ B1
ADDITIONAL ILLUSTRATIONS OF CASH VALUES, DEATH BENEFITS,
AND ACCUMULATED PREMIUMS ............................................... C1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR THE
SERIES FUND, AND THE PROSPECTUS FOR THE REAL PROPERTY ACCOUNT.
<PAGE>
BRIEF DESCRIPTION OF THE CONTRACT
This variable life insurance contract (the "Contract") being offered by Pruco
Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is in many
respects similar to traditional "fixed-benefit" whole-life insurance. In other
respects it is quite different. As with fixed-benefit whole-life insurance, the
owner pays level premiums for a Contract that provides lifetime insurance
coverage on the named insured. Like fixed-benefit whole-life insurance, a
Contract has a cash value that the owner may obtain by terminating the Contract.
Also like fixed-benefit whole-life insurance, a variety of optional benefits and
riders may be added and may require an additional premium. Finally, like
fixed-benefit whole-life insurance, the cash value of a Contract during the
early years will be substantially lower than the sum of the premiums paid. Under
a fixed-benefit contract, there are a fixed guaranteed death benefit and a cash
value that increases at a guaranteed rate as additional premiums are paid; in
some such contracts, the insurer may refund some of the premium as a dividend if
its experience is better than the assumptions upon which it made its guarantees.
The variable life insurance Contract described here also has a schedule of cash
values and a guaranteed minimum death benefit. The distinctive feature of this
Contract is that the premiums, after certain deductions are made, are placed in
one or more separate investment subaccounts of Pruco Life of New Jersey's
Variable Insurance Account, and the death benefit and cash value may increase or
decrease, depending on the investment performance of the selected subaccount[s].
There is no minimum cash value. But, as long as no premium is in default and
there is no loan on the Contract, the death benefit will not be less than a
guaranteed minimum amount (the face amount specified in the Contract, unless the
Contract owner has withdrawn part of the Contract's cash value). See Withdrawal
of a Portion of a Contract's Net Cash Value, page 12. The smallest Contract has
a guaranteed minimum death benefit of $25,000. As of January 1, 1992, these
Contracts are no longer available for sale.
The owner of a Contract chooses the subaccount[s] of the Pruco Life of New
Jersey Variable Insurance Account (the "Account") into which the net premiums
will be placed. At present there are thirteen subaccounts, each of which is
invested in a corresponding portfolio of The Prudential Series Fund, Inc. (the
"Series Fund"), a series mutual fund to which The Prudential Insurance Company
of America ("The Prudential") acts as investment advisor. The Money Market
Portfolio is invested in short-term debt obligations similar to those purchased
by money market funds; the Bond Portfolio is invested primarily in high quality
medium-term corporate and government debt securities; the Government Securities
Portfolio is invested primarily in U.S. Government securities including
intermediate and long-term U.S. Treasury securities and debt obligations issued
by agencies of or instrumentalities established, sponsored or guaranteed by the
U.S. Government; the Conservatively Managed Flexible Portfolio is invested in a
mix of money market instruments, fixed income securities, and common stocks, in
proportions believed by the investment manager to be appropriate for an investor
who desires diversification of investment who prefers a relatively lower risk of
loss and a correspondingly reduced chance of high appreciation; the Aggressively
Managed Flexible Portfolio is invested in a mix of money market instruments,
fixed income securities, and common stocks, in proportions believed by the
investment manager to be appropriate for an investor desiring diversification of
investment who is willing to accept a relatively high level of loss in an effort
to achieve greater appreciation; the High Yield Bond Portfolio is invested
primarily in high yield fixed-income securities of medium to lower quality, also
known as high risk bonds; the Stock Index Portfolio is invested in common stocks
selected to duplicate the price and yield performance of the Standard & Poor's
500 Composite Stock Price Index; the High Dividend Stock Portfolio is invested
primarily in common stocks and convertible securities that provide favorable
prospects for investment income returns above those of the Standard & Poor's 500
Stock Index or the NYSE Composite Index; the Common Stock Portfolio is invested
primarily in common stocks; the Growth Stock Portfolio is invested primarily in
equity securities of established companies with above-average growth prospects;
the Small Capitalization Stock Portfolio is invested in equity securities of
publicly-traded companies with small market capitalization; the Global Equity
Portfolio is invested primarily in common stocks and common stock equivalents
(such as convertible debt securities) of foreign and domestic issuers; and the
Natural Resources Portfolio is invested primarily in common stocks and
convertible securities of natural resource companies, and in securities
(typically debt securities or preferred stock) the terms of which are related to
the market value of a natural resource. Further information about the Series
Fund portfolios can be found under The Prudential Series Fund, Inc. on page 3.
The Contract owner may also invest a portion of his or her net premiums in the
Pruco Life of New Jersey Variable Contract Real Property Account (the "Real
Property Account"), which, through a partnership, invests primarily in
income-producing real property. If a Contract owner elects to invest a portion
of his or her net premiums in the Real Property Account, the assets will be
maintained in a subaccount of the Real Property Account related to the Contract
that provides the mechanism and maintains the records whereby the various
Contract charges are made. The investment objectives of the Real Property
Account and the partnership are described briefly under Pruco Life of New Jersey
Variable Contract Real Property Account on page 4.
Because the assets that relate to the Contract may be invested in these various
investment options, the Contract offers an opportunity for the cash value to
appreciate more rapidly than it would under comparable fixed-benefit
1
<PAGE>
whole-life insurance. But the owner must accept the risk that if investment
performance is unfavorable the cash value may not appreciate as rapidly and,
indeed, may decrease in value.
Pruco Life of New Jersey deducts certain charges from each premium payment and
from the amounts held in the designated investment options. All these charges,
which are largely designed to cover insurance costs and risks as well as sales
and administrative expenses, are fully described under Charges and Expenses on
page 6. In brief, and subject to that fuller description, the following charges
may be made: (1) an annual administrative charge of $30 if premiums are paid
annually, $32 if paid semi-annually, $36 if paid quarterly, and $48 if paid
monthly; (2) a one-time first-year administrative charge upon each premium of up
to $5 for each $1,000 of guaranteed minimum death benefit if premiums are paid
annually, $2.52 if paid semi-annually, $1.27 if paid quarterly, and $0.43 if
paid monthly; (3) sales load charges of not more than 30% of the basic premium
in the first Contract year, not more than 10% of the basic premium in the second
year, and not more than 9% of the sum of the basic premiums to be paid in the
first 20 years; (4) a charge to pay state premium taxes of not more than 2% of
each basic premium; (5) a guaranteed minimum death benefit risk charge of not
more than 1.2% of each basic premium; (6) each month, a charge for anticipated
mortality is deducted, with the maximum charge based on the 1980 CSO Tables; (7)
a daily charge equivalent to an annual rate of up to 0.35% is deducted from the
assets of the subaccounts for mortality and expense risks; (8) if the Contract
includes riders, a deduction from each premium payment will be made for charges
applicable to those riders; and (9) certain fees and expenses are deducted from
the assets of the Series Fund and Real Property Account. Because of these
charges, prospective purchasers should purchase a Contract only if they intend
and have the financial capability to keep it in force for a substantial period.
The death benefit increases or decreases monthly (but not below the guaranteed
minimum amount) depending on the investment results of the subaccount[s] and/or
the Real Property Account in which the Contract participates. It does not change
simply because a premium is paid. The cash value also changes at a rate that
depends on the investment results, but these changes take place daily rather
than monthly. Each premium payment has the effect of adding to the cash value.
For more detailed information about how the death benefit and cash value change,
see How a Contract's Death Benefit Will Vary, page 8 and How a Contract's Cash
Value Will Vary, page 10.
For a limited time, a Contract may be returned for a refund in accordance with
the terms of its "free look" provision. See Short-Term Cancellation Right or
"Free Look", page 4.
Each owner should retain a copy of the Contract document. That document,
together with the attached application, constitutes the entire agreement between
the owner and Pruco Life of New Jersey.
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY,
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT, AND THE VARIABLE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
Pruco Life Insurance Company of New Jersey. Pruco Life Insurance Company of New
Jersey ("Pruco Life of New Jersey") is a stock life insurance company, organized
in 1982 under the laws of the State of New Jersey. It is licensed to sell life
insurance and annuities only in the States of New Jersey and New York. These
Contracts are not offered in any state in which the necessary approvals have not
yet been obtained.
Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco Life Insurance
Company, which in turn is a wholly-owned subsidiary of The Prudential, a mutual
insurance company founded in 1875 under the laws of the State of New Jersey. As
of December 31, 1994, The Prudential has invested $127 million in Pruco Life of
New Jersey through its subsidiary Pruco Life Insurance Company in connection
with Pruco Life of New Jersey's organization and operation. The Prudential
intends from time to time to make additional capital contributions to Pruco Life
of New Jersey as needed to enable it to meet its reserve requirements and
expenses in connection with its business. However, The Prudential is under no
obligation to make such contributions and its assets do not back the benefits
payable under the Contract. Pruco Life of New Jersey's financial statements
begin on page B1 and should be considered only as bearing upon Pruco Life of New
Jersey's ability to meet its obligations under the Contracts.
Pruco Life of New Jersey Variable Insurance Account. The Pruco Life of New
Jersey Variable Insurance Account (the "Account") was established on December
29, 1982 under New Jersey law as a separate investment account. The Account
meets the definition of a "separate account" under the federal securities laws.
The Account holds assets that are segregated from all of Pruco Life of New
Jersey's other assets.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life of New Jersey. Pruco Life of New
Jersey is also the legal owner of the assets in the Account. Pruco Life of New
Jersey will at all times maintain assets in the Account with a total market
value at least equal to the reserve and other liabilities relating to the
variable benefits attributable to the Account. These assets may not be charged
with liabilities which arise from any other business Pruco Life of New Jersey
conducts. In addition to these
2
<PAGE>
assets, the Account's assets may include funds contributed by Pruco Life of New
Jersey to commence operation of the Account and may include accumulations of the
charges Pruco Life of New Jersey makes against the Account. From time to time
these additional assets will be transferred to Pruco Life of New Jersey's
general account. Before making any such transfer, Pruco Life of New Jersey will
consider any possible adverse impact the transfer might have on the Account.
The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any
supervision by the SEC of the management or investment policies or practices of
the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life of New Jersey. There are currently thirteen subaccounts
within the Account, each of which invests in a single corresponding portfolio of
the Series Fund. Additional subaccounts may be added in the future. The
Account's financial statements begin on page A1.
The Prudential Series Fund, Inc. The Prudential Series Fund, Inc. (the "Series
Fund") is registered under the 1940 Act as an open-end diversified management
investment company. Its shares are currently sold only to separate accounts of
The Prudential and certain other insurers that offer variable life insurance and
variable annuity contracts. On October 31, 1986, the Pruco Life Series Fund,
Inc., an open-ended, diversified management investment company which sold its
shares only to separate accounts of Pruco Life of New Jersey and Pruco Life
Insurance Company, was merged into the Series Fund. Prior to that date, the
Account invested only in shares of the Pruco Life Series Fund, Inc. The Account
will purchase and redeem shares from the Series Fund at net asset value. Shares
will be redeemed to the extent necessary for Pruco Life of New Jersey to provide
benefits under the Contract and to transfer assets from one subaccount to
another, as requested by Contract owners. Any dividend or capital gain
distribution received from a portfolio of the Series Fund will be reinvested
immediately at net asset value in shares of that portfolio and retained as
assets of the corresponding subaccount.
The Prudential is the investment advisor for the assets of each of the
portfolios of the Series Fund. The Prudential's principal business address is
Prudential Plaza, Newark, New Jersey 07102-3777. The Prudential has a Service
Agreement with its wholly-owned subsidiary The Prudential Investment Corporation
("PIC"), which provides that, subject to The Prudential's supervision, PIC will
furnish investment advisory services in connection with the management of the
Series Fund. In addition, The Prudential has entered into a Subadvisory
Agreement with its wholly-owned subsidiary Jennison Associates ("Jennison"),
under which Jennison furnishes investment advisory services in connection with
the management of the Growth Stock Portfolio. Further detail is provided in the
prospectus and statement of additional information for the Series Fund. The
Prudential, PIC, and Jennison are registered as investment advisors under the
Investment Advisers Act of 1940.
As an investment advisor, The Prudential charges the Series Fund a daily
investment management fee as compensation for its services. The following table
shows the investment management fee charged for each portfolio of the Series
Fund available for investment by Contract owners.
Annual Investment Management Fee as
Portfolio a Percentage of Average Daily Net Assets
- --------- ----------------------------------------
Stock Index Portfolio 0.35%
Bond Portfolio 0.40%
Money Market Portfolio 0.40%
Government Securities Portfolio 0.40%
High Dividend Stock Portfolio 0.40%
Small Capitalization Stock Portfolio 0.40%
Common Stock Portfolio 0.45%
Natural Resources Portfolio 0.45%
Conservatively Managed Flexible Portfolio 0.55%
High Yield Bond Portfolio 0.55%
Aggressively Managed Flexible Portfolio 0.60%
Growth Stock Portfolio 0.60%
Global Equity Portfolio 0.75%
Some investment management fees and expenses charged to the Series Fund may be
higher than those that were previously charged to the Pruco Life Series Fund,
Inc. (0.4%), in which the Account previously invested. For the Money Market,
Bond, Conservatively Managed Flexible, Aggressively Managed Flexible, and Common
Stock Portfolios, Pruco Life of New Jersey will make daily adjustments that will
offset the effect on Contract owners of any higher investment management fees
and expenses charged against the Series Fund. No such offset will be made with
respect to the remaining portfolios, which had no counterparts in the Pruco Life
Series Fund, Inc.
3
<PAGE>
It is conceivable that in the future it may become disadvantageous for both
variable life insurance and variable annuity contract separate accounts to
invest in the same underlying mutual fund. Although neither the companies which
invest in the Series Fund, nor the Series Fund currently foresees any such
disadvantage, the Series Fund's Board of Directors intends to monitor events in
order to identify any material conflict between variable life insurance and
variable annuity contract owners and to determine what action, if any, should be
taken in response thereto. Material conflicts could result from such things as:
(1) changes in state insurance law; (2) changes in federal income tax law; (3)
changes in the investment management of any portfolio of the Series Fund; or (4)
differences between voting instructions given by variable life insurance and
variable annuity contract owners.
A full description of the Series Fund, its investment objectives, management,
policies, and restrictions, its expenses, the risks attendant to investment
therein--including any risks associated with investment in the High Yield Bond
Portfolio, and all other aspects of its operation is contained in the attached
prospectus for the Series Fund and in its statement of additional information,
which should be read in conjunction with this prospectus. There is no assurance
that the investment objectives will be met.
Pruco Life of New Jersey Variable Contract Real Property Account. The Pruco Life
of New Jersey Variable Contract Real Property Account (the "Real Property
Account") is a separate account of Pruco Life of New Jersey that, through a
general partnership formed by The Prudential and two of its subsidiaries,
invests primarily in income-producing real property such as office buildings,
shopping centers, agricultural land, hotels, apartments or industrial
properties. It also invests in mortgage loans and other real estate-related
investments, including sale-leaseback transactions. The objectives of the Real
Property Account and the partnership are to preserve and protect capital,
provide for compounding of income as a result of reinvestment of cash flow from
investments, and provide for increases over time in the amount of such income
through appreciation in the value of assets.
The partnership has entered into an investment management agreement with The
Prudential, under which The Prudential selects the properties and other
investments held by the partnership. The Prudential charges the partnership a
daily fee for investment management which amounts to 1.25% per year of the
average daily gross assets of the partnership.
A full description of the Real Property Account, its management, policies, and
restrictions, its charges and expenses, the risks attendant to investment
therein, the partnership's investment objectives, and all other aspects of the
Real Property Account's and the partnership's operations is contained in the
attached prospectus for the Real Property Account, which should be read together
with this prospectus by any Contract owner considering the real estate
investment option. There is no assurance that the investment objectives will be
met.
Which Investment Option should Be Selected? A broad objective of the Contract is
to provide benefits that will increase in value if favorable investment results
are achieved. Contract owners have a large number of options as to how the
amounts credited to their Contracts will be invested. Historically, for
investments held over relatively long periods, the investment performance of
common stocks has generally been superior to that of short or long-term debt
securities, even though common stocks have been subject to much more dramatic
changes in value over short periods of time. Accordingly, the Stock Index, High
Dividend Stock, Growth Stock, Small Capitalization Stock, Common Stock, Global
Equity, or Natural Resources Portfolios may be desirable options for Contract
owners who are willing to accept such volatility in their Contract values. Each
of these equity portfolios involves somewhat different investment risks,
policies, and programs.
Some Contract owners may prefer the somewhat greater protection against loss of
principal (and reduced chance of high total return) provided by the Government
Securities or Bond Portfolios, while others, who desire even greater safety of
principal, may prefer the Money Market Portfolio, recognizing that the level of
short-term rates may change rather rapidly. Contract owners not interested in
common stocks but willing to take risks and seeking the possibility of a high
total return may prefer the High Yield Bond Portfolio, recognizing that with
higher yielding, lower quality bonds the risks are greater. Some Contract owners
may wish to divide their funds among two or more of the portfolios. Some may
wish to obtain diversification by relying on The Prudential's judgment for an
appropriate asset mix by choosing one of the Balanced Portfolios. The Real
Property Account permits a Contract owner to diversify his or her investment
under the Contract to include an interest in a pool of income-producing real
property, and real estate is often considered to be a hedge against inflation.
Each Contract owner must make his or her own choice that takes into account how
willing he or she is to accept investment risks, the manner in which his or her
other assets are invested, and his or her own predictions about what investment
results are likely to be in the future. The Prudential recommends against
frequent transfers among the several options as experience generally indicates
that "market timing" investing, particularly by non-professional investors, is
likely to prove unsuccessful.
4
<PAGE>
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS
Requirements for Issuance of a Contract. As of January 1, 1992, these Contracts
are no longer available for sale. The minimum initial guaranteed death benefit
that can be applied for is $25,000. The Contract may generally be issued on
insureds below the age of 76. Before issuing any Contract, Pruco Life of New
Jersey requires evidence of insurability which may include a medical
examination. Non-smokers who meet preferred underwriting requirements are
offered the most favorable premium rate. A higher premium is charged if an extra
mortality risk is involved. These are the current underwriting requirements. The
Company reserves the right to change them on a non-discriminatory basis.
Short-Term Cancellation Right or "Free Look". Generally, a Contract may be
returned for a refund within 10 days after it is received by the Contract owner,
within 45 days after Part I of the application for insurance is signed or within
10 days after Pruco Life of New Jersey mails or delivers a Notice of Withdrawal
Right, whichever is latest. Some states allow a longer period of time during
which a Contract may be returned for a refund. A refund can be requested by
mailing or delivering the Contract to the representative who sold it or to the
Pruco Life of New Jersey Home Office specified in the Contract. A Contract
returned according to this provision shall be deemed void from the beginning.
The Contract owner will then receive a refund of all premium payments made, plus
or minus any change due to investment experience in the value of the invested
portion of the premiums, calculated as if no charges had been made against the
Account or the Series Fund. However, if applicable law so requires, the Contract
owner who exercises his or her short-term cancellation right will receive a
refund of all premium payments made, with no adjustment for investment
experience.
Premiums. Premiums on the Contract are level, fixed, and payable in advance
during the insured's lifetime on an annual, semi-annual, quarterly or monthly
basis. If paid more often than annually, an extra fee will be charged to
compensate Pruco Life of New Jersey for the additional processing costs (see
Charges and Expenses, page 6) and for the loss of interest (computed generally
at an annual rate of 8%) incurred because premiums are paid throughout rather
than at the beginning of each Contract year. The premium amount depends on the
Contract's guaranteed minimum death benefit, the insured's sex (except where
unisex rates apply) and age at issue, and the insured's risk classification.
