AS FILED WITH THE SEC ON ______________. REGISTRATION NO. 333-85117
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-6
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 APPRECIABLE ACCOUNT
(Exact Name of Trust)
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(800) 286-7754
(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
---------------
It is proposed that this filing will become effective (check appropriate space):
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/x/ on October 16, 2000 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-B-2)
N-B-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 Appreciable Account
6. Pruco Life of New Jersey Variable Appreciable Account
7. Not Applicable
8. Not Applicable
9. Litigation and Regulatory Proceedings
10. Introduction and Summary; Charges and Expenses;
Short-Term Cancellation Right or "Free Look"; Types of
Death Benefit; Changing the Type of Death Benefit;
Riders; Premiums; Allocation of Premiums; Transfers;
Dollar Cost Averaging; Auto-Rebalancing; How a
Contract's Surrender Value Will Vary; How a Type A
(Fixed) Contract's Death Benefit Will Vary; How a Type
B (Variable) Contract's Death Benefit Will Vary; How a
Type C (Return of Premium) Contract's Death Benefit
Will Vary; Surrender of a Contract; Withdrawals; Lapse
and Reinstatement; Increases in Basic Insurance Amount;
Decreases in Basic Insurance Amount; When Proceeds are
Paid; Contract Loans; Other General Contract
Provisions; Voting Rights; Substitution of Fund Shares
11. Introduction and Summary; Pruco Life of New Jersey
Variable Appreciable Account
12. Cover Page; Introduction and Summary; The Funds; Sale
of the Contract and Sales Commissions
13. Introduction and Summary; The Funds; Charges and
Expenses; Premiums; Allocation of Premiums; Sale of the
Contract and Sales Commissions
14. Introduction and Summary; Detailed Information for
Prospective Contract Owners
15. Introduction and Summary; Premiums; Allocation of
Premiums; Transfers; Dollar Cost Averaging;
Auto-Rebalancing
16. Introduction and Summary; Detailed Information for
Prospective Contract Owners
<PAGE>
N-B-2 ITEM NUMBER LOCATION
----------------- ---------
17. When Proceeds are Paid
18. Pruco Life of New Jersey Variable Appreciable Account
19. Reports to Contract Owners
20. Not Applicable
21. Contract Loans
22. Not Applicable
23. Not Applicable
24. Other General Contract Provisions
25. Pruco Life Insurance Company of New Jersey
26. Introduction and Summary; The Funds; Charges and
Expenses
27. Pruco Life Insurance Company of New Jersey; The Funds
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
<PAGE>
N-B-2 ITEM NUMBER LOCATION
----------------- ---------
44. Introduction and Summary; The Funds; How a Contract's
Cash Surrender Value Will Vary; How a Type A (Fixed)
Contract's Death Benefit Will Vary; How a Type B
(Variable) Contract's Death Benefit Will Vary; How a
Type C (Return of Premium) Contract's Death Benefit
Will Vary
45. Not Applicable
46. Introduction and Summary; Pruco Life of New
Jersey Variable Appreciable Account; The Funds
47. Pruco Life of New Jersey Variable Appreciable Account;
The Funds
48. Not Applicable
49. Not Applicable
50. Not Applicable
51. Not Applicable
52. Substitution of Fund Shares
53. Tax Treatment of Contract Benefits
54. Not Applicable
55. Not Applicable
56. Not Applicable
57. Not Applicable
58. Not Applicable
59. Financial Statements: Financial Statements of the
PruSelect III Variable Life Subaccounts of Pruco Life
of New Jersey Variable Appreciable Account; Financial
Statements of Pruco Life Insurance Company of New
Jersey
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
<PAGE>
PRUSELECT(SM) III
Variable Life Insurance
PROSPECTUS
Pruco Life of New Jersey
Variable Appreciable Account
October 16, 2000
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
<PAGE>
PROSPECTUS
OCTOBER 16, 2000
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
PRUSELECT(SM) III
VARIABLE LIFE INSURANCE CONTRACTS
This prospectus describes certain individual flexible premium variable universal
life insurance contracts, PRUSELECT(SM) III Variable Life Insurance Contracts
(the "Contract"), issued by Pruco Life Insurance Company of New Jersey ("Pruco
Life of New Jersey", "us", "we", or "our"), a stock life insurance company.
Pruco Life of New Jersey is an indirect, wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential"). These Contracts provide
individual variable universal life insurance coverage with flexible premium
payments, a variety of investment options, and three types of death benefit
options. These Contracts may be issued with a Target Term Rider that could have
a significant effect on the performance of your Contract. For the factors to
consider when adding a Target Term Rider to your Contract, see RIDERS, page 18.
The Contracts may be owned individually or by a corporation, trust, association
or similar entity. The Contracts are available on a multiple life basis where
the insureds share a common employment or business relationship. The Contract
owner will have all rights and privileges under the Contract. The Contracts may
be used for funding non-qualified executive deferred compensation or salary
continuation plans, retiree medical benefits, or other purposes. PRUSELECT(SM)
III Contracts issued in New York may not be individually owned.
INVESTMENT CHOICES:
PruSelect III offers a wide variety of investment choices, including 32 variable
investment options that invest in mutual funds managed by these leading asset
managers:
o THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
o PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC
o A I M ADVISORS, INC.
o AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
o THE DREYFUS CORPORATION
o FRANKLIN ADVISERS, INC.
o GOLDMAN SACHS ASSET MANAGEMENT
o INVESCO FUNDS GROUP, INC.
o JANUS CAPITAL CORPORATION
o MFS INVESTMENT MANAGEMENT
o OPPENHEIMERFUNDS, INC.
o T. ROWE PRICE INTERNATIONAL, INC.
For a complete list of the 32 available variable investment options and their
investment objectives, see THE FUNDS, page 7.
This prospectus describes the Contract generally and the Pruco Life of New
Jersey Variable Appreciable Account (the "Account"). The attached prospectuses
for the Funds and their related statements of additional information describe
the investment objectives and the risks of investing in the Fund portfolios.
Pruco Life of New Jersey may add additional investment options in the future.
Please read this prospectus and keep it for future reference.
The Securities and Exchange Commission ("SEC") maintains a Web site
(http://www.sec.gov) that contains material incorporated by reference and other
information regarding registrants that file electronically with the SEC.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. 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) 286-7754
PRUSELECT is a service mark of Prudential.
<PAGE>
PROSPECTUS CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS............................................................................1
INTRODUCTION AND SUMMARY........................................................................................................2
BRIEF DESCRIPTION OF THE CONTRACT............................................................................................2
CHARGES......................................................................................................................2
TYPES OF DEATH BENEFIT.......................................................................................................5
LIFE INSURANCE DEFINITIONAL TESTS............................................................................................5
PREMIUM PAYMENTS.............................................................................................................5
REFUND.......................................................................................................................5
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, THE PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE
ACCOUNT, AND THE VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT.......................................................6
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY...................................................................................6
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT........................................................................6
THE FUNDS....................................................................................................................7
VOTING RIGHTS...............................................................................................................11
WHICH INVESTMENT OPTION SHOULD BE SELECTED?.................................................................................11
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS...........................................................................12
CHARGES AND EXPENSES........................................................................................................12
REDUCTION OF CHARGES........................................................................................................16
REQUIREMENTS FOR ISSUANCE OF A CONTRACT.....................................................................................16
SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK"................................................................................17
TYPES OF DEATH BENEFIT......................................................................................................17
CHANGING THE TYPE OF DEATH BENEFIT..........................................................................................17
RIDERS......................................................................................................................18
PREMIUMS....................................................................................................................20
ALLOCATION OF PREMIUMS......................................................................................................20
TRANSFERS...................................................................................................................20
DOLLAR COST AVERAGING.......................................................................................................21
AUTO-REBALANCING............................................................................................................21
HOW A CONTRACT'S SURRENDER VALUE WILL VARY..................................................................................22
HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY.....................................................................22
HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY..................................................................23
HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY.........................................................24
SURRENDER OF A CONTRACT.....................................................................................................25
WITHDRAWALS.................................................................................................................25
LAPSE AND REINSTATEMENT.....................................................................................................26
INCREASES IN BASIC INSURANCE AMOUNT.........................................................................................26
DECREASES IN BASIC INSURANCE AMOUNT.........................................................................................27
WHEN PROCEEDS ARE PAID......................................................................................................28
ILLUSTRATIONS OF SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS.................................................28
CONTRACT LOANS..............................................................................................................30
TAX TREATMENT OF CONTRACT BENEFITS..........................................................................................30
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS.........................................................32
EXCHANGE RIGHT..............................................................................................................33
OPTION TO EXCHANGE INSURED..................................................................................................33
OTHER GENERAL CONTRACT PROVISIONS...........................................................................................33
SUBSTITUTION OF FUND SHARES.................................................................................................33
REPORTS TO CONTRACT OWNERS..................................................................................................34
SALE OF THE CONTRACT AND SALES COMMISSIONS..................................................................................34
STATE REGULATION............................................................................................................34
EXPERTS.....................................................................................................................34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
LITIGATION AND REGULATORY PROCEEDINGS.......................................................................................35
ADDITIONAL INFORMATION......................................................................................................35
FINANCIAL STATEMENTS........................................................................................................35
DIRECTORS AND OFFICERS.........................................................................................................36
FINANCIAL STATEMENTS OF THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE
ACCOUNT .......................................................................................................................A1
FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY ............................................................B1
</TABLE>
<PAGE>
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS
ACTIVE INVESTMENT OPTION -- A variable investment option that has been allocated
an invested premium amount or a loan repayment or transfer at any time while the
Contract is in-force. An active investment option remains active even if the
current value of the variable investment option is zero.
ATTAINED AGE -- The insured's age on the Contract date plus the number of years
since then. For any coverage segment effective after the Contract date, the
insured's attained age is the issue age of that segment plus the length of time
since its effective date.
BASIC INSURANCE AMOUNT -- The amount of life insurance as shown in the Contract.
Also referred to as "face amount."
CASH VALUE -- The same as the "Contract Fund."
CONTRACT -- The variable universal life insurance policy described in this
prospectus.
CONTRACT ANNIVERSARY -- The same date as the Contract date in each later year.
CONTRACT DATE -- The date the Contract is effective, as specified in the
Contract.
CONTRACT DEBT -- The principal amount of all outstanding loans plus any interest
accrued thereon.
CONTRACT FUND -- The total amount credited to a specific Contract. On any date
it is equal to the sum of the amounts invested in the variable investment
options and the principal amount of any Contract debt plus any interest earned
thereon.
CONTRACT OWNER -- You. Unless a different owner is named in the application, the
owner of the Contract is the insured.
CONTRACT YEAR -- A year that starts on the Contract date or on a Contract
anniversary. For any portion of a Contract representing an increase, "Contract
year" is a year that starts on the effective date of the increase. See INCREASES
IN BASIC INSURANCE AMOUNT, page 26.
COVERAGE SEGMENT -- The basic insurance amount at issue is the first coverage
segment. For each increase in basic insurance amount, a new coverage segment is
created for the amount of the increase. See INCREASES IN BASIC INSURANCE AMOUNT,
page 26.
DEATH BENEFIT -- If the Contract is not in default, this is the amount we will
pay upon the death of the insured, assuming no Contract debt.
FUNDS -- Mutual funds with separate portfolios. One or more of the available
Fund portfolios may be chosen as an underlying investment for the Contract.
MONTHLY DATE -- The Contract date and the same date in each subsequent month.
NET CASH VALUE -- The Contract Fund minus any Contract debt.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY -- Us, we, our, Pruco Life of New
Jersey. The company offering the Contract.
SEGMENT ALLOCATION AMOUNT -- The amount used to determine the charge for sales
expenses. It may also be referred to as the "Target Premium." See CHARGES AND
EXPENSES, page 12.
SEPARATE ACCOUNT -- Amounts under the Contract that are allocated to the
variable investment options are held by us in a separate account called the
Pruco Life of New Jersey Variable Appreciable Account. The Separate Account is
set apart from all of the general assets of Pruco Life of New Jersey Insurance
Company.
SURRENDER VALUE -- The amount payable to the Contract owner upon surrender of
the Contract. It is equal to the Contract Fund minus any Contract debt plus any
return of sales charges.
TARGET PREMIUM -- The same as "segment allocation amount." See CHARGES AND
EXPENSES, page 12.
VALUATION PERIOD -- The period of time from one determination of the value of
the amount invested in a variable investment option to the next. Such
determinations are made when the net asset values of the portfolios of the Funds
are calculated, which is generally at 4:00 p.m. Eastern time on each day during
which the New York Stock Exchange is open.
VARIABLE INVESTMENT OPTIONS -- The 32 mutual funds available under this
Contract, whose shares are held in the separate account.
YOU -- The owner of the Contract.
1
<PAGE>
INTRODUCTION AND SUMMARY
This Summary provides a brief overview of the more significant aspects of the
Contract. We provide further detail in the subsequent sections of this
prospectus and in the Contract.
BRIEF DESCRIPTION OF THE CONTRACT
The Contract is an individual flexible premium variable universal life insurance
contract. It is issued by Pruco Life Insurance Company of New Jersey ("Pruco
Life of New Jersey", "us", "we", or "our"). These Contracts may be issued with a
Target Term Rider that could have a significant effect on the performance of
your Contract. For the factors to consider when adding a Target Term Rider to
your Contract, see RIDERS, page 18. The Contracts are available on a multiple
life basis where the insureds share a common employment or business
relationship. The Contracts may be owned individually or by a corporation,
trust, association or similar entity. The Contract owner will have all rights
and privileges under the Contract. The Contracts may be used for such purposes
as funding non-qualified executive deferred compensation or salary continuation
plans, retiree medical benefits, or other purposes. PRUSELECT(SM) III Contracts
issued in New York may not be individually owned.
The Contract is a form of variable universal life insurance. It is based on a
Contract Fund, the value of which changes every day. The chart below describes
how the value of your Contract Fund changes.
You may invest premiums in one or more of the 15 available variable investment
options. Your Contract Fund value changes every day depending upon the change in
the value of the particular investment options that you have selected.
Although the value of your Contract Fund will increase if there is favorable
investment performance in the variable investment options you select, investment
returns in the variable investment options are NOT guaranteed. There is a risk
that investment performance will be unfavorable and that the value of your
Contract Fund will decrease. The risk will be different, depending upon which
investment options you choose. See WHICH INVESTMENT OPTION SHOULD BE SELECTED?,
page 11.
Variable life insurance contracts are unsuitable as short-term savings vehicles.
Withdrawals and loans may result in adverse tax consequences. See TAX TREATMENT
OF CONTRACT BENEFITS, page 30.
CHARGES
The following chart outlines the components of your Contract Fund and the
adjustments which may be made including the maximum charges which may be
deducted from each premium payment and from the amounts held in the designated
investment options. 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, page 12. In brief, and subject to that
fuller description, the following diagram outlines the maximum charges which
Pruco Life of New Jersey may make:
----------------------------
PREMIUM PAYMENT
----------------------------
--------------------------------------------------------------------------------
o less a charge of up to 7.5% of the premiums paid for taxes
attributable to premiums.
o less a charge for sales expenses of up to 15% of the premiums paid.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
INVESTED PREMIUM AMOUNT
To be invested in one or a combination of 32 investment portfolios of the
Funds.
--------------------------------------------------------------------------------
2
<PAGE>
--------------------------------------------------------------------------------
CONTRACT FUND
On the Contract Date, the Contract Fund is equal to the invested premium amount
minus any of the charges described below which may be due on that date.
Thereafter, the value of the Contract Fund changes daily.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PRUCO LIFE OF NEW JERSEY ADJUSTS
THE CONTRACT FUND FOR:
o Addition of any new invested premium amounts.
o Addition of any increase due to investment results of the chosen variable
investment options.
o Addition of guaranteed interest at an effective annual rate of 4% on the
amount of any Contract loan. (Separately, interest charged on the loan
accrues at an effective annual rate of 4.25% or 5%. See CONTRACT LOANS,
page 30.)
o Subtraction of any decrease due to investment results of the chosen
variable investment options.
o Subtraction of any amount withdrawn.
o Subtraction of the charges listed below, as applicable.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DAILY CHARGES
o Management fees and expenses are deducted from the Fund assets. See
UNDERLYING PORTFOLIO EXPENSES chart, below.
o We deduct a daily mortality and expense risk charge, equivalent to an
annual rate of up to 0.5%, from assets of the variable investment options.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
MONTHLY CHARGES
o We reduce the Contract Fund by a monthly administrative charge of up to $10
plus $0.05 per $1,000 of the basic insurance amount.
o We deduct a cost of insurance ("COI") charge.
o If the Contract includes riders, we deduct rider charges from the Contract
Fund.
o If the rating class of an insured results in an extra charge, we will
deduct that charge from the Contract Fund.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
o We assess an administrative charge of up to $25 for any withdrawals.
o We may assess an administrative charge of up to $25 for any change in basic
insurance amount.
o We may assess an administrative charge of up to $25 for any change in the
Target Term Rider coverage amount (see RIDERS, page 18).
o We assess an administrative charge of up to $25 for each transfer exceeding
12 in any Contract year.
--------------------------------------------------------------------------------
3
<PAGE>
<TABLE>
<CAPTION>
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UNDERLYING PORTFOLIO EXPENSES
------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OTHER 12B-1 TOTAL TOTAL
ADVISORY EXPENSES FEES CONTRACTUAL ACTUAL
FEE EXPENSES EXPENSES*
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SERIES FUND
<S> <C> <C> <C> <C> <C>
Money Market 0.40% 0.02% n/a 0.42% 0.42%
Diversified Bond 0.40% 0.03% n/a 0.43% 0.43%
Conservative Balanced 0.55% 0.02% n/a 0.57% 0.57%
Flexible Managed 0.60% 0.02% n/a 0.62% 0.62%
High Yield Bond 0.55% 0.05% n/a 0.60% 0.60%
Stock Index 0.35% 0.04% n/a 0.39% 0.39%
Equity Income 0.40% 0.02% n/a 0.42% 0.42%
Equity 0.45% 0.02% N/A 0.47% 0.47%
Prudential Jennison 0.60% 0.03% N/A 0.63% 0.63%
Global 0.75% 0.09% N/A 0.84% 0.84%
SP ALLIANCE LARGE CAP GROWTH 0.90% 0.20% N/A 1.10% 1.10%
SP DAVIS VALUE 0.75% 0.08% N/A 0.83% 0.83%
SP INVESCO SMALL COMPANY GROWTH 0.95% 0.20% N/A 1.15% 1.15%
SP PIMCO HIGH YIELD 0.60% 0.22% N/A 0.82% 0.82%
SP PIMCO TOTAL RETURN 0.60% 0.16% N/A 0.76% 0.76%
SP SMALL/MID CAP VALUE 0.90% 0.15% N/A 1.05% 1.05%
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AIM VARIABLE INSURANCE FUNDS
AIM V.I. Value Fund 0.61% 0.15% N/A 0.76% 0.76%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. (1)
VP Income & Growth Fund 0.70% 0.00% N/A 0.70% 0.70%
VP Value Fund 1.00% 0.00% N/A 1.00% 1.00%
DREYFUS INVESTMENT PORTFOLIOS
MidCap Stock Portfolio 0.75% 0.71% N/A 1.46% 1.00%
DREYFUS VARIABLE INVESTMENT FUND
Small Cap Portfolio 0.75% 0.03% N/A 0.78% 0.78%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund - Class 2 0.55% 0.27% 0.25% 1.07% 1.07%
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT) (2)
CORE(SM) Small Cap Equity Fund 0.75% 0.25% N/A 1.00% 1.00%
INVESCO VARIABLE INVESTMENT FUNDS, INC. (3)
VIF - Technology Fund 0.75% 0.78% N/A 1.53% 1.53%
VIF - Utilities Fund 0.60% 1.08% N/A 1.68% 1.68%
JANUS ASPEN SERIES
Aggressive Growth Portfolio - Service Shares 0.65% 0.02% 0.25% 0.92% 0.92%
Balanced Portfolio - Service Shares 0.65% 0.02% 0.25% 0.92% 0.92%
Growth Portfolio - Institutional Shares (4) 0.65% 0.02% N/A 0.67% 0.67%
International Growth Portfolio - Service Shares 0.65% 0.11% 0.25% 1.01% 1.01%
MFS(R) VARIABLE INSURANCE TRUSTSM (5)
Emerging Growth Series 0.75% 0.09% N/A 0.84% 0.84%
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Aggressive Growth Fund/VA (Service Shares) 0.66% 0.01% 0.15% 0.82% 0.82%
T. ROWE PRICE INTERNATIONAL SERIES, INC. (1)
International Stock Portfolio 1.05% 0.00% N/A 1.05% 1.05%
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* Reflects fee waivers and reimbursement of expenses, if any.
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</TABLE>
(1) AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. / T. ROWE PRICE INTERNATIONAL
SERIES, INC.
The Investment Advisory Fee includes the ordinary expenses of operating the
Fund.
(2) GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
The Investment Adviser had voluntarily agreed to reduce or limit certain
Other Expenses to the extent such expenses exceed the percentage stated in
the table above (as calculated per annum) of each Fund's respective average
daily net assets.
(3) INVESCO VARIABLE INVESTMENT FUNDS, INC.
The expense information presented in the table has been restated from the
financials to reflect a change in the administrative services fee. Certain
expenses of the Fund were absorbed voluntarily by INVESCO in order to
ensure that expenses for the Fund did not exceed 1.25% for the Technology
Fund and 1.15% for the Utilities Fund.
4
<PAGE>
(4) JANUS ASPEN SERIES
The table reflects expenses based on expenses for the fiscal year ended
December 31, 1999, restated to reflect a reduction in the management fee.
All expenses are shown without the effect of expense offset arrangements.
(5) MFS(RM) VARIABLE INSURANCE TRUST(SM)
The 0.09% on "Other Expenses" does not take into account a 0.01% expense
offset arrangement with the Fund's custodian and is therefore higher than
the actual expenses of the Series.
TYPES OF DEATH BENEFIT
There are three types of death benefit available. You may choose a Contract with
a Type A (fixed) death benefit under which the cash value varies daily with
investment experience, and the death benefit generally remains at the basic
insurance amount you initially chose. However, the Contract Fund may grow to a
point where the death benefit may increase and vary with investment experience.
If you choose a Contract with a Type B (variable) death benefit, the cash value
and the death benefit both vary with investment experience. If you choose a
Contract with a Type C (return of premium) death benefit, the death benefit is
increased by the amount of premiums paid into the Contract, less withdrawals,
plus interest at a rate between 0% and 8% (in 1/2% increments) chosen by the
Contract owner. For Type A and Type B death benefits, as long as the Contract is
in-force, the death benefit will never be less than the basic insurance amount
shown in your Contract. See TYPES OF DEATH BENEFIT, page 17.
LIFE INSURANCE DEFINITIONAL TESTS
In order to qualify as life insurance for Federal tax purposes, the Contract
must adhere to the definition of life insurance under Section 7702 of the
Internal Revenue Code. At issue, the Contract owner chooses one of the following
definition of life insurance tests: (1) Cash Value Accumulation Test or (2)
Guideline Premium Test. Under the Cash Value Accumulation Test, there is a
minimum death benefit to cash value ratio. Under the Guideline Premium Test,
there is a limit to the amount of premiums that can be paid into the Contract,
as well as a minimum death benefit to cash value ratio. For more information,
see TAX TREATMENT OF CONTRACT BENEFITS, page 30.
PREMIUM PAYMENTS
The Contract is a flexible premium contract - there are no scheduled premiums.
Except for the minimum initial premium, and subject to a minimum of $25 per
subsequent payment, you choose the timing and amount of premium payments. Paying
insufficient premiums, poor investment results, or taking loans or withdrawals
from the Contract will increase the possibility that the Contract will lapse.
However, the Contract will remain in-force if the Contract Fund is greater than
zero and more than any Contract debt. See PREMIUMS, page 20 and LAPSE AND
REINSTATEMENT, page 26.
We offer and suggest regular billing of premiums even though you decide when to
make premium payments and, subject to a $25 minimum, in what amounts. You should
discuss your billing options with your Pruco Life of New Jersey representative
when you apply for the Contract. See PREMIUMS, page 20.
REFUND
For a limited time, you may return your Contract for a refund in accordance with
the terms of its "free-look" provision. See SHORT-TERM CANCELLATION RIGHT OR
"FREE-LOOK," page 17.
For the DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS, see page 1.
THE REPLACEMENT OF LIFE INSURANCE IS GENERALLY NOT IN YOUR BEST INTEREST. IN
MOST CASES, IF YOU REQUIRE ADDITIONAL COVERAGE, THE BENEFITS OF YOUR EXISTING
CONTRACT CAN BE PROTECTED BY PURCHASING ADDITIONAL INSURANCE OR A SUPPLEMENTAL
CONTRACT. IF YOU ARE CONSIDERING REPLACING A CONTRACT, YOU SHOULD COMPARE THE
BENEFITS AND COSTS OF SUPPLEMENTING YOUR EXISTING CONTRACT WITH THE BENEFITS AND
COSTS OF PURCHASING THE CONTRACT DESCRIBED IN THIS PROSPECTUS AND YOU SHOULD
CONSULT WITH A QUALIFIED TAX ADVISER.
THIS PROSPECTUS MAY ONLY BE OFFERED IN JURISDICTIONS IN WHICH THE OFFERING IS
LAWFUL. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION FOR THE FUNDS.
5
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE
COMPANY OF NEW JERSEY, THE PRUCO LIFE OF NEW
JERSEY VARIABLE APPRECIABLE 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", "us",
"we", or "our") 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 an indirect, wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential"), a mutual insurance
company founded in 1875 under the laws of the State of New Jersey. Prudential is
currently considering reorganizing itself into a publicly traded stock company
through a process known as "demutualization". On February 10, 1998, Prudential's
Board of Directors authorized management to take preliminary steps necessary to
allow Prudential to demutualize. On July 1, 1998, legislation was enacted in New
Jersey that would permit this conversion to occur and that specified the process
for conversion. Demutualization is a complex process involving development of a
plan of reorganization, adoption of a plan by Prudential's Board of Directors, a
public hearing, voting by qualified policyholders, and regulatory approval.