Contract owners who pay premiums other than on a monthly basis will receive
notice that a premium is due about 3 weeks before each due date. Contract owners
who pay premiums monthly will receive each year a book with twelve coupons that
will serve as a reminder. With Pruco Life of New Jersey's consent, an owner may
change the frequency of premium payments.
A Contract owner may elect to have monthly premiums paid automatically under the
"Pru-Matic Premium Plan" by pre-authorized transfers from a bank checking
account. Some Contract owners may also be eligible to have monthly premiums paid
by pre-authorized deductions from an employer's payroll.
The following table shows representative standard and preferred annual premium
amounts for various guaranteed minimum amounts:
$25,000 Guaranteed $100,000 Guaranteed
Minimum Insurance Amount Minimum Insurance Amount
------------------------ -------------------------
Preferred Standard Preferred Standard
--------- -------- --------- --------
Male, age 25
at issue ........ $270.00 $283.25 $ 990.00 $1,043.00
Female, age 35
at issue ....... $333.75 $342.75 $1,245.00 $1,281.00
Male, age 40
at issue ....... $449.00 $484.50 $1,706.00 $1,848.00
The following table compares annual and monthly premiums for insureds who are
standard risks. Note that in these examples the sum of 12 monthly premiums for a
particular Contract is approximately 105% to 110% of the annual premium for that
Contract.
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$25,000 Guaranteed $100,000 Guaranteed
Minimum Insurance Amount Minimum Insurance Amount
------------------------ -------------------------
Monthly Annual Monthly Annual
------- ------ ------- ------
Male, age 25
at issue ........ $26.00 $283.25 $ 92.00 $1,043.00
Female, age 35
at issue ....... $31.00 $342.75 $112.00 $1,281.00
Male, age 40
at issue ....... $43.25 $484.50 $161.00 $1,848.00
There is a grace period of 31 days for each premium except the first one. During
the grace period, the Contract will continue in effect. A Contract will lapse if
a premium has not been paid by the end of the grace period. Upon lapse, the
Contract owner will have several options. These may include continuing the
amount of insurance coverage in effect on the due date of the unpaid premium,
less any Contract debt, for a fixed period, continuing a lesser amount of
insurance for the lifetime of the insured, or surrender of the Contract for its
net cash value. See Options on Lapse, page 18.
Premium Adjustment. If the insured dies during the grace period before the
premium is paid, the portion of the unpaid premium that covers the period from
the due date to the date of death will be deducted from the death benefit. If
the insured dies while no premium is in default, Pruco Life of New Jersey will
increase the death benefit by the portion of the last premium that covers the
period subsequent to the date of death.
Allocation of Premiums. Net premium payments--that is, the amount of the
premiums less the deductions described below in items 1 through 5 under Charges
and Expenses--will be placed when due (not when received) in one or more
subaccounts of the Account and/or the Real Property Account, as directed by the
Contract owner. Any premium payments received prior to the due date will be held
in Pruco Life of New Jersey's general account, and the net premium will not be
credited to the subaccounts selected by a Contract owner until the due date.
Provided no premium is overdue, the Contract owner may change the way in which
premiums are allocated, beginning on the next premium due date, by giving
written notice to the Pruco Life of New Jersey Home Office stated in the
Contract. Contract owners may also change the way in which premiums are
allocated, beginning on the next premium due date, by telephoning their Pruco
Life of New Jersey Home Office, once they have completed a written telephone
transfer authorization form. There is no charge for reallocating future net
premiums. If any portion of a net premium is allocated to a particular
investment option, that portion must be at least 10% on the date the allocation
takes effect. All percentage allocations must be in whole numbers. For example,
33% can be selected but 33 1/3% cannot.
Charges and Expenses. Every charge made by Pruco Life of New Jersey under the
Contract is described below.
1. If premiums are paid annually, there is an annual administrative charge
of $30 for administrative expenses incurred, among other things, for
billing, collecting premiums, processing claims, paying cash values, making
Contract changes, keeping records, and communicating with Contract owners.
If premiums are paid more frequently, the annual administrative charge will
be higher to reflect the additional expense incurred in collecting and
processing more frequent premiums. The charge will be $32 if premiums are
paid semi-annually, $36 if premiums are paid quarterly, and $48 if premiums
are paid monthly. During 1994 and 1993, Pruco Life of New Jersey received a
total of approximately $1,679,328 and $1,779,407, respectively, in annual
administrative charges.
2. There is a one-time administrative charge in the first Contract year which,
if premiums are payable annually, will not be more than $5 for each $1,000
of guaranteed minimum death benefit. (To compensate for the loss of
interest when premiums are paid on other than an annual basis, this charge
will be slightly higher. The charge upon each premium will be $2.52 for
each $1,000 of guaranteed minimum death benefit if premiums are paid
semi-annually, $1.27 if paid quarterly, and $0.43 if paid monthly.) The
one-time administrative charge covers the cost of processing applications,
conducting medical examinations, determining insurability and the insured's
risk class, and establishing Contract records. The charge will be reduced
for certain Contracts issued upon young insureds because making the full $5
per $1,000 charge would result in a cash value of zero throughout the first
year of the Contract. During 1994 and 1993, Pruco Life of New Jersey did
not receive any one-time administrative charges.
3. There is a charge to compensate Pruco Life of New Jersey for the cost of
selling the Contract. This cost includes sales commissions, advertising,
and the printing of prospectuses and sales literature. This charge
6
<PAGE>
is generally called the "sales load." It is not more than 30% of the basic
premium (defined below) in the first Contract year, not more than 10% of
the basic premium in the second year, and not more than 9% of the sum of
the basic premiums to be paid in the first 20 years. Also, in any year it
is never more than in a prior year. The basic premium is what the gross
annual premium for the Contract, less the annual administrative charge,
would be if the insured were in the standard rating class and if the
Contract had no optional insurance benefits. During 1994 and 1993, Pruco
Life of New Jersey received a total of approximately $1,654,941 and
$1,762,262 respectively, in sales load charges.
4. There is a charge of not more than 2% of each basic premium, which for
Contracts sold in New Jersey is used to pay premium taxes and for Contracts
sold in New York is used to pay premium taxes or state income taxes. To the
extent that the 2% rate is insufficient to pay these taxes, the difference
will be borne by Pruco Life of New Jersey. During 1994 and 1993, Pruco Life
of New Jersey received a total of approximately $331,560 and $353,539,
respectively, in charges for payment of such taxes.
5. There is a charge of not more than 1.2% of each basic premium to compensate
Pruco Life of New Jersey for the risk that an insured may die at a time
when the death benefit exceeds the benefit that would have been payable in
the absence of a minimum guarantee. During 1994 and 1993, Pruco Life of New
Jersey received a total of approximately $198,936 and $212,123,
respectively, for this risk charge.
When premiums are paid more frequently than annually, these charges will be
deducted proportionately from each premium payment.
If there is an extra premium for optional insurance benefits or for an
extra mortality risk, or if there is a premium discount because the insured
is in the preferred rating class, the amount allocated to the separate
account will be equal to the amount that would have been allocated if the
insured had been in the standard rating class and there were no optional
insurance benefits.
6. Apart from the deductions from gross premiums just described, the amounts
held in the Account and/or the Real Property Account attributable to each
Contract are subject to a mortality charge and are reduced once a month to
compensate Pruco Life of New Jersey for the anticipated cost of paying
death benefits to the beneficiaries of those persons who die during that
period. The amount of this reduction is based on the assumption that actual
mortality will be accurately predicted by the 1980 Commissioner's Standard
Ordinary Mortality Table (the "1980 CSO Table") and is the maximum
mortality charge that can be made under the Contract. However, if Pruco
Life of New Jersey determines that a lesser amount than that called for by
this mortality table will be adequate to defray the anticipated cost of
paying such death benefits, a lesser monthly reduction may be made.
7. There is also a daily charge to the Account and/or the Real Property
Account for the mortality and expense risks that Pruco Life of New Jersey
assumes. This charge is made daily at an effective annual rate of up to
0.35% of the value of the Account's and/or the Real Property Account's
assets. The mortality risk assumed is that insureds may live for a shorter
period of time than that predicted by the 1980 CSO Table. The expense risk
assumed is that expenses incurred in issuing and administering the
Contracts will be greater than Pruco Life of New Jersey estimated. Pruco
Life of New Jersey will realize a gain from this charge to the extent it is
not needed to provide benefits and pay expenses under the Contracts. During
1994 and 1993, Pruco Life of New Jersey received a total of approximately
$359,093 and $334,961, respectively, in mortality and expense risk charges.
The deductions and charges described above will not be increased by Pruco
Life of New Jersey with respect to any Contract in effect regardless of any
changes in longevity or increases in expenses.
The earnings of the Account are taxed as part of the operations of Pruco
Life of New Jersey. No charge is being made currently to the Account for
Company federal income taxes. Pruco Life of New Jersey will review the
question of a charge to the Account for Company federal income taxes
periodically. Such a charge may be made in future years for any federal
income taxes that would be attributable to the Contracts.
Under current laws Pruco Life of New Jersey may incur state and local taxes
(in addition to premium taxes) in several states. At present, these taxes
are not significant and they are not charged against the Contracts or the
Account. If there is a material change in applicable state or local tax
laws, the imposition of any such taxes upon Pruco Life of New Jersey that
are attributable to the Account may result in a corresponding charge
against the Account.
The Account purchases shares of the Series Fund at net asset value. The net
asset value of those shares reflects management fees and expenses already
deducted from the assets of the Series Fund. The fees and expenses for the
Series Fund are briefly described under The Prudential Series Fund, Inc. on
page 3 in connection with a general description of the Series Fund. More
detailed information is contained in the attached prospectus for the Series
Fund and its statement of additional information.
7
<PAGE>
Transfers. Provided no premium is overdue or if the Contract is in force as
variable reduced paid-up insurance (see Options on Lapse, page 18), the owner
may, up to four times in each Contract year, transfer amounts from one
subaccount to another subaccount or to the Real Property Account. All or a
portion of the amount credited to a subaccount may be transferred. Transfers to
and from the Real Property Account are subject to restrictions described in the
prospectus for that investment option.
Transfers among subaccounts or to the Real Property Account will take effect as
of the end of the valuation period in which a proper transfer request is
received at a Pruco Life of New Jersey Home Office. The "valuation period" means
the period of time from one determination of the value of the amount invested in
a subaccount to the next. Such determinations are made when the net asset values
of the portfolios of the Series Fund are calculated, which is generally at 4:15
p.m. New York City time on each day during which the New York Stock Exchange is
open. The request may be in terms of dollars, such as a request to transfer
$10,000 from one subaccount to another, or may be in terms of a percentage
reallocation among subaccounts. In the latter case, as with premium
reallocations, the percentages must be in whole numbers. The Contract owner may
transfer amounts by proper written notice to a Pruco Life of New Jersey Home
Office, or by telephone, provided the Contract owner is enrolled to use the
Telephone Transfer System. Pruco Life of New Jersey cannot guarantee that owners
will be able to get through to complete a telephone transfer during peak periods
such as periods of drastic economic or market change.
How a Contract's Death Benefit Will Vary. Although a Contract's death benefit
can never be less than the Contract's guaranteed minimum amount (assuming no
outstanding Contract debt or premium in default), it will change on the first
day of each Contract month after the first month by an amount that depends on
the investment performance of the subaccounts and/or the Real Property Account
in which the Contract participates. The first Contract month starts on the
Contract date. When the first premium is paid with the application, the Contract
date is ordinarily the later of the date of the application or the date of any
medical examination. If the first premium is not paid with the application, the
Contract date is ordinarily 2 or 3 days after the application is approved by
Pruco Life of New Jersey so that it either coincides with or is prior to the
date on which the first premium is paid. For the purpose of calculating
benefits, the initial net premium is deemed to be placed in the Account on the
Contract date. Each succeeding Contract month starts on the same date in the
month as the Contract date. The first day of each Contract month is called the
"Monthly date."
To simplify the following discussion, it is assumed that all of the net premiums
under a Contract have been allocated to a single subaccount. If the value of the
assets relating to the Contract held in the subaccount has increased due to
investment performance during the Contract month at greater than a 4% annual
rate, the Contract's death benefit will increase on the first day of the next
Contract month; if the value of these assets decreases or increases at less than
a 4% annual rate, the death benefit will decrease (but not below the guaranteed
minimum amount). The reason the assets of the subaccount relating to a Contract
must increase from one Monthly date to the next at a rate of more than 4% a year
in order for the death benefit to increase is that Pruco Life of New Jersey, in
determining the premiums for the Contract, has assumed that the value of the
assets will increase due to investment performance at a rate of 4% a year.
The exact amount by which the death benefit changes is determined by an
actuarial computation that is based, among other things, upon the age and sex
(except where unisex rates apply) of the insured, the size of the Contract, and
the number of years it has been in effect, as well as by the investment results
of the subaccount in which the Contract participates. In general, a change in
the dollar value of a subaccount's assets due to investment results will produce
a larger change in the death benefit for a younger insured than for an older
insured and a slightly larger change for a female insured than for a male.
Because the assets relating to a Contract tend to grow as net premiums are paid,
the dollar change in the death benefit will tend to be greater for a Contract
that has been in effect for a long time than for one that has been in effect for
a short time, despite the fact that the insured is older.
Illustrations of how the death benefit for representative Contracts will vary
over extended periods, assuming several different uniform investment results,
are included in tables on pages T1 and T2 and on pages C1 and C2 of this
prospectus. The death benefits shown are calculated upon the assumption that the
maximum mortality charges specified by the 1980 CSO Table are made throughout
the life of the Contract. The examples set forth below illustrate death benefits
calculated upon a maximum mortality charge assumption. These examples also
assume a total Series Fund expense ratio of 0.57% (taking into account the
offsets described under The Prudential Series Fund, Inc. on page 3).
The following two examples show, for the same Contracts, how the death benefit
will vary over a selected year for two hypothetical investment results that are
different from those shown in the tables and thus provide additional
comparisons.
Example No. 1. Contract with $50,000 guaranteed death benefit and annual
premiums in effect for 18 years, during which the value of the assets in the
subaccount increased due to investment performance at a uniform rate
8
<PAGE>
of 7.08% per year. In the 19th year the value of the assets increases at a
uniform rate of 8.08%. (These percentages correspond to gross annual investment
returns in the corresponding Series Fund portfolio of 8% and 9% per year,
respectively.)
MAXIMUM MORTALITY CHARGE ASSUMPTION
Death Benefit Death Benefit
Insured End of Year 18 End of Year 19
------- -------------- --------------
Male, age 25
at issue ....... $59,195 $60,636
Male, age 40
at issue ....... $60,295 $61,878
Example No. 2. Same assumptions as in Example No. 1 except that the value of the
assets increases by 1.08% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
MAXIMUM MORTALITY CHARGE ASSUMPTION
Death Benefit Death Benefit
Insured End of Year 18 End of Year 19
------- -------------- --------------
Male, age 25
at issue ....... $59,195 $58,163
Male, age 40
at issue ....... $60,295 $59,163
In these examples the changes are slightly greater for the Contract issued on
the older insured because the premiums for a $50,000 Contract issued at age 40
are greater than those for one issued at age 25, and the dollar amount of the
increase resulting from a 7.08% compounded return upon the assets in the Account
relating to the Contract on the older insured is therefore larger. The changes
in the death benefit are greater even though the increase or decrease in the
death benefit resulting from a $1 change in the assets relating to the Contract
is greater for a younger insured.
Example No. 3. This example and the one following provide information for a
Contract with an $800 annual premium, in effect for 18 years, during which the
value of the assets in the subaccount increased due to investment performance at
a uniform rate of 7.08% per year. In the 19th year the value of the assets
increases at a uniform rate of 8.08%. (These percentages correspond to gross
annual investment returns in the corresponding Series Fund portfolio of 8% and
9% per year, respectively.)
MAXIMUM MORTALITY CHARGE ASSUMPTION
Guaranteed Death Benefit Death Benefit
Insured Death Benefit End of Year 18 End of Year 19
- ------- ------------- -------------- --------------
Male, age 25
at issue ....... $76,012 $89,990 $98,182
Male, age 40
at issue ....... $42,354 $51,075 $52,416
Example No. 4. Same assumptions as Example No. 3 except that the value of the
assets increases by 1.08% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
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<PAGE>
MAXIMUM MORTALITY CHARGE ASSUMPTION
Guaranteed Death Benefit Death Benefit
Insured Death Benefit End of Year 18 End of Year 19
- ------- ------------- -------------- --------------
Male, age 25
at issue ....... $76,012 $89,990 $88,422
Male, age 40
at issue ....... $42,354 $51,075 $50,116
These examples show how the same investment results affect the death benefit
more significantly for a younger insured.
If the assets in the subaccount in which the Contract participates have earned
less than 4%, and the death benefit accordingly equals the guaranteed minimum
amount, Pruco Life of New Jersey will keep a record of what the death benefit
would have been had there not been a guaranteed minimum. If later investment
results are favorable, that is if the value of the assets in the subaccount
later increases at a rate greater than 4% a year, the death benefit will not
become more than the guaranteed minimum amount until the earlier unfavorable
investment results have been offset. For example, suppose for the first 3 years
the value of the assets in the subaccount increases due to investment
performance at only a rate of 2% per year. The death benefit will nevertheless
remain at the guaranteed minimum amount. If the value of the assets increases at
a rate of 8% in the fourth year, this might not be enough to offset the earlier
unfavorable investment results. If so, the death benefit will not increase.
For further information, see the tables on pages T1 and T2. They show for
various insureds how a Contract's death benefit and cash value will change if
the gross investment return in the selected Series Fund portfolio[s] is 0%, 4%
or 8%. In addition, the tables on pages C1 and C2 show, for various insureds,
how a Contract's death benefit and cash value will change if the gross
investment return is 0%, 6% or 12%. The registration statement of the Account on
file with the SEC contains a full and precise description of how the death
benefit and cash value of a Contract are determined.
How a Contract's Cash Value Will Vary. A variable life insurance Contract has a
net cash value which the owner may get by surrender of the Contract while the
insured is living. Unlike traditional fixed-benefit whole-life insurance,
however, a Contract's cash value is not known in advance even if it is assumed
that premiums are paid when due, because it varies daily with the investment
performance of the subaccount[s] and/or the Real Property Account in which the
Contract participates.
A Contract's value upon surrender is its "net cash value," which is the cash
value less any outstanding Contract debt. See Contract Loans, page 15. The
following discussion of cash values assumes that there is no Contract debt, that
no premium is in default, and that the net premiums have all been allocated to a
single subaccount.
During the early months of the first Contract year, the cash value will be very
small or zero because of the charges made in connection with issuance of the
Contract. On the Contract date the cash value is equal to the first net premium,
unless, as may be the case throughout the first Contract year, there are unpaid
issue charge installments which reduce the cash value. Thereafter, the cash
value on every Monthly date will be equal to the cash value on the preceding
Monthly date increased or decreased by the change in the value of the assets
relating to the Contract, less the amount Pruco Life of New Jersey needs to
provide for the death benefit for the period between the two dates. If a premium
is due and paid on a Monthly date, the cash value on that date is further
increased by the amount of the net premium. The cash value between Monthly dates
is computed in a similar way.
While the death benefit increases if the value of the assets in the subaccount
increases at a rate of more than 4% a year, the investment performance needed to
produce an increase in the cash value cannot be stated in advance. It is
different for insureds of different age and sex (except where unisex rates
apply) at issue. It is also different for Contracts on comparable insureds if
those Contracts have been in effect for different lengths of time. Moreover, the
crediting of the net premium on the due date (even if it has not yet been paid)
does not result in any change in the death benefit, while the cash value is
assumed to increase by exactly the amount of the net premium. But if the net
premium is not paid before the end of the grace period, or if the Contract is
surrendered before then, the cash value is adjusted downward to take into
account the failure to pay the premium on the due date.
The tables on pages T1 and T2 and on pages C1 and C2 of this prospectus
illustrate what the cash values would be for representative Contracts over
extended periods, assuming uniform investment results, together with information
about the aggregate premiums paid under these Contracts. As is the case for
death benefit illustrations (see How a Contract's Death Benefit Will Vary, page
8), such tables show cash values calculated upon maximum mortality assumptions.
The examples set forth below assume a total Series Fund expense ratio of 0.57%
(taking into account the offsets described under The Prudential Series Fund,
Inc. on page 3).
10
<PAGE>
The following two examples show, for the same Contracts, how the cash values
will vary over a selected year for two hypothetical investment results that are
different from those shown in the tables.
Example No. 1. Contract with $50,000 guaranteed death benefit and annual
premiums in effect for 18 years, during which the value of the assets in the
subaccount increased due to investment performance at a uniform rate of 7.08%
per year. In the 19th year the value of the assets increases at a uniform rate
of 8.08%. (These percentages correspond to gross annual investment returns in
the corresponding Series Fund portfolio of 8% and 9% per year, respectively.)
MAXIMUM MORTALITY CHARGE ASSUMPTION
Cash Value Cash Value
Insured End of Year 18 End of Year 19
------- -------------- --------------
Male, age 25
at issue ....... $11,766 $13,007
Male, age 40
at issue ....... $19,947 $21,904
Example No. 2. Same assumptions as in Example No. 1 except that the value of the
assets increases by 1.08% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
MAXIMUM MORTALITY CHARGE ASSUMPTION
Cash Value Cash Value
Insured End of Year 18 End of Year 19
------- -------------- --------------
Male, age 25
at issue ....... $11,766 $12,160
Male, age 40
at issue ....... $19,947 $20,473
The changes are greater for the older insured because the premiums (and hence
the assets in the Account relating to the Contract on that insured) are greater
and the same rate of increase therefore produces a greater dollar amount.
Example No. 3. This example and the one following provide information for a
Contract with an $800 annual premium, in effect for 18 years, during which time
the value of the assets in the subaccount increased due to investment
performance at a uniform rate of 7.08% per year. In the 19th year the value of
the assets increases at a uniform rate of 8.08%. (These percentages correspond
to gross annual investment returns in the corresponding Series Fund portfolio of
8% and 9% per year, respectively.)
MAXIMUM MORTALITY CHARGE ASSUMPTION
Cash Value Cash Value
Insured End of Year 18 End of Year 19
------- -------------- --------------
Male, age 25
at issue ....... $17,887 $19,773
Male, age 40
at issue ....... $16,897 $18,554
Example No. 4. Same assumptions as in Example No. 3 except that the value of the
assets increases by 1.08% in the 19th year. (This percentage corresponds to a
gross annual investment return in the corresponding Series Fund portfolio of
2%.)
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<PAGE>
MAXIMUM MORTALITY CHARGE ASSUMPTION
Cash Value Cash Value
Insured End of Year 18 End of Year 19
------- -------------- --------------
Male, age 25
at issue ....... $17,887 $18,487
Male, age 40
at issue ....... $16,897 $17,343
The last two examples might be compared with Examples No. 3 and 4 on page 9.
Note that while the same premium results in a larger death benefit for the
younger insured, the cash values for the younger and older insureds are quite
similar. Note also that while the death benefit decreases if the investment
return is 1.08% per year, the cash value increases.
Because a substantial part of each premium is used to provide life insurance
protection, the cash values cannot meaningfully be compared with the amounts
that would have been available had the gross premiums been invested without
obtaining life insurance protection.
Surrender of a Contract for its Net Cash Value. A Contract may be surrendered in
whole or in part for its net cash value while the insured is living.
Surrendering a Contract in part involves splitting the Contract into two
Contracts. One is surrendered for its net cash value; the other is continued in
force on the same terms as the original Contract except that premiums and values
will be appropriately reduced. The Contract continued must have a guaranteed
minimum amount of at least $25,000, and its premium will be based on the new
guaranteed minimum amount. Surrender of all or part of a Contract may have tax
consequences. See Tax Treatment of Contract Benefits, page 16.
To surrender a Contract in whole or in part, the owner must deliver or mail it,
together with a written request in a form that meets Pruco Life of New Jersey's
needs, to a Pruco Life of New Jersey Home Office. The net cash value of a
surrendered Contract will be determined as of the valuation period such notice
is received in the Pruco Life of New Jersey Home Office.
Withdrawal of a Portion of a Contract's Net Cash Value. Pruco Life of New Jersey
will permit a Contract owner to withdraw a portion of the Contract's net cash
value (generally that resulting from investment performance in excess of 4% a
year) without surrendering the Contract, provided that the death benefit is
reduced by the amount of paid-up whole life insurance that the cash value
withdrawn would have purchased for that Contract owner, and that the guaranteed
minimum death benefit is reduced so that the difference between the death
benefit and the guaranteed minimum death benefit is the same percentage of cash
value after the withdrawal as before. The right to withdraw such excess net cash
value may be usefully compared with a partial surrender. As noted above, a
partial surrender essentially involves splitting an existing Contract into two
Contracts and surrendering one for its net cash value; the death benefit, the
guaranteed minimum death benefit, and the cash value of the continuing Contract
will all be proportionately reduced and a new lower scheduled premium will
henceforth be payable. If a Contract owner elects to withdraw excess cash value,
the scheduled premium is not reduced. The cash value is, of course, reduced by
exactly the amount of the withdrawal. Both the death benefit and the guaranteed
minimum death benefit are also reduced but by a lesser amount than they would be
under a partial surrender. For a brief discussion of the potential tax
consequences of a Contract owner's withdrawal of the excess cash value, see Tax
Treatment of Contract Benefits, page 16.
Upon request, Pruco Life of New Jersey will tell a Contract owner the amount of
the net cash value that may be withdrawn in this manner and the amount of the
corresponding reductions in the death benefit and guaranteed minimum death
benefit for that or any lesser amount of cash value withdrawn. A Contract owner
is able to exercise the right to withdraw a portion of the Contract's cash value
either on an isolated or occasional basis or automatically every year, to the
extent investment performance warrants, for the purpose of applying partial cash
value withdrawals toward the payment of premiums on the Contract. To exercise
this right, a Contract owner must deliver or mail a written request in a form
that meets Pruco Life of New Jersey's needs to a Pruco Life of New Jersey Home
Office.
When Proceeds Are Paid. Pruco Life of New Jersey will generally pay any death
benefit, cash value or loan proceeds within 7 days after receipt at a Pruco Life
of New Jersey Home Office of all the documents required for such a payment.
Other than the death benefit, which is determined as of the date of death, the
amount will be determined as of the end of the valuation period in which the
necessary documents are received. However, Pruco Life of New Jersey may delay
payment of proceeds from the subaccount[s] and the variable portion of the death
benefit due under the Contract if the disposal or valuation of the Account's
assets is not reasonably practicable
12
<PAGE>
because the New York Stock Exchange is closed for other than a regular holiday
or weekend, trading is restricted by the SEC or the SEC declares that an
emergency exists.
With respect to a Contract in force as extended term or fixed reduced paid-up
insurance, Pruco Life of New Jersey expects to pay any cash value promptly upon
request. However, Pruco Life of New Jersey has the right to delay payment of
such cash value for up to 6 months (or a shorter period if required by
applicable law). Pruco Life of New Jersey will pay interest of at least 3% a
year if it delays such a payment for 30 days or more (or a shorter period if
required by applicable law).
Living Needs Benefit. Contract applicants may elect to add the Living Needs
Benefit(sm) to their Contracts at issue, subject to Pruco Life of New Jersey's
receipt of satisfactory evidence of insurability. The benefit may vary
state-by-state where it is available, and a Pruco Life of New Jersey
representative should be consulted as to whether and to what extent the benefit
is available in a particular state and on any particular Contract. Where
available, the benefit can generally be added only to Contracts of $50,000 or
more or when the aggregate face amounts of the insured's eligible contracts
equal $50,000 or more.
The Living Needs Benefit allows the Contract owner to elect to receive an
accelerated payment of all or part of the Contract's death benefit, adjusted to
reflect current value, at a time when certain special needs exist. The adjusted
death benefit will always be less than the death benefit, but will generally be
greater than the Contract's cash surrender value. Depending upon state
regulatory approval, one or both of the following options may be available. A
Pruco Life of New Jersey representative should be consulted as to whether
additional options may be available.
Terminal Illness Option. This option is available if the insured is diagnosed as
terminally ill with a life expectancy of 6 months or less. When satisfactory
evidence is provided, Pruco Life of New Jersey will provide an accelerated
payment of the portion of the death benefit selected by the Contract owner as a
Living Needs Benefit. The Contract owner may (1) elect to receive the benefit in
a single sum or (2) receive equal monthly payments for 6 months. If the insured
dies before all of the payments have been made, the present value of the
remaining payments will be paid to the beneficiary designated in the Living
Needs Benefit claim form in a single sum.
Nursing Home Option. This option is available after the insured has been
confined to an eligible nursing home for 6 months or more. When satisfactory
evidence is provided, including certification by a licensed physician, that the
insured is expected to remain in the nursing home until death, Pruco Life of New
Jersey will provide an accelerated payment of the portion of the death benefit
selected by the Contract owner as a Living Needs Benefit. The Contract owner may
(1) elect to receive the benefits in a single sum or (2) receive equal monthly
payments for a specified number of years (not more than 10 nor less than 2),
depending upon the age of the insured. If the insured dies before all of the
payments have been made, the present value of the remaining payments will be
paid to the beneficiary designated in the Living Needs Benefit claim form in a
single sum.
All or part of the Contract's death benefit may be accelerated under the Living
Needs Benefit. If the benefit is only partially accelerated, a death benefit of
at least $25,000 must remain under the Contract. Pruco Life of New Jersey
reserves the right to determine the minimum amount that may be accelerated.
The Living Needs Benefit is available only in jurisdictions where and to the
extent regulatory approval has been obtained. If desired by a Contract owner,
the benefit must be requested on the Contract's application. There is no charge
for adding the benefit to the Contract. However, an administrative charge (not
to exceed $150) will be made at the time the Living Needs Benefit is paid.
No benefit will be payable if the Contract owner is required to elect it in
order to meet the claims of creditors or to obtain a government benefit. Pruco
Life of New Jersey can furnish details about the amount of Living Needs Benefit
that is available to an eligible Contract owner under a particular Contract, and
the adjusted premium payments that would be in effect if less than the entire
death benefit is accelerated.
The Contract owner should consider whether adding this settlement option is
appropriate in his or her given situation. Adding the Living Needs Benefit to
the Contract has no adverse consequences; however, electing to use it could.
Contract owners should consult a qualified tax advisor before electing to
receive this benefit. Unlike a death benefit received by a beneficiary after the
death of an insured, receipt of a Living Needs Benefit payment may give rise to
a federal or state income tax. Receipt of Living Needs Benefit payment may also
affect a Contract owner's eligibility for certain government benefits or
entitlements.
Illustrations of Cash Values, Death Benefits, and Accumulated Premiums. The
following tables have been prepared to help show how values under the Contract
change with investment performance of the Account. The tables assume that no
portion of the Contract's cash value is allocated to the Real Property Account.
The tables illustrate how cash values and death benefits of Contracts with a
given premium and guaranteed minimum death benefit issued on an insured of a
given age would vary over time if the return on the assets held in the selected
Series Fund portfolios were a uniform, gross, after-tax, annual rate of 0%, 4%
or 8%. The death benefits and cash values
13
<PAGE>
would be different from those shown if the returns averaged 0%, 4%, and 8% but
fluctuated over and under those averages throughout the years.
The death benefits and cash values shown in the tables are calculated upon the
assumption that the maximum mortality charges specified by the 1980 CSO Table
will be made throughout the life of the Contract.
The amounts shown for the death benefit and cash value as of each Contract year
reflect the fact that the net investment return on the assets held in the
subaccounts is lower than the gross, after-tax return of the portfolios. This is
because the tables assume a total Series Fund expense ratio of 0.57% (taking
into account the offsets described under The Prudential Series Fund, Inc. on
page 3), and also reflect a daily mortality and expense risk charge to the
Account equal to an effective annual charge of 0.35%. The actual fees and
expenses of the portfolios associated with a particular Contract may be more or
less than 0.57% and will depend on which subaccounts are selected. Based on the
above assumptions, gross annual rates of return of 0%, 4%, and 8% correspond to
approximate net annual rates of return of -0.92%, 3.08%, and 7.08%.
The tables reflect the fact that no charges for federal or state income taxes
are currently made against the Account. If such a charge is made in the future,
it will take a higher gross rate of return to produce after-tax returns of 0%,
4% or 8% than it does now.
The second column of each table shows what results would be achieved if an
amount equal to the total annual premium were invested to earn 4% interest
compounded annually.
Upon request, Pruco Life of New Jersey will furnish a comparable illustration
based on the proposed insured's age and sex (except where unisex rates apply)
and on the guaranteed minimum death benefit or premium amount requested. Such an
illustration will assume that the insured is a standard (or, on request, a
preferred) risk and that the premium will be paid on an annual basis.
Additional illustrations that assume the gross annual investment return is 0%,
6%, and 12% can be found on pages C1 and C2. These percentages correspond to
approximate net annual rates of return of -0.92%, 3.08%, and 7.08%,
respectively.
14
<PAGE>
ILLUSTRATIONS
-------------
<TABLE>
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 25
$50,000 GUARANTEED DEATH BENEFIT
$536.50 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES
<CAPTION>
Death Benefit (2) Cash Value (2)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 0% Gross 4% Gross 8% Gross
Year Per Year (-0.92% Net) (3.08% Net) (7.08% Net) (-0.92% Net) (3.08% Net) (7.08% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 558 $50,000 $50,000 $50,011 $ 22 $ 25 $ 28
2 $ 1,138 $50,000 $50,000 $50,079 $ 376 $ 396 $ 416
3 $ 1,742 $50,000 $50,000 $50,203 $ 728 $ 780 $ 833
4 $ 2,369 $50,000 $50,000 $50,384 $1,078 $ 1,176 $ 1,280
5 $ 3,022 $50,000 $50,000 $50,624 $1,434 $ 1,594 $ 1,768
6 $ 3,701 $50,000 $50,000 $50,923 $1,787 $ 2,024 $ 2,289
7 $ 4,407 $50,000 $50,000 $51,281 $2,135 $ 2,466 $ 2,845
8 $ 5,141 $50,000 $50,000 $51,699 $2,478 $ 2,919 $ 3,438
9 $ 5,905 $50,000 $50,000 $52,176 $2,816 $ 3,383 $ 4,068
10 $ 6,699 $50,000 $50,000 $52,713 $3,149 $ 3,858 $ 4,739
15 $11,172 $50,000 $50,000 $56,305 $4,706 $ 6,379 $ 8,754
20 $16,615 $50,000 $50,000 $61,435 $6,047 $ 9,096 $14,069
25 $23,237 $50,000 $50,000 $68,170 $7,161 $11,982 $21,044
30 $31,293 $50,000 $50,000 $76,620 $8,027 $14,978 $30,087
40 (Age 65) $53,020 $50,000 $50,000 $99,296 $8,901 $20,857 $55,967
<FN>
(1) If premiums are paid more frequently than annually, the payments would be
$274.50 semi-annually, $139.50 quarterly or $48 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been made.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, AND 8% OVER A
PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T1
<PAGE>
<TABLE>
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 40
$50,000 GUARANTEED DEATH BENEFIT
$939 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES
<CAPTION>
Death Benefit (2) Cash Value (2)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 4% Gross 8% Gross 0% Gross 4% Gross 8% Gross
Year Per Year (-0.92% Net) (3.08% Net) (7.08% Net) (-0.92% Net) (3.08% Net) (7.08% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 977 $50,000 $50,000 $50,028 $ 197 $ 208 $ 219
2 $ 1,992 $50,000 $50,000 $50,118 $ 814 $ 862 $ 911
3 $ 3,048 $50,000 $50,000 $50,268 $ 1,415 $ 1,525 $ 1,640
4 $ 4,147 $50,000 $50,000 $50,479 $ 1,998 $ 2,195 $ 2,406
5 $ 5,289 $50,000 $50,000 $50,755 $ 2,637 $ 2,948 $ 3,291
6 $ 6,477 $50,000 $50,000 $51,097 $ 3,257 $ 3,711 $ 4,223
7 $ 7,713 $50,000 $50,000 $51,505 $ 3,860 $ 4,484 $ 5,206
8 $ 8,998 $50,000 $50,000 $51,977 $ 4,444 $ 5,266 $ 6,241
9 $10,335 $50,000 $50,000 $52,515 $ 5,012 $ 6,058 $ 7,332
10 $11,725 $50,000 $50,000 $53,118 $ 5,561 $ 6,859 $ 8,480
15 $19,554 $50,000 $50,000 $57,111 $ 8,002 $10,941 $15,147
20 $29,080 $50,000 $50,000 $62,753 $ 9,888 $15,046 $23,532
25 (Age 65) $40,670 $50,000 $50,000 $70,106 $11,217 $19,054 $33,939
<FN>
(1) If premiums are paid more frequently than annually, the payments would be
$479.50 semi-annually, $243 quarterly or $82.50 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been made.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 4%, AND 8% OVER A
PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
T2
<PAGE>
Contract Loans. After the first Contract year, the owner may borrow from Pruco
Life of New Jersey using the Contract as the only security for the loan. During
the first Contract year, no loans are permitted. Except as provided in the
following paragraph, after the first Contract year a Contract owner may borrow
up to 75% of the Contract's cash value. The minimum amount that may be borrowed
at any one time is $500, except that a smaller amount may be borrowed if used to
pay premiums on the Contract. The owner who is paying premiums other than
monthly may elect in advance to have Pruco Life of New Jersey automatically make
a loan against the Contract, if the net cash value is large enough, in order to
pay a premium that has not been paid at the end of a grace period.
Under one of the loan provisions available under this Contract, interest on a
loan accrues daily at a fixed effective annual rate of 5.5%. However, if a
Contract owner so desires, and if Pruco Life of New Jersey has received any
required approvals from the regulatory officials in the state or other
jurisdiction in which the Contract is to be issued, the Contract owner may elect
at the time of issuance of the Contract to have a different loan provision in
the Contract under which the interest rate will vary from time to time. Under
this variable loan interest rate provision, a Contract owner may borrow up to
90% of the Contract's cash value after the first Contract year.
If an owner elects the variable loan interest rate provision, interest on any
loan will accrue daily at an effective annual rate Pruco Life of New Jersey
determines at the start of each Contract year (instead of at the fixed 5.5%
rate). This interest rate will not exceed the greatest of: (1) the "Published
Monthly Average" for the calendar month ending 2 months before the calendar
month of the Contract anniversary; (2) 5%, which is the assumed rate of return
for the Contract plus 1%; and (3) any rate required by law in the state of issue
of the Contract. The "Published Monthly Average" means Moody's Corporate Bond
Yield Average-Monthly Average Corporates, as published by Moody's Investors
Service, Inc. or any successor to that service, or if that average is no longer
published, a substantially similar average established by the insurance
regulator where the Contract is issued. For example, the Published Monthly
Average in 1994 ranged from 7.25% to 8.94%.