Prudential is working toward completing this process in 2001 and currently
expects adoption by the Board of Directors to take place in the latter part of
2000. However, there is no certainty that the demutualization will be completed
in this timeframe or that the necessary approvals will be obtained. Also it is
possible that after careful review, Prudential could decide not to demutualize
or could decide to delay its plans.
The plan of reorganization, which has not been fully developed and approved,
would provide the criteria for determining eligibility and the methodology for
allocating shares or other consideration to those who would be eligible.
Generally the amount of shares or other consideration eligible customers would
receive would be based on a number of factors, including types, amounts, and
issue years of the policies. As a general rule, owners of Prudential-issued
insurance policies and annuity contracts would be eligible, provided that their
policies were in force on the date Prudential's Board of Directors adopted a
plan of reorganization, while mutual fund customers and customers of
Prudential's subsidiaries (such as the Pruco Life insurance companies) would not
be. It has not yet been determined whether any exceptions to that general rule
will be made with respect to policyholders and contractholders of Prudential's
subsidiaries. This does not constitute a proposal, offer, solicitation or
recommendation regarding any plan of reorganization that may be proposed or a
recommendation regarding the ownership of any stock that could be issued in
connection with any such demutualization.
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
We have established a separate account, the Pruco Life of New Jersey Variable
Appreciable Account (the "Account"), to hold the assets that are associated with
the Contracts. The Account was established on January 13, 1984 under New Jersey
law and is registered with the Securities and Exchange Commission ("SEC") under
the Investment Company Act of 1940 as a unit investment trust which is a type of
investment company. 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.
Pruco Life of New Jersey is the legal owner of the assets in the Account. Pruco
Life of New Jersey will 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 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.
6
<PAGE>
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life of New Jersey.
Currently, you may choose to invest in no more than 16 of the 32 available
variable investment options. Once you allocate funds to a particular variable
investment option, it continues as one of the 16 variable investment options you
may use, even if the current value of the variable investment option is zero.
When you choose a variable investment option, we purchase shares of a mutual
fund which are held as an investment for that option. We hold these shares in
the Account. The division of the separate account of Pruco Life of New Jersey
that invests in a particular mutual fund is referred to in your contract as a
subaccount. Pruco Life of New Jersey may add additional variable investment
options in the future. The Account's financial statements begin on page A1.
THE FUNDS
Listed below are the mutual funds (the "Funds") in which the variable investment
options invest, the Funds' investment objectives, and investment advisers.
EACH FUND HAS A SEPARATE PROSPECTUS THAT IS PROVIDED WITH THIS PROSPECTUS. YOU
SHOULD READ THE FUND PROSPECTUS BEFORE YOU DECIDE TO ALLOCATE ASSETS TO THE
VARIABLE INVESTMENT OPTION USING THAT FUND. THERE IS NO ASSURANCE THAT THE
INVESTMENT OBJECTIVES OF THE FUNDS WILL BE MET.
THE PRUDENTIAL SERIES FUND, INC. (THE "SERIES FUND"):
o MONEY MARKET PORTFOLIO: The investment objective is maximum current income
consistent with the stability of capital and the maintenance of liquidity.
The Portfolio invests in high quality short-term debt obligations that
mature in 13 months or less.
o DIVERSIFIED BOND PORTFOLIO: The investment objective is a high level of
income over a longer term while providing reasonable safety of capital. The
Portfolio invests primarily in higher grade debt obligations and high
quality money market investments.
o CONSERVATIVE BALANCED PORTFOLIO: The investment objective is a total
investment return consistent with a conservatively managed diversified
portfolio. The Portfolio invests in a mix of equity securities, debt
obligations and money market instruments.
o FLEXIBLE MANAGED PORTFOLIO: The investment objective is a total investment
return consistent with an aggressively managed diversified portfolio. The
Portfolio invests in a mix of equity securities, debt obligations and money
market instruments.
o HIGH YIELD BOND PORTFOLIO: The investment objective is a high total return.
The Portfolio invests primarily in high yield/high risk debt securities.
o STOCK INDEX PORTFOLIO: The investment objective is investment results that
generally correspond to the performance of publicly-traded common stocks.
The Portfolio attempts to duplicate the price and yield performance of the
Standard & Poor's 500 Stock Index (the "S&P 500").
o EQUITY INCOME PORTFOLIO: The investment objective is both current income
and capital appreciation. The Portfolio invests primarily in common stocks
and convertible securities that provide good prospects for returns above
those of the S&P 500 or the NYSE Composite Index.
o EQUITY PORTFOLIO: The investment objective is capital appreciation. The
Portfolio invests primarily in common stocks of major established
corporations as well as smaller companies that offer attractive prospects
of appreciation.
o PRUDENTIAL JENNISON PORTFOLIO: The investment objective is to achieve
long-term growth of capital. The Portfolio invests primarily in equity
securities of major established corporations that offer above-average
growth prospects.
o GLOBAL PORTFOLIO: The investment objective is long-term growth of capital.
The Portfolio invests primarily in common stocks (and their equivalents) of
foreign and U.S. companies.
7
<PAGE>
o SP ALLIANCE LARGE CAP GROWTH PORTFOLIO: The investment objective is growth
of capital by pursuing aggressive investment policies. The Portfolio
invests primarily in equity securities of U.S. companies.
o SP DAVIS VALUE PORTFOLIO: The investment objective is growth of capital.
The Portfolio invests primarily in common stock of U.S. companies with
market capitalizations of at least $5 billion.
o SP INVESCO SMALL COMPANY GROWTH PORTFOLIO: The investment objective is
long-term capital growth. Most holdings are in small-capitalization
companies - those with market capitalizations under $2 billion at the time
of purchase.
o SP PIMCO HIGH YIELD PORTFOLIO: The investment objective is maximum total
return, consistent with preservation of capital and prudent investment
management. The Portfolio invests in high yield securities and investment
grade fixed income instruments.
o SP PIMCO TOTAL RETURN PORTFOLIO: The investment objective is to seek
maximum total return, consistent with preservation of capital and prudent
investment management. The Portfolio invests in a diversified portfolio of
fixed income instruments of varying maturities.
o SP SMALL/MID CAP VALUE PORTFOLIO: The investment objective is long-term
growth of capital. The Portfolio focuses on common stock of companies with
small to medium market capitalizations.
Prudential is the overall investment adviser for the assets of the Conservative
Balanced, Diversified Bond, Equity, Equity Income, Flexible Managed, Global,
High Yield Bond, Money Market, Prudential Jennison, and the Stock Index
Portfolios of the Series Fund. Prudential's principal business address is 751
Broad Street, Newark, New Jersey 07102-3777.
Jennison Associates LLC ("Jennison"), a wholly-owned subsidiary of Prudential,
serves as sub-adviser to the Prudential Jennison Portfolio. During 2000, it is
expected that Jennison will become sub-adviser to the Equity, Equity Income,
Global, and Stock Index Portfolios, and the equity portions of the Conservative
Balanced and Flexible Managed Portfolios. Jennison's principal business address
is 466 Lexington Avenue, New York, NY 10017.
Prudential Investment Corporation ("PIC"), also a wholly-owned subsidiary of
Prudential, serves as sub-adviser to the Conservative Balanced, Diversified
Bond, Equity, Equity Income, Flexible Managed, Global, High Yield Bond, Money
Market, and Stock Index Portfolios. PIC's business address is 751 Broad Street,
Newark, NJ 07102.
Prudential Investments Fund Management LLC ("PIFM"), a subsidiary of Prudential,
is the investment adviser to the SP Alliance Large Cap Growth Portfolio, the SP
Davis Value Portfolio, the SP INVESCO Small Company Growth Portfolio, the SP
PIMCO High Yield Portfolio, the SP PIMCO Total Return Portfolio, and the SP
Small/Mid Cap Value Portfolio. PIFM's business address is 100 Mulberry Street,
Newark, NJ 07102.
Alliance Capital Management, L.P. ("Alliance") serves as the sub-adviser to the
SP Alliance Large Cap Growth Portfolio. Alliance's principal business address is
1345 Avenue of the Americas, New York, NY 10105.
Davis Selected Advisers, L.P. serves as the sub-adviser to the SP Davis Value
Portfolio. The principal business address for Davis Selected Advisers, LP is 124
East Elvira Street, Santa Fe, NM 87501.
Fidelity Management & Research Company ("FMR") serves as the sub-adviser to the
SP Small/Mid Cap Value Portfolio. FMR's principal business address is 82
Devonshire Street, Boston, Massachusetts 02109.
INVESCO Funds Group, Inc. ("INVESCO") serves as the sub-adviser to the SP
INVESCO Small Company Growth Portfolio. INVESCO's principal business address is
7800 East Union Avenue, Denver CO 80237.
Pacific Investment Management Company LLC ("PIMCO") serves as the sub-adviser to
the SP PIMCO High Yield Portfolio and the SP PIMCO Total Return Portfolio.
PIMCO's principal business address is 840 Newport Center Drive, Newport Beach,
California 92660.
8
<PAGE>
AIM VARIABLE INSURANCE FUNDS:
o AIM V.I. VALUE FUND. The investment objective is long-term growth of capital.
Income is a secondary objective.
A I M Advisors, Inc. ("AIM") is the investment adviser for this fund. The
principal business address for AIM is 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.:
o AMERICAN CENTURY VP INCOME & GROWTH FUND. The investment objective is
growth of capital by investing in common stocks. Income is a secondary
objective. The Fund seeks to achieve its objective by investing primarily
from the largest 1,500 publicly traded U.S. companies.
o AMERICAN CENTURY VP VALUE FUND. The investment objective is long-term
growth of capital. Income is a secondary objective. The Fund seeks to
achieve its objective by investing primarily in equity securities of
well-established companies with intermediate-to-large market
capitalizations that are believed by management to be undervalued at the
time of purchase.
American Century Investment Management, Inc. ("ACIM") is the investment adviser
for this fund. ACIM's principal business address is American Century Tower, 4500
Main Street, Kansas City, Missouri 64111. The principal underwriter of the fund
is American Century Services, Inc., located at 4500 Main Street, Kansas City,
Missouri 64111.
DREYFUS INVESTMENT PORTFOLIOS:
o MIDCAP STOCK PORTFOLIO. The investment objective is to achieve investment
results that are greater than the total return performance of publicly
traded common stocks of medium-size domestic companies in the aggregate, as
represented by the Standard and Poor's MidCap 400(RM) Index ("S&P 400").
The portfolio invests primarily in growth and value stocks of medium-size
companies.
DREYFUS VARIABLE INVESTMENT FUND:
o SMALL CAP PORTFOLIO. The investment objective is to maximize capital
appreciation. The Portfolio generally invests at least 65% of its assets in
the common stock of U.S. and foreign companies. The Portfolio invests
primarily in small-cap companies with total market values of less than $1.5
billion.
The Dreyfus Corporation ("Dreyfus") is the investment adviser to each of the
above mentioned portfolios. The principal distributor of the portfolios is
Dreyfus Services Corporation ("DSC"). Dreyfus' and DSC's principal business
address is 200 Park Avenue, New York, New York 10166.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST:
o FRANKLIN SMALL CAP FUND - CLASS 2. The investment objective is long-term
growth of capital. The Fund invests primarily in equity securities of U.S.
small capitalization growth companies.
Franklin Advisers, Inc. (Advisers) is the Fund's investment manager. The
principal business address for Franklin Advisers, Inc. is 777 Mariners Island
Boulevard, San Mateo, California 94403-7777.
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT):
o CORE(SM) SMALL CAP EQUITY FUND. The investment objective is long-term
growth of capital. The Fund invests at least 90% if its total assets in
equity securities of U.S. issuers, including foreign issuers that are
traded in the United States.
Goldman Sachs Asset Management ("GSAM"), a unit of the Investment Management
Division of Goldman, Sachs & Co. ("Goldman Sachs"), serves as investment adviser
to the CORE(SM) Small Cap Equity Fund. GSAM's principal business address is 32
Old Slip, New York, New York 10005.
9
<PAGE>
INVESCO VARIABLE INVESTMENT FUNDS, INC.:
o VIF - TECHNOLOGY FUND. The investment objective is capital appreciation.
The Fund invests primarily in the equity securities of companies engaged in
technology-related industries.
o VIF - UTILITIES FUND. The investment objective is capital appreciation and
income. The Fund invests at least 80% of its assets in companies doing
business in the utilities economic sector.
INVESCO Funds Group, Inc. ("INVESCO") serves as the investment adviser and
principal underwriter of each of the above-mentioned funds. INVESCO's principal
business address is 7800 E. Union Avenue, Denver, Colorado 80237.
JANUS ASPEN SERIES:
o AGGRESSIVE GROWTH PORTFOLIO - SERVICE SHARES. The investment objective is
long-term growth of capital. The Portfolio invests at least 50% of its
equity assets in securities issued by medium-sized companies.
o BALANCED PORTFOLIO - SERVICE SHARES. The investment objective is long-term
growth of capital, consistent with preservation of capital, and balanced by
current income. The Portfolio invests 40-60% of its assets in securities
selected primarily for their growth potential and 40-60% of its assets in
securities selected primarily for their income potential.
o GROWTH PORTFOLIO - INSTITUTIONAL SHARES. The investment objective is
long-term growth of capital in a manner consistent with the preservation of
capital. The Portfolio invests primarily in common stocks of larger, more
established issuers.
o INTERNATIONAL GROWTH PORTFOLIO - SERVICE SHARES. The investment objective
is long-term growth of capital. The Portfolio invests primarily in common
stocks of issuers located outside the United States.
Janus Capital Corporation is the investment adviser and is responsible for the
day-to-day management of the portfolio and other business affairs of the
portfolio. Janus Capital Corporation's principal business address is 100
Fillmore Street, Denver, Colorado 80206-4928.
MFS(RM) VARIABLE INSURANCE TRUST(SM):
o EMERGING GROWTH SERIES. The investment objective is long-term growth of
capital. The Series invests, under normal market conditions, at least 65%
of its total assets in common stocks and related securities of emerging
growth companies.
MFS Investment Management(RM)("Massachusetts Financial Services Company"), a
Delaware corporation, is the investment adviser to this MFS Series. The
principal business address for MFS Investment Management is 500 Boylston Street,
Boston, Massachusetts 02116.
OPPENHEIMER VARIABLE ACCOUNT FUNDS:
o AGGRESSIVE GROWTH FUND/VA (SERVICE SHARES). The investment objective is
capital appreciation by investing in "growth type" companies. The Fund
invests primarily is stocks of mid-cap companies.
OppenheimerFunds, Inc. is the investment manager for this Fund. The principal
business address for OppenheimerFunds, Inc. is Two World Trade Center, 34th
Floor, New York, New York 10048-0203.
T. ROWE PRICE INTERNATIONAL SERIES, INC.:
o INTERNATIONAL STOCK PORTFOLIO. The investment objective is long-term growth
of capital The Portfolio invests primarily in common stocks of established,
non-U.S. companies.
10
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T. Rowe Price International, Inc. is the investment manager for this fund. The
principal business address for T. Rowe Price International, Inc. is 100 East
Pratt Street, Baltimore, Maryland 21202.
The investment advisers for the Funds charge a daily investment management fee
as compensation for their services. These fees are described in the table under
DEDUCTIONS FROM PORTFOLIOS in the CHARGES AND EXPENSES section, page 12, and are
more fully described in the prospectus for each Fund.
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 funds. Although neither of the companies that invest in the Funds nor the
Funds currently foresee any such disadvantage, the Board of Directors for each
Fund 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. Material conflicts could result
from such things as:
(1) changes in state insurance law;
(2) changes in federal income tax law;
(3) changes in the investment management of any portfolio of the Funds; or
(4) differences between voting instructions given by variable life insurance and
variable annuity contract owners.
Pruco Life of New Jersey may be compensated by an affiliate of each of the Funds
(other than the Prudential Series Fund) based upon an annual percentage of the
average assets held in the Fund by Pruco Life of New Jersey under the Contracts.
These percentages vary by Fund, and reflect administrative and other services
provided by Pruco Life of New Jersey.
VOTING RIGHTS
We are the legal owner of the shares of the Funds associated with the variable
investment options. However, we vote the shares in the Funds according to voting
instructions we receive from Contract owners. We will mail you a proxy, which is
a form you need to complete and return to us to tell us how you wish us to vote.
When we receive those instructions, we will vote all of the shares we own on
your behalf in accordance with those instructions. We will vote the shares for
which we do not receive instructions and shares that we own, in the same
proportion as the shares for which instructions are received. We may change the
way your voting instructions are calculated if it is required by federal
regulation. Should the applicable federal securities laws or regulations, or
their current interpretation, change so as to permit Pruco Life of New Jersey to
vote shares of the Funds in its own right, it may elect to do so.
WHICH INVESTMENT OPTION SHOULD BE SELECTED?
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,
portfolios such as the Stock Index, Equity Income, Equity, Prudential Jennison,
Global, SP Alliance Large Cap Growth, SP Davis Value, SP INVESCO Small Company
Growth, SP Small/Mid Cap Value, AIM V.I. Value Fund, American Century Income &
Growth Fund, American Century VP Value Fund, Dreyfus MidCap Stock Portfolio,
Dreyfus Small Cap Portfolio, Franklin Small Cap Fund, CORE(SM) Small Cap
Equity Fund, INVESCO Technology Fund, INVESCO Utilities Fund, Janus Aggressive
Growth Portfolio, Janus Balanced Portfolio, Janus Growth Portfolio, Janus
International Growth Portfolio, MFS Emerging Growth Series, Oppenheimer
Aggressive Growth Fund, or T. Rowe Price International Stock Portfolio may be
desirable options if you are willing to accept such volatility in your Contract
values. Each equity portfolio involves different policies and investment risks.
You may prefer the somewhat greater protection against loss of principal (and
reduced chance of high total return) provided by the Diversified Bond and SP
PIMCO Total Return Portfolios. You may want even greater safety of principal and
may prefer the Money Market Portfolio, recognizing that the level of short-term
rates may change rather rapidly. If you are willing to take risks and possibly
achieve a higher total return, you may prefer the High Yield Bond Portfolio and
the SP PIMCO High Yield Portfolio, recognizing that the risks are greater for
lower quality bonds with normally higher yields. You may wish to divide your
invested premium among two or more of the portfolios. You may wish to obtain
diversification by relying on Prudential's judgment for an appropriate asset mix
by choosing the Conservative Balanced or Flexible Managed Portfolio.
11
<PAGE>
Your choice should take into account your willingness to accept investment
risks, how your other assets are invested, and what investment results you may
experience in the future. You should consult your Pruco Life of New Jersey
representative from time to time about the choices available to you under the
Contract. Pruco Life of New Jersey recommends AGAINST frequent transfers among
the several options. Experience generally indicates that "market timing"
investing, particularly by non-professional investors, is likely to prove
unsuccessful.
DETAILED INFORMATION FOR
PROSPECTIVE CONTRACT OWNERS
CHARGES AND EXPENSES
This section provides a more detailed description of each charge that is
described briefly in the chart on page 3.
In several instances we will use the terms "maximum charge" and "current
charge." The "maximum charge," in each instance, is the highest charge that
Pruco Life of New Jersey is entitled to make under the Contract. The "current
charge" is the lower amount that Pruco Life of New Jersey is now charging. If
circumstances change, we reserve the right to increase each current charge, up
to the maximum charge, without giving any advance notice.
DEDUCTIONS FROM PREMIUM PAYMENTS
(a) We charge up to 7.5% for taxes attributable to premiums. For these
purposes, "taxes attributable to premiums" shall include any federal,
state or local income, premium, excise, business or any other type of tax
(or component thereof) measured by or based upon the amount of premium
received by Pruco Life of New Jersey. That charge is made up of two parts
which currently equal a total of 3.75% of the premiums received. The first
part is a charge for state and local premium taxes. The current amount for
this first part is 2.5% of the premium. Tax rates vary from jurisdiction
to jurisdiction and generally range from 0.75% to 5%. Pruco Life of New
Jersey may collect more for this charge than it actually pays for state
and local premium taxes. The second part is for federal income taxes
measured by premiums, and it is currently equal to 1.25% of premiums. We
believe that this charge is a reasonable estimate of an increase in its
federal income taxes resulting from a 1990 change in the Internal Revenue
Code. It is intended to recover this increased tax.
(b) We will deduct a charge for sales expenses. This charge, often called a
"sales load", is deducted to compensate us for the cost of selling the
Contracts, including commissions, advertising and the printing and
distribution of prospectuses and sales literature. A portion of the sales
load may be returned to you if the Contract is surrendered during the
first four Contract years. See RETURN OF SALES CHARGES, below.
The amount used to determine the charge for sales expenses is called the
"segment allocation amount" in your Contract. It may also be referred to
as the Target Premium. Target Premiums vary by the age, sex (except where
unisex rates apply), smoking status, and rating class of the insured and
will drop to zero after 10 years. Each coverage segment has its own Target
Premium. Target Premiums for each coverage segment are shown in the
Segment Table located in your Contract data pages.
For the first ten years of each coverage segment we charge up to 15% of
premiums received each year up to the Target Premium and up to 2% on any
excess. In years 11 and later of each coverage segment, we charge up to 2%
of premiums received. Currently, we charge 13 1/2% of premiums received up
to the Target Premium and 2% of any excess for the first 10 years of each
coverage segment. In years 11 and later of each coverage segment, we
currently charge 2% of premiums received. For information on determining
the sales expense charge if there are two or more coverage segments in
effect, see INCREASES IN BASIC INSURANCE AMOUNT, page 26.
Attempting to structure the timing and amount of premium payments to
reduce the potential sales load may increase the risk that your Contract
will lapse without value. In addition, there are circumstances where
payment of premiums that are too large may cause the Contract to be
characterized as a Modified Endowment Contract, which could be
significantly disadvantageous. See TAX TREATMENT OF CONTRACT BENEFITS,
page 30.
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RETURN OF SALES CHARGES
If the Contract is fully surrendered within the first four Contract years and it
is not in default, Pruco Life of New Jersey will return 50% of any sales charges
deducted from premiums paid within 24 months prior to the date Pruco Life of New
Jersey receives the surrender request at a Home Office.
DEDUCTIONS FROM PORTFOLIOS
We deduct an investment advisory fee daily from each portfolio of the Funds at a
rate, on an annualized basis, ranging from 0.35% for the Series Fund Stock Index
Portfolio to 1.05% for the T. Rowe Price International Stock Portfolio. The
expenses incurred in conducting the investment operations of the portfolios
(such as custodian fees and preparation and distribution of annual reports) are
paid out of the portfolio's income. These expenses also vary from portfolio to
portfolio.
The total expenses of each portfolio for the year ended December 31, 1999,
expressed as a percentage of the average assets during the year, are shown
below:
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO EXPENSES
-----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OTHER 12B-1 TOTAL TOTAL
ADVISORY FEE EXPENSES FEES CONTRACTUAL ACTUAL
EXPENSES EXPENSES*
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SERIES FUND
Money Market 0.40% 0.02% n/a 0.42% 0.42%
Diversified Bond 0.40% 0.03% n/a 0.43% 0.43%
Conservative Balanced 0.55% 0.02% n/a 0.57% 0.57%
Flexible Managed 0.60% 0.02% n/a 0.62% 0.62%
High Yield Bond 0.55% 0.05% n/a 0.60% 0.60%
Stock Index 0.35% 0.04% n/a 0.39% 0.39%
Equity Income 0.40% 0.02% n/a 0.42% 0.42%
Equity 0.45% 0.02% N/A 0.47% 0.47%
Prudential Jennison 0.60% 0.03% N/A 0.63% 0.63%
Global 0.75% 0.09% N/A 0.84% 0.84%
SP ALLIANCE LARGE CAP GROWTH 0.90% 0.20% N/A 1.10% 1.10%
SP DAVIS VALUE 0.75% 0.08% N/A 0.83% 0.83%
SP INVESCO SMALL COMPANY GROWTH 0.95% 0.20% N/A 1.15% 1.15%
SP PIMCO HIGH YIELD 0.60% 0.22% N/A 0.82% 0.82%
SP PIMCO TOTAL RETURN 0.60% 0.16% N/A 0.76% 0.76%
SP SMALL/MID CAP VALUE 0.90% 0.15% N/A 1.05% 1.05%
-----------------------------------------------------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS
AIM V.I. Value Fund 0.61% 0.15% N/A 0.76% 0.76%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. (1)
VP Income & Growth Fund 0.70% 0.00% N/A 0.70% 0.70%
VP Value Fund 1.00% 0.00% N/A 1.00% 1.00%
DREYFUS INVESTMENT PORTFOLIOS
MidCap Stock Portfolio 0.75% 0.71% N/A 1.46% 1.00%
DREYFUS VARIABLE INVESTMENT FUND
Small Cap Portfolio 0.75% 0.03% N/A 0.78% 0.78%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund - Class 2 0.55% 0.27% 0.25% 1.07% 1.07%
GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT) (2)
CORE(SM) Small Cap Equity Fund 0.75% 0.25% N/A 1.00% 1.00%
INVESCO VARIABLE INVESTMENT FUNDS, INC. (3)
VIF - Technology Fund 0.75% 0.78% N/A 1.53% 1.53%
VIF - Utilities Fund 0.60% 1.08% N/A 1.68% 1.68%
JANUS ASPEN SERIES
Aggressive Growth Portfolio - Service Shares 0.65% 0.02% 0.25% 0.92% 0.92%
Balanced Portfolio - Service Shares 0.65% 0.02% 0.25% 0.92% 0.92%
Growth Portfolio - Institutional Shares (4) 0.65% 0.02% N/A 0.67% 0.67%
International Growth Portfolio - Service Shares 0.65% 0.11% 0.25% 1.01% 1.01%
MFS(R) VARIABLE INSURANCE TRUSTSM (5)
Emerging Growth Series 0.75% 0.09% N/A 0.84% 0.84%
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Aggressive Growth Fund/VA (Service Shares) 0.66% 0.01% 0.15% 0.82% 0.82%
T. ROWE PRICE INTERNATIONAL SERIES, INC. (1)
International Stock Portfolio 1.05% 0.00% N/A 1.05% 1.05%
-----------------------------------------------------------------------------------------------------------------------------
* Reflects fee waivers, reimbursement of expenses, or expense reductions, if any.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. / T. ROWE PRICE INTERNATIONAL
SERIES, INC.
The Investment Advisory Fee includes the ordinary expenses of operating the
Fund.
(2) GOLDMAN SACHS VARIABLE INSURANCE TRUST (VIT)
The Investment Adviser had voluntarily agreed to reduce or limit certain
Other Expenses to the extent such expenses exceed the percentage stated in
the table above (as calculated per annum) of each Fund's respective average
daily net assets.
(3) INVESCO VARIABLE INVESTMENT FUNDS, INC.
The expense information presented in the table has been restated from the
financials to reflect a change in the administrative services fee. Certain
expenses of the Fund were absorbed voluntarily by INVESCO in order to ensure
that expenses for the Fund did not exceed 1.25% for the Technology Fund and
1.15% for the Utilities Fund.
14
<PAGE>
(4) JANUS ASPEN SERIES
The table reflects expenses based on expenses for the fiscal year ended
December 31, 1999, restated to reflect a reduction in the management fee.
All expenses are shown without the effect of expense offset arrangements.
(5) MFS(RM) VARIABLE INSURANCE TRUST(SM)
The 0.09% on "Other Expenses" does not take into account a 0.01% expense
offset arrangement with the Fund's custodian and is therefore higher than
the actual expenses of the Series.
THE EXPENSES RELATING TO THE FUNDS (OTHER THAN THOSE OF THE SERIES FUND) HAVE
BEEN PROVIDED TO PRUCO LIFE OF NEW JERSEY BY THE FUNDS. PRUCO LIFE OF NEW JERSEY
HAS NOT INDEPENDENTLY VERIFIED THEM.
DAILY DEDUCTION FROM THE CONTRACT FUND
Each day we deduct a charge from the assets of each of the variable investment
options in an amount equivalent to an effective annual rate of up to 0.50%.
Currently, we intend to charge 0.20%. This charge is intended to compensate
Pruco Life of New Jersey for assuming mortality and expense risks under the
Contract. The mortality risk assumed is that insureds may live for shorter
periods of time than Pruco Life of New Jersey estimated when it determined what
mortality charge to make. The expense risk assumed is that expenses incurred in
issuing and administering the Contract will be greater than Pruco Life of New
Jersey estimated in fixing its administrative charges.
MONTHLY DEDUCTIONS FROM THE CONTRACT FUND
Pruco Life of New Jersey deducts the following monthly charges proportionately
from the dollar amounts held in each of the chosen investment option[s].
(a) An administrative charge based on the basic insurance amount is deducted.
The charge is intended to compensate us for things like processing claims,
keeping records and communicating with Contract owners. Currently, the
charge is equal to $10 per month. Pruco Life of New Jersey reserves the
right, however to charge up to $10 per Contract plus $0.05 per $1,000 of
basic insurance amount each month.
For example, a Contract with a basic insurance amount of $100,000 would
currently have a charge equal to $10. The maximum charge for this same
Contract would be $10 plus $5 for a total of $15 per month.
(b) A cost of insurance ("COI") charge is deducted. When an insured dies, the
amount payable to the beneficiary (assuming there is no Contract debt) is
larger than the Contract Fund - significantly larger if the insured dies in
the early years of a Contract. The cost of insurance charges collected from
all Contract owners enables Pruco Life of New Jersey to pay this larger
death benefit. The maximum COI charge is determined by multiplying the "net
amount at risk" under a Contract (the amount by which the Contract's death
benefit exceeds the Contract Fund) by maximum COI rates. The maximum COI
rates are based upon the 1980 Commissioners Standard Ordinary ("CSO")
Tables and an insured's current attained age, sex (except where unisex
rates apply), smoker/non-smoker status, and extra rating class, if any. At
most ages, Pruco Life of New Jersey's current COI rates are lower than the
maximum rates. For additional information, see INCREASES IN BASIC INSURANCE
AMOUNT, page 26.
(c) You may add a Target Term Rider to the Contract. If you add this rider to
the basic Contract, additional charges will be deducted.
(d) If an insured is in a substandard risk classification (for example, a
person in a hazardous occupation), additional charges will be deducted.
(e) Although the Account is registered as a unit investment trust, it is not a
separate taxpayer for purposes of the Code. The earnings of the Account are
taxed as part of the operations of Pruco Life. Currently, no charge is
being made to the Account for Pruco Life's federal income taxes. We will
review the question of a charge to the Account for Pruco Life's federal
income taxes periodically. Such a charge may be made in the future for any
federal income taxes that would be attributable to the Account.
Under current law, Pruco Life may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes are not
significant and they are not charged against the Account. If there is a
material change in the applicable state or local tax laws, the imposition
of any such taxes upon Pruco Life that are attributable to the Account may
result in a corresponding charge against the Account.
15
<PAGE>
TRANSACTION CHARGES
(a) We currently charge an administrative processing fee equal to the lesser of
$25 or 2% of the withdrawal amount in connection with each withdrawal.
(b) We currently do not charge an administrative processing fee in connection
with a change in basic insurance amount. We reserve the right to make such a
charge in an amount of up to $25 for any change in basic insurance amount.
(c) We will charge an administrative processing fee of up to $25 for each
transfer exceeding 12 in any Contract year.
(d) We may charge an administrative processing fee of up to $25 for any change
in the Target Term Rider coverage amount for Contracts with this rider.
REDUCTION OF CHARGES
We reserve the right to reduce the sales charges and/or other charges on certain
multiple life sales, where it is expected that the amount or nature of such
multiple sales will result in savings of sales, administrative or other costs.
We determine both the eligibility for such reduced charges, as well as the
amount of such reductions, by considering the following factors:
(1) the number of individuals;
(2) the total amount of premium payments expected to be received from these
Contracts;
(3) the nature of the association between these individuals, and the
expected persistency of the individual Contracts;
(4) the purpose for which the individual Contracts are purchased and
whether that purpose makes it likely that costs will be reduced; and
(5) any other circumstances which we believe to be relevant in determining
whether reduced costs may be expected.
Some of the reductions in charges for these sales may be contractually
guaranteed. We may withdraw or modify other reductions on a uniform basis. Our
reductions in charges for these Contracts will not be unfairly discriminatory to
the interests of any Contract owners.
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
Pruco Life of New Jersey offers the Contract on a fully underwritten, simplified
issue, and guaranteed issue basis. Fully underwritten Contracts require
individualized evidence of the insured's insurability and rating class.
Simplified issue Contracts reflect underwriting risk factors related to the
issue of the Contract as one of several Contracts requiring some medical
underwriting of the proposed insureds. Conversely, guaranteed issue Contracts
are issued with minimal underwriting but may only be issued in certain
circumstances on associated individuals, such as employees of a company who meet
criteria established by Pruco Life of New Jersey. PRUSELECT (SM) III Contracts
issued in New York are not eligible for simplified issue.
Pruco Life of New Jersey sets minimum face amounts that it offers. The minimum
face amount offered may depend on whether the Contract is issued on a fully
underwritten, simplified issue or guaranteed issue basis. Currently, the minimum
total face amount (basic insurance amount plus any Target Term Rider coverage
amount combined) that can be applied for is $100,000 for all three
aforementioned underwriting bases. If the Target Term Rider is added to the
Contract, neither the basic insurance amount nor the rider coverage amount can
be less than $5,000. See RIDERS, page 18. Pruco Life of New Jersey may reduce
the minimum face amounts of the Contracts it will issue. Furthermore, the
Contract owner may establish a schedule under which the basic insurance amount
increases on designated Contract anniversaries. See INCREASES IN BASIC INSURANCE
AMOUNT, page 26.
Generally, the Contract may be issued on insureds between the ages of 20 and 75
for fully underwritten Contracts and between the ages of 20 and 64 for
simplified and guaranteed issue Contracts. In its discretion, Pruco Life of New
Jersey may issue the Contract on insureds of other ages.
16
<PAGE>
SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK"
Generally, you may return the Contract for a refund within 10 days after you
receive it. You can request a refund by mailing or delivering the Contract to
the representative who sold it or to the Home Office specified in the Contract.
A Contract returned according to this provision shall be deemed void from the
beginning. You will then receive a refund of all premium payments made, plus or
minus any change due to investment experience. However, if applicable law so
requires and you exercise your short-term cancellation right, you will receive a
refund of all premium payments made, with no adjustment for investment
experience. For information on how premium payments are allocated during the
"free-look" period, see ALLOCATION OF PREMIUMS, page 20.
TYPES OF DEATH BENEFIT
You may select from three types of death benefits. Generally, a Contract with a
Type A (fixed) death benefit has a death benefit equal to the basic insurance
amount. This type of death benefit does not vary with the investment performance
of the investment options you selected, except in certain circumstances. See HOW
A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY, page 22. The payment of
additional premiums and favorable investment results of the variable investment
options to which the assets are allocated will generally increase the cash
value. See HOW A CONTRACT'S SURRENDER VALUE WILL VARY, page 22.
A Contract with a Type B (variable) death benefit has a death benefit which will
generally equal the basic insurance amount plus the Contract Fund. Since the
Contract Fund is a part of the death benefit, favorable investment performance
and payment of additional premiums generally result in an increase in the death
benefit as well as in the cash value. Over time, however, the increase in the
cash value will be less than under a Type A (fixed) Contract. This is because,
given two Contracts with the same basic insurance amount and equal Contract
Funds, generally the cost of insurance charge for a Type B (variable) Contract
will be greater. Unfavorable investment performance will result in decreases in
the death benefit and in the cash value. But, as long as the Contract is not in
default, the death benefit may not fall below the basic insurance amount stated
in the Contract. See HOW A CONTRACT'S SURRENDER VALUE WILL VARY, page 22 and HOW
A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY, page 23.
A Contract with a Type C (return of premium) death benefit has a death benefit
which will generally equal the basic insurance amount plus the total premiums
paid into the Contract less withdrawals, accumulated at an interest rate
(between 0% and 8%; in 1/2% increments) chosen by the Contract owner to the date
of death. This death benefit allows the Contract owner, in effect, to recover
the cost of the Contract, plus a predetermined rate of return, upon the death of
the insured. Under certain circumstances, it is possible for a Type C Contract's
death benefit to fall below the basic insurance amount. Favorable investment
performance and payment of additional premiums will generally increase the
Contract's cash value. Over time, however, the increase in cash value will be
less than under a Type A (fixed) Contract. See HOW A CONTRACT'S SURRENDER VALUE
WILL VARY, page 22 and HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT
WILL VARY, page 24.
In choosing a death benefit type, you should also consider whether you intend to
use the withdrawal feature. Contract owners of Type A (fixed) Contracts should
note that any withdrawal may result in a reduction of the basic insurance
amount. In addition, we will not allow you to make a withdrawal that will
decrease the basic insurance amount below the minimum basic insurance amount.
Furthermore, the sum of the basic insurance amount and the Target Term Rider
must equal or exceed $100,000. See REQUIREMENTS FOR ISSUANCE OF A CONTRACT, page
16. For Type B (variable) and Type C (return of premium) Contracts, withdrawals
will not change the basic insurance amount. See WITHDRAWALS, page 25.
CHANGING THE TYPE OF DEATH BENEFIT
You may change the type of death benefit at any time and subject to Pruco Life
of New Jersey's approval. We will increase or decrease the basic insurance
amount so that the death benefit immediately after the change matches the death
benefit immediately before the change.
If you are changing your Contract's type of death benefit from a Type A (fixed)
to a Type B (variable) death benefit, we will reduce the basic insurance amount
by the amount in your Contract Fund on the date the change takes place.
17
<PAGE>
If you are changing from a Type A (fixed) to a Type C (return of premium) death
benefit, we will change the basic insurance amount by subtracting the total
premiums paid on this Contract minus total withdrawals on the date the change
takes effect.
If you are changing from a Type B (variable) to a Type A (fixed) death benefit,
we will increase the basic insurance amount by the amount in your Contract Fund
on the date the change takes place.
If you are changing from a Type B (variable) to a Type C (return of premium)
death benefit, we first find the difference between: (1) the amount in your
Contract Fund and (2) the total premiums paid on this Contract minus total
withdrawals, determined on the date the change takes effect. If (1) is larger
than (2), we will increase the basic insurance amount by that difference. If (2)
is larger than (1), we will reduce the basic insurance amount by that
difference.
If you are changing from a Type C (return of premium) to a Type A (fixed) death
benefit, we will change the basic insurance amount by adding the total premiums
paid minus total withdrawals to this Contract both accumulated with interest at
the rate(s) chosen by the Contract owner on the date the change takes place.
If you are changing from a Type C (return of premium) to a Type B (variable)
death benefit, we first find the difference between: (1) the Contract Fund and
(2) the total premiums paid minus total withdrawals to this Contract both
accumulated with interest at the rate(s) chosen by the Contract owner as of the
date the change takes place. If (2) is larger than (1), we will increase the
basic insurance amount by that difference. If (1) is larger than (2), we will
reduce the basic insurance amount by that difference.
The basic insurance amount after a change may not be lower than the minimum
basic insurance amount applicable to the Contract. In addition, the sum of the
basic insurance amount and the Target Term Rider must equal or exceed $100,000.
See REQUIREMENTS FOR ISSUANCE OF A CONTRACT, page 16. We reserve the right to
make an administrative processing charge of up to $25 for any change in the
basic insurance amount, although we do not currently do so. See CHARGES AND
EXPENSES, page 12.
The following chart illustrates the changes in basic insurance amount with each
change of death benefit type described above. The chart assumes a $50,000
Contract Fund and a $300,000 death benefit. For changes to and from a Type C
death benefit, the chart assumes $40,000 in total premiums minus total
withdrawals and the rate chosen to accumulate premiums minus withdrawals is 0%.
--------------------------------------------------------------------
BASIC INSURANCE AMOUNT
====================================================================
FROM TO
--------------------------------------------------------------------
TYPE A TYPE B TYPE C
$300,000 $250,000 $260,000
--------------------------------------------------------------------
TYPE B TYPE A TYPE C
$250,000 $300,000 $260,000
--------------------------------------------------------------------
TYPE C TYPE A TYPE B
$260,000 $300,000 $250,000
--------------------------------------------------------------------
To request a change, fill out an application for change which can be obtained
from your Pruco Life of New Jersey representative or a Home Office. If the
change is approved, we will recompute the Contract's charges and appropriate
tables and send you new Contract data pages. We may require you to send us your
Contract before making the change.
RIDERS
Contract owners may be able to obtain extra benefits which may involve an extra
charge. These optional insurance benefits will be described in what is known as
a "rider" to the Contract. Charges applicable to riders will be deducted from
the Contract Fund on each Monthly date.
18
<PAGE>
TARGET TERM RIDER
The Target Term Rider provides a flexible term insurance benefit to attained age
100 on the life of the insured. The Contract owner specifies the amount of term
rider coverage he or she desires. This amount is called the rider coverage
amount and is the maximum death benefit payable under the rider. The sum of the
base Contract's basic insurance amount and the rider coverage amount equals the
target coverage amount. The Rider death benefit fluctuates as the base
Contract's death benefit changes, as described below. See TAX TREATMENT OF
CONTRACT BENEFITS, page 30.
When the Contract Fund has not grown to the point where the base Contract's
death benefit is increased to satisfy the Internal Revenue Code's definition of
life insurance, the rider death benefit equals the rider coverage amount.
However, once the Contract Fund has grown to the point where the base Contract's
death benefit begins to vary as required by the Internal Revenue Code's
definition of life insurance, the rider's death benefit will decrease (or
increase) dollar for dollar as the base Contract's death benefit increases (or
decreases). It is possible for the Contract Fund and, consequently, the base
Contract's death benefit to grow to the point where the rider death benefit is
reduced to zero. As we state above, however, the rider death benefit will never
increase beyond the rider coverage amount. In addition, you may change the rider
coverage amount once each Contract year while the rider is in-force.
$500,000 BASIC INSURANCE AMOUNT AND $500,000 TARGET TERM RIDER
TYPE A DEATH BENEFIT
[GRAPH]
The following factors should be considered when adding a Target Term Rider to
your Contract:
1. The sales expense charge for a Contract with a Target Term Rider is less
than that for an all base policy with the same death benefit. This is
because the sales expense charge is based on the Target Premium (referred
to as "segment allocation amount" in your Contract) of the Contract's basic
insurance amount (BIA) only. For example, consider two identical $1,000,000
policies; the first with a $1,000,000 BIA and the other with a $500,000 BIA
and $500,000 of rider coverage amount. The sales expense charge for the
first policy will be based on the Target Premium of a $1,000,000 BIA while
the sales expense charge for the second policy will be based on the Target
Premium of a $500,000 BIA only. See CHARGES AND EXPENSES, page 12.
2. The current Cost of Insurance (COI) is different for the basic insurance
amount and for the rider coverage amount. Cost of Insurance is determined
by multiplying the COI rates by the Contract's "net amount of risk." The
"net amount of risk" is the amount by which the Contract's death benefit
exceeds the Contract Fund. The COI rates for both the basic insurance
amount and the Target Term Rider will increase annually. However, current
COI rates for the Target Term Rider are less than the current rates for the
basic insurance amount death benefit for the first ten years, but are
greater thereafter.
3. You may increase or decrease both your basic insurance amount and rider
coverage amount after issue subject to the underwriting requirements
determined by Pruco Life of New Jersey. See INCREASES IN BASIC INSURANCE
AMOUNT, page 26 and DECREASES IN BASIC INSURANCE AMOUNT, page 27.
Increasing your basic insurance amount after issue increases your sales
expense charges on any premiums paid after the effective date of the
increase for that portion of the premium allocated to the new coverage
segment.
19
<PAGE>
4. The amount and timing of premium payments, loans, and withdrawals you make
under the Contract and your choice of definition of life insurance test
(see TAX TREATMENT OF CONTRACT BENEFITS, page 30) will all be factors in
determining the relative performance of a Contract with and without a
Target Term Rider.
5. Investment experience will be a factor in determining the relative
performance of a Contract with and without a Target Term Rider.
The five factors outlined above can have opposite effects on the financial
performance of a Contract, including the amount of the Contract's cash value and
death benefit. It is important that you ask your Pruco Life of New Jersey
representative to see illustrations based on different combinations of all of
the above. You can then discuss with your Pruco Life of New Jersey
representative how these combinations may address your objectives.
PREMIUMS
The Contract is a flexible premium contract. The minimum initial premium is due
on or before the Contract date. It is the premium needed to start the Contract.
There is no insurance under the Contract unless the minimum initial premium is
paid. Thereafter, you decide when to make premium payments and, subject to a $25
minimum, in what amounts. We reserve the right to refuse to accept any payment
that increases the death benefit by more than it increases the Contract Fund.
See HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY, page 22, HOW A TYPE
B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY, page 23 and HOW A TYPE C
(RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY, page 24. There are
circumstances under which the payment of premiums in amounts that are too large
may cause the Contract to be characterized as a Modified Endowment Contract,
which could be significantly disadvantageous. See TAX TREATMENT OF CONTRACT
BENEFITS, page 30.
We can bill you for the amount you select annually, semi-annually, quarterly or
monthly. Because the Contract is a flexible premium contract, there are no
premium due dates. When you receive a premium notice, you are not required to
pay this amount. The Contract will remain in-force if the Contract Fund is
greater than zero and more than any Contract debt. When you apply for the
Contract, you should discuss with your Pruco Life of New Jersey representative
how frequently you would like to be billed (if at all) and for what amount.
ALLOCATION OF PREMIUMS
On the Contract date, we deduct the charge for sales expenses and the charge for
taxes attributable to premiums from the initial premium. See CHARGES AND
EXPENSES, page 12. Also on the Contract date, the remainder of the initial
premium and any other premium received during the short-term cancellation right
("free-look") period, will be allocated to the Money Market investment option
and the first monthly deductions are made. At the end of the "free-look" period,
these funds will be allocated among the variable investment options according to
your desired allocation, as specified in the application form. See SHORT-TERM
CANCELLATION RIGHT OR "FREE-LOOK", page 17. If the first premium is received
before the Contract date, there will be a period during which the Contract
owner's initial premium will not be invested.
The charge for sales expenses and the charge for taxes attributable to premiums
also apply to all subsequent premium payments. The remainder of each subsequent
premium payment will be invested as of the end of the valuation period in which
it is received at a Home Office, in accordance with the allocation you
previously designated. Provided the Contract is not in default, you may change
the way in which subsequent premiums are allocated by giving written notice to a
Home Office or by telephoning a Home Office, provided you are enrolled to use
the Telephone Transfer System. There is no charge for reallocating future
premiums. All percentage allocations must be in whole numbers. For example, 33%
can be selected but 33% cannot. Of course, the total allocation to all
selected investment options must equal 100%. We will not permit a change in the
allocation that would cause the number of active investment options to exceed
sixteen.
TRANSFERS
You may, up to 12 times each Contract year, transfer amounts from one variable
investment option to another variable investment option without charge.
Additional transfers may be made during each Contract year, but only with our
consent. There is an administrative charge of up to $25 for each transfer made
exceeding 12 in any Contract year. All or a portion of the amount credited to a
variable investment option may be transferred. We will not permit a transfer
that would cause the number of active investment options to exceed sixteen.
20
<PAGE>
Transfers among variable investment options will take effect as of the end of
the valuation period in which a proper transfer request is received at a Home
Office. The request may be in terms of dollars, such as a request to transfer
$5,000 from one variable investment option to another, or may be in terms of a
percentage reallocation among variable investment options. In the latter case,
as with premium reallocations, the percentages must be in whole numbers. You may
transfer amounts by proper written notice to a Home Office or by telephone,
provided you are enrolled to use the Telephone Transfer System. You will
automatically be enrolled to use the Telephone Transfer System unless the
Contract is jointly owned or you elect not to have this privilege. Telephone
transfers may not be available on Contracts that are assigned (see ASSIGNMENT,
page 33), depending on the terms of the assignment.
We will use reasonable procedures, such as asking you to provide certain
personal information provided on your application for insurance, to confirm that
instructions given by telephone are genuine. We will not be held liable for
following telephone instructions that we reasonably believe to be genuine. Pruco
Life of New Jersey cannot guarantee that you will be able to get through to
complete a telephone transfer during peak periods such as periods of drastic
economic or market change.
The Contract was not designed for professional market timing organizations,
other organizations, or individuals using programmed, large, or frequent
transfers. A pattern of exchanges that coincides with a "market timing" strategy
may be disruptive to the investment option or to the disadvantage of other
contract owners. If such a pattern were to be found, we may modify your right to
make transfers by restricting the number, timing and amount of transfers. We
also reserve the right to prohibit transfer requests made by an individual
acting under a power of attorney on behalf of more than one contract owner.
DOLLAR COST AVERAGING
We offer a feature called Dollar Cost Averaging ("DCA"). Under this feature,
either fixed dollar amounts or a percentage of the amount designated for use
under the DCA option will be transferred periodically from the DCA Money Market
investment option into variable investment options available under the Contract.
You may choose to have periodic transfers made monthly or quarterly. DCA
transfers will not begin until the end of the "free-look" period. See SHORT-TERM
CANCELLATION RIGHT OR "FREE-LOOK", page 17.
Each automatic transfer will take effect as of the end of the valuation period
on the date coinciding with the periodic timing you designate provided the New
York Stock Exchange is open on that date. If the New York Stock Exchange is not
open on that date, or if the date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. Automatic transfers will continue until: (1) $50
or less remains of the amount designated for Dollar Cost Averaging, at which
time the remaining amount will be transferred; or (2) you give us notification
of a change in DCA allocation or cancellation of the feature. Currently, a
transfer that occurs under the DCA feature is not counted towards the 12 free
transfers permitted each Contract year. We reserve the right to change this
practice, modify the requirements, or discontinue the feature.
AUTO-REBALANCING
As an administrative practice, we are currently offering a feature called
Auto-Rebalancing. This feature allows you to automatically rebalance assets in
the variable investment options at specified intervals based on percentage
allocations that you choose. For example, suppose your initial investment
allocation of variable investment options X and Y is split 40% and 60%,
respectively. Then, due to investment results, that split changes. You may
instruct that those assets be rebalanced to your original or different
allocation percentages. Auto-Rebalancing is not available until the end of the
"free-look" period. See SHORT-TERM CANCELLATION RIGHT OR "FREE-LOOK", page 17.
Auto-Rebalancing can be performed on a quarterly, semi-annual, or annual basis.
Each rebalance will take effect as of the end of the valuation period on the
date coinciding with the periodic timing you designate provided the New York
Stock Exchange is open on that date. If the New York Stock Exchange is not open
on that date, or if the date does not occur in that particular month, the
transfer will take effect as of the end of the valuation period which
immediately follows that date. Currently, a transfer that occurs under the
Auto-Rebalancing feature is not counted towards the 12 free transfers permitted
each Contract year. We reserve the right to change this practice, modify the
requirements or discontinue the feature.
21
<PAGE>
HOW A CONTRACT'S SURRENDER VALUE WILL VARY
You may surrender the Contract for its surrender value. The Contract's surrender
value on any date will be the Contract Fund less any Contract debt plus any
return of sales charges. See CONTRACT LOANS, page 30 and RETURN OF SALES
CHARGES, page 13. The Contract Fund value changes daily, reflecting: (1)
increases or decreases in the value of the variable investment option[s]; (2)
interest credited on any loan; and (3) the daily asset charge for mortality and
expense risks assessed against the variable investment options. The Contract
Fund value also changes to reflect the receipt of premium payments and the
monthly deductions described under CHARGES AND EXPENSES, page 12. Upon request,
Pruco Life of New Jersey will tell you the surrender value of your Contract. It
is possible for the surrender value of a Contract to decline to zero because of
unfavorable investment performance or outstanding Contract debt.