Interest payments on any loan are due at the end of each Contract year. If
interest is not paid when due, it is added to the amount of the loan. If the sum
of all outstanding loans plus accrued interest exceeds what the net cash value
would be if there were no Contract debt, Pruco Life of New Jersey will notify
the Contract owner of its intent to terminate the Contract in 31 days, within
which time the owner may repay all or enough of the loan to obtain a positive
net cash value and thus keep the Contract in force.
When a loan is made, an amount equal to the loan proceeds will be transferred
out of the Account and the Real Property Account, as applicable. The reduction
will generally be made in the same proportions as the value in each subaccount
and Real Property Account bears to the total value of the Contract. While a
fixed-rate loan is outstanding, the amount that was so transferred will be
credited with the assumed investment return of 4% rather than with the actual
rate of return of the subaccount[s] and/or the Real Property Account. While a
loan made pursuant to the variable loan interest rate provision is outstanding,
the amount that was so transferred will be credited with a rate which is 1% less
than the loan interest rate for the Contract year (instead of 4%), rather than
with the actual rate of return of the subaccount[s] and/or the Real Property
Account.
A loan will not affect the amount of the premiums due. Should the death benefit
become payable while a loan is outstanding, or should the Contract be
surrendered, the amount of the Contract debt will be deducted from the death
benefit or the cash value otherwise payable.
A loan will have a permanent effect on a Contract's death benefit and cash value
because the investment results of the subaccount[s] and/or the Real Property
Account will apply only to the amount remaining in the subaccount[s] and/or the
Real Property Account. The longer the loan is outstanding, the greater the
effect is likely to be. The effect could be favorable or unfavorable. If
investment results are favorable while the loan is outstanding, the death
benefit and cash value will not increase as rapidly as they would have if no
loan had been made. If investment results are unfavorable, the death benefit and
the cash value will not be as adversely affected as they would have been had no
loan been made. Of course, a loan that is repaid will not have any effect upon
the guaranteed minimum death benefit.
The tax treatment of Contract loans depends upon whether the Contract is
classified as a Modified Endowment Contract for federal tax purposes. See Tax
Treatment of Contract Benefits, page 16.
Consider the Contract issued on a 25 year old insured illustrated in the
table on page T1 with an 8% gross investment return. Assume a $2,500 (5.5%)
fixed-rate loan was made at the end of Contract year 8 and repaid at the end of
Contract year 9. Upon repayment, the death benefit would be $49,371.49 and the
cash value $3,992.92. These amounts are lower than the death benefit and cash
value shown on that page for the end of Contract year 9 because the loan amount
was credited with the 4% assumed investment return rather than the 8% gross rate
of return for the selected subaccounts.
Right to Exchange a Contract for a Fixed-Benefit Whole-Life Policy. At any time
during the first 24 months after a Contract is issued, so long as no premium due
remains unpaid, the owner may exchange it for a fixed benefit whole-life policy
on the insured's life. No evidence of insurability will be required to make an
exchange. The new
15
<PAGE>
policy's death benefit will be the same as the guaranteed minimum amount of the
Contract. The new policy will also have the same issue date and risk
classification for the insured as the Contract, but it will be issued by The
Prudential and will be a participating (potentially dividend paying) policy.
Premiums for the new policy will be based on The Prudential's rates in effect on
the original issue date for the same class of risk which are currently higher
than premiums under the Contract. The new policy's cash value will be the same
as it would have been had the new policy been purchased at the outset. There
will be an equitable cash adjustment on the exchange equal to the difference
between the premiums on the new policy and the premiums on the Contract for the
period between the Contract date and the date of the exchange, reduced by the
amount, if any, by which the cash value of the Contract on the date of the
exchange exceeds what the cash value would have been had the subaccounts and/or
the Real Property Account in which the Contract participated uniformly earned
the assumed investment return of 4%. A further adjustment will be made for any
differences in premiums for any optional benefits carried over to the new
policy.
The exchange will be effective when Pruco Life of New Jersey receives a written
request in a form that meets its needs, and receives the Contract and payment of
any adjustment due on the exchange. Any outstanding Contract debt must be repaid
on or before the effective date of the exchange.
The Contract owner may also exchange the Contract for a fixed-benefit life
insurance policy according to procedures meeting applicable state insurance law
requirements if the Series Fund or one of its portfolios has a material change
in its investment policy. Pruco Life of New Jersey, in conjunction with the New
Jersey Insurance Commissioner, will determine if a change in investment policy
is material. The Contract owner will be able to exchange within 60 days of
receipt of notice of such a material change or of the effective date of the
change, whichever is later. Upon such an exchange, there will be a cash
adjustment based on any difference in net cash value between the Contract and
the new policy.
Sale of the Contract and Sales Commissions. Pruco Securities Corporation
("Prusec"), an indirect wholly-owned subsidiary of The Prudential, acts as the
principal underwriter of the Contract. Prusec, organized in 1971 under New
Jersey law, is registered as a broker and dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers,
Inc. Prusec's principal business address is 1111 Durham Avenue, South
Plainfield, New Jersey 07080. The Contract is sold by registered representatives
of Prusec who are also authorized by state insurance departments to do so. The
Contract may also be sold through other broker-dealers authorized by Prusec and
applicable law to do so. Registered representatives of such other broker-dealers
may be paid on a different basis than described below. Where the insured is less
than 58 years of age, the representative will generally receive a commission of
no more than 50% of the premiums for the first year, no more than 11% of the
premiums for the second, third, and fourth years, no more than 3% of the
premiums for the fifth through tenth years, and no more than 2% of the premiums
thereafter. For insureds over 58 years of age, the commission will be lower. The
representative may be required to return all or part of the first year
commission if the Contract is not continued through the second year.
Representatives with less than 3 years of service may be paid on a different
basis. Representatives who meet certain productivity, profitability, and
persistency standards with regard to the sale of the Contract will be eligible
for additional compensation.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life of New Jersey expects to recover its total sales expenses over
the periods the Contracts are in effect. To the extent that the sales charges
are insufficient to cover total sales expenses, the sales expenses will be
recovered from Pruco Life of New Jersey's surplus, which may include the amounts
derived from the risk charge and the mortality and expense risk charge,
described in items 5 and 7 under Charges and Expenses, page 6.
Tax Treatment of Contract Benefits. Each prospective purchaser is urged to
consult a qualified tax advisor. The following discussion is not intended as tax
advice, and it is not a complete statement of what the effect of federal income
taxes will be under all circumstances. Rather, it provides information about how
Pruco Life of New Jersey believes the current laws apply in the most commonly
occurring circumstances. There is no guarantee, however, that the current
federal income tax laws, regulations or interpretations will not change.
Treatment as Life Insurance. Under provisions of the Internal Revenue Code (the
"Code"), life insurance policies like the Contract will be treated as life
insurance for tax purposes as long as the Contract satisfies certain
definitional tests set forth in section 7702 of the Code and as long as the
underlying investment for the Contract satisfies diversification requirements
under section 817(h) of the Code. (For further detail on diversification
requirements, see DIVIDENDS, DISTRIBUTIONS, AND TAXES in the attached prospectus
for the Series Fund).
Pruco Life of New Jersey believes that the Contract meets these definitional and
diversification requirements and accordingly will be treated as life insurance
for tax purposes. This means that: (1) the death benefit should be excludible
from the gross income of the beneficiary under section 101(a) of the Code; and
(2) except as noted below, the Contract owner should not be taxed on any part of
the Contract fund, including additions attributable to interest, dividends or
appreciation.
16
<PAGE>
However, Section 7702 of the Code which defines life insurance for tax purposes
gives the Secretary of the Treasury authority to prescribe regulations to carry
out the purposes of the Section. In this regard, proposed regulations governing
mortality charges were issued in 1991 and proposed regulations under Sections
101, 7702, and 7702A governing the treatment of life insurance policies that
provide accelerated death benefits were issued in 1992. None of these proposed
regulations has yet been finalized. Additional regulations under Section 7702
may also be promulgated in the future. Moreover, in connection with the issuance
of temporary regulations under Section 817(h), the Treasury Department announced
that such regulations do not provide guidance concerning the extent to which
Contract owners may direct their investments to particular divisions of a
separate account. Such guidance will be included in regulations or rulings under
Section 817(d) relating to the definition of a variable contract.
Pruco Life of New Jersey intends to comply with final regulations issued under
sections 7702 and 817. Therefore, it reserves the right to make such changes as
it deems necessary to assure that the Contract continues to qualify as life
insurance for tax purposes. Any such changes will apply uniformly to affected
Contract owners and will be made only after advance written notice to affected
Contract owners.
Pre-Death Distributions. The taxation of pre-death distributions depends on
whether the Contract is classified as a Modified Endowment Contract. The
following discussion first deals with distributions under Contracts not so
classified, and then with Modified Endowment Contracts.
1. A surrender (or lapse) of the Contract may have tax consequences. Upon
surrender, the owner may not be taxed on the net cash value except for the
amount, if any, that exceeds the gross premiums paid less the untaxed
portion of any prior withdrawals. The amount of any unpaid Contract debt
will, upon surrender or lapse, be added to the net cash value and treated,
for this purpose, as if it had been received. Any loss incurred upon
surrender is generally not deductible. The tax consequences of a surrender
may differ if the proceeds are received under an income payment settlement
option.
A withdrawal or partial surrender generally is not taxable unless it
exceeds total premiums paid to the date of withdrawal less the untaxed
portion of any prior withdrawals. However, under certain limited
circumstances, in the first 15 Contract years all or a portion of a
withdrawal or partial surrender may be taxable if the cash value exceeds
the total premiums paid less the untaxed portion of any prior withdrawals,
even if total withdrawals do not exceed total premiums paid to date.
Extra premiums for optional benefits and riders generally do not count in
computing gross premiums paid, which in turn determines the extent to which
a withdrawal might be taxed.
Loans received under the Contract will ordinarily be treated as
indebtedness of the owner and will not be considered to be distributions
subject to tax.
2. Some of the above rules are changed if the Contract is classified as a
Modified Endowment Contract under Section 7702A of the Code. In general,
this Contract should not become a Modified Endowment Contract. However,
certain actions may cause the Contract to become a Modified Endowment
Contract. These actions may include partial surrenders or withdrawals, the
deletion of certain riders or the selection of certain options upon the
lapse of the Contract. Contract owners contemplating any of these steps
should consult a qualified tax advisor and their Pruco Life of New Jersey
representative.
If the Contract is classified as a Modified Endowment Contract then
pre-death distributions, including loans, withdrawals and partial
surrenders are includible in income to the extent that the Contract's cash
value exceeds the gross premiums paid for the Contract increased by the
amount of any loans previously includible in income and reduced by any
untaxed amounts previously received other than the amount of any loans
excludible from income. These rules may also apply to pre-death
distributions, including loans, made during the 2 year period prior to the
Contract becoming a Modified Endowment Contract.
In addition, pre-death distributions from such Contracts (including full
surrenders) will be subject to a penalty of 10 percent of the amount includible
in income unless the amount is distributed on or after age 59 1/2, on account of
the taxpayer's disability or as a life annuity. It is presently unclear how the
penalty tax provisions apply to Contracts owned by nonnatural persons such as
corporations.
Under certain circumstances, Modified Endowment Contracts issued during any
calendar year will be treated as a single contract for purposes of applying the
above rules.
Withholding. The taxable portion of any amounts received under the Contract will
be subject to withholding to meet federal income tax obligations. If the
Contract owner fails to elect that no taxes be withheld, Pruco Life of New
Jersey will withhold from each payment the appropriate percentage of the taxable
portion of the payment. Pruco Life of New Jersey will provide the Contract owner
with forms and instructions concerning the right to elect that no taxes be
withheld from the taxable portion of any payment. All recipients may be subject
to penalties under
17
<PAGE>
the estimated tax payment rules if withholding and estimated tax payments are
not sufficient. Contract owners who do not provide a social security number or
other taxpayer identification number will not be permitted to elect out of
withholding.
Other Tax Considerations. Transfer of the Contract to a new owner or assignment
of the Contract may have tax consequences depending on the circumstances. In the
case of a transfer of the Contract for a valuable consideration, the death
benefit may be subject to federal income taxes under Section 101(a)(2) of the
Code. In addition, a transfer of the Contract to or the designation of a
beneficiary who is either 37 1/2 years younger than the Contract owner or a
grandchild of the Contract owner may have Generation Skipping Transfer tax
consequences under Section 2601 of the Code.
In certain circumstances, deductions for interest paid or accrued on Contract
debt or on other loans incurred or continued to purchase or carry the Contract
may be denied under Section 163 of the Code as personal interest or under
Section 264 of the Code. Contract owners should consult a tax advisor regarding
the application of these provisions to their circumstances.
Business-owned life insurance is subject to additional rules. Section 264(a)(1)
of the Code generally precludes business Contract owners from deducting premium
payments. Under Section 264(a)(4) of the Code, a deduction is not allowed for
any interest paid or accrued on any Contract debt on an insurance policy to the
extent the indebtedness exceeds $50,000 per officer, employee or financially
interested person. The Code also imposes an indirect tax upon additions to the
Contract fund or the receipt of death benefits under business-owned life
insurance policies under certain circumstances by way of the corporate
alternative minimum tax.
The individual situation of each owner or beneficiary will determine the federal
estate taxes and the state and local estate, inheritance and other taxes due if
the owner or insured dies.
Lapse and Reinstatement. This Contract ensures that as long as premiums are
paid, insurance protection remains in effect. However, if a premium is not paid
on or before each due date, or within the grace period after each due date, the
Contract will go into default. Should this happen, Pruco Life of New Jersey will
send the Contract owner a notice of default setting forth the payment necessary
to keep the Contact in force on a premium paying basis. This payment must be
received at the Pruco Life of New Jersey Home Office within the 31 day grace
period after the notice of default is mailed or the Contract will lapse. A
Contract that lapses with an outstanding Contract loan may have tax
consequences. See Tax Treatment of Contract Benefits on page 16.
A Contract that has lapsed may be reinstated within 3 years after the date of
default unless the Contract has been surrendered for its cash value. To
reinstate a lapsed Contract, Pruco Life of New Jersey requires renewed evidence
of insurability, and submission of certain payments due under the Contract.
If a Contract does lapse, it may still provide some benefits. Those benefits are
described below under Options on Lapse.
Options on Lapse. If a Contract lapses because the premium has not been paid
before the end of the grace period, some life insurance coverage may continue in
effect or the owner may choose to surrender the Contract for its net cash value.
A lapse of a Contract with a Contract loan may have tax consequences. See Tax
Treatment of Contract Benefits, page 16.
1. Extended Term Insurance. With one exception explained below, if the owner
does not communicate at all with Pruco Life of New Jersey, life insurance
coverage will continue for a length of time that depends on the net cash value
on the due date of the first unpaid premium, the amount of insurance, and the
age and sex (except where unisex rates apply) of the insured. The insurance
amount will be what it would have been on the due date of the unpaid premium,
taking into account any Contract debt on that date. The amount will not change
while the insurance stays in force. This benefit is known as extended term
insurance. The owner will be told in writing how long the insurance will be in
effect. Extended term insurance has a cash value but no loan value.
Contracts issued on the lives of certain insureds in high risk rating classes
will include a statement that extended term insurance will not be provided. In
that case, variable reduced paid-up insurance (as described in item 3 below)
will be the automatic benefit provided on lapse.
2. Fixed Reduced Paid-Up Insurance. The owner may choose to have insurance
coverage provided for the lifetime of the insured. The amount will be lower than
what extended term insurance would provide. This is known as fixed reduced
paid-up insurance. The insurance amount will depend on the net cash value on the
due date of the first premium in default, and the age and sex (except where
unisex rates apply) of the insured. The amount will not change thereafter unless
a loan is taken against the fixed reduced paid-up insurance. Pruco Life of New
Jersey will, if asked, tell the owner what the amount will be. Apart from the
case described above in which fixed reduced paid-up insurance is the automatic
benefit provided on lapse, the owner who wants fixed reduced paid-up insurance
must ask for it in writing, in a form that meets Pruco Life of New Jersey's
needs, within 3 months of the due date of the first unpaid premium. Fixed
reduced paid-up insurance has a cash value and a loan value. Acquisition of
18
<PAGE>
reduced paid-up insurance within the first 7 Contract years may result in the
Contract becoming a Modified Endowment Contract. See Tax Treatment of Contract
Benefits, page 16.
3. Variable Reduced Paid-Up Insurance. Variable reduced paid-up insurance
provides insurance coverage for the lifetime of the insured. The initial
insurance amount will depend upon the net cash value on the due date of the
first premium in default, and the age and sex (except where unisex rates apply)
of the insured. This will be a new guaranteed minimum death benefit. Aside from
this guarantee, the cash value and the amount of insurance will vary with
investment performance in the same manner as a Contract in force on a premium
paying basis (see How a Contract's Death Benefit Will Vary, page 8 and How a
Contract's Cash Value Will Vary, page 10). Variable reduced paid-up insurance
has a loan privilege identical to that available on premium paying Contracts
(see Contract Loans, page 15). Acquisition of reduced paid-up insurance within
the first 7 Contract years may result in the Contract becoming a Modified
Endowment Contract. See Tax Treatment of Contract Benefits, page 16.
As explained in item 1 above, variable reduced paid-up insurance is the
automatic benefit on lapse for Contracts issued on certain insureds. Owners of
other Contracts who want variable reduced paid-up insurance must ask for it in
writing, in a form that meets Pruco Life of New Jersey's needs, within 3 months
of the date of default; it will be available to such owners only if the initial
amount of variable reduced paid-up insurance would be at least $5,000. This
minimum is not applicable to Contracts for which variable reduced paid-up
insurance is the automatic benefit upon lapse.
4. Payment of Net Cash Value. The owner can receive the net cash value by
surrendering the Contract and making a written request in a form that meets
Pruco Life of New Jersey's needs. If Pruco Life of New Jersey receives the
request within the days of grace of a premium in default, the net cash value
will be the net cash value as of the due date of that premium, adjusted for any
loan made or repaid during the days of grace, plus or minus an amount that
depends upon the investment performance between the due date and the date Pruco
Life of New Jersey receives the request. Whether the net cash value as of the
due date of the unpaid premium is increased or decreased by subsequent
investment performance depends upon whether or not the assets relating to the
Contract have increased at more than 4% a year. If Pruco Life of New Jersey
receives the request after the grace period expires, the net cash value will be
the net value of any extended term insurance then in force, or the net value of
any reduced paid-up insurance then in force (either fixed or variable), less any
Contract debt. Surrender of the Contract may have tax consequences. See Tax
Treatment of Contract Benefits, page 16.
The following table shows the cash value, extended term insurance, and both
fixed and variable reduced paid-up insurance for two representative Contracts,
each with a guaranteed death benefit of $50,000, which lapse at the end of 8
years after a uniform gross annual investment return of 8%. The tables assume a
total Series Fund expense ratio of 0.57% (taking into account the offsets
described under The Prudential Series Fund, Inc. on page 3).