The tables on pages T1 through T10 of this prospectus illustrate approximately
what the surrender values would be for representative Contracts, assuming
hypothetical uniform investment results in the Fund portfolios. See
ILLUSTRATIONS OF SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS,
page 28.
HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL VARY
As described earlier, there are three types of death benefit available under the
Contract: (1) Type A, a generally fixed death benefit; (2) Type B, a variable
death benefit and; (3) Type C, a return of premium death benefit. A Type B
(variable) death benefit varies with investment performance while Type A (fixed)
and Type C (return of premium) death benefits do not, unless they must be
increased to comply with the Internal Revenue Code's definition of life
insurance.
Under a Type A (fixed) Contract, the death benefit is generally equal to the
basic insurance amount. If the Contract is kept in-force for several years,
depending on how much premium you pay, and/or if investment performance is
reasonably favorable, the Contract Fund may grow to the point where Pruco Life
of New Jersey will increase the death benefit in order to ensure that the
Contract will satisfy the Internal Revenue Code's definition of life insurance.
The death benefit under a Type A (fixed) Contract will always be the greater of:
(1) the basic insurance amount; and
(2) the Contract Fund before the deduction of any monthly charges due on
that date plus any return of sales charges, multiplied by the attained
age factor that applies.
A listing of attained age factors can be found on your Contract data pages. The
second provision ensures that the Contract will always have a death benefit
large enough to be treated as life insurance for tax purposes under current law.
Before the Contract is issued, the Contract owner may choose between two methods
that we use to determine the tax treatment of the Contract. See TAX TREATMENT OF
CONTRACT BENEFITS, page 30, for a discussion of these methods and the impact of
each on the Contract's values, benefits and tax status.
The following table illustrates at different ages how the attained age factor
affects the death benefit for different Contract Fund amounts. The table assumes
that a $250,000 Type A (fixed) Contract was issued when the insured was a male
nonsmoker, age 35.
22
<PAGE>
TYPE A (FIXED) DEATH BENEFIT
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
IF THEN
--------------------------------------------- ---------------------------------------------------------------------------
THE AND THE CONTRACT THE ATTAINED AGE THE CONTRACT FUND
INSURED FUND IS FACTOR IS** MULTIPLIED BY THE ATTAINED AND THE DEATH
IS AGE AGE FACTOR IS BENEFIT IS
----------------------- --------------------- -------------------- ---------------------------- -------------------------
<S> <C> <C> <C> <C>
40 $ 25,000 3.57 89,250 $250,000
40 $ 75,000 3.57 267,750 $267,750*
40 $100,000 3.57 357,000 $357,000*
----------------------- --------------------- -------------------- ---------------------------- -------------------------
60 $ 75,000 1.92 144,000 $250,000
60 $125,000 1.92 240,000 $250,000
60 $150,000 1.92 288,000 $288,000*
----------------------- --------------------- -------------------- ---------------------------- -------------------------
80 $150,000 1.26 189,000 $250,000
80 $200,000 1.26 252,000 $252,000*
80 $225,000 1.26 283,500 $283,500*
----------------------- --------------------- -------------------- ---------------------------- -------------------------
</TABLE>
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract Owner selected the Cash Value Accumulation Test.
--------------------------------------------------------------------------------
This means, for example, that if the insured has reached the age of 60, and the
Contract Fund is $150,000, the death benefit will be $288,000, even though the
basic insurance amount is $250,000. In this situation, for every $1 increase in
the Contract Fund, the death benefit will be increased by $1.92. We reserve the
right to refuse to accept any premium payment that increases the death benefit
by more than it increases the Contract Fund.
HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY
Under a Type B (variable) Contract, while the Contract is in-force, the death
benefit will never be less than the basic insurance amount, but will also vary,
immediately after it is issued, with the investment results of the selected
variable investment options. The death benefit may be further increased to
ensure that the Contract will satisfy the Internal Revenue Code's definition of
life insurance.
The death benefit under a Type B (variable) Contract will always be the greater
of:
(1) the basic insurance amount plus the Contract Fund before the deduction
of any monthly charges due on that date; and
(2) the Contract Fund before the deduction of any monthly charges due on
that date plus any return of sales charges, multiplied by the attained
age factor that applies.
For purposes of computing the death benefit, if the Contract Fund is less than
zero we will consider it to be zero. A listing of attained age factors can be
found on your Contract data pages. The latter provision ensures that the
Contract will always have a death benefit large enough to be treated as life
insurance for tax purposes under current law. Before the Contract is issued, the
Contract owner may choose between two methods that we use to determine the tax
treatment of the Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 30, for
a discussion of these methods and the impact of each on the Contract's values,
benefits and tax status.
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type B
(variable) Contract was issued when the insured was a male nonsmoker, age 35.
23
<PAGE>
TYPE B (VARIABLE) DEATH BENEFIT
<TABLE>
<CAPTION>
-------------------------------------------- -----------------------------------------------------------------------------
IF THEN
-------------------------------------------- -----------------------------------------------------------------------------
THE AND THE CONTRACT THE ATTAINED AGE THE CONTRACT FUND
INSURED FUND IS FACTOR IS ** MULTIPLIED BY THE ATTAINED AND THE DEATH
IS AGE AGE FACTOR IS BENEFIT IS
----------------------- -------------------- --------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
40 $ 25,000 3.57 89,250 $275,000
40 $ 75,000 3.57 267,750 $325,000
40 $100,000 3.57 357,000 $357,000*
----------------------- -------------------- --------------------- --------------------------- ---------------------------
60 $ 75,000 1.92 144,000 $325,000
60 $125,000 1.92 240,000 $375,000
60 $150,000 1.92 288,000 $400,000
----------------------- -------------------- --------------------- --------------------------- ---------------------------
80 $150,000 1.26 189,000 $400,000
80 $200,000 1.26 252,000 $450,000
80 $225,000 1.26 283,500 $475,000
----------------------- -------------------- --------------------- --------------------------- ---------------------------
</TABLE>
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract Owner selected the Cash Value Accumulation Test.
--------------------------------------------------------------------------------
This means, for example, that if the insured has reached the age of 40, and the
Contract Fund is $100,000, the death benefit will be $357,000, even though the
basic insurance amount is $250,000. In this situation, for every $1 increase in
the Contract Fund, the death benefit will be increased by $3.57. We reserve the
right to refuse to accept any premium payment that increases the death benefit
by more than it increases the Contract Fund.
HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY
Under a Type C (return of premium) Contract, while the Contract is in-force, the
death benefit will be the greater of:
(1) the basic insurance amount plus the total premiums paid into the
Contract less any withdrawals, accumulated at an interest rate (between
0% and 8%; in 1/2% increments) chosen by the Contract owner to the date
of death; and
(2) the Contract Fund before the deduction of monthly charges due on that
date plus any return of sales charges, multiplied by the attained age
factor that applies.
A listing of attained age factors can be found on your Contract data pages. The
latter provision ensures that the Contract will always have a death benefit
large enough so that the Contract will be treated as life insurance for tax
purposes under current law. Before the Contract is issued, the Contract owner
may choose between two methods that we use to determine the tax treatment of the
Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 30, for a discussion of
these methods and the impact of each on the Contract's values, benefits and tax
status.
Unlike Type A and Type B Contracts, the death benefit of a Type C Contract may
be less than the basic insurance amount in the event total withdrawals plus
interest is greater than total premiums paid plus interest.
The following table illustrates various attained age factors and Contract Funds
and the corresponding death benefits. The table assumes a $250,000 Type C
(return of premium) Contract was issued when the insured was a male nonsmoker,
age 35.
24
<PAGE>
TYPE C (RETURN OF PREMIUM) DEATH BENEFIT
<TABLE>
<CAPTION>
------------------------------------------------------------------ ----------------------------------------------------------------
IF THEN
------------------------------------------------------------------ ----------------------------------------------------------------
AND THE
PREMIUMS PAID THE CONTRACT FUND
THE AND THE CONTRACT LESS ANY THE ATTAINED AGE MULTIPLIED BY THE AND THE DEATH
INSURED FUND IS WITHDRAWALS WITH FACTOR IS** ATTAINED AGE FACTOR IS BENEFIT IS
IS AGE INTEREST EQUALS
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
40 $ 25,000 $15,000 3.57 89,250 $265,000
40 $ 75,000 $60,000 3.57 267,750 $310,000
40 $100,000 $80,000 3.57 357,000 $357,000*
------------------- ------------------- -------------------------- ------------------- ------------------------- ------------------
60 $ 75,000 $ 60,000 1.92 144,000 $310,000
60 $125,000 $100,000 1.92 240,000 $350,000
60 $150,000 $125,000 1.92 288,000 $375,000
------------------- ------------------- -------------------------- ------------------- ------------------------- ------------------
80 $150,000 $125,000 1.26 189,000 $375,000
80 $200,000 $150,000 1.26 252,000 $400,000
80 $225,000 $175,000 1.26 283,500 $425,000
------------------- ------------------- -------------------------- ------------------- ------------------------- ------------------
</TABLE>
* Note that the death benefit has been increased to comply with the Internal
Revenue Code's definition of life insurance.
** Assumes the Contract owner selected the Cash Value Accumulation Test.
This means, for example, that if the insured has reached the age of 40, and the
premiums paid with interest less any withdrawals equals $80,000, the death
benefit will be $357,000, even though the basic insurance amount is $250,000. In
this situation, for every $1 increase in the Contract Fund, the death benefit
will be increased by $3.57. We reserve the right to refuse to accept any premium
payment that increases the death benefit by more than it increases the Contract
Fund.
SURRENDER OF A CONTRACT
A Contract may be surrendered for its net cash value (or for a fixed reduced
paid-up insurance benefit in New York state) while the insured is living. To
surrender a Contract, we may require you to deliver or mail the Contract with a
written request in a form that meets Pruco Life of New Jersey's needs, to a Home
Office. The surrender value of a surrendered Contract will be determined as of
the end of the valuation period in which such a request is received in a Home
Office. If the Contract is fully surrendered within the first four Contract
years, you may be entitled to a return of sales charges. See CHARGES AND
EXPENSES, page 12. Surrender of a Contract may have tax consequences. See TAX
TREATMENT OF CONTRACT BENEFITS, page 30.
Fixed reduced paid-up insurance (available in New York state only) provides
paid-up insurance, the amount of which will be paid when the insured dies. There
will be cash values and loan values. The loan interest rate for fixed reduced
paid-up insurance is 5%. Upon surrender of the Contract, the amount of fixed
reduced paid-up insurance depends upon the net cash value and the insured's
issue age, sex, smoker/non-smoker status, and the length of time since the
Contract date.
WITHDRAWALS
Under certain circumstances, you may withdraw a portion of the Contract's net
cash value without surrendering the Contract. The withdrawal amount is limited
by the requirement that the net cash value after the withdrawal may not be zero
or less than zero. The amount withdrawn must be at least $500. There is an
administrative processing fee for each withdrawal which is the lesser of: (a)
$25 and; (b) 2% of the withdrawal amount. An amount withdrawn may not be repaid
except as a premium subject to the applicable charges. Upon request, we will
tell you how much you may withdraw. Withdrawals may have tax consequences. See
TAX TREATMENT OF CONTRACT BENEFITS, page 30.
25
<PAGE>
Generally, whenever a withdrawal is made, the death benefit will be immediately
reduced by at least the amount of the withdrawal. Withdrawals under Type B
(variable) and Type C (return of premium) Contracts, will not change the basic
insurance amount. However, under a Type A (fixed) Contract, the withdrawal may
require a reduction in the basic insurance amount, unless you provide evidence
that the insured is insurable for the increase in net amount at risk. In
addition, no withdrawal will be permitted under a Type A (fixed) Contract if it
would result in a basic insurance amount of less than the minimum basic
insurance amount. Furthermore, the sum of the basic insurance amount and the
Target Term Rider must equal or exceed $100,000. See REQUIREMENTS FOR ISSUANCE
OF A CONTRACT, page 16. It is important to note, however, that if the basic
insurance amount is decreased, there is a possibility that the Contract might be
classified as a Modified Endowment Contract. See TAX TREATMENT OF CONTRACT
BENEFITS, page 30. Before making any withdrawal which causes a decrease in basic
insurance amount, you should consult with your tax adviser and your Pruco Life
of New Jersey representative.
When a withdrawal is made, the Contract Fund is reduced by the sum of the cash
withdrawn and the withdrawal fee. An amount equal to the reduction in the
Contract Fund will be withdrawn proportionally from the investment options
unless you direct otherwise.
Withdrawals increase the risk that the Contract Fund may be insufficient to
provide Contract benefits. If such a withdrawal is followed by unfavorable
investment experience, the Contract may go into default.
LAPSE AND REINSTATEMENT
Pruco Life of New Jersey will determine the value of the Contract Fund on each
Monthly date. If the Contract Fund is zero or less, the Contract is in default.
If the Contract debt ever grows to be equal to or more than the Contract Fund,
the Contract will be in default. Should this happen, Pruco Life of New Jersey
will send you a notice of default setting forth the payment which we estimate
will keep the Contract in-force for three months from the date of default. This
payment must be received at a Home Office within the 61-day grace period after
the notice of default is mailed or the Contract will end and have no value. A
Contract that lapses with an outstanding Contract loan may have tax
consequences. See TAX TREATMENT OF CONTRACT BENEFITS, page 30.
A Contract that ended in default may be reinstated within 5 years after the date
of default if the following conditions are met: (1) renewed evidence of
insurability is provided on the insured; (2) submission of certain payments
sufficient to bring the Contract up to date plus a premium that we estimate will
cover all charges and deductions for the next three months; and (3) any Contract
debt with interest to date must be restored or paid back. If the Contract debt
is restored and the debt with interest would exceed the loan value of the
reinstated Contract, the excess must be paid to us before reinstatement. The
reinstatement date will be the Monthly date that coincides with or next follows
the date we approve your request. We will deduct all required charges from your
payment and the balance will be placed into your Contract Fund.
INCREASES IN BASIC INSURANCE AMOUNT
Subject to state approval and subject to the underwriting requirements
determined by Pruco Life of New Jersey, you may increase the amount of insurance
by increasing the basic insurance amount of the Contract. We will allow up to 98
increases during the life of the Contract. The following conditions must be met:
(1) you must ask for the change in a form that meets Pruco Life of New
Jersey's needs;
(2) the amount of the increase must be at least equal to the minimum
increase in basic insurance amount shown under CONTRACT LIMITATIONS in
your Contract data pages;
(3) you must prove to us that the insured is insurable for any increase;
(4) the Contract must not be in default; and
(5) if we ask you to do so, you must send us the Contract to be endorsed.
If we approve the change, we will send you new Contract data pages showing the
amount and effective date of the change and the recomputed charges, values and
limitations. If the insured is not living on the effective date, the change will
not take effect. No administrative processing charge is currently being made in
connection with an increase in basic insurance amount. We reserve the right to
make such a charge in an amount of up to $25.
26
<PAGE>
Furthermore, you may establish a schedule under which the basic insurance amount
increases on designated Contract anniversaries. The schedule of increases must
meet the following conditions:
(1) The amount of each scheduled increase must be at least equal to the
minimum increase in basic insurance amount shown under CONTRACT
LIMITATIONS in your Contract data pages.
(2) The amount of each scheduled increase cannot exceed:
(a) 20% of the underwritten death benefit (at issue, the underwritten
death benefit is equal to the face amount on the Contract date)
for increases scheduled to take place at attained ages up to and
including 65; or
(b) 10% of the underwritten death benefit for increases scheduled to
take place at attained ages from 66 up to and including 70.
(3) Increases cannot be scheduled to take place after attained age 70.
(4) The total face amount including scheduled increases can never exceed 4
times the underwritten death benefit for fully underwritten Contracts
or 2 times the underwritten death benefit for Contracts issued on a
simplified issue or guaranteed issue basis.
These are our current guidelines. We reserve the right to change these
conditions.
For sales load purposes, the Target Premium (referred to as "segment allocation
amount" in your Contract) is calculated separately for each coverage segment.
When premiums are paid, each premium payment is allocated to each coverage
segment based on the proportion of its Target Premium to the total of all Target
Premiums currently in effect. Currently, the sales load charge for each segment
is equal to 13 1/2% of the allocated premium paid in each Contract year up to
the Target Premium and 2% on any excess. See CHARGES AND EXPENSES, page 12.
The COI rates for an increase in basic insurance amount are based upon 1980 CSO
Tables, the age at the increase effective date and the number of years since
then, sex (except where unisex rates apply), smoker/nonsmoker status, and extra
rating class, if any. The net amount at risk for the whole Contract (the death
benefit minus the Contract Fund) is allocated to each basic insurance amount
segment based on the proportion of its basic insurance amount to the total of
all basic insurance amount segments. In addition, the attained age factor for a
Contract with an increase in basic insurance amount is based on the Insured's
attained age for the initial basic insurance amount segment. For a description
of attained age factor, see HOW A TYPE A (FIXED) CONTRACT'S DEATH BENEFIT WILL
VARY, page 22, HOW A TYPE B (VARIABLE) CONTRACT'S DEATH BENEFIT WILL VARY, page
23 and HOW A TYPE C (RETURN OF PREMIUM) CONTRACT'S DEATH BENEFIT WILL VARY, page
24.
Each Contract owner who elects to increase the basic insurance amount of his or
her Contract will receive a "free-look" right which will apply only to the
increase in basic insurance amount, not the entire Contract. This right is
comparable to the right afforded to a purchaser of a new Contract except that,
any cost of insurance charge for the increase in the basic insurance amount will
be returned to the Contract Fund instead of a refund of premium. See SHORT-TERM
CANCELLATION RIGHT OR "FREE-LOOK", page 17. Generally, the "free-look" right
would have to be exercised no later than 10 days after receipt of the Contract
as increased.
An increase in basic insurance amount may cause the Contract to be classified as
a Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 30.
Therefore, before increasing the basic insurance amount, you should consult with
your tax adviser and your Pruco Life of New Jersey representative.
DECREASES IN BASIC INSURANCE AMOUNT
As explained earlier, you may make a withdrawal. See WITHDRAWALS, page 25. You
also have the option of decreasing the basic insurance amount of your Contract
without withdrawing any cash value. Contract owners who conclude that, because
of changed circumstances, the amount of insurance is greater than needed will be
able to decrease their amount of insurance protection, and the monthly
deductions for the cost of insurance. The amount of the decrease must be at
least equal to the minimum decrease in basic insurance amount shown under
CONTRACT LIMITATIONS in your Contract data pages. In addition, the basic
insurance amount after the decrease must be at least equal to the minimum basic
insurance amount shown under CONTRACT LIMITATIONS in your Contract data pages.
No administrative processing charge is currently being made in connection with a
decrease in basic insurance amount. We reserve the right to make such a charge
in an amount of up to $25. See CHARGES AND EXPENSES, page 12. If we ask
27
<PAGE>
you to, you must send us your Contract to be endorsed. The Contract will be
amended to show the new basic insurance amount, charges, values in the
appropriate tables and the effective date of the decrease.
We may decline a reduction if we determine it would cause the Contract to fail
to qualify as "life insurance" for purposes of Section 7702 of the Internal
Revenue Code. See TAX TREATMENT OF CONTRACT BENEFITS, page 30. Furthermore, a
decrease will not take effect if the insured is not living on the effective
date.
It is important to note, however, that if the basic insurance amount is
decreased, there is a possibility that the Contract might be classified as a
Modified Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 30.
Before requesting any decrease in basic insurance amount, you should consult
with your tax adviser and your Pruco Life of New Jersey representative.
WHEN PROCEEDS ARE PAID
Pruco Life of New Jersey will generally pay any death benefit, cash value, loan
proceeds or withdrawal within seven days after all the documents required for
such a payment are received at a Home Office. 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 at
a Home Office. However, Pruco Life of New Jersey may delay payment of proceeds
from the variable investment option[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 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.
ILLUSTRATIONS OF SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS
The following tables show how a Contract's death benefit and surrender values
change with the investment experience of the Account. They are "hypothetical"
because they are based, in part, upon several assumptions, which are described
below. All the tables assume the following:
o a Contract bought by a 45 year old male, select, non-smoker, with no extra
risks or substandard ratings, issued on a Guaranteed Issue basis.
o a given premium amount is paid on each Contract anniversary for seven years
and no loans are taken.
o the Contract Fund has been invested in equal amounts in each of the 15
portfolios of the Funds.
The first two tables (pages T1 and T2) assume: (1) a Type A (fixed) Contract has
been purchased, (2) a $1,000,000 basic insurance amount and no riders have been
added to the Contract, and (3) a Cash Value Accumulation Test has been elected
for definition of life insurance testing. See TAX TREATMENT OF CONTRACT
BENEFITS, page 30 and TYPES OF DEATH BENEFIT, page 17. The first table assumes
current charges will continue for the indefinite future while the second table
assumes maximum contractual charges have been made from the beginning. See
CHARGES AND EXPENSES, page 12.
The third and fourth tables (pages T3 and T4) assume: (1) a Type A (fixed)
Contract has been purchased, (2) a $5,000 basic insurance amount and a $995,000
Target Term Rider has been added to the Contract, and (3) a Cash Value
Accumulation Test has been elected for definition of life insurance testing. See
TAX TREATMENT OF CONTRACT BENEFITS, page 30 and TYPES OF DEATH BENEFIT, page 17.
The third table assumes current charges will continue for the indefinite future
while the fourth table assumes maximum contractual charges have been made from
the beginning. See CHARGES AND EXPENSES, page 12.
The next two tables (pages T5 and T6) assume: (1) a Type A (fixed) Contract has
been purchased, (2) a $1,000,000 basic insurance amount and no riders have been
added to the Contract, and (3) a Guideline Premium Test has been elected for
definition of life insurance testing. See TAX TREATMENT OF CONTRACT BENEFITS,
page 30 and TYPES OF DEATH BENEFIT, page 17. The fifth table assumes current
charges will continue for the indefinite future while the sixth table assumes
maximum contractual charges have been made from the beginning. See CHARGES AND
EXPENSES, page 12.
28
<PAGE>
The tables on pages T7 and T8 assume: (1) a Type B (variable) Contract has been
purchased, (2) a $1,000,000 basic insurance amount and no riders have been added
to the Contract, and (3) a Cash Value Accumulation Test has been elected for
definition of life insurance testing. See TAX TREATMENT OF CONTRACT BENEFITS,
page 30 and TYPES OF DEATH BENEFIT, page 17. The table on page T7 assumes
current charges will continue for the indefinite future while the table on page
T8 assumes maximum contractual charges have been made from the beginning. See
CHARGES AND EXPENSES, page 12.
The last two tables (pages T9 and T10) assume: (1) a Type C (return of premium)
Contract has been purchased with premiums accumulating at 6%, (2) a $1,000,000
basic insurance amount and no riders have been added to the Contract, and (3) a
Cash Value Accumulation Test has been elected for definition of life insurance
testing. See TAX TREATMENT OF CONTRACT BENEFITS, page 30 and TYPES OF DEATH
BENEFIT, page 17. The table on page T9 assumes current charges will continue for
the indefinite future while the table on page T10 assumes maximum contractual
charges have been made from the beginning. See CHARGES AND EXPENSES, page 12.
Finally, there are three assumptions, shown separately, about the average
investment performance of the portfolios. The first is that there will be a
uniform 0% gross rate of return with the average value of the Contract Fund
uniformly adversely affected by very unfavorable investment performance. The
other two assumptions are that investment performance will be at a uniform gross
annual rate of 6% and 12%. Actual returns will fluctuate from year to year. In
addition, death benefits and surrender values would be different from those
shown if investment returns averaged 0%, 6%, and 12% but fluctuated from those
averages throughout the years. Nevertheless, these assumptions help show how the
Contract values will change with investment experience.
The first column in the following 10 tables (pages T1 through T10) shows the
Contract year. The second column, to provide context, shows what the aggregate
amount would be if the premiums had been invested to earn interest, after taxes,
at 4% compounded annually. The next three columns show the death benefit payable
in each of the years shown for the three different assumed investment returns.
The last three columns show the surrender value payable in each of the years
shown for the three different assumed investment returns.
A gross return (as well as the net return) is shown at the top of each column.
The gross return represents the combined effect of investment income and capital
gains and losses, realized or unrealized, of the portfolios before any reduction
is made for investment advisory fees or other Fund expenses. The net return
reflects average total annual expenses of the 32 portfolios of 0.84%, and the
daily deduction from the Contract Fund of 0.20% per year for the tables based on
current charges and 0.50% per year for the tables based on maximum charges.
Thus, assuming current charges, gross returns of 0%, 6%, and 12% are the
equivalent of net returns of -1.04%, 4.96%, and 10.96%, respectively. Assuming
maximum charges, gross returns of 0%, 6%, and 12% are the equivalent of net
returns of -1.34%, 4.66%, and 10.66%, respectively. The actual fees and expenses
of the portfolios associated with a particular Contract may be more or less than
0.84% and will depend on which variable investment options are selected. The
death benefits and surrender values shown reflect the deduction of all expenses
and charges both from the Funds and under the Contract.
The Contract allows you to invest your net premium dollars in a variety of
professionally managed funds. Fluctuating investment returns in these funds,
together with the actual pattern of your premium payments, our Contract charges,
and any loans and withdrawals you may make will generate different Contract
values than those illustrated, even if the averages of the investment rates of
return over the years were to match those illustrated. Because of this, we
strongly recommend periodic Contract reviews with your Pruco Life of New Jersey
representative. Reviews are an excellent way to monitor the performance of the
policy against your expectations and to identify adjustments that may be
necessary.
If you are considering the purchase of a variable life insurance contract from
another insurance company, you should not rely upon these tables for comparison
purposes. A comparison between two tables, each showing values for a 45 year old
man, may be useful for a 45 year old man but would be inaccurate if made for
insureds of other ages or sex. Your Pruco Life of New Jersey representative can
provide you with a hypothetical illustration for your own age, sex, and rating
class.
29
<PAGE>
<TABLE>
ILLUSTRATIONS
-------------
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
-------------------------------------------- -----------------------------------------------
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 (-1.04% Net) (4.96% Net) (10.96% Net) (-1.04% Net) (4.96% Net) (10.96% Net)
------------ --------------- -------------- ------------- ------------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 48,393 $ 51,106 $ 53,820
2 $ 116,115 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 94,886 $ 103,091 $ 111,624
3 $ 177,679 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 137,152 $ 153,699 $ 171,598
4 $ 241,705 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 178,888 $ 206,747 $ 238,099
5 $ 308,293 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 212,712 $ 254,978 $ 304,481
6 $ 377,544 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 253,416 $ 313,322 $ 386,362
7 $ 449,565 $ 1,000,000 $ 1,000,000 $ 1,192,305 $ 293,613 $ 374,539 $ 476,922
8 $ 467,547 $ 1,000,000 $ 1,000,000 $ 1,280,246 $ 288,370 $ 391,131 $ 526,850
9 $ 486,249 $ 1,000,000 $ 1,000,000 $ 1,367,496 $ 282,947 $ 408,407 $ 581,913
10 $ 505,699 $ 1,000,000 $ 1,000,000 $ 1,465,193 $ 277,335 $ 426,408 $ 642,629
15 $ 615,260 $ 1,000,000 $ 1,045,771 $ 2,083,609 $ 245,224 $ 528,167 $ 1,052,328
20 (Age 65) $ 748,558 $ 1,000,000 $ 1,125,951 $ 2,963,884 $ 202,056 $ 650,839 $ 1,713,228
25 $ 910,735 $ 1,000,000 $ 1,232,665 $ 4,286,878 $ 145,455 $ 800,432 $ 2,783,687
30 $1,108,049 $ 1,000,000 $ 1,360,771 $ 6,251,938 $ 56,313 $ 978,972 $ 4,497,797
35 $1,348,111 $ 0(2) $ 1,517,619 $ 9,210,893 $ 0(2) $ 1,185,640 $ 7,196,010
40 $1,640,183 $ 0 $ 1,708,656 $ 13,698,674 $ 0 $ 1,423,880 $11,415,562
45 $1,995,533 $ 0 $ 1,932,965 $ 20,469,663 $ 0 $ 1,695,583 $17,955,845
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 33, unless an additional premium payment
was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T1
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- ---------------------------------------------
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 (-1.34% Net) (4.66% Net) (10.66% Net) (-1.34% Net) (4.66% Net) (10.66% Net)
------------ --------------- --------------- --------------- ------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <S> <C> <C>
1 $ 56,919 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 41,962 $ 44,380 $ 46,202
2 $ 116,115 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 83,289 $ 90,521 $ 98,049
3 $ 177,679 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 119,887 $ 134,411 $ 150,138
4 $ 241,705 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 155,863 $ 180,252 $ 207,731
5 $ 308,293 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 183,012 $ 219,940 $ 263,248
6 $ 377,544 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 217,746 $ 270,000 $ 333,807
7 $ 449,565 $ 1,000,000 $ 1,000,000 $ 1,029,920 $ 251,845 $ 322,333 $ 411,968
8 $ 467,547 $ 1,000,000 $ 1,000,000 $ 1,096,323 $ 243,190 $ 332,399 $ 451,162
9 $ 486,249 $ 1,000,000 $ 1,000,000 $ 1,160,869 $ 234,131 $ 342,579 $ 493,987
10 $ 505,699 $ 1,000,000 $ 1,000,000 $ 1,232,862 $ 224,606 $ 352,844 $ 540,729
15 $ 615,260 $ 1,000,000 $ 1,000,000 $ 1,674,111 $ 167,484 $ 404,437 $ 845,510
20 (Age 65) $ 748,558 $ 1,000,000 $ 1,000,000 $ 2,263,440 $ 83,538 $ 451,751 $ 1,308,347
25 $ 910,735 $ 0(2) $ 1,000,000 $ 3,072,931 $ 0(2) $ 482,717 $ 1,995,410
30 $ 1,108,049 $ 0 $ 1,000,000 $ 4,165,495 $ 0 $ 471,627 $ 2,996,759
35 $ 1,348,111 $ 0 $ 1,000,000 $ 5,653,441 $ 0 $ 346,848 $ 4,416,751
40 $ 1,640,183 $ 0 $ 0(2) $ 7,704,557 $ 0 $ 0(2) $ 6,420,464
45 $ 1,995,533 $ 0 $ 0 $10,532,818 $ 0 $ 0 $ 9,239,314
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 24, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 40, unless an additional premium
payment was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T2
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 TARGET COVERAGE AMOUNT($5,000 BASIC INSURANCE AMOUNT, $995,000 TARGET TERM RIDER)
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
---------------------------------------------- ----------------------------------------------
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 (-1.04% Net) (4.96% Net) (10.96% Net) (-1.04% Net) (4.96% Net) (10.96% Net)
------------ --------------- ---------------- ----------- ------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 51,459 $ 54,548 $ 57,638
2 $ 116,115 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 101,084 $ 110,434 $ 120,156
3 $ 177,679 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 149,552 $ 168,425 $ 188,836
4 $ 241,705 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 197,426 $ 229,218 $ 264,989
5 $ 308,293 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 243,594 $ 291,845 $ 348,338
6 $ 377,544 $ 1,000,000 $ 1,000,000 $ 1,140,119 $ 290,321 $ 358,723 $ 441,907
7 $ 449,565 $ 1,000,000 $ 1,071,957 $ 1,363,073 $ 336,487 $ 428,783 $ 545,229
8 $ 467,547 $ 1,000,000 $ 1,088,745 $ 1,463,654 $ 330,978 $ 448,043 $ 602,327
9 $ 486,249 $ 1,000,000 $ 1,100,010 $ 1,563,446 $ 325,325 $ 468,089 $ 665,296
10 $ 505,699 $ 1,000,000 $ 1,114,806 $ 1,675,184 $ 319,514 $ 488,950 $ 734,730
15 $ 615,260 $ 1,000,000 $ 1,200,186 $ 2,382,451 $ 284,021 $ 606,155 $ 1,203,258
20 (Age 65) $ 748,558 $ 1,000,000 $ 1,292,376 $ 3,389,173 $ 235,129 $ 747,038 $ 1,959,059
25 $ 910,735 $ 1,000,000 $ 1,415,015 $ 4,902,175 $ 169,107 $ 918,841 $ 3,183,230
30 $1,108,049 $ 1,000,000 $ 1,562,208 $ 7,149,435 $ 61,300 $ 1,123,891 $ 5,143,478
35 $1,348,111 $ 0(2) $ 1,742,400 $ 10,533,303 $ 0(2) $ 1,361,250 $ 8,229,143
40 $1,640,183 $ 0 $ 1,961,849 $ 15,665,528 $ 0 $ 1,634,874 $13,054,606
45 $1,995,533 $ 0 $ 2,219,508 $ 23,408,819 $ 0 $ 1,946,937 $20,534,051
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 32, unless an additional premium payment
was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T3
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 TARGET COVERAGE AMOUNT($5,000 BASIC INSURANCE AMOUNT, $995,000 TARGET TERM RIDER)
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
------------------------------------------------ ------------------------------------------------
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 (-1.34% Net) (4.66% Net) (10.66% Net) (-1.34% Net) (4.66% Net) (10.66% Net)
------------ --------------- --------------- ------------ ------------- --------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 45,431 $ 48,276 $ 51,123
2 $ 116,115 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 90,161 $ 98,689 $ 107,565
3 $ 177,679 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 133,641 $ 150,794 $ 169,363
4 $ 241,705 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 176,442 $ 205,277 $ 237,756
5 $ 308,293 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 217,447 $ 261,144 $ 312,373
6 $ 377,544 $ 1,000,000 $ 1,000,000 $ 1,022,488 $ 258,915 $ 320,793 $ 396,313
7 $ 449,565 $ 1,000,000 $ 1,000,000 $ 1,221,170 $ 299,714 $ 383,243 $ 488,468
8 $ 467,547 $ 1,000,000 $ 1,000,000 $ 1,300,244 $ 290,709 $ 396,540 $ 535,080
9 $ 486,249 $ 1,000,000 $ 1,000,000 $ 1,377,126 $ 281,331 $ 410,165 $ 586,011
10 $ 505,699 $ 1,000,000 $ 1,000,000 $ 1,462,851 $ 271,522 $ 424,109 $ 641,601
15 $ 615,260 $ 1,000,000 $ 1,000,000 $ 1,988,094 $ 213,600 $ 498,537 $ 1,004,088
20 (Age 65) $ 748,558 $ 1,000,000 $ 1,003,494 $ 2,689,417 $ 130,348 $ 580,054 $ 1,554,576
25 $ 910,735 $ 0(2) $ 1,026,606 $ 3,652,548 $ 0(2) $ 666,627 $ 2,371,785
30 $ 1,108,049 $ 0 $ 1,049,314 $ 4,952,351 $ 0 $ 754,902 $ 3,562,842
35 $ 1,348,111 $ 0 $ 1,073,909 $ 6,722,425 $ 0 $ 838,992 $ 5,251,895
40 $ 1,640,183 $ 0 $ 1,103,738 $ 9,162,360 $ 0 $ 919,781 $ 7,635,300
45 $ 1,995,533 $ 0 $ 1,138,105 $12,526,695 $ 0 $ 998,338 $ 10,988,329
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 25, unless an additional premium payment
was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T4
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
GUIDELINE PREMIUM TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS (3)
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- ---------------------------------------------
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 (-1.04% Net) (4.96% Net) (10.96% Net) (-1.04% Net) (4.96% Net) (10.96% Net)
----------- --------------- --------------- ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 48,393 $ 51,106 $ 53,820
2 $ 116,115 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 94,886 $ 103,091 $ 111,624
3 $ 177,679 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 137,152 $ 153,699 $ 171,598
4 $ 241,705 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 178,888 $ 206,747 $ 238,099
5 $ 255,646 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 171,167 $ 210,915 $ 257,898
6 $ 265,872 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 167,277 $ 219,310 $ 284,174
7 $ 276,507 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 163,202 $ 227,936 $ 313,208
8 $ 287,567 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 158,935 $ 236,802 $ 345,318
9 $ 299,070 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 154,440 $ 245,895 $ 380,845
10 $ 311,032 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 149,708 $ 255,223 $ 420,190
15 $ 378,419 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 121,127 $ 304,939 $ 691,719
20 (Age 65) $ 460,404 $ 1,000,000 $ 1,000,000 $ 1,403,538 $ 79,490 $ 357,999 $ 1,150,441
25 $ 560,152 $ 1,000,000 $ 1,000,000 $ 2,221,502 $ 22,314 $ 416,149 $ 1,915,088
30 $ 681,510 $ 0(2) $ 1,000,000 $ 3,413,447 $ 0(2) $ 472,104 $ 3,190,138
35 $ 829,162 $ 0 $ 1,000,000 $ 5,591,457 $ 0 $ 510,237 $ 5,325,198
40 $1,008,802 $ 0 $ 1,000,000 $ 9,289,001 $ 0 $ 505,711 $ 8,846,668
45 $1,227,362 $ 0 $ 1,000,000(2) $ 15,310,593 $ 0 $ 380,909(2) $14,581,517
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 27, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 50, unless an additional premium
payment was made.
(3) The Guideline Premium Test limits the premium payable in policy year 5 to $4,108.12, and zero in years 6 and 7.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T5
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
GUIDELINE PREMIUM TEST
TYPE A (FIXED) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS (3)
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- --------------------------------------------
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 (-1.34% Net) (4.66% Net) (10.66% Net) (-1.34% Net) (4.66% Net) (10.66% Net)
----------- --------------- --------------- --------------- ------------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 41,962 $ 44,380 $ 46,802
2 $ 116,115 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 83,289 $ 90,521 $ 98,049
3 $ 177,679 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 119,887 $ 134,411 $ 150,138
4 $ 241,705 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 155,863 $ 180,252 $ 207,731
5 $ 255,646 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 144,123 $ 178,686 $ 219,629
6 $ 265,872 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 137,118 $ 181,980 $ 238,111
7 $ 276,507 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 129,768 $ 185,053 $ 258,295
8 $ 287,567 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 122,008 $ 187,838 $ 280,340
9 $ 299,070 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 113,762 $ 190,255 $ 304,420
10 $ 311,032 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 104,962 $ 192,230 $ 330,750
15 $ 378,419 $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 49,886 $ 192,362 $ 506,308
20 (Age 65) $ 460,404 $ 0(2) $ 1,000,000 $ 1,000,000 $ 0(2) $ 162,598 $ 797,442
25 $ 560,152 $ 0 $ 1,000,000 $ 1,492,939 $ 0 $ 66,394 $ 1,287,017
30 $ 681,510 $ 0 $ 0(2) $ 2,227,671 $ 0 $ 0(2) $ 2,081,936
35 $ 829,162 $ 0 $ 0 $ 3,559,569 $ 0 $ 0 $ 3,390,065
40 $ 1,008,802 $ 0 $ 0 $ 5,740,529 $ 0 $ 0 $ 5,467,170
45 $ 1,227,362 $ 0 $ 0 $ 9,122,649 $ 0 $ 0 $ 8,688,237
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 19, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 27, unless an additional premium
payment was made.
(3) The Guideline Premium Test limits the premium payable in policy year 5 to $4,108.12, and zero in years 6 and 7.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T6
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE B (VARIABLE) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- ----------------------------------------------
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 (-1.04% Net) (4.96% Net) (10.96% Net) (-1.04% Net) (4.96% Net) (10.96% Net)
----------- --------------- --------------- -------------- ------------ --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,044,699 $ 1,047,412 $ 1,050,126 $ 48,393 $ 51,106 $ 53,820
2 $ 116,115 $ 1,087,357 $ 1,095,549 $ 1,104,068 $ 94,746 $ 102,938 $ 111,457
3 $ 177,679 $ 1,129,394 $ 1,145,890 $ 1,163,734 $ 136,782 $ 153,279 $ 171,122
4 $ 241,705 $ 1,170,796 $ 1,198,524 $ 1,229,728 $ 178,184 $ 205,913 $ 237,116
5 $ 308,293 $ 1,211,549 $ 1,253,544 $ 1,302,724 $ 211,549 $ 253,544 $ 302,724
6 $ 377,544 $ 1,251,651 $ 1,311,058 $ 1,383,478 $ 251,651 $ 311,058 $ 383,478
7 $ 449,565 $ 1,291,079 $ 1,371,159 $ 1,472,809 $ 291,079 $ 371,159 $ 472,809
8 $ 467,547 $ 1,285,011 $ 1,386,431 $ 1,521,395 $ 285,011 $ 386,431 $ 521,395
9 $ 486,249 $ 1,278,700 $ 1,402,143 $ 1,574,980 $ 278,700 $ 402,143 $ 574,980
10 $ 505,699 $ 1,272,137 $ 1,418,307 $ 1,634,102 $ 272,137 $ 418,307 $ 634,102
15 $ 615,260 $ 1,234,144 $ 1,505,101 $ 2,048,690 $ 234,144 $ 505,101 $ 1,034,692
20 (Age 65) $ 748,558 $ 1,182,879 $ 1,598,200 $ 2,913,924 $ 182,879 $ 598,200 $ 1,684,349
25 $ 910,735 $ 1,117,627 $ 1,697,462 $ 4,214,597 $ 117,627 $ 697,462 $ 2,736,751
30 $1,108,049 $ 1,020,745 $ 1,784,302 $ 6,146,506 $ 20,745 $ 784,302 $ 4,421,947
35 $1,348,111 $ 0(2) $ 1,819,598 $ 9,055,545 $ 0(2) $ 819,598 $ 7,074,645
40 $1,640,183 $ 0 $ 1,748,175 $ 13,467,621 $ 0 $ 748,175 $11,223,018
45 $1,995,533 $ 0 $ 1,467,356(2) $ 20,124,390 $ 0 $ 467,356(2) $17,652,974
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 31, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 49, unless an additional premium
payment was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T7
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE B (VARIABLE) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
--------------------------------------------- --------------------------------------------
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 (-1.34% Net) (4.66% Net) (10.66% Net) (-1.34% Net) (4.66% Net) (10.66% Net)
----------- --------------- --------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,037,719 $ 1,040,130 $ 1,042,543 $ 41,824 $ 44,235 $ 46,647
2 $ 116,115 $ 1,074,657 $ 1,081,844 $ 1,089,326 $ 82,866 $ 90,054 $ 97,535
3 $ 177,679 $ 1,110,803 $ 1,125,197 $ 1,140,781 $ 119,012 $ 133,406 $ 148,991
4 $ 241,705 $ 1,146,139 $ 1,170,233 $ 1,197,375 $ 154,348 $ 178,442 $ 205,584
5 $ 308,293 $ 1,180,645 $ 1,217,001 $ 1,259,623 $ 180,645 $ 217,001 $ 259,623
6 $ 377,544 $ 1,214,285 $ 1,265,531 $ 1,328,077 $ 214,285 $ 265,531 $ 328,077
7 $ 449,565 $ 1,247,010 $ 1,315,843 $ 1,403,335 $ 247,010 $ 315,843 $ 403,335
8 $ 467,547 $ 1,236,914 $ 1,323,556 $ 1,439,110 $ 236,914 $ 323,556 $ 439,110
9 $ 486,249 $ 1,226,341 $ 1,330,996 $ 1,478,048 $ 226,341 $ 330,996 $ 478,048
10 $ 505,699 $ 1,215,227 $ 1,338,079 $ 1,520,412 $ 215,227 $ 338,079 $ 520,412
15 $ 615,260 $ 1,149,235 $ 1,364,722 $ 1,794,807 $ 149,235 $ 364,722 $ 794,807
20 (Age 65) $ 748,558 $ 1,056,508 $ 1,362,579 $ 2,209,448 $ 56,508 $ 362,579 $ 1,209,448
25 $ 910,735 $ 0(2) $ 1,299,225 $ 2,828,171 $ 0(2) $ 299,225 $ 1,828,171
30 $ 1,108,049 $ 0 $ 1,119,019 $ 3,806,810 $ 0 $ 119,019 $ 2,738,712
35 $ 1,348,111 $ 0 $ 0(2) $ 5,165,926 $ 0 $ 0(2) $ 4,035,880
40 $ 1,640,183 $ 0 $ 0 $ 7,039,714 $ 0 $ 0 $ 5,866,429
45 $ 1,995,533 $ 0 $ 0 $ 9,623,491 $ 0 $ 0 $ 8,441,658
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 23, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 32, unless an additional premium
payment was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T8
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE C (RETURN OF PREMIUM AT 6%) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING CURRENT CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
-------------------------------------------- ---------------------------------------------
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 (-1.04% Net) (4.96% Net) (10.96% Net) (-1.04% Net) (4.96% Net) (10.96% Net)
----------- --------------- --------------- ------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,058,014 $ 1,058,014 $ 1,058,014 $ 48,393 $ 51,106 $ 53,820
2 $ 116,115 $ 1,119,508 $ 1,119,508 $ 1,119,508 $ 94,703 $ 102,903 $ 111,429
3 $ 177,679 $ 1,184,693 $ 1,184,693 $ 1,184,693 $ 136,656 $ 153,177 $ 171,048
4 $ 241,705 $ 1,253,788 $ 1,253,788 $ 1,253,788 $ 177,916 $ 205,701 $ 236,976
5 $ 308,293 $ 1,327,029 $ 1,327,029 $ 1,327,029 $ 211,060 $ 253,168 $ 302,499
6 $ 377,544 $ 1,404,665 $ 1,404,665 $ 1,404,665 $ 250,835 $ 310,445 $ 383,156
7 $ 449,565 $ 1,486,958 $ 1,486,958 $ 1,486,958 $ 289,797 $ 370,215 $ 472,385
8 $ 467,547 $ 1,516,176 $ 1,516,176 $ 1,516,176 $ 283,118 $ 385,068 $ 520,905
9 $ 486,249 $ 1,547,146 $ 1,547,146 $ 1,547,146 $ 276,017 $ 400,251 $ 574,487
10 $ 505,699 $ 1,579,975 $ 1,579,975 $ 1,579,975 $ 268,455 $ 415,755 $ 633,701
15 $ 615,260 $ 1,776,138 $ 1,776,138 $ 2,052,295 $ 220,377 $ 495,912 $ 1,036,512
20 (Age 65) $ 748,558 $ 2,038,647 $ 2,038,647 $ 2,919,320 $ 141,554 $ 570,031 $ 1,687,468
25 $ 910,735 $ 2,389,944 $ 2,389,944 $ 4,222,404 $ 15,694 $ 622,808 $ 2,741,821
30 $1,108,049 $ 0(2) $ 2,860,059 $ 6,157,894 $ 0(2) $ 584,857 $ 4,430,139
35 $1,348,111 $ 0 $ 3,489,179 $ 9,072,324 $ 0 $ 258,216 $ 7,087,753
40 $1,640,183 $ 0 $ 0(2) $ 13,492,577 $ 0 $ 0(2) $11,243,814
45 $1,995,533 $ 0 $ 0 $ 20,161,682 $ 0 $ 0 $17,685,686
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 26, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 37, unless an additional premium
payment was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T9
<PAGE>
<TABLE>
PRUSELECT III LIFE INSURANCE CONTRACT
CASH VALUE ACCUMULATION TEST
TYPE C (RETURN OF PREMIUM AT 6%) DEATH BENEFIT
MALE GUARANTEED ISSUE SELECT PREFERRED ISSUE AGE 45
$1,000,000 BASIC INSURANCE AMOUNT
ASSUME PAYMENT OF $54,730 ANNUAL PREMIUMS FOR SEVEN YEARS
USING MAXIMUM CONTRACTUAL CHARGES
<CAPTION>
Death Benefit (1) Surrender Value (1)
-------------------------------------------- --------------------------------------------
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 (-1.34% Net) (4.66% Net) (10.66% Net) (-1.34% Net) (4.66% Net) (10.66% Net)
----------- --------------- -------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $ 56,919 $ 1,058,014 $ 1,058,014 $ 1,058,014 $ 41,769 $ 44,182 $ 46,597
2 $ 116,115 $ 1,119,508 $ 1,119,508 $ 1,119,508 $ 82,670 $ 89,870 $ 97,366
3 $ 177,679 $ 1,184,693 $ 1,184,693 $ 1,184,693 $ 118,559 $ 132,989 $ 148,618
4 $ 241,705 $ 1,253,788 $ 1,253,788 $ 1,253,788 $ 153,484 $ 177,660 $ 204,911
5 $ 308,293 $ 1,327,029 $ 1,327,029 $ 1,327,029 $ 179,171 $ 215,684 $ 258,535
6 $ 377,544 $ 1,404,665 $ 1,404,665 $ 1,404,665 $ 211,941 $ 263,462 $ 326,441
7 $ 449,565 $ 1,486,958 $ 1,486,958 $ 1,486,958 $ 243,464 $ 312,746 $ 401,001
8 $ 467,547 $ 1,516,176 $ 1,516,176 $ 1,516,176 $ 231,823 $ 319,157 $ 435,987
9 $ 486,249 $ 1,547,146 $ 1,547,146 $ 1,547,146 $ 219,283 $ 324,953 $ 474,042
10 $ 505,699 $ 1,579,975 $ 1,579,975 $ 1,579,975 $ 205,690 $ 329,968 $ 515,434
15 $ 615,260 $ 1,776,138 $ 1,776,138 $ 1,776,138 $ 115,122 $ 335,583 $ 784,360
20 (Age 65) $ 748,558 $ 0(2) $ 2,038,647 $ 2,075,689 $ 0(2) $ 271,709 $ 1,199,820
25 $ 910,735 $ 0 $ 2,389,944 $ 2,817,404 $ 0 $ 26,520 $ 1,829,483
30 $ 1,108,049 $ 0 $ 0(2) $ 3,818,601 $ 0 $ 0(2) $ 2,747,195
35 $ 1,348,111 $ 0 $ 0 $ 5,182,165 $ 0 $ 0 $ 4,048,566
40 $ 1,640,183 $ 0 $ 0 $ 7,061,860 $ 0 $ 0 $ 5,884,883
45 $ 1,995,533 $ 0 $ 0 $ 9,653,780 $ 0 $ 0 $ 8,468,228
(1) Assumes no Contract Loan has been made.
(2) Based on a gross return of 0%, the Contract would go into default in policy year 19, unless an additional premium payment
was made. Based on a gross return of 6%, the Contract would go into default in policy year 26, unless an additional premium
payment was made.
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 surrender value for a contract would be different from those shown if the actual rates of
return averaged 0%, 6%, 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.
</TABLE>
T10
<PAGE>
CONTRACT LOANS
You may borrow from Pruco Life of New Jersey an amount up to the current loan
value of your Contract less any existing Contract debt using the Contract as the
only security for the loan. The loan value at any time is equal to 90% of the
Contract Fund value. A Contract in default has no loan value. The minimum loan
amount you may borrow is $200.
Interest charged on a loan accrues daily. Interest is due on each Contract
anniversary or when the loan is paid back, whichever comes first. If interest is
not paid when due, it becomes part of the loan and we will charge interest on
it, too. Except in the case of preferred loans, we charge interest at an
effective annual rate of 5%.
A portion of any amount you borrow on or after the 10th Contract anniversary may
be considered a preferred loan if the Contract has not been surrendered for
fixed reduced paid-up insurance. Fixed reduced paid-up insurance is available
only in the state of New York. See SURRENDER OF A CONTRACT, page 25. The maximum
preferred loan amount is the total amount you may borrow minus the total net
premiums paid (net premiums equal premiums paid less total withdrawals, if any).