MAXIMUM MORTALITY CHARGE ASSUMPTION
Extended Reduced
Insured Cash Value Term Insurance Paid-Up Insurance
------- ---------- -------------- -----------------
Male, age 25 $3,438 $51,699 $14,352
at issue for 19.80 years for life
Male, age 40 $6,241 $51,977 $16,139
at issue for 12.70 years for life
Legal Considerations Relating to Sex-Distinct Premiums and Benefits. The
Contract generally employs mortality tables that distinguish between males and
females. Thus, premiums and benefits under Contracts issued on males and females
of the same age will generally differ. However, in those states that have
adopted regulations prohibiting sex-distinct insurance rates, premiums and cost
of insurance charges will be based on male mortality tables whether the insured
is male or female. In addition, employers and employee organizations considering
purchase of a Contract should consult their legal advisors to determine whether
purchase of a Contract based on sex-distinct actuarial tables is consistent with
Title VII of the Civil Rights Act of 1964 or other applicable law. Pruco Life of
New Jersey may offer the Contract with unisex mortality rates to such
prospective purchasers.
Other General Contract Provisions.
Beneficiary. The beneficiary is designated and named in the application by the
Contract owner. Thereafter, the owner may change the beneficiary, provided it is
in accordance with the terms of the Contract. Should the insured die with no
surviving beneficiary, the insured's estate will become the beneficiary.
19
<PAGE>
Incontestability. After the Contract has been in force during the insured's
lifetime for 2 years from the Contract date, Pruco Life of New Jersey will not
contest its liability under the Contract in accordance with its terms.
Misstatement of Age or Sex. If the insured's stated age or sex (except where
unisex rates apply) or both are incorrect in the Contract, Pruco Life of New
Jersey will adjust the benefits payable, as required by law, to reflect what the
premium would have purchased for the correct age and sex.
Suicide Exclusion. Generally, if the insured, whether sane or insane, dies by
suicide within 2 years from the Contract date, Pruco Life of New Jersey will pay
no more under the Contract than the sum of the premiums paid.
Assignment. This Contract may not be assigned if such assignment would violate
any federal, state or local law or regulation. Pruco Life of New Jersey assumes
no responsibility for the validity or sufficiency of any assignment, and it will
not be obligated to comply with any assignment unless it has received a copy at
one of its Home Offices.
Settlement Options. The Contract grants to most owners, or to the beneficiary, a
wide variety of optional ways of receiving Contract proceeds, other than in a
lump sum. Any Pruco Life of New Jersey representative authorized to sell this
Contract can explain these options upon request.
Riders. When the Contract is first issued, the owner may be able to obtain extra
fixed benefits, which may require an additional premium. These benefits will be
described in what is known as a "rider" to the Contract. For example, one
benefit pays an additional amount if the insured dies in an accident. Others
waive certain premiums if the insured is disabled within the meaning of the
provision (or, in the case of a Contract issued on an insured under the age of
15, if the applicant dies or becomes disabled within the meaning of the
provision). Others pay an additional amount if the insured dies within a stated
number of years after issue; similar benefits may be available if the insured's
spouse or child should die. The amounts of these benefits are fully guaranteed
at issue; they do not depend on the performance of the Account. Certain
restrictions may apply; they are clearly described in the applicable rider. Any
Pruco Life of New Jersey representative authorized to sell the Contract can
explain these extra benefits further. Samples of the provisions are available
from Pruco Life of New Jersey upon written request.
Voting Rights. As stated above, all of the assets held in the subaccounts of the
Account will be invested in shares of the corresponding portfolios of the Series
Fund. Pruco Life of New Jersey is the legal owner of those shares and as such
has the right to vote on any matter voted on at Series Fund shareholders
meetings. However, Pruco Life of New Jersey will, as required by law, vote the
shares of the Series Fund at any regular and special shareholders meetings it is
required to hold in accordance with voting instructions received from Contract
owners. The Series Fund will not hold annual shareholders meetings when not
required to do so under Maryland law or the Investment Company Act of 1940.
Series Fund shares for which no timely instructions from Contract owners are
received, and any shares attributable to general account investments of Pruco
Life of New Jersey will be voted in the same proportion as shares in the
respective portfolios for which instructions are received. Should the applicable
federal securities laws or regulations, or their current interpretation, change
so as to permit Pruco Life of New Jersey to vote shares of the Series Fund in
its own right, it may elect to do so.
Matters on which Contract owners may give voting instructions include the
following: (1) election of the Board of Directors of the Series Fund; (2)
ratification of the independent accountant of the Series Fund; (3) approval of
the investment advisory agreement for a portfolio of the Series Fund
corresponding to the Contract owner's selected subaccount[s]; (4) any change in
the fundamental investment policy of a portfolio corresponding to the Contract
owner's selected subaccount[s]; and (5) any other matter requiring a vote of the
shareholders of the Series Fund. With respect to approval of the investment
advisory agreement or any change in a portfolio's fundamental investment policy,
Contract owners participating in such portfolios will vote separately on the
matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.
The number of Series Fund shares for which instructions may be given by a
Contract owner is determined by dividing the portion of the value of the
Contract derived from participation in a subaccount, by the value of one share
in the corresponding portfolio of the Series Fund. The number of votes for which
each Contract owner may give Pruco Life of New Jersey instructions will be
determined as of the record date chosen by the Board of Directors of the Series
Fund. Pruco Life of New Jersey will furnish Contract owners with proper forms
and proxies to enable them to give these instructions. Pruco Life of New Jersey
reserves the right to modify the manner in which the weight to be given voting
instructions is calculated where such a change is necessary to comply with
current federal regulations or interpretations of those regulations.
Pruco Life of New Jersey may, if required by state insurance regulations,
disregard voting instructions if such instructions would require shares to be
voted so as to cause a change in the sub-classification or investment objectives
of one or more of the Series Fund's portfolios, or to approve or disapprove an
investment advisory contract for the Series Fund. In addition, Pruco Life of New
Jersey itself may disregard voting instructions that would require changes in
the investment policy or investment advisor of one or more of the Series Fund's
portfolios, provided that Pruco Life of New Jersey reasonably disapproves such
changes in accordance with applicable federal
20
<PAGE>
regulations. If Pruco Life of New Jersey does disregard voting instructions, it
will advise Contract owners of that action and its reasons for such action in
the next annual or semi-annual report to Contract owners.
Substitution of Series Fund Shares. Although Pruco Life of New Jersey believes
it to be unlikely, it is possible that in the judgment of its management, one or
more of the portfolios of the Series Fund may become unsuitable for investment
by Contract owners because of investment policy changes, tax law changes or the
unavailability of shares for investment. In that event, Pruco Life of New Jersey
may seek to substitute the shares of another portfolio or of an entirely
different mutual fund. Before this can be done, the approval of the SEC, and
possibly one or more state insurance departments, will be required. Contract
owners will be notified of such substitution.
Reports to Contract Owners. Once each Contract year (except where the Contract
is in force as fixed extended term insurance or fixed reduced paid-up
insurance), Contract owners will be sent statements that provide certain
information pertinent to their own Contract. These statements detail values and
transactions made and specific Contract data that apply only to each particular
Contract. On request, a Contract owner will be sent a current statement in a
form similar to that of the annual statement described above, but Pruco Life of
New Jersey may limit the number of such requests or impose a reasonable charge
if such requests are made too frequently.
Each Contract owner will also be sent an annual report for the Account. Contract
owners will also be sent annual and semi-annual reports of the Series Fund
showing the financial condition of the portfolios and the investments held in
each.
State Regulations. Pruco Life of New Jersey is subject to regulation and
supervision by the Department of Insurance of the State of New Jersey, which
periodically examines its operations and financial condition. It is also subject
to the insurance laws and regulations of all jurisdictions in which it is
authorized to do business.
Pruco Life of New Jersey is required to submit annual statements of its
operations, including financial statements, to the insurance departments of the
various jurisdictions in which it does business to determine solvency and
compliance with local insurance laws and regulations.
In addition to the annual statements referred to above, Pruco Life of New Jersey
is required to file with New Jersey and other jurisdictions a separate statement
with respect to the operations of all its variable contract accounts, in a form
promulgated by the National Association of Insurance Commissioners.
Experts. The financial statements included in this prospectus have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing. Deloitte &
Touche LLP's principal business address is Two Hilton Court, Parsippany, New
Jersey 07054-0319. Actuarial matters included in this prospectus have been
examined by Nancy D. Davis, FSA, MAAA, whose opinion is filed as an exhibit to
the registration statement.
Litigation. No litigation is pending that would have a material effect upon the
Account or the Series Fund.
Additional Information. A registration statement has been filed with the SEC
under the Securities Act of 1933, relating to the offering described in this
prospectus. This prospectus does not include all of the information set forth in
the registration statement. Certain portions have been omitted pursuant to the
rules and regulations of the SEC. The omitted information may, however, be
obtained from the SEC's principal office in Washington, D.C., upon payment of a
prescribed fee.
Further information may also be obtained from Pruco Life of New Jersey's office.
The address and telephone number are set forth on the cover of this prospectus.
Financial Statements. The financial statements of Pruco Life of New Jersey
included herein should be distinguished from the financial statements of the
Account, and should be considered only as bearing upon the ability of Pruco Life
of New Jersey to meet its obligations under the Contracts.
21
<PAGE>
DIRECTORS AND OFFICERS
The directors and 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
E. MICHAEL CAULFIELD, Director--Chief Executive Officer, Prudential Preferred
Financial Services since 1995; 1993 to 1995: President, Prudential Preferred
Financial Services; 1992 to 1993: President, Prudential Property and Casualty
Insurance Company*; Prior to 1992: President of Investment Services of The
Prudential.
ROBERT P. HILL, Chairman and Director--Executive Vice President of The
Prudential.
GARNETT L. KEITH, JR., Director--Vice Chairman of The Prudential.
IRA J. KLEINMAN, Director--President, Prudential Select Marketing since 1993;
1992 to 1993: Senior Vice President of The Prudential; Prior to 1992: Vice
President of The Prudential.
ESTHER H. MILNES, President and Director--Senior Vice President and Chief
Actuary, Prudential Insurance and Financial Services since 1993; Prior to 1993:
Vice President and Associate Actuary of The Prudential.
I. EDWARD PRICE, Vice Chairman and Director--Chief Executive Officer,
International Insurance of The Prudential since 1994; 1993 to 1994: President,
International Insurance of The Prudential; Prior to 1993: Senior Vice President
and Company Actuary of The Prudential.
DONALD G. SOUTHWELL, Director--President, Prudential Insurance and Financial
Services since 1993; Prior to 1993: Senior Vice President of The Prudential.
OFFICERS WHO ARE NOT DIRECTORS
BEVERLY R. BARNEY, Senior Vice President--Vice President and Associate Actuary,
Prudential Insurance and Financial Services since 1995; 1993 to 1995: Senior
Vice President and Associate Actuary, Prudential Direct; 1991 to 1993: Senior
Vice President and Actuary of Pruco Life of New Jersey; Prior to 1991: Vice
President and Actuary of Pruco Life of New Jersey.
ROBERT EARL, Senior Vice President--Vice President, Strategic Initiatives,
Prudential Preferred Financial Services since 1993; Prior to 1993: Vice
President Regional Marketing of The Prudential.
JOHN P. GUALTIERI, Senior Vice President and Assistant Secretary--Vice President
and Insurance Counsel of The Prudential since 1993. Prior to 1993: Senior Vice
President and General Counsel of Pruco Life of New Jersey.
RICHARD F. LAMBERT, Senior Vice President, Chief Actuary, Appointed
Actuary--Vice President and Associate Actuary, Prudential Preferred Financial
Services since 1993; 1991 to 1993: Vice President and Actuary of The Prudential.
Prior to 1991: Vice President, Prudential Select Marketing.
DOROTHY K. LIGHT, Secretary--Vice President and Secretary of The Prudential.
DIANE M. MCGOVERN, Vice President and Actuary--Vice President and Assistant
Actuary of The Prudential.
MARTIN PFINSGRAFF, Treasurer--Vice President and Treasurer of The Prudential
since 1991; Prior to 1991: Managing Director, Corporate Finance of The
Prudential.
MICHAEL R. SHAPIRO, Senior Vice President--Senior Vice President, Prudential
Select Brokerage.
LAWRENCE J. SUNDRAM, Senior Vice President--Senior Vice President of Property
and Casualty, Prudential Insurance and Financial Services since 1994; 1993 to
1994: Vice President, Prudential Insurance and Financial Services; Prior to
1993: Vice President, District Agencies Marketing for The Prudential.
STEPHEN P. TOOLEY, Vice President, Comptroller and Chief Accounting
Officer--Vice President and Comptroller, Prudential Insurance and Financial
Services since 1993; Prior to 1993: Director, Financial Analysis for The
Prudential.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
- ----------
* Subsidiary of The Prudential
22
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
AGGRESSIVELY
MONEY COMMON MANAGED
TOTAL MARKET BOND STOCK FLEXIBLE
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc.
Portfolios at net asset value [Note 2]........ $ 103,273,639 $ 7,006,864 $ 7,586,064 $ 41,252,993 $ 34,099,484
-------------- -------------- -------------- -------------- --------------
LIABILITIES
Payable to Related Separate Account............. 480 0 0 0 0
-------------- -------------- -------------- -------------- --------------
NET ASSETS........................................ $ 103,273,159 $ 7,006,864 $ 7,586,064 $ 41,252,993 $ 34,099,484
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 103,033,371 $ 6,998,782 $ 7,584,160 $ 41,179,104 $ 34,042,396
Equity of Pruco Life Insurance Company of New
Jersey........................................ 239,788 8,082 1,904 73,889 57,088
-------------- -------------- -------------- -------------- --------------
$ 103,273,159 $ 7,006,864 $ 7,586,064 $ 41,252,993 $ 34,099,484
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
AGGRESSIVELY
MONEY COMMON MANAGED
TOTAL MARKET BOND STOCK FLEXIBLE
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 3,120,052 $ 274,594 $ 492,644 $ 922,089 $ 946,912
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk [Note 3A]..... 356,660 24,083 26,916 142,174 118,697
Reimbursement for excess expenses [Note 3B]..... (177,831) (4,463) (4,242) (57,463) (88,986)
-------------- -------------- -------------- -------------- --------------
NET EXPENSES...................................... 178,829 19,620 22,674 84,711 29,711
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME............................. 2,941,223 254,974 469,970 837,378 917,201
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 2,850,268 0 17,313 1,713,938 969,306
Realized gain on shares redeemed
[average cost basis].......................... 272,292 0 307 189,189 63,255
Net unrealized loss on investments.............. (6,337,510) 0 (767,566) (1,705,026) (3,075,595)
-------------- -------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... (3,214,950) 0 (749,946) 198,101 (2,043,034)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ (273,727) $ 254,974 $ (279,976) $ 1,035,479 $ (1,125,833)
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A7 AND A8.
A1
<PAGE>
STATEMENTS OF NET ASSETS (CONTINUED)
December 31, 1994
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------
CONSERVATIVELY HIGH HIGH
MANAGED YIELD STOCK DIVIDEND NATURAL
FLEXIBLE BOND INDEX STOCK RESOURCES
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc.
Portfolios at net asset value [Note 2]........ $ 10,960,490 $ 662,955 $ 554,936 $ 535,486 $ 317,964
-------------- -------------- -------------- -------------- --------------
LIABILITIES
Payable to Related Separate Account............. 0 480 0 0 0
-------------- -------------- -------------- -------------- --------------
NET ASSETS........................................ $ 10,960,490 $ 662,475 $ 554,936 $ 535,486 $ 317,964
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 10,920,150 $ 652,481 $ 544,586 $ 525,001 $ 306,969
Equity of Pruco Life Insurance Company of New
Jersey........................................ 40,340 9,994 10,350 10,485 10,995
-------------- -------------- -------------- -------------- --------------
$ 10,960,490 $ 662,475 $ 554,936 $ 535,486 $ 317,964
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
GLOBAL GOVERNMENT
EQUITY SECURITIES
-------------- --------------
<S> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc.
Portfolios at net asset value [Note 2]........ $ 129,460 $ 166,943
-------------- --------------
LIABILITIES
Payable to Related Separate Account............. 0 0
-------------- --------------
NET ASSETS........................................ $ 129,460 $ 166,943
-------------- --------------
-------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 118,833 $ 160,909
Equity of Pruco Life Insurance Company of New
Jersey........................................ 10,627 6,034
-------------- --------------
$ 129,460 $ 166,943
-------------- --------------
-------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS (CONTINUED)
For the year ended December 31, 1994
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------
CONSERVATIVELY HIGH HIGH
MANAGED YIELD STOCK DIVIDEND NATURAL
FLEXIBLE BOND INDEX STOCK RESOURCES
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 374,168 $ 65,022 $ 13,242 $ 17,895 $ 3,058
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk [Note 3A]..... 37,381 2,246 1,860 1,598 1,046
Reimbursement for excess expenses [Note 3B]..... (22,677) 0 0 0 0
-------------- -------------- -------------- -------------- --------------
NET EXPENSES...................................... 14,704 2,246 1,860 1,598 1,046
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME............................. 359,464 62,776 11,382 16,297 2,012
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 115,421 0 821 27,247 6,205
Realized gain on shares redeemed
[average cost basis].......................... 6,748 2,452 3,354 4,860 1,954
Net unrealized loss on investments.............. (598,093) (85,121) (12,240) (44,244) (24,890)
-------------- -------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... (475,924) (82,669) (8,065) (12,137) (16,731)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ (116,460) $ (19,893) $ 3,317 $ 4,160 $ (14,719)
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
GLOBAL GOVERNMENT
EQUITY* SECURITIES
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 182 $ 10,246
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk [Note 3A]..... 115 544
Reimbursement for excess expenses [Note 3B]..... 0 0
-------------- --------------
NET EXPENSES...................................... 115 544
-------------- --------------
NET INVESTMENT INCOME............................. 67 9,702
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 17 0
Realized gain on shares redeemed
[average cost basis].......................... 0 173
Net unrealized loss on investments.............. (5,739) (18,996)
-------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... (5,722) (18,823)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ (5,655) $ (9,121)
-------------- --------------
-------------- --------------
*Commenced
Business
on 5/1/94
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A7 AND A8.
A2
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------
MONEY
TOTAL MARKET BOND
------------------------------ ------------------------------ ------------------------------
1993
1994 (AS RESTATED) 1994 1993 1994 1993
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income............ $ 2,941,223 $ 2,652,296 $ 254,974 $ 182,908 $ 469,970 $ 425,927
Capital gains distributions
received....................... 2,850,268 4,258,464 0 0 17,313 107,340
Realized gain on shares redeemed
[average cost basis]........... 272,292 347,684 0 0 307 16,430
Net unrealized gain (loss) on
investments.................... (6,337,510) 6,685,323 0 0 (767,566) 164,713
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS........ (273,727) 13,943,767 254,974 182,908 (279,976) 714,410
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS.... 1,034,925 1,680,598 (171,851) (311,557) (109,516) 9,925
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM SURPLUS
TRANSFERS........................ 21,427 (83,371) (12,529) (48,875) (10,810) (5,575)
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 782,625 15,540,994 70,594 (177,524) (400,302) 718,760
NET ASSETS:
Beginning of year................ 102,490,534 86,949,540 6,936,270 7,113,794 7,986,366 7,267,606
-------------- -------------- -------------- -------------- -------------- --------------
End of year...................... $ 103,273,159 $ 102,490,534 $ 7,006,864 $ 6,936,270 $ 7,586,064 $ 7,986,366
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A7 AND A8.