If the net premium amount is less than zero, we will, for purposes of this
calculation, consider it to be zero. Only new loans borrowed after the 10th
Contract anniversary may be considered preferred loans. Standard loans will not
automatically be converted into preferred loans. Preferred loans are charged
interest at an effective annual rate of 4.25%.
The Contract debt is the amount of all outstanding loans plus any interest
accrued but not yet due. If at any time the Contract debt equals or exceeds the
Contract Fund, the Contract will go into default. See LAPSE AND REINSTATEMENT,
page 26. If the Contract debt equals or exceeds the Contract Fund and you fail
to keep the Contract in-force, the amount of unpaid Contract debt will be
treated as a distribution which may be taxable. See TAX TREATMENT OF CONTRACT
BENEFITS, page 30.
When a loan is made, an amount equal to the loan proceeds is transferred out of
the Account. Unless you ask us to take the loan amount from specific investment
options and we agree, the reduction will be made in the same proportions as the
value in each variable investment option bears to the total value of the
Contract. While a loan is outstanding, the amount that was so transferred will
continue to be treated as part of the Contract Fund. It will be credited with an
effective annual rate of return of 4%. On each Monthly date, we will increase
the portion of the Contract Fund in the investment options by interest credits
accrued on the loan since the last Monthly date. The net cost of a standard loan
is 1% and the net cost of a preferred loan is 1/4%.
Loans from Modified Endowment Contracts may be treated for tax purposes as
distributions of income. See TAX TREATMENT OF CONTRACT BENEFITS, page 30.
Any Contract debt will directly reduce a Contract's cash value and will be
subtracted from the death benefit to determine the amount payable. In addition,
even if the loan is fully repaid, it may have an effect on future death benefits
because the investment results of the selected investment options will apply
only to the amount remaining invested under those options. 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 greater than the rate being
credited on the amount of the loan while the loan is outstanding, values under
the Contract will not increase as rapidly as they would have if no loan had been
made. If investment results are below that rate, Contract values will be higher
than they would have been had no loan been made.
When you repay all or part of a loan, we will increase the portion of the
Contract Fund in the investment options by the amount of the loan you repay
using the investment allocation for future premium payments as of the loan
payment date, plus interest credits accrued on the loan since the last
transaction date. If loan interest is paid when due, it will not change the
portion of the Contract Fund allocated to the investment options. We reserve the
right to change the manner in which we allocate loan repayments.
TAX TREATMENT OF CONTRACT BENEFITS
This summary provides general information on the federal income tax treatment of
the Contract. It is not a complete statement of what the federal income taxes
will be in all circumstances. It is based on current law and interpretations,
which may change. It does not cover state taxes or other taxes. It is not
intended as tax advice. You should consult your own qualified tax adviser for
complete information and advice.
30
<PAGE>
TREATMENT AS LIFE INSURANCE. The Contract must meet certain requirements to
qualify as life insurance for tax purposes. These requirements include certain
definitional tests and rules for diversification of the Contract's investments.
For further information on the diversification requirements, see TAXATION OF THE
FUND in the statement of additional information for the Series Fund.
In order to meet the definition of life insurance rules for federal income tax
purposes, the Contract must satisfy one of the two following tests: (1) Cash
Value Accumulation Test or (2) Guideline Premium Test. At issue, the Contract
owner chooses which of these two tests will apply to their Contract. This choice
cannot be changed thereafter.
Under the Cash Value Accumulation Test, the Contract must maintain a minimum
ratio of death benefit to cash value. Therefore, in order to ensure that the
Contract qualifies as life insurance, the Contract's basic insurance amount may
increase as the Contract Fund value increases. The death benefit, at all times,
must be at least equal to the Contract Fund multiplied by the applicable
attained age factor. A listing of attained age factors can be found on your
Contract data pages.
Under the Guideline Premium Test, there is a limit as to the amount of premium
that can be paid into the Contract in relation to the death benefit. In
addition, there is a minimum ratio of death benefit to cash value associated
with this test. This ratio, however, is less than the required ratio under the
Cash Value Accumulation test. Therefore, the death benefit required under this
test is generally lower than that of the Cash Value Accumulation test.
The selection of the definition of life insurance test most appropriate for you
is dependent on several factors, including the insured's age at issue, actual
Contract earnings, and whether or not the Contract is classified as a Modified
Endowment Contract. You should consult your own qualified tax adviser for
complete information and advice with respect to the selection of the definition
of life insurance test.
We believe we have taken adequate steps to insure that the Contract qualifies as
life insurance for tax purposes. Generally speaking, this means that:
o you will not be taxed on the growth of the funds in the Contract,
unless you receive a distribution from the Contract, and
o the Contract's death benefit will be income tax free to your
beneficiary.
Although we believe that the Contract should qualify as life insurance for tax
purposes, there are some uncertainties, particularly because the Secretary of
Treasury has not yet issued permanent regulations that bear on this question.
Accordingly, we reserve the right to make changes -- which will be applied
uniformly to all Contract owners after advance written notice -- that we deem
necessary to insure that the Contract will qualify as life insurance.
PRE-DEATH DISTRIBUTIONS. The tax treatment of any distribution you receive
before the insured's death depends on whether the Contract is classified as a
Modified Endowment Contract.
CONTRACTS NOT CLASSIFIED AS MODIFIED ENDOWMENT CONTRACTS
o If you surrender the Contract or allow it to lapse, you will be
taxed on the amount you receive in excess of the premiums you paid
less the untaxed portion of any prior withdrawals. For this
purpose, you will be treated as receiving any portion of the cash
value used to repay Contract debt. The tax consequences of a
surrender may differ if you take the proceeds under an income
payment settlement option.
o Generally, you will be taxed on a withdrawal to the extent the
amount you receive exceeds the premiums you paid for the Contract
less the untaxed portion of any prior withdrawals. However, under
some limited circumstances, in the first 15 Contract years, all or
a portion of a withdrawal may be taxed if the Contract Fund
exceeds the total premiums paid less the untaxed portions of any
prior withdrawals, even if total withdrawals do not exceed total
premiums paid.
o Loans you take against the Contract are ordinarily treated as debt
and are not considered distributions subject to tax. However,
there is some risk the Internal Revenue Service might assert that
the preferred loan should be treated as a distribution for tax
purposes because of the relatively low differential between the
loan interest rate and Contract's crediting rate. Were the
Internal Revenue
31
<PAGE>
Service to take this position, Pruco Life of New Jersey would take
reasonable steps to avoid this result, including modifying the
Contract's loan provisions.
MODIFIED ENDOWMENT CONTRACTS
o The rules change if the Contract is classified as a Modified
Endowment Contract. The Contract could be classified as a Modified
Endowment Contract if premiums in amounts that are too large are
paid or a decrease in the face amount of insurance is made (or a
rider removed). The addition of a rider or an increase in the face
amount of insurance may also cause the Contract to be classified
as a Modified Endowment Contract. You should first consult a
qualified tax adviser and your Pruco Life of New Jersey
representative if you are contemplating any of these steps.
o If the Contract is classified as a Modified Endowment Contract,
then amounts you receive under the Contract before the insured's
death, including loans and withdrawals, are included in income to
the extent that the Contract Fund exceeds the premiums paid for
the Contract increased by the amount of any loans previously
included in income and reduced by any untaxed amounts previously
received other than the amount of any loans excludable from
income. An assignment of a Modified Endowment Contract is taxable
in the same way. These rules also apply to pre-death
distributions, including loans and assignments, made during the
two-year period before the time that the Contract became a
Modified Endowment Contract.
o Any taxable income on pre-death distributions (including full
surrenders) is subject to a penalty of 10 percent unless the
amount is received on or after age 59 1/2, on account of your
becoming disabled or as a life annuity. It is presently unclear
how the penalty tax provisions apply to Contracts owned by
businesses.
o All Modified Endowment Contracts issued by us to you during the
same calendar year are treated as a single Contract for purposes
of applying these rules.
WITHHOLDING. You must affirmatively elect that no taxes be withheld from a
pre-death distribution. Otherwise, the taxable portion of any amounts you
receive will be subject to withholding. You are not permitted to elect out of
withholding if you do not provide a social security number or other taxpayer
identification number. You may be subject to penalties under the estimated tax
payment rules if your withholding and estimated tax payments are insufficient to
cover the tax due.
OTHER TAX CONSIDERATIONS. If you transfer or assign the Contract to someone
else, there may be gift, estate and/or income tax consequences. If you transfer
the Contract to a person two or more generations younger than you (or designate
such a younger person as a beneficiary), there may be Generation Skipping
Transfer tax consequences. Deductions for interest paid or accrued on Contract
debt or on other loans that are incurred or continued to purchase or carry the
Contract may be denied. Your individual situation or that of your beneficiary
will determine the federal estate taxes and the state and local estate,
inheritance and other taxes due if you or the insured dies.
BUSINESS-OWNED LIFE INSURANCE. If a business, rather than an individual, is the
owner of the Contract, there are some additional rules. Business Contract owners
generally cannot deduct premium payments. Business Contract owners generally
cannot take tax deductions for interest on Contract debt paid or accrued after
October 13, 1995. An exception permits the deduction of interest on policy loans
on Contracts for up to 20 key persons. The interest deduction for Contract debt
on these loans is limited to a prescribed interest rate and a maximum aggregate
loan amount of $50,000 per key insured person. The corporate alternative minimum
tax also applies to business-owned life insurance. This is an indirect tax on
additions to the Contract Fund or death benefits received under business-owned
life insurance policies.
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 differ under Contracts issued on males
and females of the same age. Employers and employee organizations considering
the purchase of a Contract should consult their legal advisers 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.
32
<PAGE>
EXCHANGE RIGHT
In the state of New York, you have the right to exchange the Contract for a
fixed benefit insurance plan issued by The Prudential Insurance Company of
America on the insured's life. Such an exchange is permitted within the first 18
months after a Contract is issued, so long as the Contract is not in default.
This is a general account policy with guaranteed minimum values. No evidence of
insurability will be required to make an exchange. The new policy will have the
same issue date and risk classification for the insured as the original
Contract. The exchange may be subject to an equitable adjustment in premiums and
values, and a payment may be required. You may wish to obtain tax advice before
effecting such an exchange.
OPTION TO EXCHANGE INSURED
Pruco Life of New Jersey will permit a Contract owner to exchange a contract for
a new contract on the life of a new insured. Upon the exchange, the original
contract is surrendered and the cash value is moved to the new contract without
subjecting it to new sales charges and the portion of the charge for taxes
attributable to premiums for state and local premium taxes. See CHARGES AND
EXPENSES, page 12. We will, however, report this as a taxable surrender of your
original Contract, which means that you will be subject to income tax to the
extent of any gain in the Contract and that we will withhold applicable federal
income taxes. Also, the cash value moved to the new Contract will be considered
new premium, which may cause your Contract to be classified as a Modified
Endowment Contract. See TAX TREATMENT OF CONTRACT BENEFITS, page 30.
OTHER GENERAL CONTRACT PROVISIONS
ASSIGNMENT. This Contract may not be assigned if the assignment would violate
any federal, state or local law or regulation prohibiting sex distinct rates for
insurance. Generally, the Contract may not be assigned to an employee benefit
plan or program without Pruco Life of New Jersey's consent. Pruco Life of New
Jersey assumes no responsibility for the validity or sufficiency of any
assignment. We will not be obligated to comply with any assignment unless we
receive a copy at a Home Office.
BENEFICIARY. You designate and name your beneficiary in the application.
Thereafter, you 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.
INCONTESTABILITY. We will not contest the Contract after it has been in-force
during the insured's lifetime for two years from the issue date except when any
change is made in the Contract that requires Pruco Life of New Jersey's approval
and would increase our liability. We will not contest such change after it has
been in effect for two years during the lifetime of the insured.
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex or both are
incorrect in the Contract, Pruco Life of New Jersey will adjust the death
benefits payable and any amount to be paid, as required by law, to reflect the
correct age and sex. Any such benefit will be based on what the most recent
deductions from the Contract Fund would have provided at the insured's correct
age and sex.
SETTLEMENT OPTIONS. The Contract grants to most owners, or to the beneficiary, a
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.
SUICIDE EXCLUSION. Generally, if the insured, whether sane or insane, dies by
suicide within two years from the Contract date, the Contract will end and Pruco
Life of New Jersey will return the premiums paid, less any Contract debt, and
less any withdrawals. Generally, if the insured, whether sane or insane, dies by
suicide after two years from the issue date, but within two years of the
effective date of an increase in the basic insurance amount, we will pay, as to
the increase in amount, no more than the sum of the premiums paid on and after
the effective date of an increase.
SUBSTITUTION OF FUND SHARES
Although Pruco Life of New Jersey believes it to be unlikely, it is possible
that in the judgment of its management, one or more of the portfolios of the
Funds may become unsuitable for investment by Contract owners because of
investment policy changes, tax law changes, or the unavailability of shares for
investment. In that event, Pruco Life of
33
<PAGE>
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, may be required.
Contract owners will be notified of any such substitution.
REPORTS TO CONTRACT OWNERS
Once each year, Pruco Life of New Jersey will send you a statement that provides
certain information pertinent to your own Contract. This statement will detail
values, transactions made, and specific Contract data that apply only to your
particular Contract. You will also be sent annual and semi-annual reports of the
Funds showing the financial condition of the portfolios and the investments held
in each portfolio.
SALE OF THE CONTRACT AND SALES COMMISSIONS
Pruco Securities Corporation ("Prusec"), an indirect wholly-owned subsidiary of
Prudential, acts as the principal underwriter of the Contract. Prusec, organized
in 1971 under New Jersey law, is registered as a broker and dealer under the
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. Prusec's principal business address is 751 Broad
Street, Newark, New Jersey 07102-3777. 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.
Generally, representatives will receive a commission of no more than: (1) 20% of
the premiums received in the first year on premiums up to the Target Premium
(referred to as "segment allocation amount" in your Contract); (2) 12% of
premiums received in years two through 10 on premiums up to the Target Premium;
and (3) 2% on premiums received in the first 10 years in excess of the Target
Premium or received after 10 years. If the basic insurance amount is increased,
representatives will generally receive a commission of no more than: (1) 20% of
the premiums received up to the Target Premium for the increase received in the
first year; (2) 12% of the premiums received up to the Target Premium for years
two through 10; and (3) 2% on other premiums received for the increase.
Moreover, trail commissions of up to 0.05% of the Contract Fund may be paid as
of the end of each calendar quarter for years six through 20 and .025%
thereafter. Representatives with less than 4 years of service may receive
compensation on a different basis. Representatives who meet certain productivity
or persistency standards may be eligible for additional compensation.
STATE REGULATION
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 of Pruco Life of New Jersey as of December 31, 1999 and
1998 and for each of the three years in the period ended December 31, 1999 and
the financial statements of the Account as of December 31, 1999 and for each of
the three years in the period then ended included in this prospectus have been
so included in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting. PricewaterhouseCoopers LLP's principal business address
is 1177 Avenue of the Americas, New York, New York 10036.
Actuarial matters included in this prospectus have been examined by Nancy Davis,
FSA, MAAA, Vice President and Actuary of Prudential, whose opinion is filed as
an exhibit to the registration statement.
34
<PAGE>
LITIGATION AND REGULATORY PROCEEDINGS
We are subject to legal and regulatory actions in the ordinary course of our
businesses, including class actions. Pending legal regulatory actions include
proceedings specific to our practices and proceedings generally applicable to
business practices in the industries in which we operate. In certain of these
lawsuits, large and/or indeterminate amounts are sought, including punitive or
exemplary damages.
In particular, Pruco Life of New Jersey and Prudential have been subject to
substantial regulatory actions and civil litigation involving individual life
insurance sales practices. In 1996, Prudential, on behalf of itself and many of
its life insurance subsidiaries including Pruco Life of New Jersey, entered into
settlement agreements with relevant insurance regulatory authorities and
plaintiffs in the principal life insurance sales practices class action lawsuit
covering policyholders of individual permanent life insurance policies issued in
the United States from 1982 to 1995. Pursuant to the settlements, the companies
agreed to various changes to their sales and business practices controls and a
series of fines, and are in the process of distributing final remediation relief
to eligible class members. In many instances, claimants have the right to
"appeal" the decision to an independent reviewer. The bulk of such appeals were
resolved in 1999, and the balance is expected to be addressed in 2000. As of
January 31, 2000, Prudential and/or Pruco Life of New Jersey remained a party to
two putative class actions and approximately 158 individual actions relating to
permanent life insurance policies issued in the United States between 1982 and
1995. Additional suits may be filed by individuals who opted out of the
settlements. While the approval of the class action settlement is now final,
Prudential and Pruco Life of New Jersey remain subject to oversight and review
by insurance regulators and other regulatory authorities with respect to their
sales practices and the conduct of the remediation program. The U.S. District
Court has also retained jurisdiction as to all matters relating to the
administration, consummation, enforcement and interpretation of the settlements.
Prudential has indemnified Pruco Life of New Jersey for any liabilities incurred
in connection with sales practices litigation covering policyholders of
individual permanent life insurance policies issued in the United States from
1982 to 1995.
In 1999, 1998, 1997 and 1996, Prudential recorded provision in its Consolidated
Statements of Operations of $100 million, $1,150 million, $2,030 million and
$1,125 million, respectively, to provide for estimated remediation costs, and
additional sales practices costs including related administrative costs,
regulatory fines, penalties and related payments, litigation costs and
settlements, including settlements associated with the resolution of claims of
deceptive sales practices asserted by policyholders who elected to "opt-out" of
the class action settlement and litigate their claims against Prudential
separately, and other fees and expenses associated with the resolution of sales
practices issues.
ADDITIONAL INFORMATION
Pruco Life of New Jersey has filed a registration statement with the SEC under
the Securities Act of 1933, relating to the offering described in this
prospectus. This prospectus does not include all 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 Public Reference Section at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or by telephoning (800) SEC-0330, upon payment of a
prescribed fee.
Further information may also be obtained from Pruco Life of New Jersey. Its
address and telephone number are set forth on the inside front cover of this
prospectus.
FINANCIAL STATEMENTS
The financial statements of the Account should be distinguished from the
financial statements of Pruco Life of New Jersey, which should be considered
only as bearing upon the ability of Pruco Life of New Jersey to meet its
obligations under the Contracts.
35
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past five years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
JAMES J. AVERY, JR., Chairman and Director - President, Prudential Individual
Life Insurance since 1998; 1997 to 1998: Senior Vice President, Chief Actuary
and CFO, Prudential Individual Insurance Group; 1995 to 1997: President,
Prudential Select.
IRA J. KLEINMAN, Director - Executive Vice President, Prudential International
Insurance Group since 1997; 1995 to 1997: Chief Marketing and Product
Development Officer, Prudential Individual Insurance Group.
ESTHER H. MILNES, President and Director - Vice President and Chief Actuary,
Prudential Individual Life Insurance since 1999; prior to 1999: Vice President
and Actuary, Prudential Individual Insurance Group.
DAVID R. ODENATH, JR., Director - President, Prudential Investments since 1999;
prior to 1999: Senior Vice President and Director of Sales, Investment
Consulting Group, PaineWebber.
I. EDWARD PRICE, Vice Chairman and Director - Senior Vice President and Actuary,
Prudential Individual Life Insurance since 1998; 1995 to 1998: Senior Vice
President and Actuary, Prudential Individual Insurance Group.
OFFICERS WHO ARE NOT DIRECTORS
C. EDWARD CHAPLIN, Treasurer - Vice President and Treasurer, Prudential since
1995.
JAMES C. DROZANOWSKI, Senior Vice President - Vice President, Operations and
Systems, Prudential Individual Financial Services since 1998; 1996 to 1998: Vice
President and Operations Executive, Prudential Individual Insurance Group; 1995
to 1996: President, Credit Card Division, Chase Manhattan Bank.
THOMAS F. HIGGINS, Senior Vice President - Vice President, Annuity Services,
Prudential Individual Financial Services since 1999; 1998 to 1999: Vice
President, Mutual Funds, Prudential Individual Financial Services; 1995 to 1998:
Principal, Mutual Fund Operations, The Vanguard Group.
CLIFFORD E. KIRSCH, Chief Legal Officer and Secretary - Chief Counsel, Variable
Products, Prudential Law Department since 1995.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary - Vice President and
Associate Actuary, Prudential since 1996; prior to 1996: Vice President and
Assistant Actuary, Prudential Corporate Risk Management.
WILLIAM J. ECKERT, Vice President and Chief Accounting Officer - Vice President
and IFS Controller, Enterprise Financial Management, Prudential since 2000; 1999
to 2000: Vice President and Individual Life Controller, Enterprise Financial
Management, Prudential; 1997 to 1999: Vice President, Accounting, Enterprise
Financial Management; 1995 to 1997: Vice President, Accounting, External
Financial Reporting.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
Pruco Life of New Jersey directors and officers are elected annually.
36
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF NET ASSETS (UNAUDITED)
June 30, 2000
<CAPTION>
SUBACCOUNTS
-----------------------------
PRUDENTIAL PRUDENTIAL
MONEY DIVERSIFIED
MARKET BOND
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
ASSETS
Investment in The Prudential Series Fund, Inc.