A3
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
AGGRESSIVELY
COMMON MANAGED
STOCK FLEXIBLE
------------------------------ ------------------------------
1994 1993 1994 1993
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income............ $ 837,378 $ 633,489 $ 917,201 $ 1,038,519
Capital gains distributions
received....................... 1,713,938 1,950,528 969,306 1,787,159
Realized gain on shares redeemed
[average cost basis]........... 189,189 208,090 63,255 95,738
Net unrealized gain (loss) on
investments.................... (1,705,026) 4,339,155 (3,075,595) 1,660,403
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS........ 1,035,479 7,131,262 (1,125,833) 4,581,819
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS.... (181,317) 151,069 555,429 889,724
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM SURPLUS
TRANSFERS........................ 43,028 4,974 (5,718) (24,374)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 897,190 7,287,305 (576,122) 5,447,169
NET ASSETS:
Beginning of year................ 40,355,803 33,068,498 34,675,606 29,228,437
-------------- -------------- -------------- --------------
End of year...................... $ 41,252,993 $ 40,355,803 $ 34,099,484 $ 34,675,606
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
CONSERVATIVELY HIGH
MANAGED YIELD
FLEXIBLE BOND
------------------------------ ------------------------------
1993
1994 1993 1994 (AS RESTATED)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income............ $ 359,464 $ 290,889 $ 62,776 $ 53,336
Capital gains distributions
received....................... 115,421 393,153 0 0
Realized gain on shares redeemed
[average cost basis]........... 6,748 17,020 2,452 1,178
Net unrealized gain (loss) on
investments.................... (598,093) 387,772 (85,121) 46,414
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS........ (116,460) 1,088,834 (19,893) 100,928
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS.... 571,807 531,599 21,126 44,183
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM SURPLUS
TRANSFERS........................ (9,102) 616 3,640 (6,137)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 446,245 1,621,049 4,873 138,974
NET ASSETS:
Beginning of year................ 10,514,245 8,893,196 657,602 518,628
-------------- -------------- -------------- --------------
End of year...................... $ 10,960,490 $ 10,514,245 $ 662,475 $ 657,602
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A7 AND A8.
A4
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
HIGH
STOCK DIVIDEND NATURAL
INDEX STOCK RESOURCES
------------------------------ ------------------------------ ------------------------------
1994 1993 1994 1993 1994 1993
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income............ $ 11,382 $ 9,760 $ 16,297 $ 8,731 $ 2,012 $ 2,344
Capital gains distributions
received....................... 821 1,134 27,247 12,037 6,205 6,553
Realized gain on shares redeemed
[average cost basis]........... 3,354 0 4,860 4,917 1,954 3,254
Net unrealized gain (loss) on
investments.................... (12,240) 30,374 (44,244) 20,701 (24,890) 32,153
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS........ 3,317 41,268 4,160 46,386 (14,719) 44,304
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS.... 11,474 96,172 147,153 146,187 58,409 59,070
-------------- -------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM SURPLUS
TRANSFERS........................ 5,387 (4,557) (1,555) 4,742 1,637 (2,347)
-------------- -------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 20,178 132,883 149,758 197,315 45,327 101,027
NET ASSETS:
Beginning of year................ 534,758 401,875 385,728 188,413 272,637 171,610
-------------- -------------- -------------- -------------- -------------- --------------
End of year...................... $ 554,936 $ 534,758 $ 535,486 $ 385,728 $ 317,964 $ 272,637
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A7 AND A8.
A5
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the years ended December 31, 1994 and 1993
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------
GLOBAL GOVERNMENT
EQUITY* SECURITIES
-------------- ------------------------------
1994 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income............ $ 67 $ 9,702 $ 6,393
Capital gains distributions
received....................... 17 0 560
Realized gain on shares redeemed
[average cost basis]........... 0 173 1,057
Net unrealized gain (loss) on
investments.................... (5,739) (18,996) 3,638
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS........ (5,655) (9,121) 11,648
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS.... 123,441 8,770 64,226
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM SURPLUS
TRANSFERS........................ 11,674 (4,225) (1,838)
-------------- -------------- --------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS.................... 129,460 (4,576) 74,036
NET ASSETS:
Beginning of year................ 0 171,519 97,483
-------------- -------------- --------------
End of year...................... $ 129,460 $ 166,943 $ 171,519
-------------- -------------- --------------
-------------- -------------- --------------
*Commenced
Business
on 5/1/94
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A7 AND A8.
A6
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE INSURANCE ACCOUNT
FOR THE YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993
NOTE 1: GENERAL
Pruco Life of New Jersey Variable Insurance Account (the "Account") was
established on November 10, 1982 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 ("The Prudential"). The assets of the Account are
segregated from Pruco Life of New Jersey's other assets.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. There are eleven subaccounts within the Account,
each of which invests only in a corresponding portfolio of The Prudential Series
Fund, Inc. (the "Series Fund"). The Series Fund is a diversified open-end
management investment company and is managed by The Prudential.
New sales of the product which invests in the Account were discontinued as of
January 1, 1992. However, premium payments made by current Contract owners will
continue to be received by the Account.
NOTE 2: INVESTMENT INFORMATION FOR THE PRUDENTIAL SERIES FUND, INC. PORTFOLIO
The net asset value per share for each portfolio of the Series Fund, the number
of shares of each portfolio held by the subaccounts of the Account and the
aggregate cost of investments in such shares at December 31, 1994 were as
follows:
<TABLE>
<CAPTION>
PORTFOLIOS
------------------------------------------------------------------------------------------
AGGRESSIVELY CONSERVATIVELY HIGH
PORTFOLIO MONEY COMMON MANAGED MANAGED YIELD
INFORMATION MARKET BOND STOCK FLEXIBLE FLEXIBLE BOND
- -------------------------- ------------- ------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Number of shares: 700,686 755,708 1,996,527 2,200,533 777,618 89,955
Net asset value per share: $ 10.0000 $ 10.0384 $ 20.6624 $ 15.4960 $ 14.0950 $ 7.3655
Cost: $ 7,006,864 $ 7,994,038 $ 33,158,762 $ 32,094,942 $ 10,543,477 $ 716,167
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
---------------------------------------------------------------------------
HIGH
PORTFOLIO STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT
INFORMATION INDEX STOCK RESOURCES EQUITY SECURITIES
- -------------------------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Number of shares: 37,102 36,970 22,015 9,328 15,958
Net asset value per share: $ 14.9571 $ 14.4842 $ 14.4432 $ 13.8787 $ 10.4614
Cost: $ 487,354 $ 545,044 $ 303,696 $ 135,199 $ 181,219
</TABLE>
NOTE 3: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges at an effective annual rate of
0.35% are applied daily against the net assets representing equity of
Contract owners held in each subaccount.
B. Expense Reimbursement
Pursuant to a prior merger agreement, the Account is reimbursed by Pruco
Life of New Jersey for expenses in excess of 0.40% of the average daily net
assets incurred by the Money Market, Bond, Common Stock, Aggressively
Managed Flexible and the Conservatively Managed Flexible Portfolios of the
Series Fund.
A7
<PAGE>
NOTE 4: TAXES
The operations of the subaccounts form a part of, and are taxed with, the
operations of Pruco Life of New Jersey. Under the Internal Revenue Code, all
ordinary income and capital gains allocated to the Contract owners are not taxed
to Pruco Life of New Jersey. As a result, the net asset values of the
subaccounts are not affected by federal income taxes on distributions received
by the subaccounts.
NOTE 5: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM SURPLUS TRANSFERS
The increase (decrease) in net assets resulting from surplus transfers
represents the net contributions of Pruco Life of New Jersey to the Account.
NOTE 6: RESTATEMENT
Subsequent to the issuance of the Account's previously issued December 31, 1993
financial statements, Pruco Life of New Jersey determined that in the High Yield
Bond subaccount, net assets and net increase in net assets resulting from
operations were overstated by approximately $3,962 due to the overvaluation of a
security held in the High Yield Bond Portfolio of the Series Fund at December
31, 1993. Accordingly, the comparative 1993 financial information included in
the statements of changes in net assets of the Account has been restated.
A8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners of
Pruco Life of New Jersey Variable Insurance
Account and the Board of Directors
of Pruco Life Insurance Company of New Jersey
Newark, New Jersey
We have audited the accompanying statements of net assets of Pruco Life of New
Jersey Variable Insurance Account of Pruco Life Insurance Company of New Jersey
(comprising, respectively, the Money Market, Bond, Common Stock, Aggressively
Managed Flexible, Conservatively Managed Flexible, High Yield Bond, Stock Index,
High Dividend Stock, Natural Resources, Global Equity and Government Securities
subaccounts) as of December 31, 1994, the related statements of operations for
the periods presented in the year then ended, and the statements of changes in
net assets for each of the periods presented in the two years then ended. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1994. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of each of the respective subaccounts
constituting the Pruco Life of New Jersey Variable Insurance Account as of
December 31, 1994, the results of their operations, and the changes in their net
assets for the respective stated periods in conformity with generally accepted
accounting principles.
As discussed in Note 6, the 1993 financial statements of Pruco Life of New
Jersey Variable Insurance Account have been restated.
Deloitte & Touche LLP
Parsippany, New Jersey
February 10, 1995
A9
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
<S> <C> <C>
1994 1993
---------- ----------
<CAPTION>
($000'S)
<S> <C> <C>
ASSETS
Fixed maturities (market value
$509,821 and $606,543)............ $ 527,304 $ 587,213
Policy loans........................ 85,277 69,766
Short-term investments.............. 41,695 29,599
---------- ----------
Total Investments................. 654,276 686,578
Cash................................ 17 37
Accrued investment income........... 11,262 10,583
Premiums due and deferred........... 2,753 3,021
Receivable from affiliates.......... 1,827 1,695
Federal income taxes--from
affiliate......................... 8,597 149
Other assets........................ 1,549 4,309
Assets held in Separate Accounts.... 642,049 646,083
---------- ----------
TOTAL ASSETS.......................... $1,322,330 $1,352,455
---------- ----------
---------- ----------
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
LIABILITIES:
Policy liabilities and insurance
reserves:
Future policy benefits and
claims.......................... $ 497,353 $ 537,725
Other policy claims and benefits
payable......................... 3,268 3,132
Interest Maintenance Reserve
(IMR)........................... 6,931 14,440
Payable to affiliates............... 4,568 7,987
Other liabilities................... 14,117 3,595
Asset Valuation Reserve (AVR)....... 5,512 5,306
Liabilities related to Separate
Accounts.......................... 627,515 630,328
---------- ----------
TOTAL LIABILITIES..................... 1,159,264 1,202,513
---------- ----------
STOCKHOLDER'S EQUITY:
Common Stock, $5 par value; 400,000
shares authorized, issued and
outstanding....................... 2,000 2,000
Paid-in capital..................... 125,000 125,000
Unassigned surplus.................. 36,066 22,942
---------- ----------
TOTAL STOCKHOLDER'S EQUITY............ 163,066 149,942
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY................ $1,322,330 $1,352,455
---------- ----------
---------- ----------
</TABLE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
1994 1993 1992
--------- --------- ---------
<CAPTION>
($000'S)
<S> <C> <C> <C>
REVENUE
Premiums and annuity
considerations............. $ 106,117 $ 105,390 $ 100,371
Net investment income........ 44,381 47,700 53,063
Net realized investment
gains/ (losses)............ (2,825) 6,066 10,296
Other income................. 3,201 2,831 2,570
--------- --------- ---------
TOTAL REVENUE.................. 150,874 161,987 166,300
--------- --------- ---------
BENEFITS AND EXPENSES
Current and future benefits
and claims................. 100,555 100,514 98,016
Commission expenses.......... 3,075 3,038 2,766
General, administrative and
other expenses............. 17,149 19,182 19,371
--------- --------- ---------
TOTAL BENEFITS AND
EXPENSES..................... 120,779 122,734 120,153
--------- --------- ---------
Income before provision in
lieu of federal income
tax........................ 30,095 39,253 46,147
Provision in lieu of federal
income tax................. (16,765) (19,460) (22,701)
--------- --------- ---------
NET INCOME..................... $ 13,330 $ 19,793 $ 23,446
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
B1
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
1994 1993 1992
--------- --------- ---------
<CAPTION>
($000'S)
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of year... $ 2,000 $ 2,000 $ 2,000
Issued during year........... - - -
--------- --------- ---------
Balance, end of year......... 2,000 2,000 2,000
--------- --------- ---------
PAID-IN CAPITAL
Balance, beginning of year... 125,000 125,000 125,000
Paid-in during year.......... - - -
--------- --------- ---------
Balance, end of year......... 125,000 125,000 125,000
--------- --------- ---------
UNASSIGNED SURPLUS
Balance, beginning of year... 22,942 29,333 33,255
Net income................... 13,330 19,793 23,446
Net unrealized investment
gains...................... - - 810
Increase in AVR.............. (206) (184) (1,016)
Dividends to stockholder..... - (26,000) (27,162)
--------- --------- ---------
Balance, end of year......... 36,066 22,942 29,333
--------- --------- ---------
TOTAL STOCKHOLDER'S EQUITY..... $ 163,066 $ 149,942 $ 156,333
--------- --------- ---------
--------- --------- ---------
</TABLE>
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
1994 1993 1992
--------- --------- ---------
<CAPTION>
($000'S)
CASH FLOW FROM OPERATING
ACTIVITIES
<S> <C> <C> <C>
Net income................. $ 13,330 $ 19,793 $ 23,446
Adjustments to reconcile
net income to net cash
from operations:
Increase (decrease) in
policy liabilities and
insurance reserves..... (40,237) (13,998) 22,323
Net decrease in Separate
Accounts............... 1,220 3,426 1,336
Net realized
investment(gains)/
losses................. 2,825 (6,066) (10,296)
Amortization and other
non-cash items......... 1,696 1,791 108
<CAPTION>
STATEMENTS OF CASH FLOWS (CONT'D)
YEARS ENDED
DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
--------- --------- ---------
<CAPTION>
($000'S)
<S> <C> <C> <C>
(Increase) decrease in
operating assets:
Policy loans........... (15,511) (13,921) (15,177)
Accrued investment
income............... (679) 500 534
Premiums due and
deferred............. 268 115 11,596
Receivable from
affiliates........... (132) (953) (5)
Federal income
taxes--from
affiliate............ (8,448) 4,065 (3,876)
Other assets........... 2,760 (3,808) (501)
Increase (decrease) in
operating liabilities:
Payable to
affiliates............. (3,419) 732 (1,012)
Other liabilities...... 10,522 (1,271) 985
--------- --------- ---------
CASH FLOW FROM (USED FOR)
OPERATING ACTIVITIES......... (35,805) (9,595) 29,461
--------- --------- ---------
CASH FLOW FROM INVESTING
ACTIVITIES
Proceeds from the sale/
maturity of:
Fixed maturities......... 705,889 443,879 578,236
Payments for the purchase
of:
Fixed maturities......... (658,008) (391,561) (642,511)
Net proceeds (payments)
of short-term
investments............ (12,096) (17,838) 35,792
--------- --------- ---------
CASH FLOW FROM (USED FOR)
INVESTING ACTIVITIES....... 35,785 34,480 (28,483)
--------- --------- ---------
CASH FLOW FROM FINANCING
ACTIVITIES
Dividends paid............. - (26,000) -
--------- --------- ---------
Net increase (decrease) in
Cash..................... (20) (1,115) 978
Cash, beginning of year.... 37 1,152 174
--------- --------- ---------
CASH, END OF YEAR............ $ 17 $ 37 $ 1,152
--------- --------- ---------
--------- --------- ---------
<CAPTION>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<S> <C> <C> <C>
Cash paid in lieu of income
taxes.................... $ 17,679 $ 15,396 $ 26,576
--------- --------- ---------
--------- --------- ---------
<CAPTION>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
<S> <C> <C> <C>
Dividends paid in the form
of fixed maturities...... $ - $ - $ 27,162
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
B2
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
1. GENERAL
Pruco Life Insurance Company of New Jersey (the Company), a stock life
insurance company domiciled in the State of New Jersey, is an indirect
subsidiary of The Prudential Insurance Company of America (The Prudential), a
mutual life insurance company, and a direct subsidiary of Pruco Life
Insurance Company (Pruco Life), a stock life insurance company domiciled in
the State of Arizona. The Company markets individual life insurance and
single-pay deferred annuities through The Prudential's sales force.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES
A. BASIS OF PRESENTATION
The financial statements are presented in conformity with Generally
Accepted Accounting Principles (GAAP), which for mutual life insurance
companies and their life insurance subsidiaries are statutory accounting
practices prescribed or permitted by state regulatory authorities in the
domiciliary states. Certain reclassifications have been made to the 1992
and 1993 financial statements and footnotes to conform to the 1994
presentation. Included in the Statement of Operations are certain items
which, under statutory accounting practices, are charged or credited
directly to surplus.
In 1994, The American Institute of Certified Public Accountants issued
Statement of Position 94-5 "Disclosures of Certain Matters in the
Financial Statements of Insurance Enterprises",("SOP 94-5"), which
requires insurance enterprises to disclose in their financial statements
the accounting methods used in their statutory financial statements that
are permitted by the state insurance departments rather than prescribed
statutory accounting practices.
Pruco Life Insurance Company of New Jersey, domiciled in the State of New
Jersey, prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the New Jersey Department
of Insurance ("The Department"). Prescribed statutory accounting practices
include publications of the National Association of Insurance
Commissioners (NAIC), state laws, regulations, and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed.
The Company has established guaranty fund liabilities for the insolvencies
of certain life insurance companies. The liabilities were established net
of premium tax credits and federal income tax. Prescribed statutory
accounting practices do not address the establishment of liabilities for
guaranty fund assessments.
The Company, with permission from the Department, prepares an Annual
Report that differs from the Annual Statement filed with the Department in
that certain financial statement captions are presented differently.
The following is a reconciliation of statutory net income with net income
per the financial statements.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
1994 1993 1992
--------- --------- ---------
($000'S)
<S> <C> <C> <C>
Statutory net income including net gains and losses
on sales of investments............................ $ 16,309 $ 20,075 $ 29,432
Adjustments to reconcile to net income as follows:
Change in determination of deferred premiums....... - - (5,529)
Income tax applicable to other than current year... (7,534) - -
Net gain/(loss) from operations in Separate
Accounts......................................... 1,372 (458) 433
Other.............................................. 3,183 176 (890)
--------- --------- ---------
Net Income........................................... $ 13,330 $ 19,793 $ 23,446
--------- --------- ---------
--------- --------- ---------
</TABLE>
B. FUTURE APPLICATION OF ACCOUNTING STANDARDS
The Financial Accounting Standards Board (the "FASB") issued Financial
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises" which, as
amended is effective for fiscal years beginning after December 15, 1995.
Interpretation No. 40 changes the current practice of the Company with
respect to utilizing statutory basis financial statements for general
B3
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
purposes in that it would not allow such financial statements to be
referred to as having been prepared in accordance with GAAP.
Interpretation No. 40 requires GAAP financial statements to apply all GAAP
pronouncements, unless specifically exempted. Implementation of the
Interpretation will require significant effort and judgement as to
determining GAAP for insurance operations. The Company is currently unable
to determine the impact of Interpretation No. 40 on its financial
statements.
C. INVESTMENTS
Fixed maturities are stated at amortized cost. Short-term investments are
stated at amortized cost, which approximates fair value.
Policy loans are stated primarily at unpaid principal balances.
Realized investment gains and losses are reported based on specific
identification of the investments sold.
D. FUTURE POLICY BENEFITS, LOSSES, AND CLAIMS
Reserves for individual life insurance are calculated using various
methods, interest rates and mortality tables which produce reserves that
meet the aggregate requirements of state laws and regulations.