Portfolios and non-Prudential administered
funds, at net asset value [Note 3] ....................................................... $ 7,274,115 $ 22,753,943
------------- -------------
Net Assets ................................................................................. $ 7,274,115 $ 22,753,943
============= =============
NET ASSETS, representing:
Equity of contract owners [Note 4] ......................................................... $ 7,274,115 $ 22,753,943
------------- -------------
$ 7,274,115 $ 22,753,943
============= =============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A1
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------------------------
PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL PRUDENTIAL
PRUDENTIAL FLEXIBLE CONSERVATIVE HIGH YIELD STOCK EQUITY PRUDENTIAL PRUDENTIAL
EQUITY MANAGED BALANCED BOND INDEX INCOME GLOBAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- -------------- ------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 174,171,311 $ 237,167,192 $ 112,242,602 $ 30,668,045 $ 84,715,549 $ 10,587,257 $ 85,583,856 $ 35,564,018
-------------- -------------- -------------- ------------- --------------- ------------- ------------- -------------
$ 174,171,311 $ 237,167,192 $ 112,242,602 $ 30,668,045 $ 84,715,549 $ 10,587,257 $ 85,583,856 $ 35,564,018
============== ============== ============== ============= =============== ============= ============= =============
$ 174,171,311 $ 237,167,192 $ 112,242,602 $ 30,668,045 $ 84,715,549 $ 10,587,257 $ 85,583,856 $ 35,564,018
-------------- -------------- -------------- ------------- --------------- ------------- ------------- -------------
$ 174,171,311 $ 237,167,192 $ 112,242,602 $ 30,668,045 $ 84,715,549 $ 10,587,257 $ 85,583,856 $ 35,564,018
============== ============== ============== ============= =============== ============= ============= =============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A2
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF OPERATIONS
For the six months ended June 30, 2000, and the years ended December 31, 1999 and 1998
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ........................... $ 210,406 $ 362,423 $ 376,466 $ 359,224 $ 0 $ 1,518,983
---------- ---------- ---------- ---------- ---------- -----------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk
[Note 5A] ............................... 21,699 44,562 43,083 68,019 144,104 147,669
Reimbursement for excess expenses
[Note 5D] ............................... (893) (1,825) (1,102) (3,244) (6,334) (5,945)
---------- ---------- ---------- ---------- ---------- -----------
NET EXPENSES ................................ 20,806 42,737 41,981 64,775 137,770 141,724
---------- ---------- ---------- ---------- ---------- -----------
NET INVESTMENT INCOME (LOSS) ................ 189,600 319,686 334,485 294,449 (137,770) 1,377,259
---------- ---------- ---------- ---------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received .... 0 0 0 2,920 67,535 88,872
Realized gain (loss) on shares
redeemed .............................. 0 0 0 29,368 41,756 65,294
Net change in unrealized gain (loss)
on investments ........................ 0 0 0 239,267 (295,317) 22,951
---------- ---------- ---------- ---------- ---------- -----------
NET GAIN (LOSS) ON INVESTMENTS .............. 0 0 0 271,555 (186,026) 177,117
---------- ---------- ---------- ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS ................................ $ 189,600 $ 319,686 $ 334,485 $ 566,004 $ (323,796) $ 1,554,376
========== ========== ========== ========== ========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A3
<PAGE>
<TABLE>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED CONSERVATIVE BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------ --------------------------------------- -----------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 916,295 $ 3,250,226 $ 3,479,231 $2,066,886 $ 11,143 $ 10,349,173 $ 1,226,029 $ 4,689,573 $ 4,872,397
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
532,177 1,150,889 1,143,923 725,173 1,509,261 2,116,233 347,866 718,530 713,776
(70,358) (158,561) (166,679) (262,376) (544,224) (767,447) (93,797) (190,933) (183,772)
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
461,819 992,328 977,244 462,797 965,037 1,348,786 254,069 527,597 530,004
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
454,476 2,257,898 2,501,987 1,604,089 (953,894) 9,000,387 971,960 4,161,976 4,342,393
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
4,323,765 22,859,279 20,675,751 3,321,644 2,827,339 27,434,444 8,445 658,398 6,925,741
1,659,226 5,681,025 4,685,572 761,124 1,322,321 8,721,978 344,813 787,439 594,578
(17,548,892) (9,060,032) (12,015,861) (4,816,778) 14,382,751 (22,408,120) (65,903) 1,388,838 329,870
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
(11,565,901) 19,480,272 13,345,462 (734,010) 18,532,411 13,748,302 287,355 2,834,675 7,850,189
------------- ------------ ------------ ---------- ----------- ------------ ----------- ----------- ------------
$ (11,111,425) $ 21,738,170 $ 15,847,449 $ 870,079 $17,578,517 $ 22,748,689 $ 1,259,315 $ 6,996,651 $ 12,192,582
============= ============ ============ ========== =========== ============ =========== =========== ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A4
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF OPERATIONS
For six months ended June 30, 2000, and the years ended December 31, 1999 and 1998
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------
HIGH YIELD BOND STOCK INDEX
PORTFOLIO PORTFOLIO
-------------------------------------- ---------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
---------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income .......................... $ 867,184 $ 85,549 $ 1,994,015 $ 179,973 $ 767,914 $ 540,470
---------- ----------- ----------- ----------- ------------ ------------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk [Note 5A] 92,781 193,583 97,586 246,170 443,707 207,744
Reimbursement for excess expenses
[Note 5D] ................................ 0 0 0 0 0 0
---------- ----------- ----------- ----------- ------------ ------------
NET EXPENSES ................................ 92,781 193,583 97,586 246,170 443,707 207,744
---------- ----------- ----------- ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS) ................ 774,403 (108,034) 1,896,429 (66,197) 324,207 332,726
---------- ----------- ----------- ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received .... 0 0 0 84,563 976,749 1,074,502
Realized gain (loss) on shares redeemed . (27,127) (217,380) (173,650) 330,027 4,605,818 1,754,137
Net change in unrealized gain (loss)
on investments ........................ (1,439,347) 1,589,321 (2,569,803) (1,060,054) 8,162,150 11,731,008
---------- ----------- ----------- ----------- ------------ ------------
NET GAIN (LOSS) ON INVESTMENTS .............. (1,466,474) 1,371,941 (2,743,453) (645,464) 13,744,717 14,559,647
---------- ----------- ----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS ................................ $ (692,071) $ 1,263,907 $ (847,024) $ (711,661) $ 14,068,924 $ 14,892,373
========== =========== =========== =========== ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A5
<PAGE>
<TABLE>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME GLOBAL PRUDENTIAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------- --------------------------------------- -----------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 91,633 $ 273,914 $ 327,421 $ 148,461 $ 295,800 $ 490,032 $ 0 $ 22,451 $ 10,621
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
32,039 71,439 74,057 254,369 411,889 140,140 93,562 81,659 29,296
0 0 0 0 0 0 0 0 0
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
32,039 71,439 74,057 254,369 411,889 140,140 93,562 81,659 29,296
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
59,594 202,475 253,364 (105,908) (116,089) 349,892 (93,562) (59,208) (18,675)
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
23,888 1,332,460 721,671 5,399,070 518,662 2,640,161 499,627 970,020 104,664
(10,580) 244,341 117,016 339,852 1,889,924 32,172 6,950 108,823 27,074
(748,669) (422,725) (1,610,976) (6,866,642) 25,916,670 7,149,778 403,698 4,732,816 1,492,381
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
(735,361) 1,154,076 (772,289) (1,127,720) 28,325,256 9,822,111 910,275 5,811,659 1,624,119
----------- ----------- ----------- ------------ ------------ ------------ ---------- ----------- -----------
$ (675,767) $ 1,356,551 $ (518,925) $ (1,233,628) $ 28,209,167 $ 10,172,003 $ 816,713 $ 5,752,451 $ 1,605,444
=========== =========== =========== ============ ============ ============ ========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A6
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000, and the years ended December 31, 1999 and 1998
<CAPTION>
SUBACCOUNTS
-----------------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
--------------------------------------- ---------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
----------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ............ $ 189,600 $ 319,686 $ 334,485 $ 294,449 $ (137,770) $ 1,377,259
Capital gains distributions received .... 0 0 0 2,920 67,535 88,872
Realized gain (loss) on shares redeemed . 0 0 0 29,368 41,756 65,294
Net change in unrealized gain (loss) on
investments ........................... 0 0 0 239,267 (295,317) 22,951
----------- ----------- ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .............................. 189,600 319,686 334,485 566,004 (323,796) 1,554,376
----------- ----------- ----------- ------------ ------------ ------------
PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
Contract Owner Net Payments ............. 157,516 18,255 362,297 482,292 485,236 1,209,116
Policy Loans ............................ (61,673) (182,692) (147,149) (437,965) (553,832) (529,009)
Policy Loan Repayments and Interest ..... 71,010 204,337 265,406 208,567 509,659 421,496
Surrenders, Withdrawals and Death
Benefits .............................. (410,473) (433,849) (627,277) (510,043) (1,188,933) (1,336,342)
Net Transfers From (To) Other Subaccounts
or Fixed Rate Option .................. 17,379 252,166 538,372 (624,843) (351,534) 682,202
Withdrawal and Other Charges ............ (109,920) (231,397) (246,028) (268,009) (571,355) (621,531)
----------- ----------- ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS ............................... (336,161) (373,180) 145,621 (1,150,001) (1,670,759) (174,068)
----------- ----------- ----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RETAINED IN THE
ACCOUNT [Note 7] ........................ 0 0 (15,018) 0 0 (2,680)
----------- ----------- ----------- ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS .................................. (146,561) (53,494) 465,088 (583,997) (1,994,555) 1,377,628
NET ASSETS:
Beginning of period ..................... 7,420,676 7,474,170 7,009,082 23,337,940 25,332,495 23,954,867
----------- ----------- ----------- ------------ ------------ ------------
End of period ........................... $ 7,274,115 $ 7,420,676 $ 7,474,170 $ 22,753,943 $ 23,337,940 $ 25,332,495
=========== =========== =========== ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A7
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED CONSERVATIVE BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------- ----------------------------------------- -----------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 454,476 $ 2,257,898 $ 2,501,987 $ 1,604,089 $ (953,894) $ 9,000,387 $ 971,960 $ 4,161,976 $ 4,342,393
4,323,765 22,859,279 20,675,751 3,321,644 2,827,339 27,434,444 8,445 658,398 6,925,741
1,659,226 5,681,025 4,685,572 761,124 1,322,321 8,721,978 344,813 787,439 594,578
(17,548,892) (9,060,032) (12,015,861) (4,816,778) 14,382,751 (22,408,120) (65,903) 1,388,838 329,870
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(11,111,425) 21,738,170 15,847,449 870,079 17,578,517 22,748,689 1,259,315 6,996,651 12,192,582
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
3,520,231 484,980 8,768,106 7,261,910 4,963,270 19,460,603 3,510,450 2,955,315 8,965,691
(3,068,610) (5,865,015) (6,477,542) (3,137,905) (7,384,636) (7,974,049) (1,335,887) (2,889,851) (3,015,778)
2,141,486 5,452,661 4,223,794 2,996,544 7,010,849 5,598,233 1,243,370 2,927,288 1,976,521
(4,544,579) (7,992,313) (9,891,027) (7,325,489) (10,727,647) (13,996,390) (2,878,450) (5,619,206) (6,131,547)
(4,302,554) (3,629,986) (1,215,581) (5,336,110) (4,161,991) (144,967,979) (2,585,794) (2,179,539) (1,292,182)
(2,395,046) (5,119,578) (5,422,744) (4,614,461) (9,811,225) (11,055,099) (2,354,368) (4,974,621) (5,312,571)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(8,649,072) (16,669,251) (10,014,994) (10,155,511) (20,111,380) (152,934,681) (4,400,679) (9,780,614) (4,809,866)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
0 0 (132,641) 0 0 (177,182) 0 0 (8,012)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(19,760,497) 5,068,919 5,699,814 (9,285,432) (2,532,863) (130,363,174) (3,141,364) (2,783,963) 7,374,704
193,931,808 188,862,889 183,163,075 246,452,624 248,985,487 379,348,661 115,383,966 118,167,929 110,793,225
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$174,171,311 $193,931,808 $188,862,889 $237,167,192 $246,452,624 $248,985,487 $112,242,602 $115,383,966 $118,167,929
============ ============ ============ ============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A8
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended June 30, 2000, and the years ended December 31, 1999 and 1998
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------------
HIGH YIELD BOND STOCK INDEX
PORTFOLIO PORTFOLIO
----------------------------------------- -----------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ........... $ 774,403 $ (108,034) $ 1,896,429 $ (66,197) $ 324,207 $ 332,726
Capital gains distributions received ... 0 0 0 84,563 976,749 1,074,502
Realized gain (loss) on shares redeemed (27,127) (217,380) (173,650) 330,027 4,605,818 1,754,137
Net change in unrealized gain (loss) on
investments .......................... (1,439,347) 1,589,321 (2,569,803) (1,060,054) 8,162,150 11,731,008
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS ............................. (692,071) 1,263,907 (847,024) (711,661) 14,068,924 14,892,373
------------ ------------ ------------ ------------ ------------ ------------
PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
Contract Owner Net Payments ............ 165,877 247,400 356,982 1,106,350 836,738 (458,592)
Policy Loans ........................... (67,095) (145,200) (163,296) (388,613) (768,138) (528,435)
Policy Loan Repayments and Interest .... 51,182 288,800 167,408 320,289 641,476 429,300
Surrenders, Withdrawals and Death
Benefits ............................. (202,373) (164,918) (501,296) (1,300,751) (1,093,052) (1,117,895)
Net Transfers From (To) Other Subaccounts
or Fixed Rate Option ................. (541,754) (3,734,139) 29,637,732 1,736,026 (6,699,608) 50,128,317
Withdrawal and Other Charges ........... (142,814) (332,102) (283,352) (449,058) (876,437) (637,808)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS .............................. (736,977) (3,840,159) 29,214,178 1,024,243 (7,959,021) 47,814,887
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RETAINED IN THE
ACCOUNT [Note 7] ....................... 0 0 (60,128) 0 0 687,255
------------ ------------ ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN
NET ASSETS ............................. (1,429,048) (2,576,252) 28,307,026 312,582 6,109,903 63,394,515
NET ASSETS:
Beginning of period .................... 32,097,093 34,673,345 6,366,319 84,402,967 78,293,064 14,898,549
------------ ------------ ------------ ------------ ------------ ------------
End of period .......................... $ 30,668,045 $ 32,097,093 $ 34,673,345 $ 84,715,549 $ 84,402,967 $ 78,293,064
============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A9
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME GLOBAL PRUDENTIAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------- ----------------------------------------- -----------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 59,594 $ 202,475 $ 253,364 $ (105,908) $ (116,089) $ 349,892 $ (93,562) $ (59,208) $ (18,675)
23,888 1,332,460 721,671 5,399,070 518,662 2,640,161 499,627 970,020 104,664
(10,580) 244,341 117,016 339,852 1,889,924 32,172 6,950 108,823 27,074
(748,669) (422,725) (1,610,976) (6,866,642) 25,916,670 7,149,778 403,698 4,732,816 1,492,381
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(675,767) 1,356,551 (518,925) (1,233,628) 28,209,167 10,172,003 816,713 5,752,451 1,605,444
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
264,951 93,369 625,273 (100,239) (1,977,776) (404,538) 447,675 918,991 350,999
(146,592) (299,074) (348,765) (92,772) (156,604) (117,217) (449,011) (541,040) (186,693)
110,161 310,105 211,308 60,105 170,944 65,209 241,895 423,520 207,729
(200,014) (501,214) (642,033) (392,409) (19,903) (359,688) (386,923) (548,558) (263,749)
(510,611) (548,343) 1,663,734 2,861,817 (5,578,438) 47,651,150 9,801,174 12,249,824 2,831,858
(148,158) (331,274) (356,431) (253,593) (418,808) (207,310) (283,903) (318,494) (156,276)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(630,263) (1,276,431) 1,153,086 2,082,909 (7,980,585) 46,627,606 9,370,907 12,184,243 2,783,868
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
0 0 12,012 0 0 99,132 0 0 (7,320)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(1,306,030) 80,120 646,173 849,281 20,228,582 56,898,741 10,187,620 17,936,694 4,381,992
11,893,287 11,813,167 11,166,994 84,734,575 64,505,993 7,607,252 25,376,398 7,439,704 3,057,712
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 10,587,257 $ 11,893,287 $ 11,813,167 $ 85,583,856 $ 84,734,575 $ 64,505,993 $ 35,564,018 $ 25,376,398 $ 7,439,704
============ ============ ============ ============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A16
</TABLE>
A10
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
JUNE 30, 2000 (UNAUDITED)
NOTE 1: GENERAL
Pruco Life of New Jersey Variable Appreciable Account (the "Account")
was established on January 13, 1984 under New Jersey law as a separate
investment account of Pruco Life Insurance Company of New Jersey ("Pruco
Life of New Jersey") which is a wholly-owned subsidiary of Pruco Life
Insurance Company (an Arizona domiciled company) and is indirectly
wholly-owned by The Prudential Insurance Company of America
("Prudential"). The assets of the Account are segregated from Pruco Life
of New Jersey's other assets. Proceeds from the purchases of Pruco Life
of New Jersey Variable Appreciable Life ("VAL"), Pruco Life of New
Jersey PRUvider Variable Appreciable Life ("PRUvider"), effective
November 10, 1999 Pruco Life of New Jersey PruSelect III ("PSEL III")
and, effective May 1, 2000, Pruco Life of New Jersey Survivorship
Variable Universal Life ("SVUL") contracts are invested in the Account.
The Account is registered under the Investment Company act of 1940, as
amended, as a unit investment trust. There are nineteen subaccounts
within the Account, fifteen of which are available to PruSelect III
contract owners. Each subaccount invests in its corresponding portfolio
of The Prudential Series Fund, Inc. (the "Series Fund") or its
corresponding non-Prudential administered fund. The Series Fund is a
diversified open-end management investment company, and is managed by
Prudential.
Beginning October 16, 2000, the following seventeen additional
subaccounts will be available to PruSelect III contract owners: Franklin
Small Cap Fund - Class 2, American Century VP Income and Growth Fund, SP
Alliance Large Cap Growth Portfolio, SP Davis Value Portfolio, Dreyfus
MidCap Stock Portfolio, Dreyfus Small Cap Portfolio, SP Small/Mid Cap
Value Portfolio, Goldman Sachs CORE Small Cap Equity Fund, VIF -
Utilities Fund, VIF Technology Fund, SP INVESCO Small Company Growth
Portfolio, Janus Aspen Aggressive Growth Portfolio - Service Shares,
Janus Aspen Balanced Portfolio - Service Shares, Oppenheimer Aggressive
Growth Fund/VA - Service Shares, SP PIMCO Total Return Portfolio, SP
PIMCO High Yield Portfolio, and Janus Aspen International Growth
Portfolio - Service Shares.
New sales of the VAL product, which invests in the Account, were
discontinued as of May 1, 1992. However, premium payments made by the
contract owners existing at that date will continue to be received by
the Account.
At June 30, 2000, there were no balances pertaining to PruSelect III in
the subaccounts investing in the Series Fund or the non-Prudential
administered funds.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with
accounting principles generally accepted in the United States ("GAAP").
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts and disclosures. Actual results could differ from those
estimates.
Investments--The investments in shares of the Series Fund or the
non-Prudential administered funds are stated at the net asset value of
the respective portfolio.
Security Transactions--Realized gains and losses on security
transactions are reported on an average cost basis. Purchase and sale
transactions are recorded as of the trade date of the security being
purchased or sold.
Distributions Received--Dividend and capital gain distributions received
are reinvested in additional shares of the Series Fund or the
non-Prudential administered funds and are recorded on the ex-dividend
date.
A11
<PAGE>
NOTE 3: INVESTMENT INFORMATION FOR THE PRUCO LIFE OF NEW JERSEY VARIABLE
APPRECIABLE ACCOUNT
The net asset value per share for each portfolio of the Series Fund, the
number of shares (rounded) of each portfolio held by the Account and the
aggregate cost of investments in such shares at June 30, 2000 were as
follows: (unaudited)
<TABLE>
<CAPTION>
PORTFOLIOS
---------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C.
Number of shares (rounded): 727,411 2,053,605 6,572,502 13,669,679 7,288,481
Net asset value per share: $ 10.00 $ 11.08 $ 26.50 $ 17.35 $ 15.40
Cost: $ 7,274,115 $ 22,060,748 $145,532,311 $219,834,200 $103,434,783
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------
HIGH
YIELD STOCK EQUITY PRUDENTIAL
BOND INDEX INCOME GLOBAL JENNISON
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Number of shares (rounded): 4,277,273 1,922,731 579,172 2,996,634 1,073,469
Net asset value per share : $ 7.17 $ 44.06 $ 18.28 $ 28.56 $ 33.13
Cost: $ 32,600,994 $ 59,810,293 $ 10,627,810 $ 59,874,025 $ 28,426,819
</TABLE>
A12
<PAGE>
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding contract owner units, unit values and total value of
contract owner equity at June 30, 2000 were as follows: (unaudited)
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding
(VAL - rounded) ..................... 3,520,309 7,415,379 22,910,284 43,501,434 24,543,601
Unit Value (VAL) ...................... $ 2.06395 $ 3.06848 $ 7.60232 $ 5.12626 $ 4.18790
----------- ------------ ------------- ------------- -------------
Contract Owner Equity (VAL) ........... $ 7,265,743 $ 22,753,943 $ 174,171,311 $ 222,999,659 $ 102,786,147
----------- ------------ ------------- ------------- -------------
Contract Owner Units Outstanding
(PRUvider - rounded) ................ N/A N/A N/A 4,040,340 3,220,567
Unit Value (PRUvider) ................. N/A N/A N/A $ 3.50652 $ 2.93627
----------- ------------ ------------- ------------- -------------
Contract Owner Equity (PRUvider) ...... N/A N/A N/A $ 14,167,533 $ 9,456,455
----------- ------------ ------------- ------------- -------------
Contract Owner Units Outstanding
(PSEL III - rounded) ................ 0 0 0 0 0
Unit Value (PSEL III) ................. $ 1.03625 $ 1.02103 $ 0.99430 $ 1.04233 $ 1.04042
----------- ------------ ------------- ------------- -------------
Contract Owner Equity (PSEL III) ...... $ 0 $ 0 $ 0 $ 0 $ 0
----------- ------------ ------------- ------------- -------------
Contract Owner Units Outstanding
(SVUL - rounded) .................... 8,306 0 0 0 0
Unit Value (SVUL) ..................... $ 1.00793 $ 1.02931 $ 0.97653 $ 1.01741 $ 1.02049
----------- ------------ ------------- ------------- -------------
Contract Owner Equity (SVUL) .......... $ 8,372 $ 0 $ 0 $ 0 $ 0
----------- ------------ ------------- ------------- -------------
TOTAL CONTRACT OWNER EQUITY ........... $ 7,274,115 $ 22,753,943 $ 174,171,311 $ 237,167,192 $ 112,242,602
=========== ============ ============= ============= =============
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------
HIGH
YIELD STOCK EQUITY PRUDENTIAL
BOND INDEX INCOME GLOBAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding
(VAL - rounded) ..................... 12,627,090 13,773,565 2,381,471 33,488,822 9,521,851
Unit Value (VAL) ...................... $ 2.42875 $ 6.15059 $ 4.44568 $ 2.55581 $ 3.73499
------------- ------------- -------------- -------------- --------------
Contract Owner Equity (VAL) ........... $ 30,668,045 $ 84,715,549 $ 10,587,257 $ 85,583,856 $ 35,564,018
------------- ------------- -------------- -------------- --------------
Contract Owner Units Outstanding
(PRUvider - rounded) ................ N/A N/A N/A N/A N/A
Unit Value (PRUvider) ................. N/A N/A N/A N/A N/A
------------- ------------- -------------- -------------- --------------
Contract Owner Equity (PRUvider) ...... N/A N/A N/A N/A N/A
------------- ------------- -------------- -------------- --------------
Contract Owner Units Outstanding
(PSEL III - rounded) ................ 0 0 0 0 0
Unit Value (PSEL III) ............... $ 1.00078 $ 1.07018 $ 1.01719 $ 1.19434 $ 1.20545
------------- ------------- -------------- -------------- --------------
Contract Owner Equity (PSEL III) ...... $ 0 $ 0 $ 0 $ 0 $ 0
------------- ------------- -------------- -------------- --------------
Contract Owner Units Outstanding
(SVUL - rounded) .................... 0 0 0 0 0
Unit Value SVUL) .................... $ 0.99596 $ 1.01499 $ 0.97987 $ 1.00568 $ 1.01051
------------- ------------- -------------- -------------- --------------
Contract Owner Equity (SVUL) .......... $ 0 $ 0 $ 0 $ 0 $ 0
------------- ------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER EQUITY ........... $ 30,658,045 $ 84,715,549 $ 10,587,257 $ 85,583,856 $ 35,564,018
============= ============= ============== ============== ==============
</TABLE>
A13
<PAGE>
NOTE 5: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges, at an effective annual
rate of up to 0.60%, 0.90%, 0.50% and 0.90% are applied daily against
the net assets representing equity of VAL, PRUvider, PruSelect III
and SVUL contract owners held in each subaccount, respectively.
Mortality risk is that contract owners may not live as long as
estimated and expense risk is that the cost of issuing and
administering the policies may exceed related charges by Pruco Life
of New Jersey. Pruco Life of New Jersey currently intends to charge
only 0.20% on PruSelect III contracts but reserves the right to make
the full 0.50% charge.
B. Deferred Sales Charge
A deferred sales charge is imposed upon surrenders of certain VAL,
PRUvider and SVUL contracts to compensate Pruco Life of New Jersey
for sales and other marketing expenses. The amount of any sales
charge will depend on the number of years that have elapsed since the
contract was issued. No sales charge will be imposed after the tenth
year of the contract. No sales charge will be imposed on death
benefits.
C. Partial Withdrawal Charge
A charge is imposed by Pruco Life of New Jersey on partial
withdrawals of the cash surrender value. A charge equal to the lesser
of $15 or 2% and $25 or 2% will be made in connection with each
partial withdrawal of the cash surrender value of a VAL or PRUvider
contract and PruSelect III or SVUL contract, respectively.
D. Expense Reimbursement
The Account is reimbursed by Pruco Life of New Jersey for expenses in
excess of 0.40% of the VAL product's average daily net assets
incurred by the Money Market, Diversified Bond, Equity, Flexible
Managed and Conservative Balanced Portfolios of the Series Fund.
E. Cost of Insurance and Other Related Charges
Contract owner contributions are subject to certain deductions prior
to being invested in the Account. The deductions are for (1)
transaction costs which are deducted from each premium payment to
cover premium collection and processing costs; (2) state premium
taxes; (3) sales charges which are deducted in order to compensate
Pruco Life of New Jersey for the cost of selling the contract.
Contracts are also subject to monthly charges for the costs of
administering the contract and to compensate Pruco Life of New Jersey
for the guaranteed minimum death benefit risk.
NOTE 6: TAXES
Pruco Life of New Jersey is taxed as a "life insurance company" as
defined by the Internal Revenue Code and the results of operations of
the Account form a part of Prudential's consolidated federal tax return.
Under current federal law, no federal income taxes are payable by the
Account. As such, no provision for tax liability has been recorded in
these financial statements.
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RETAINED IN THE ACCOUNT
The increase (decrease) in net assets retained in the Account represents
the net contributions (withdrawals) of Pruco Life of New Jersey to
(from) the Account. Effective October 13, 1998, Pruco Life of New Jersey
no longer maintains a position in the Account. Previously, Pruco Life of
New Jersey maintained a position in the Account for liquidity purposes
including unit purchases and redemptions, fund share transactions and
expense processing.
A14
<PAGE>
NOTE 8: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts), for the
six months ended June 30, 2000 and the years ended December 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
---------------------------------------- -------------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 509,936 1,394,252 1,651,137 231,709 1,817,938 3,461,354
Contract Owner
Redemptions: (671,400) (1,583,513) (1,575,664) (612,952) (2,374,019) (3,523,454)
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED
PORTFOLIO PORTFOLIO
---------------------------------------- -------------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 736,933 1,053,096 4,007,348 1,912,194 2,928,417 16,398,289
Contract Owner
Redemptions: (1,878,536) (3,213,126) (5,431,230) (3,912,453) (6,981,728) (51,572,419)
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------------------
CONSERVATIVE BALANCED HIGH YIELD BOND
PORTFOLIO PORTFOLIO
---------------------------------------- -------------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 1,103,563 2,742,649 3,568,780 117,020 10,923,909 33,003,985
Contract Owner
Redemptions: (2,174,227) (5,207,302) (4,841,159) (416,253) (12,518,142) (21,070,995)
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------------------
STOCK INDEX EQUITY INCOME
PORTFOLIO PORTFOLIO
---------------------------------------- -------------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 620,041 10,650,541 25,612,492 146,058 214,150 724,545
Contract Owner
Redemptions: (454,283) (12,168,789) (14,154,931) (290,194) (494,521) (492,449)
<CAPTION>
SUBACCOUNTS (CONTINUED)
----------------------------------------------------------------------------------------
GLOBAL PRUDENTIAL
PORTFOLIO JENNISON PORTFOLIO
---------------------------------------- -------------------------------------------
01/01/2000 01/01/1999 01/01/1998 01/01/2000 01/01/1999 01/01/1998
TO TO TO TO TO TO
06/30/2000 12/31/1999 12/31/1998 06/30/2000 12/31/1999 12/31/1998
(UNAUDITED) (UNAUDITED)
----------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 1,279,032 31,717,854 84,626,033 2,932,872 4,934,733 1,808,411
Contract Owner
Redemptions: (523,650) (35,712,959) (53,280,086) (454,738) (810,425) (520,419)
</TABLE>
A15
<PAGE>
NOTE 9: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
in the Series Fund for the six months ended June 30, 2000 were as
follows:
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Purchases ........................... $ 940,583 $ 64,707 $ 65,197 $ 519,772 $ 318,215
Sales ............................... $ (1,349,901) $ (1,282,227) $ (9,215,637) $(11,132,219) $ (4,962,889)
<CAPTION>
PORTFOLIOS (CONTINUED)
------------------------------------------------------------------------------
HIGH YIELD STOCK EQUITY PRUDENTIAL
BOND INDEX INCOME GLOBAL JENNISON
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Purchases ........................... $ 86,260 $ 1,966,065 $ 176,516 $ 2,818,802 $ 9,318,811
Sales ............................... $ (916,480) $ (1,179,735) $ (837,566) $ (970,746) $ (34,285)
</TABLE>
A16
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1999
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------
MONEY DIVERSIFIED
MARKET BOND
PORTFOLIO PORTFOLIO
----------- ------------
<S> <C> <C>
ASSETS
Investment in The Prudential Series Fund, Inc.