Approximately 7% of individual life insurance reserves are determined
using the net level premium method, or by using the greater of a net level
premium reserve or the policy cash value. About 93% of individual life
insurance reserves are calculated according to the Commissioner's Reserve
Valuation Method ("CRVM"), or methods which compare CRVM reserves to
policy cash values.
Reserves for individual annuity contracts are determined using the
Commissioner's Annuity Reserve Valuation Method.
For life insurance, unpaid claims include estimates of both death benefits
on reported claims and those which are incurred but not reported.
E. REVENUE RECOGNITION AND RELATED EXPENSES
Premium revenues are recognized as income over the premium paying period
of the related policies. Annuity considerations are recognized as revenue
when received. Expenses, including new business acquisition costs such as
commissions, are charged to operations as incurred.
F. FEDERAL INCOME TAXES
The Company is a member of a group of affiliated companies which join in
filing a consolidated federal tax return. Pursuant to a tax allocation
agreement, current tax liabilities are determined for individual companies
based upon their separate return basis taxable income. Members with
taxable income incur an amount in lieu of the separate return basis
federal tax. Members with a loss for tax purposes recognize a current
benefit in proportion to the amount of their losses utilized in computing
consolidated taxable income. Differences between estimated liabilities and
actual payments are included in the current year's operations as an
adjustment to the provision in lieu of income taxes. For the years 1993
and 1992, the Company was allocated a portion of the consolidated income
tax liability attributable to Section 809 in the Internal Revenue Code
(commonly referred to as the "Equity Tax"). Beginning in 1994, the Company
will no longer be allocated this Equity Tax.
Taxes on the Company are calculated under the Internal Revenue Code of
1986 which provides that life insurance companies be taxed on their gain
from operations after dividends to policyholders. In calculating this tax,
the Code requires the capitalization and amortization of policy
acquisition expenses.
G. ASSET VALUATION RESERVE AND INTEREST MAINTENANCE RESERVE
The Asset Valuation Reserve (AVR) and the Interest Maintenance Reserve
(IMR) are required reserves for assets of life insurance companies. The
AVR is calculated based on a statutory formula and designed to mitigate
the effect of valuation and credit related losses on unassigned surplus.
The IMR is designed to reduce the fluctuations of surplus resulting from
market interest rate movements. Predominantly all interest rate related
realized capital gains and losses are deferred and amortized into
investment income over the remaining life of the investment sold. The IMR
balance was $6.9 million and $14.4
B4
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
million at December 31, 1994 and 1993 respectively. "Net realized
investment gains/(losses) of $(5.5)million and $7.2 million were deferred
in 1994 and 1993, respectively. Amortized into "Net investment income"
were $2.0 million and $2.4 million of IMR for the year ended December 31,
1994 and 1993, respectively.
H. SEPARATE ACCOUNTS
Separate accounts represent funds for which investment income and
investment gains and losses accrue directly to, and investment risk is
borne by, the policyholders. Each account has specific investment
objectives. Assets are carried at market value. Deposits to such accounts
are included in revenues with a corresponding liability increase included
in benefits and expenses. The assets of each account are legally
segregated and are not subject to claims that arise out of any other
business of the Company. Consequently, management believes that it is
appropriate to combine Separate Account policyholder net investment income
and net realized and unrealized capital gains/(losses) along with benefit
payments and change in reserves in "Current and future benefits and
claims". Policyholder net investment income and net realized and
unrealized gains/(losses) for the years ended December 31, 1994, 1993 and
1992 were ($7) million, $86 million and $45 million, respectively.
3. FEDERAL INCOME TAXES
The following is a reconciliation of the Company's federal tax provision as
computed at the federal tax rate with that computed at the Company's
effective tax rate. The below amounts include federal income tax applicable
to prior years, where appropriate.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
1994 1993 1992
--------- --------- ---------
<CAPTION>
($000'S)
<S> <C> <C> <C>
Operating income before federal income taxes............. $ 30,095 $ 39,253 $ 46,147
Statutory tax rate....................................... 35% 35% 34%
--------- --------- ---------
Expected federal income taxes............................ 10,533 13,739 15,690
Tax effect of:
Statutory/tax policy reserve difference................ 4,279 1,367 (4,059)
Timing differences in tax/book income recognition on
investments.......................................... (2,743) 2,151 3,758
Timing differences in tax/book income
recognition--other................................... (78) (25) (87)
Change in determination of deferred premiums........... - - 1,880
Decrease in life insurance premium deferred and
uncollected.......................................... 94 40 726
Capitalization of policy acquisition expenses.......... 4,680 1,541 2,047
Allocated equity tax................................... - 647 2,746
--------- --------- ---------
Federal income taxes..................................... $ 16,765 $ 19,460 $ 22,701
--------- --------- ---------
--------- --------- ---------
Effective tax rate....................................... 56% 50% 49%
--------- --------- ---------
--------- --------- ---------
</TABLE>
B5
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
4. NET INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
1994 1993 1992
--------- --------- ---------
<CAPTION>
($000'S)
<S> <C> <C> <C>
Gross investment income
Fixed maturities.................................... $ 36,565 $ 40,546 $ 47,722
Policy loans........................................ 4,290 3,506 2,644
Short-term investments.............................. 2,364 1,817 2,834
Other............................................... 44 25 30
--------- --------- ---------
43,263 45,894 53,230
Investment expenses................................... (906) (581) (996)
--------- --------- ---------
42,357 45,313 52,234
Amortization of Interest Maintenance Reserve.......... 2,024 2,387 829
--------- --------- ---------
Net investment income................................. $ 44,381 $ 47,700 $ 53,063
--------- --------- ---------
--------- --------- ---------
</TABLE>
5. INVESTMENTS AND INVESTMENT GAINS/(LOSSES)
Net realized and unrealized gains/(losses) were as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
1994 1993 1992
--------- --------- ---------
<CAPTION>
($000'S)
<S> <C> <C> <C>
Realized Gains
Fixed maturities.................................... $ (8,311) $ 13,225 $ 20,767
Short-term investments.............................. 1 26 -
Tax effected amounts transferred to Interest
Maintenance Reserve................................. 5,485 (7,185) (10,471)
--------- --------- ---------
Net realized investment gains......................... $ (2,825) $ 6,066 $ 10,296
--------- --------- ---------
--------- --------- ---------
Unrealized Gains
Fixed maturities.................................... $ - $ - $ 810
--------- --------- ---------
Net unrealized investment gains....................... - - 810
Balance beginning of year............................. - - (810)
--------- --------- ---------
Balance end of year................................... $ - $ - $ -
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
FIXED MATURITIES
<S> <C> <C> <C>
($000'S)
<CAPTION>
AT DECEMBER 31,
INCREASE (DECREASE) IN
AMORTIZED MARKET DIFFERENCE BETWEEN MARKET VALUE
COST VALUE AND AMORTIZED COST DURING THE YEAR
----------- --------- ----------------------------------
<S> <C> <C> <C>
1994............................... $ 527,304 $ 509,821 $ (36,813)
1993............................... 587,213 606,543 (1,472)
1992............................... 630,484 651,286 (21,101)
</TABLE>
B6
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
The amortized cost and estimated market values of investments in debt securities
at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994
<S> <C> <C> <C> <C>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
($000'S) ($000'S) ($000'S) ($000'S)
----------- ----------- ----------- -----------
U.S. Treasury securities and obligations of
U.S. government corporations and agencies.... $ 116,502 $ 10 $ 11,641 $ 104,871
Debt securities issued by foreign governments
and their agencies........................... 34,554 1,631 723 35,462
Corporate securities........................... 336,641 1,261 7,524 330,378
Mortgage-backed securities..................... 39,607 180 677 39,110
----------- ----------- ----------- -----------
Total.......................................... $ 527,304 $ 3,082 $ 20,565 $ 509,821
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
1993
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
($000'S) ($000'S) ($000'S) ($000'S)
<S> <C> <C> <C> <C>
----------- ----------- ----------- -----------
U.S. Treasury securities and obligations of
U.S. government corporations and agencies.... $ 153,304 $ 62 $ 616 $ 152,750
Debt securities issued by foreign governments
and their agencies........................... 35,034 2,017 - 37,051
Corporate securities........................... 364,158 17,792 533 381,417
Mortgage-backed securities..................... 34,717 793 185 35,325
----------- ----------- ----------- -----------
Total.......................................... $ 587,213 $ 20,664 $ 1,334 $ 606,543
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The amortized cost and estimated market value of debt securities at December 31,
1994 by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED MARKET
COST VALUE
($000'S) ($000'S)
<S> <C> <C>
----------- -----------
Due in one year or less............................................ $ 30,132 $ 30,029
Due after one year through five years.............................. 404,859 395,195
Due after five years through ten years............................. 42,489 35,368
Due after ten years................................................ 10,217 10,120
----------- -----------
487,697 470,712
Mortgage-backed securities......................................... 39,607 39,109
----------- -----------
Total.............................................................. $ 527,304 $ 509,821
----------- -----------
----------- -----------
</TABLE>
Proceeds from the sale/maturity of debt securities during 1994, 1993 and
1992 were $705.9 million, $443.9 million and $578.2 million, respectively.
Gross gains of $3.3 million, $13.4 million and $23.5 million and gross
losses of $11.6 million, $.2 million and $2.7 million were realized on
those sales during 1994, 1993 and 1992, respectively.
The Company invests in both investment grade and non-investment grade
securities. The SVO of the NAIC rates fixed maturities held by insurers
(SVO rated securities accounted for approximately 99.0% of the Company's
total fixed maturities balances at both December 31, 1994 and 1993) for
regulatory purposes and groups investments into six categories ranging
from highest quality bonds to those in or near default. The
B7
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
lowest three NAIC categories represent, for the most part, high yield
securities and are defined by the NAIC as including any security with a
public agency rating of B+, B1 or less. At December 31, 1994 and 1993, the
Company held no securities in the three lowest NAIC categories.
6. RELATED PARTY TRANSACTIONS
A. SERVICE AGREEMENTS
The Company, The Prudential, Pruco Life, and Pruco Securities Corporation,
an indirect wholly-owned subsidiary of The Prudential, operate under
service and lease agreements whereby services of officers and employees,
supplies, use of equipment and office space are provided. The net cost of
these services allocated to the Company were $15 million, $17.1 million,
and $17.2 million for the years ended December 31, 1994, 1993 and 1992,
respectively.
B. EMPLOYEES BENEFIT PLANS
PENSION PLANS
The Company is a wholly-owned subsidiary of The Prudential which sponsors
a defined benefit pension plan. The defined benefit pension plan is
generally based on career average earnings and credit length of service.
The Prudential's funding policy is to contribute annually the amount
necessary to satisfy the Internal Revenue Service contribution guidelines.
No pension expense for contributions to the plan was allocated to the
Company in 1994, 1993 or 1992 because the plan was subject to the full
funding limitation under the Internal Revenue Code.
POSTRETIREMENT LIFE AND HEALTH BENEFITS
The Prudential also sponsors postretirement defined benefit plans which
provide certain life insurance and health care benefits. Substantially all
employees may become eligible to receive a benefit if they retire after
age 55 with at least 10 years of service. Prior to 1993, The Prudential's
policy was to fund the cost of providing these benefits in the years that
the employees were providing services to the Company. Effective for 1993,
The Prudential has recognized the cost of these benefits in accordance
with the accounting policy issued by the National Association of Insurance
Commissioners (NAIC). The NAIC's policy is similar to SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
except that the NAIC policy excludes non-vested employees and only allows
the transition obligation to be recognized immediately or amortized over
twenty years. The Prudential has elected to amortize its transition
obligation over twenty years. A provision for contributions to the
postretirement fund is included in the net cost of services allocated to
the Company discussed above for the years ended December 31, 1994, 1993
and 1992.
C. OTHER TRANSACTIONS
The Company has issued approximately 375 variable appreciable life
contracts to The Prudential for the purpose of funding non-qualified
pension benefits for certain employees. Included in insurance premiums and
annuity considerations for the years ended December 31, 1994, 1993 and
1992 are respectively, $12 million, $12 million, and $13 million, which
are attributable to these contracts.
7. DIVIDENDS
The Company is subject to New Jersey law which limits the amount of dividends
that insurance companies can pay to stockholders. The maximum dividend that
may be paid in any 12 month period without prior approval of the New Jersey
Commissioner of Insurance is limited to the greater of 10% of surplus as of
December 31 of the preceding year or the net gain from operations of the
preceding calendar year. Based on these limitations, the Company would be
permitted a maximum of $16 million in dividend distributions in 1995, all of
which could be paid in cash, without the approval from The Department of
Insurance of the State of New Jersey.
8. FAIR VALUE INFORMATION
The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies for only those accounts
for which fair value disclosures are required. Considerable
B8
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
judgment is necessarily applied in interpreting data to develop the estimates
of fair value. Accordingly, the estimates presented may not be realized in a
current market exchange. The use of different market assumptions and/or
estimation methodologies could have a material effect on the estimated fair
values.
The following methods and assumptions were used in calculating the fair
values. For all other financial instruments presented in the table, the
carrying value is a reasonable estimate of fair value.
FIXED MATURITIES. Fair values for fixed maturities, other than private
placement securities, are based on quoted market prices or estimates from
independent pricing services. Fair values for private placement securities
are estimated using a discounted cash flow model which considers the current
market spreads between the U.S. Treasury yield curve and corporate bond yield
curve adjusted for the type of issue, its current quality and its remaining
average life. The fair value of certain non-performing private placement
securities is based on amounts provided by state regulatory authorities.
POLICY LOANS. The estimated fair value is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan
repayments.
INVESTMENT-TYPE INSURANCE CONTRACT LIABILITIES. Fair values for the Company's
investment-type insurance contract liabilities are estimated using a
discounted cash flow model, based on interest rates currently being offered
for similar contracts.
The following table discloses the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1994 and 1993.
<TABLE>
<CAPTION>
($000'S) ($000'S)
1994 1993
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C>
--------- --------- --------- ---------
Financial Assets:
Fixed maturities $ 527,304 $ 509,821 $ 587,213 $ 606,543
Policy loans 85,277 76,734 69,766 71,821
Short-term investments 41,695 41,695 29,599 29,599
Financial Liabilities:
Investment-type insurance contracts $ 166,183 $ 159,463 $ 231,203 $ 226,982
</TABLE>
9. 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. In the opinion of the Company, any ultimate liability
which would result from such litigation would not have a material adverse
effect on the Company's financial position.
B9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Pruco Life Insurance Company of New Jersey
Newark, New Jersey
We have audited the accompanying statements of financial position of Pruco Life
Insurance Company of New Jersey as of December 31, 1994 and 1993, and the
related statements of operations, stockholder's equity, and cash flows for each
of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Pruco Life Insurance Company of New Jersey
as of December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
March 6, 1995
B10
<PAGE>
ADDITIONAL ILLUSTRATIONS OF
CASH VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS
-----------------------------------------------------
<TABLE>
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 25
$50,000 GUARANTEED DEATH BENEFIT
$536.50 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES
<CAPTION>
Death Benefit (2) Cash Value (2)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-0.92% Net) (5.08% Net) (11.08% Net) (-0.92% Net) (5.08% Net) (11.08% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 558 $50,000 $50,004 $ 50,026 $ 22 $ 26 $ 30
2 $ 1,138 $50,000 $50,028 $ 50,182 $ 376 $ 406 $ 436
3 $ 1,742 $50,000 $50,071 $ 50,475 $ 728 $ 806 $ 888
4 $ 2,369 $50,000 $50,133 $ 50,910 $1,078 $ 1,227 $ 1,391
5 $ 3,022 $50,000 $50,214 $ 51,497 $1,434 $ 1,679 $ 1,958
6 $ 3,701 $50,000 $50,315 $ 52,244 $1,787 $ 2,153 $ 2,586
7 $ 4,407 $50,000 $50,434 $ 53,158 $2,135 $ 2,649 $ 3,280
8 $ 5,141 $50,000 $50,572 $ 54,245 $2,478 $ 3,168 $ 4,048
9 $ 5,905 $50,000 $50,727 $ 55,516 $2,816 $ 3,710 $ 4,895
10 $ 6,699 $50,000 $50,900 $ 56,978 $3,149 $ 4,275 $ 5,831
15 $11,172 $50,000 $52,019 $ 67,520 $4,706 $ 7,462 $ 12,135
20 $16,615 $50,000 $53,524 $ 84,600 $6,047 $11,277 $ 22,244
25 $23,237 $50,000 $55,379 $110,336 $7,161 $15,794 $ 38,351
30 $31,293 $50,000 $57,553 $147,753 $8,027 $21,058 $ 63,770
40 (Age 65) $53,020 $50,000 $62,766 $276,390 $8,901 $33,688 $163,969
<FN>
(1) If premiums are paid more frequently than annually, the payments would be
$274.50 semi-annually, $139.50 quarterly or $48 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been made.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
C1
<PAGE>
<TABLE>
VARIABLE LIFE INSURANCE CONTRACT
MALE ISSUE AGE 40
$50,000 GUARANTEED DEATH BENEFIT
$939 ANNUAL PREMIUM FOR STANDARD UNDERWRITING RISK (1)
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES
<CAPTION>
Death Benefit (2) Cash Value (2)
---------------------------------------------- ----------------------------------------------
Assuming Hypothetical Gross (and Net) Assuming Hypothetical Gross (and Net)
Premiums Annual Investment Return of Annual Investment Return of
End of Accumulated ---------------------------------------------- ----------------------------------------------
Policy at 4% Interest 0% Gross 6% Gross 12% Gross 0% Gross 6% Gross 12% Gross
Year Per Year (-0.92% Net) (5.08% Net) (11.08% Net) (-0.92% Net) (5.08% Net) (11.08% Net)
---------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 977 $50,000 $50,010 $ 50,065 $ 197 $ 214 $ 231
2 $ 1,992 $50,000 $50,041 $ 50,273 $ 814 $ 887 $ 961
3 $ 3,048 $50,000 $50,093 $ 50,630 $ 1,415 $ 1,582 $ 1,760
4 $ 4,147 $50,000 $50,165 $ 51,138 $ 1,998 $ 2,299 $ 2,632
5 $ 5,289 $50,000 $50,259 $ 51,819 $ 2,637 $ 3,116 $ 3,666
6 $ 6,477 $50,000 $50,374 $ 52,678 $ 3,257 $ 3,959 $ 4,798
7 $ 7,713 $50,000 $50,509 $ 53,723 $ 3,860 $ 4,832 $ 6,038
8 $ 8,998 $50,000 $50,664 $ 54,961 $ 4,444 $ 5,733 $ 7,394
9 $10,335 $50,000 $50,839 $ 56,400 $ 5,012 $ 6,664 $ 8,880
10 $11,725 $50,000 $51,033 $ 58,051 $ 5,561 $ 7,625 $10,505
15 $19,554 $50,000 $52,273 $ 69,849 $ 8,002 $12,856 $21,178
20 $29,080 $50,000 $53,922 $ 88,795 $ 9,888 $18,759 $37,607
25 (Age 65) $40,670 $50,000 $55,936 $117,196 $11,217 $25,297 $62,658
<FN>
(1) If premiums are paid more frequently than annually, the payments would be
$479.50 semi-annually, $243 quarterly or $82.50 monthly. The death benefits
and cash values would be slightly different for a Contract with more
frequent premium payments.
(2) Assumes no Contract loan has been made.
</FN>
</TABLE>
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING INTEREST RATES, AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A CONTRACT WOULD BE DIFFERENT
FROM THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A
PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL
CONTRACT YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE OF NEW JERSEY OR
THE SERIES FUND THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY
ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
C2
<PAGE>
VARIABLE
LIFE INSURANCE
CONTRACTS
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 437-4016, Ext. 46
<PAGE>
PART II
OTHER INFORMATION
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Prudential Directors' and Officers' Liability and Corporation Reimbursement
Program, purchased by The Prudential from Aetna Casualty & Surety Company, CNA
Insurance Company, Lloyds of London, Great American Insurance Company, Reliance
Insurance Company, Corporate Officers & Directors Assurance Ltd., A.C.E.
Insurance Company, Ltd., XL Insurance Company, Ltd., and Zurich-American
Insurance Company, provides coverage for "Loss" (as defined in the policies)
arising from any claim or claims by reason of any actual or alleged act, error,
misstatement, misleading statement, omission, or breach of duty by persons in
the discharge of their duties solely in their capacities as directors or
officers of The Prudential, any of its subsidiaries, or certain investment
companies affiliated with The Prudential. Coverage is also provided to the
individual directors or officers for such Loss, for which they shall not be
indemnified. Loss essentially is the legal liability on claims against a
director or officer, including adjudicated damages, settlements and reasonable
and necessary legal fees and expenses incurred in defense of adjudicatory
proceedings and appeals therefrom. Loss does not include punitive or exemplary
damages or the multiplied portion of any multiplied damage award, criminal or
civil fines or penalties imposed by law, taxes or wages, or matters which are
insurable under the law pursuant to which the policies are construed.
There are a number of exclusions from coverage. Among the matters excluded are
Losses arising as the result of (1) claims brought about or contributed to by
the criminal or deliberate fraudulent acts of a director or officer, and (2)
claims arising from actual or alleged performance of, or failure to perform,
services as, or in any capacity similar to, an investment adviser, investment
banker, underwriter, broker or dealer, as those terms are defined in the
Securities Act of 1933, the Securities Exchange Act of 1934, the Investment
Advisers Act of 1940, the Investment Company Act of 1940, any rules or
regulations thereunder, or any similar federal, state or local statute, rule or
regulation.
The limit of coverage under the Program for both individual and corporate
reimbursement coverage is $150,000,000. The retention for corporate
reimbursement coverage is $10,000,000 per loss.
The relevant provisions of New Jersey law permitting or requiring
indemnification, New Jersey being the state of organization of The Prudential
and Pruco Life of New Jersey, can be found in Section 14A:3-5 of the New Jersey
Statutes Annotated. The text of The Prudential's by-law 27 permitting or
requiring indemnification, which relates to indemnification of officers and
directors, is incorporated by reference to Exhibit (8)(ii) of Post-Effective
Amendment No. 26 to Form N-3, Registration No. 2-76580, filed April __, 1995, on
behalf of The Prudential Variable Contract Account-10. The text of Pruco Life of
New Jersey's by-laws, Article V, which relates to indemnification of officers
and directors, is incorporated by reference to Exhibit (8)(ii) to this
Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-1
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 48 pages.
The undertaking to file reports.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
1. Deloitte and Touche LLP, independent auditors.
2. Clifford E. Kirsch
3. Nancy Davis, FSA, MAAA, actuarial expert.
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of the
instructions as to exhibits in Form N-8B-2:
A. (1) Resolution of Board of Directors of Pruco Life Insurance Company
of New Jersey establishing the Pruco Life of New Jersey Variable
Insurance Account. (Note 2)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities Corporation
and Pruco Life Insurance Company of New Jersey. (Note 3)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the Sale
of the Contracts. (Note 4)
(c) Schedules of Sales Commissions. (Note 3)
(4) Not Applicable.
(5) (a) Variable Life Insurance Contract. (Note 2)
(b) Illustrative Tabular Cash Values. (Note 3)
(c) Copy of New York PLY-5 Endorsement to the Variable Life
Contract. (Note 5)
(d) Copy of New York and New Jersey PLY-6 Endorsement to the
Variable Life Contract. (Note 5)
(e) Copy of New York PLY 39 Endorsement to the Variable Life
Contract. (Note 6)
(f) Copy of New Jersey PLIY 39 Endorsement to the Variable
Life Contract. (Note 6)
(g) Copy of New York jacket to the Variable Life Insurance
Contract. (Note 7)
(h) Copy of page 5 to the Variable Life Insurance Contract--New
York issues. (Note 7)
(i) Copy of page 7 to the Variable Life Insurance Contract--New
York issues. (Note 7)
(j) Copy of New York and New Jersey PLY 50 Endorsement to the
Variable Life Insurance Contract. (Note 7)
(k) Copy of New York PLY 36 Endorsement to the Variable Life
Insurance Contract. (Note 7)
(l) Copy of New Jersey PLIY 38 Endorsement to the Variable Life
Insurance Contract. (Note 7)
(m) Copy of New Jersey PLIY 62-85 Endorsement to the Variable
Life Insurance Contract. (Note 8)
(n) Copy of New York PLY 61-85 Endorsement to the Variable
Life Insurance Contract. (Note 8)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company
of New Jersey, as amended March 11, 1983. (Note 10)
(b) By-laws of Pruco Life Insurance Company of New Jersey, as
amended February 1, 1991. (Note 10)
(7) Not Applicable.
II-2
<PAGE>
(8) Not Applicable.
(9) Not Applicable.
(10) (a) Application Form for Variable Life Insurance Contract.
(Note 2)
(b) Supplement to the Application for Variable Life Insurance
Contract. (Note 2)
(c) Application Form for Variable Life Insurance Contract--New
York issues. (Note 7)
(d) Application Form for Variable Life Insurance Contract--New
Jersey issues. (Note 7)
(11) Form of Notice of Withdrawal Right. (Note 4)
(12) Memorandum describing Pruco Life of New Jersey's issuance,
transfer, and redemption procedures for the Contracts pursuant to
Rule 6e-2(b) (12)(ii) and method of computing cash adjustment upon
exercise of right to exchange for fixed-benefit insurance pursuant
to Rule 6e-2(b)(13)(v)(B). (Note 7)
(13) Available Contract Riders.
(a) Rider for Insured's Waiver of Premium Benefit. (Note 3)
(b) Rider for Insured's Accidental Death Benefit. (Note 3)
(c) Rider for Term Insurance Benefit on Life of
Insured-Decreasing Amount. (Note 3)
(d) Rider for Option to Purchase Additional Insurance on Life
of Insured. (Note 3)
(e) Rider for Interim Term Insurance Benefit. (Note 3)
(f) Rider for Term Insurance Benefit on Life of Insured
Spouse-Decreasing Amount. (Note 3)
(g) Rider for Level Term Insurance Benefit on Dependent
Children. (Note 3)
(h) Rider Exempting Child from Reinstatement--New York Issues.
(Note 5)
(i) Rider Exempting Child from Reinstatement--New Jersey
Issues. (Note 5)
(j) Rider for Level Term Insurance Benefit on Dependent
Children--New York Issues. (Note 5)
(k) Rider for Level Term Insurance Benefit on Dependent
Children--New Jersey Issues. (Note 5)
(l) Rider for Reduced Paid-Up Insurance--New York Issues.
(Note 5)
(m) Rider for Reduced Paid-Up Insurance--New Jersey Issues.
(Note 5)
(n) Rider for Insured's Waiver of Premium Benefit--New York
Issues. (Note 5)
(o) Rider for Insured's Waiver of Premium Benefit--New Jersey
Issues. (Note 5)
(p) Rider for Insured's Accidental Death Benefit--New York
Issues. (Note 5)
(q) Rider for Insured's Accidental Death Benefit--New Jersey
Issues. (Note 5)
(r) Rider Defining Incontestability Period--New York Issues.
(Note 5)
(s) Rider Defining Incontestability Period--New Jersey Issues.
(Note 5)
(t) Rider Defining Incontestability Period--New York Issues.
(Note 5)
(u) Rider Defining Incontestability Period--New Jersey Issues.
(Note 5)
(v) Rider for Modification of Insured's Waiver of Premium
Benefit Provision--New York Issues. (Note 5)
(w) Rider for Modification of Insured's Waiver of Premium
Benefit Provision--New Jersey Issues. (Note 5)
(x) Rider for Termination of Benefit--New York Issues.
(Note 5)
(y) Rider for Termination of Benefit--New Jersey Issues.
(Note 5)
(z) Rider for Automatic Premium Loan--New York Issues.
(Note 5)
(aa) Rider for Automatic Premium Loan--New Jersey Issues.
(Note 5)
(bb) Rider for Aviation Risk Exclusion--New York Issues.
(Note 5)
(cc) Rider for Aviation Risk Exclusion--New Jersey Issues.
(Note 5)
(dd) Rider for Military Aviation Risk Exclusion--New York
Issues. (Note 5)
(ee) Rider for Military Aviation Risk Exclusion--New Jersey
Issues. (Note 5)
(ff) Rider for War Risk Exclusion--New York Issues. (Note 5)
(gg) Rider for War Risk Exclusion--New Jersey Issues. (Note 5)
(hh) Rider for Defining Incontestability Period--New York
Issues. (Note 5)
(ii) Rider for Defining Incontestability Period--New Jersey
Issues. (Note 5)
(jj) Rider for Suicide Provision--New York Issues. (Note 5)
(kk) Rider for Ownership and Control--New York Issues. (Note 5)
(ll) Rider for Ownership and Control--New Jersey Issues. (Note 5)
(mm) Rider for Applicant's Waiver of Premium Benefit--New York
Issues. (Note 5)
II-3
<PAGE>
(nn) Rider for Applicant's Waiver of Premium Benefit--New Jersey
Issues. (Note 5)
(oo) Rider for Level Term Insurance Benefit on Life of
Insured--New York and New Jersey Issues. (Note 7)
(pp) Rider for Special Premium Remittance Plan--New York Issues.
(Note 7)
(qq) Rider for Variable Loan Interest Rate--New York Issues.
(Note 7)
(rr) Rider for Special Premium Remittance Plan--New Jersey
Issues. (Note 7)
(ss) Rider for Variable Loan Interest Rate--New Jersey Issues.
(Note 7)
(tt) Rider for Decreasing Term Insurance Benefit--New York and
New Jersey Issues. (Note 8)
(uu) Rider for Variable Reduced Paid-Up Insurance--New York
Issues. (Note 8)
(vv) Rider for Variable Reduced Paid-Up Insurance--New Jersey
Issues. (Note 8)
(ww) Rider for Decreasing Term Insurance on Life of Insured
Spouse--New York Issues. (Note 8)
(xx) Rider for Decreasing Term Insurance Benefit on Life of
Insured Spouse--New Jersey Issues. (Note 8)
(yy) Rider for Variable Loan Interest Rate--New Jersey Issues.
(Note 8)
(zz) Rider for Variable Loan Interest Rate--New York Issues.
(Note 8)
(aaa) Rider providing Options on Lapse--New Jersey Issues.
(Note 8)
(bbb) Rider providing Options on Lapse--New York Issues. (Note 8)
(ccc) Living Needs Benefit Rider for use in New Jersey. (Note 9)
(ddd) Living Needs Benefit Rider for use in New York. (Note 12)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of Clifford E. Kirsch as to the legality of the
securities being registered. (Note 1)
4. None.
5. Not Applicable.
6. Opinion and Consent of Nancy D. Davis, FSA, MAAA, as to actuarial matters
pertaining to the securities being registered. (Note 1)
7. Powers of Attorney. (Note 13)
27. Financial Data Schedule. (Note 1)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Registrant's Form N-8B-2, filed
January 10, 1983.
(Note 3) Incorporated by reference to Pre-Effective Amendment No. 1 to this
Registration Statement, filed February 17, 1983.
(Note 4) Incorporated by reference to Pre-Effective Amendment No. 2 to this
Registration Statement, filed May 19, 1983.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 2 to this
Registration Statement, filed March 28, 1984.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 3 to this
Registration Statement, filed April 30, 1984.
(Note 7) Incorporated by reference to Post-Effective Amendment No. 4 to this
Registration Statement, filed April 30, 1985.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 5 to this
Registration Statement, filed March 7, 1986.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 15 to this
Registration Statement, filed April 26, 1990.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 17 to Form
S-6, Registration No. 2-89780, filed March 1, 1991, on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
II-4
<PAGE>
(Note 11) Incorporated by reference to Post-Effective Amendment No. 15 to Form
S-6, Registration No. 2-99537, filed March 2, 1993, on behalf of the
Pruco Life of New Jersey Single Premium Variable Life Account.
(Note 12) Incorporated by reference to Post-Effective Amendment No. 19 to this
Registration Statement, filed April 26, 1990.
(Note 13) Incorporated by reference to Form S-1, Registration No. 33-86780,
filed November 23, 1994 on behalf of the Pruco Life Real Property
Account.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that this Amendment is filed solely for one or more of the purposes
specified in Rule 485(b)(1) under the Securities Act of 1933 and that no
material event requiring disclosure in the prospectus, other than one listed in
Rule 485(b)(1), has occured since the effective date of the most recent date of
a Post-Effective Amendment to the Registration Statement which include a
prospectus, and has caused this Registration Statement to be signed on its
behalf by the undersigned thereunto duly authorized, and its seal hereunto
affixed and attested, all in the city of Newark and the State of New Jersey, on
this 24th day of April, 1995.
(Seal) Pruco Life of New Jersey Variable Insurance Account
(Registrant)
By: Pruco Life Insurance Company of New Jersey
(Depositor)
Attest: /s/ THOMAS C. CASTANO By: /s/ ESTHER H. MILNES
------------------------------- -----------------------------
Thomas C. Castano Esther H. Milnes
Assistant Secretary President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 22 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 24th day of April, 1995.
Signature and Title
-------------------
/s/ *
- -------------------------------
Robert P. Hill
Chairman of the Board
/s/ *
- -------------------------------
Esther Milnes
President and Director
/s/ *
- -------------------------------
Stephen Tooley
Chief Financial Officer and
Comptroller
/s/ *
- -------------------------------
E. Michael Caulfield
Director
/s/ * *By: /s/ THOMAS C. CASTANO
- ------------------------------- -----------------------------
Garnett L. Keith, Jr. Thomas C. Castano
Director (Attorney-in-Fact)
/s/ *
- -------------------------------
Ira J. Kleinman
Director
/s/ *
- -------------------------------
I. Edward Price
Director
/s/ *
- -------------------------------
Donald G. Southwell
Director
II-6
<PAGE>
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the use in this Post-Effective Amendment No. 22 to Registration
Statement No. 2-81243 on Form S-6 of Pruco Life of New Jersey Variable Insurance
Account of Pruco Life Insurance Company of New Jersey of our report dated
February 10, 1995, relating to the financial statements of Pruco Life of New
Jersey Variable Insurance Account, and of our report dated March 6, 1995,
relating to the consolidated financial statements of Pruco Life Insurance
Company of New Jersey and subsidiaries appearing in the Prospectus, which is
part of such Registration Statement, and to the reference to use under the
heading "Experts" in such Prospectus.
/S/ Deloitte and Touche LLP
Parsippany, New Jersey
April 24, 1995
II-7
<PAGE>
EXHIBIT INDEX
Consent of Deloitte and Touche LLP, independent auditors. Page II-7
3. Opinion and Consent of Clifford E. Kirsch, as to
the legality of the securities being registered. Page II-9
6. Opinion and Consent of Nancy Davis, FSA, MAAA, as
to actuarial matters pertaining to the securities
being registered. Page II-10
27. Financial Data Schedule Page II-11
II-8
Exhibit 3
April 24, 1995
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
Gentlemen:
In my capacity as Chief Legal Officer and Assistant Secretary of Pruco Life
Insurance Company of New Jersey ("Pruco Life of New Jersey"), I have reviewed
the establishment on December 29, 1982 of Pruco Life of New Jersey Variable
Insurance Account (the "Account") by the Executive Committee of the Board of
Directors of Pruco Life of New Jersey as a separate account for assets
applicable to certain variable life insurance contracts, pursuant to the
provisions of Section 17B:28-7 of the Revised Statues of New Jersey. I am
responsible for oversight of the preparation and review of the Registration
Statement on Form S-6, as amended, filed by Pruco Life of New Jersey with the
Securities and Exchange Commission (Registration Number 2-81243) under the
Securities Act of 1933 for the registration of certain variable life insurance
contracts issued with respect to the Account.
I am of the following opinion:
(1) Pruco Life of New Jersey was duly organized under the laws of New Jersey
and is a validly existing corporation.
(2) The Account has been duly created and is validly existing as a separate
account pursuant to the aforesaid provisions of New Jersey law.
(3) The portion of the assets held in the Account equal to the reserve and
other liabilities for variable benefits under the single premium variable
life insurance contracts is not chargeable with liabilities arising out
of any other business Pruco Life of New Jersey may conduct.
(4) The single premium variable life insurance contracts are legal and
binding obligations of Pruco Life of New Jersey in accordance with their
terms.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as I judged to be necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Clifford E. Kirsch
II-9
Exhibit 6
April 24, 1995
Pruco Life Insurance Company of New Jersey
213 Washington Street
Newark, New Jersey 07102-2992
To Pruco Life Insurance Company of New Jersey:
This opinion is furnished in connection with the registration by Pruco Life of
New Jersey Insurance Company of New Jersey of variable life insurance contracts
("Contracts") under the Securities Act of 1933. The prospectus included in
Post-Effective Amendment No. 22 to Registration Statement No. 2-81243 on Form
S-6 describes the Contracts. I have reviewed the Contract form and I have
participated in the preparation and review of the Registration Statement and
Exhibits thereto. In my opinion:
(1) The illustrations of death benefits included in the prospectus section
entitled "How a Contract's Death Benefit Will Vary", based on the
assumptions stated in the illustrations, are consistent with the
provisions of the Contract.
(2) The illustrations of the cash values included in the prospectus section
entitled "How a Contract's Cash Value Will Vary"), based on the
assumptions stated in the illustrations, are consistent with the
provisions of the Contract.
(3) The illustrations of cash values and death benefits included in the
section entitled "Illustrations", and in the Appendix of the prospectus,
based on the assumptions stated in the illustrations, are consistent with
the provisions of the Contract. The rate structure of the Contract has
not been designed so as to make the relationship between the premium and
benefits, as shown in the illustrations, appear more favorable to a
prospective purchaser of a Contract for male age 25 or male age 40, than
to prospective purchasers of Contracts on males of other ages or on
females.
(4) The illustration of the effect of a Contract loan on the death benefit
and cash value included in the prospectus section entitled "Contract
Loans", based on the assumptions stated in the illustration, is
consistent with the provisions of the Contract.
(5) The illustrations (with respect to a lapsed Contract) of cash values,
extended term insurance and reduced paid-up insurance which are included
in the prospectus section entitled "Options on Lapse", based on the
assumptions stated in the illustrations, are consistent with the
provisions of the Contract.
I hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to my name under the heading "Experts" in the
prospectus.
Very truly yours,
Nancy D. Davis, FSA, MAAA
Vice President and Assistant Actuary
The Prudential Insurance Company of America
II-10
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 93,167
<INVESTMENTS-AT-VALUE> 103,274
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 103,274
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,642
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 103,274
<DIVIDEND-INCOME> 3,120
<INTEREST-INCOME> 0
<OTHER-INCOME> 2,850
<EXPENSES-NET> 179
<NET-INVESTMENT-INCOME> 2,941
<REALIZED-GAINS-CURRENT> 272
<APPREC-INCREASE-CURRENT> (6,338)
<NET-CHANGE-FROM-OPS> (274)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 783
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