Portfolios at net asset value [Note 3] .............. $ 7,473,027 $ 23,340,683
Receivable from (Payable to) Pruco Life
of New Jersey [Note 2] .............................. (52,351) (2,743)
----------- ------------
Net Assets .......................................... $ 7,420,676 $ 23,337,940
=========== ============
NET ASSETS, representing:
Equity of contract owners [Note 4] .................... $ 7,420,676 $ 23,337,940
----------- ------------
$ 7,420,676 $ 23,337,940
=========== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
A17
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------------------------------------------------
HIGH
FLEXIBLE CONSERVATIVE YIELD STOCK EQUITY PRUDENTIAL
EQUITY MANAGED BALANCED BOND INDEX INCOME GLOBAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 193,971,356 $ 246,446,762 $ 115,373,893 $ 32,097,556 $ 84,394,710 $ 11,892,035 $ 84,715,059 $ 25,369,217
(39,548) 5,862 10,073 (463) 8,257 1,252 19,516 7,181
------------- ------------- ------------- ------------ ------------ ------------ ------------ ------------
$ 193,931,808 $ 246,452,624 $ 115,383,966 $ 32,097,093 $ 84,402,967 $ 11,893,287 $ 84,734,575 $ 25,376,398
============= ============= ============= ============ ============ ============ ============ ============
$ 193,931,808 $ 246,452,624 $ 115,383,966 $ 32,097,093 $ 84,402,967 $ 11,893,287 $ 84,734,575 $ 25,376,398
------------- ------------- ------------- ------------ ------------ ------------ ------------ ------------
$ 193,931,808 $ 246,452,624 $ 115,383,966 $ 32,097,093 $ 84,402,967 $ 11,893,287 $ 84,734,575 $ 25,376,398
============= ============= ============= ============ ============ ============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
A18
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF OPERATIONS
For the years ended December 31, 1999, 1998, and 1997
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
--------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
--------- --------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ............................. $ 362,423 $ 376,466 $ 390,865 $ 0 $ 1,518,983 $ 1,730,646
--------- --------- --------- ---------- ----------- -----------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk [Note 5A] .. 44,562 43,083 44,046 144,104 147,669 140,877
Reimbursement for excess expenses
[Note 5D] .................................. (1,825) (1,102) (1,630) (6,334) (5,945) (5,701)
--------- --------- --------- ---------- ----------- -----------
NET EXPENSES .................................. 42,737 41,981 42,416 137,770 141,724 135,176
--------- --------- --------- ---------- ----------- -----------
NET INVESTMENT INCOME (LOSS) .................. 319,686 334,485 348,449 (137,770) 1,377,259 1,595,470
--------- --------- --------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received ...... 0 0 0 67,535 88,872 276,650
Realized gain (loss) on shares
redeemed ................................ 0 0 0 41,756 65,294 70,032
Net change in unrealized gain (loss)
on investments .......................... 0 0 0 (295,317) 22,951 (154,839)
--------- --------- --------- ---------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS ................ 0 0 0 (186,026) 177,117 191,843
--------- --------- --------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS .................................. $ 319,686 $ 334,485 $ 348,449 $ (323,796) $ 1,554,376 $ 1,787,313
========= ========= ========= ========== =========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
A19
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-----------------------------------------------------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED CONSERVATIVE BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------------------ ------------------------------------------ -----------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 3,250,226 $ 3,479,231 $ 3,958,383 $ 11,143 $ 10,349,173 $ 10,897,673 $ 4,689,573 $ 4,872,397 $ 4,982,357
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
1,150,889 1,143,923 1,028,832 1,509,261 2,116,233 2,184,985 718,530 713,776 665,939
(158,561) (166,679) (133,380) (544,224) (767,447) (793,096) (190,933) (183,772) (163,989)
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
992,328 977,244 895,452 965,037 1,348,786 1,391,889 527,597 530,004 501,950
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
2,257,898 2,501,987 3,062,931 (953,894) 9,000,387 9,505,784 4,161,976 4,342,393 4,480,407
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
22,859,279 20,675,751 9,847,752 2,827,339 27,434,444 56,731,648 658,398 6,925,741 11,925,141
5,681,025 4,685,572 3,605,717 1,322,321 8,721,978 2,974,960 787,439 594,578 961,056
(9,060,032) (12,015,861) 19,914,304 14,382,751 (22,408,120) (11,688,757) 1,388,838 329,870 (4,407,263)
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
19,480,272 13,345,462 33,367,773 18,532,411 13,748,302 48,017,851 2,834,675 7,850,189 8,478,934
------------ ------------ ------------ ------------ ------------ ------------ ----------- ------------ ------------
$ 21,738,170 $ 15,847,449 $ 36,430,704 $ 17,578,517 $ 22,748,689 $ 57,523,635 $ 6,996,651 $ 12,192,582 $ 12,959,341
============ ============ ============ ============ ============ ============ =========== ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
A20
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF OPERATIONS
For the years ended December 31, 1999, 1998 and 1997
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------
HIGH YIELD BOND STOCK INDEX
PORTFOLIO PORTFOLIO
-------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
---------- ----------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend income ............................... $ 85,549 $ 1,994,015 $568,574 $ 767,914 $ 540,470 $ 188,173
---------- ----------- -------- ----------- ----------- ----------
EXPENSES
Charges to contract owners for assuming
mortality risk and expense risk [Note 5A] .... 193,583 97,586 35,704 443,707 207,744 73,231
Reimbursement for excess expenses
[Note 5D] .................................... 0 0 0 0 0 0
NET EXPENSES .................................... 193,583 97,586 35,704 443,707 207,744 73,231
---------- ----------- -------- ----------- ----------- ----------
NET INVESTMENT INCOME (LOSS) .................... (108,034) 1,896,429 532,870 324,207 332,726 114,942
---------- ----------- -------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Capital gains distributions received ........ 0 0 0 976,749 1,074,502 412,169
Realized gain (loss) on shares
redeemed .................................. (217,380) (173,650) 32,615 4,605,818 1,754,137 260,629
Net change in unrealized gain (loss)
on investments ............................ 1,589,321 (2,569,803) 171,940 8,162,150 11,731,008 2,468,185
---------- ----------- -------- ----------- ----------- ----------
NET GAIN (LOSS) ON INVESTMENTS .................. 1,371,941 (2,743,453) 204,555 13,744,717 14,559,647 3,140,983
---------- ----------- -------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS .................................... $1,263,907 $ (847,024) $737,425 $14,068,924 $14,892,373 $3,255,925
========== =========== ======== =========== =========== ==========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
</TABLE>
A21
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME GLOBAL PRUDENTIAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------------------------- ---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 273,914 $ 327,421 $ 237,992 $ 295,800 $ 490,032 $ 69,248 $ 22,451 $ 10,621 $ 5,371
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
71,439 74,057 53,801 411,889 140,140 31,924 81,659 29,296 13,312
0 0 0 0 0 0 0 0 0
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
71,439 74,057 53,801 411,889 140,140 31,924 81,659 29,296 13,312
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
202,475 253,364 184,191 (116,089) 349,892 37,324 (59,208) (18,675) (7,941)
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
1,332,460 721,671 998,911 518,662 2,640,161 352,331 970,020 104,664 171,556
244,341 117,016 52,359 1,889,924 32,172 32,176 108,823 27,074 16,410
(422,725) (1,610,976) 1,459,574 25,916,670 7,149,778 (672,740) 4,732,816 1,492,381 364,364
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
1,154,076 (772,289) 2,510,844 28,325,256 9,822,111 (288,233) 5,811,659 1,624,119 552,330
----------- ---------- ---------- ----------- ----------- ---------- ----------- ----------- ---------
$ 1,356,551 $ (518,925) $2,695,035 $28,209,167 $10,172,003 $ (250,909) $ 5,752,451 $ 1,605,444 $ 544,389
=========== ========== ========== =========== =========== ========== =========== =========== =========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
</TABLE>
A22
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1999, 1998 and 1997
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
------------------------------------- ---------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................ $ 319,686 $ 334,485 $ 348,449 $ (137,770) $ 1,377,259 $ 1,595,470
Capital gains distributions received ........ 0 0 0 67,535 88,872 276,650
Realized gain (loss) on shares redeemed ..... 0 0 0 41,756 65,294 70,032
Net change in unrealized gain (loss) on
investments ............................... 0 0 0 (295,317) 22,951 (154,839)
---------- ---------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .................................. 319,686 334,485 348,449 (323,796) 1,554,376 1,787,313
---------- ---------- ---------- ----------- ----------- -----------
PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
Contract Owner Net Payments ................. 18,255 362,297 505,183 485,236 1,209,116 1,404,553
Policy Loans ................................ (182,692) (147,149) (409,790) (553,832) (529,009) (473,054)
Policy Loan Repayments and Interest ......... 204,337 265,406 140,076 509,659 421,496 409,993
Surrenders, Withdrawals and Death
Benefits .................................. (433,849) (627,277) (550,152) (1,188,933) (1,336,342) (1,502,838)
Net Transfers From (To) Other Subaccounts
or Fixed Rate Option ...................... 252,166 538,372 (156,879) (351,534) 682,202 194,525
Administrative and Other Charges ............ (231,397) (246,028) (301,944) (571,355) (621,531) (732,626)
---------- ---------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS ................................... (373,180) 145,621 (773,506) (1,670,759) (174,068) (699,447)
---------- ---------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RETAINED IN THE
ACCOUNT [Note 7] ............................ 0 (15,018) (99,078) 0 (2,680) (57,377)
---------- ---------- ---------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET
ASSETS ...................................... (53,494) 465,088 (524,135) (1,994,555) 1,377,628 1,030,489
NET ASSETS:
Beginning of year ........................... 7,474,170 7,009,082 7,533,217 25,332,495 23,954,867 22,924,378
---------- ---------- ---------- ----------- ----------- -----------
End of year ................................. $7,420,676 $7,474,170 $7,009,082 $23,337,940 $25,332,495 $23,954,867
========== ========== ========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
</TABLE>
A23
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED CONSERVATIVE BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------- ----------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 2,257,898 $ 2,501,987 $ 3,062,931 $ (953,894) $ 9,000,387 $ 9,505,784 $ 4,161,976 $ 4,342,393 $ 4,480,407
22,859,279 20,675,751 9,847,752 2,827,339 27,434,444 56,731,648 658,398 6,925,741 11,925,141
5,681,025 4,685,572 3,605,717 1,322,321 8,721,978 2,974,960 787,439 594,578 961,056
(9,060,032) (12,015,861) 19,914,304 14,382,751 (22,408,120) (11,688,757) 1,388,838 329,870 (4,407,263)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
21,738,170 15,847,449 36,430,704 17,578,517 22,748,689 57,523,635 6,996,651 12,192,582 12,959,341
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
484,980 8,768,106 10,298,271 4,963,270 19,460,603 22,730,005 2,955,315 8,965,691 10,313,838
(5,865,015) (6,477,542) (6,145,354) (7,384,636) (7,974,049) (7,849,567) (2,889,851) (3,015,778) (3,213,273)
5,452,661 4,223,794 3,591,634 7,010,849 5,598,233 5,129,697 2,927,288 1,976,521 2,156,195
(7,992,313) (9,891,027) (10,093,245) (10,727,647) (13,996,390) (15,259,724) (5,619,206) (6,131,547) (6,793,526)
(3,629,986) (1,215,581) 678,473 (4,161,991) (144,967,979) (2,359,588) (2,179,539) (1,292,182) (1,375,131)
(5,119,578) (5,422,744) (6,160,863) (9,811,225) (11,055,099) (12,720,067) (4,974,621) (5,312,571) (6,059,806)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(16,669,251) (10,014,994) (7,831,084) (20,111,380) (152,934,681) (10,329,244) (9,780,614) (4,809,866) (4,971,703)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
0 (132,641) (149,464) 0 (177,182) (219,866) 0 (8,012) (508,220)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
5,068,919 5,699,814 28,450,156 (2,532,863) (130,363,174) 46,974,525 (2,783,963) 7,374,704 7,479,418
188,862,889 183,163,075 154,712,919 248,985,487 379,348,661 332,374,136 118,167,929 110,793,225 103,313,807
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$193,931,808 $188,862,889 $183,163,075 $246,452,624 $248,985,487 $379,348,661 $115,383,966 $118,167,929 $110,793,225
============ ============ ============ ============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
</TABLE>
A24
<PAGE>
<TABLE>
FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1999, 1998 and 1997
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------
HIGH YIELD BOND STOCK INDEX
PORTFOLIO PORTFOLIO
------------------------------------- --------------------------------------
1999 1998 1997 1999 1998 1997
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................. $ (108,034) $ 1,896,429 $ 532,870 $ 324,207 $ 332,726 $ 114,942
Capital gains distributions received .......... 0 0 0 976,749 1,074,502 412,169
Realized gain (loss) on shares redeemed ....... (217,380) (173,650) 32,615 4,605,818 1,754,137 260,629
Net change in unrealized gain (loss) on
investments ................................. 1,589,321 (2,569,803) 171,940 8,162,150 11,731,008 2,468,185
----------- ----------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS .................................... 1,263,907 (847,024) 737,425 14,068,924 14,892,373 3,255,925
----------- ----------- ---------- ----------- ----------- -----------
PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
Contract Owner Net Payments ................... 247,400 356,982 469,592 836,738 (458,592) 919,468
Policy Loans .................................. (145,200) (163,296) (201,423) (768,138) (528,435) (466,875)
Policy Loan Repayments and Interest ........... 288,800 167,408 118,870 641,476 429,300 254,143
Surrenders, Withdrawals and Death
Benefits .................................... (164,918) (501,296) (305,958) (1,093,052) (1,117,895) (558,323)
Net Transfers From (To) Other Subaccounts
or Fixed Rate Option ........................ (3,734,139) 29,637,732 130,175 (6,699,608) 50,128,317 2,108,397
Administrative and Other Charges .............. (332,102) (283,352) (265,639) (876,437) (637,808) (474,579)
----------- ----------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM PREMIUM
PAYMENTS AND OTHER OPERATING
TRANSFERS ..................................... (3,840,159) 29,214,178 (54,383) (7,959,021) 47,814,887 1,782,231
----------- ----------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RETAINED IN THE
ACCOUNT [Note 7] .............................. 0 (60,128) 3,000 0 687,255 22,000
----------- ----------- ---------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS .................................... (2,576,252) 28,307,026 686,042 6,109,903 63,394,515 5,060,156
NET ASSETS:
Beginning of year ............................. 34,673,345 6,366,319 5,680,277 78,293,064 14,898,549 9,838,393
----------- ----------- ---------- ----------- ----------- -----------
End of period year ............................ $32,097,093 $34,673,345 $6,366,319 $84,402,967 $78,293,064 $14,898,549
=========== =========== ========== =========== =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
</TABLE>
A25
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------------------------------------------
EQUITY INCOME GLOBAL PRUDENTIAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------------- ----------------------------------------- -----------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 202,475 $ 253,364 $ 184,191 $ (116,089) $ 349,892 $ 37,324 $ (59,208) $ (18,675) $ (7,941)
1,332,460 721,671 998,911 518,662 2,640,161 352,331 970,020 104,664 171,556
244,341 117,016 52,359 1,889,924 32,172 32,176 108,823 27,074 16,410
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(422,725) (1,610,976) 1,459,574 25,916,670 7,149,778 (672,740) 4,732,816 1,492,381 364,364
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
1,356,551 (518,925) 2,695,035 28,209,167 10,172,003 (250,909) 5,752,451 1,605,444 544,389
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
93,369 625,273 636,376 (1,977,776) (404,538) 296,914 918,991 350,999 221,934
(299,074) (348,765) (321,220) (156,604) (117,217) (119,989) (541,040) (186,693) (95,540)
310,105 211,308 165,506 170,944 65,209 60,528 423,520 207,729 33,699
(501,214) (642,033) (413,503) (19,903) (359,688) (118,830) (548,558) (263,749) (53,534)
(548,343) 1,663,734 1,464,170 (5,578,438) 47,651,150 5,040,462 12,249,824 2,831,858 976,677
(331,274) (356,431) (325,521) (418,808) (207,310) (125,863) (318,494) (156,276) (85,689)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
(1,276,431) 1,153,086 1,205,808 (7,980,585) 46,627,606 5,033,222 12,184,243 2,783,868 997,547
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
0 12,012 (21,017) 0 99,132 37,702 0 (7,320) (34,235)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
80,120 646,173 3,879,826 20,228,582 56,898,741 4,820,015 17,936,694 4,381,992 1,507,701
11,813,167 11,166,994 7,287,168 64,505,993 7,607,252 2,787,237 7,439,704 3,057,712 1,550,011
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 11,893,287 $ 11,813,167 $ 11,166,994 $ 84,734,575 $ 64,505,993 $ 7,607,252 $ 25,376,398 $ 7,439,704 $ 3,057,712
============ ============ ============ ============ ============ ============ ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A27 THROUGH A31
</TABLE>
A26
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
THE PRUSELECT III VARIABLE LIFE SUBACCOUNTS OF
PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE ACCOUNT
DECEMBER 31, 1999
NOTE 1: GENERAL
Pruco Life of New Jersey Variable Appreciable Account ("the Account")
was established on January 13, 1984 under New Jersey law as a separate
investment account of Pruco Life Insurance Company of New Jersey ("Pruco
Life of New Jersey") which is a wholly-owned subsidiary of Pruco Life
Insurance Company (an Arizona domiciled company) and is indirectly
wholly-owned by The Prudential Insurance Company of America
("Prudential"). The assets of the Account are segregated from Pruco Life
of New Jersey's other assets. Proceeds from the purchases of Pruco Life
of New Jersey Variable Appreciable Life ("VAL"), Pruco Life of New
Jersey PRUvider Variable Appreciable Life ("PRUvider") and effective
November 10, 1999 Pruco Life of New Jersey PruSelect III ("PSEL III")
contracts are invested in the Account.
The Account is registered under the Investment Company Act of 1940, as
amended, as a unit investment trust. There are eighteen subaccounts
within the Account, fifteen of which are available to PruSelect III
contract owners. Each subaccount 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 Prudential.
New sales of the VAL product, which invests in the Account, were
discontinued as of May 1, 1992. However, premium payments made by
contract owners existing at that date will continue to be received by
the Account.
At December 31, 1999, there were no balances pertaining to PruSelect III
in the subaccounts investing in the Series Fund or the non-Prudential
admnistered funds.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with
accounting principles generally accepted in the United States ("GAAP").
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts and disclosures. Actual results could differ from those
estimates.
Investments--The investments in shares of the Series Fund are stated at
the net asset value of the respective portfolio.
Security Transactions--Realized gains and losses on security
transactions are reported on an average cost basis. Purchase and sale
transactions are recorded as of the trade date of the security being
purchased or sold.
Distributions Received--Dividend and capital gain distributions received
are reinvested in additional shares of the Series Fund and are recorded
on the ex-dividend date.
Receivable from (Payable to) Pruco Life of New Jersey--At times, Pruco
Life of New Jersey may owe an amount to or expect to receive an amount
from the Account primarily related to processing contract owner
payments, surrenders, withdrawals and death benefits. This amount is
reflected in the Account's Statements of Net Assets as either a
receivable from or payable to Pruco Life of New Jersey. The receivable
and or payable does not have an effect on the contract owner's account
or the related unit value.
A27
<PAGE>
NOTE 3: INVESTMENT INFORMATION FOR THE PRUCO LIFE OF NEW JERSEY VARIABLE
APPRECIABLE ACCOUNT
The net asset value per share for each portfolio of the Series Fund, the
number of shares (rounded) of each portfolio held by the Account and the
aggregate cost of investments in such shares at December 31, 1999 were
as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
----------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Number of shares (rounded): ........ 747,303 2,131,569 6,711,812 13,970,904 7,511,321
Net asset value per share: ......... $ 10.00 $ 10.95 $ 28.90 $ 17.64 $ 15.36
Cost: .............................. $ 7,473,027 $ 22,886,755 $147,783,464 $224,296,992 $106,500,171
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------------
HIGH
YIELD STOCK EQUITY PRUDENTIAL
BOND INDEX INCOME GLOBAL JENNISON
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Number of shares (rounded): ........ 4,268,292 1,898,644 609,223 2,734,508 783,242
Net asset value per share : ........ $ 7.52 $ 44.45 $ 19.52 $ 30.98 $ 32.39
Cost: .............................. $32,591,158 $58,429,400 $11,183,919 $51,938,586 $18,635,716
</TABLE>
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding contract owner units, unit values and total value of
contract owner equity at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding (VAL) .. 3,690,079 7,796,622 24,051,887 45,581,573 25,613,699
(VAL - rounded) ......................... $ 2.01098 $ 2.99334 $ 8.06306 $ 5.10277 $ 4.13896
------------ ------------ ------------ ------------ ------------
Contract Owner Equity (VAL) ............. $ 7,420,676 $ 23,337,940 $193,931,808 $232,592,282 $106,014,078
------------ ------------ ------------ ------------ ------------
Contract Owner Units Outstanding
(PRUvider - rounded) .................. N/A N/A N/A 3,960,460 3,221,133
Unit Value (PRUvider) ................... N/A N/A N/A $ 3.49968 $ 2.90888
------------ ------------ ------------ ------------ ------------
Contract Owner Equity (PRUvider) ........ N/A N/A N/A $ 13,860,342 $ 9,369,888
------------ ------------ ------------ ------------ ------------
Contract Owner Units Outstanding
(PSEL III - rounded) .................. 0 0 0 0 0
Unit Value (PSEL III) ................... $ 1.00775 $ 0.99424 $ 1.05287 $ 1.03671 $ 1.02714
------------ ------------ ------------ ------------ ------------
Contract Owner Equity (PSEL III) ........ $ 0 $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------ ------------
TOTAL CONTRACT OWNER EQUITY ............. $ 7,420,676 $ 23,337,940 $193,931,808 $246,452,624 $115,383,966
============ ============ ============ ============ ============
</TABLE>
A28
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------
HIGH
YIELD STOCK EQUITY PRUDENTIAL
BOND INDEX INCOME GLOBAL JENNISON
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Contract Owner Units Outstanding (VAL) ....... 12,926,323 13,607,807 2,525,607 32,733,240 7,043,717
(VAL - rounded) ............................ $ 2.48308 $ 6.20254 $ 4.70908 $ 2.58864 $ 3.60270
----------- ----------- ----------- ----------- -----------
Contract Owner Equity (VAL) .................. $32,097,093 $84,402,967 $11,893,287 $84,734,575 $25,376,398
----------- ----------- ----------- ----------- -----------
Contract Owner Units Outstanding
(PRUvider - rounded) ....................... N/A N/A N/A N/A N/A
Unit Value (PRUvider) ........................ N/A N/A N/A N/A N/A
----------- ----------- ----------- ----------- -----------
Contract Owner Equity (PRUvider) ............. N/A N/A N/A N/A N/A
----------- ----------- ----------- ----------- -----------
Contract Owner Units Outstanding
(PSEL III - rounded) ....................... 0 0 0 0 0
Unit Value (PSEL III) ...................... $ 1.02134 $ 1.07712 $ 1.07537 $ 1.20743 $ 1.16040
----------- ----------- ----------- ----------- -----------
Contract Owner Equity (PSEL III) ............. $ 0 $ 0 $ 0 $ 0 $ 0
----------- ----------- ----------- ----------- -----------
TOTAL CONTRACT OWNER EQUITY .................. $32,097,093 $84,402,967 $11,893,287 $84,734,575 $25,376,398
=========== =========== =========== =========== ===========
</TABLE>
NOTE 5: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges, at an effective annual
rate of 0.60%, 0.90% and 0.20%, are applied daily against the net
assets representing equity of VAL, PRUvider and PruSelect III
contract owners held in each subaccount, respectively. Mortality risk
is that contract owners may not live as long as estimated and expense
risk is that the cost of issuing and administering the policies may
exceed related charges by Pruco Life of New Jersey.
B. Deferred Sales Charge
A deferred sales charge is imposed upon surrenders of certain VAL and
PRUvider variable life insurance contracts to compensate Pruco Life
of New Jersey for sales and other marketing expenses. The amount of
any sales charge will depend on the number of years that have elapsed
since the contract was issued. No sales charge will be imposed after
the tenth year of the contract. No sales charge will be imposed on
death benefits.
C. Partial Withdrawal Charge
A charge is imposed by Pruco Life of New Jersey on partial
withdrawals of the cash surrender value. A charge equal to the lesser
of $15 or 2% and $25 or 2% will be made in connection with each
partial withdrawal of the cash surrender value of a VAL or PRUvider
contract and PruSelect III contract, respectively.
D. Expense Reimbursement
The Account is reimbursed by Pruco Life of New Jersey for expenses in
excess of 0.40% of the VAL product's average daily net assets
incurred by the Money Market, Diversified Bond, Equity, Flexible
Managed and Conservative Balanced Portfolios of the Series Fund.
E. Cost of Insurance and Other Related Charges
Contract owner contributions are subject to certain deductions prior
to being invested in the Account. The deductions are for (1)
transaction costs which are deducted from each premium payment to
cover premium collection and processing costs; (2) state premium
taxes; (3) sales charges which are deducted in order to compensate
Pruco Life of New Jersey for the cost of selling the contract.
Contracts are also subject to monthly charges for the costs of
administering the contract and to compensate Pruco Life of New Jersey
for the guaranteed minimum death benefit risk.
NOTE 6: TAXES
Pruco Life of New Jersey is taxed as a "life insurance company" as
defined by the Internal Revenue Code and the results of operations of
the Account form a part of Prudential's consolidated federal tax return.
Under current federal law, no federal income taxes are payable by the
Account. As such, no provision for tax liability has been recorded in
these financial statements.
A29
<PAGE>
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RETAINED IN THE ACCOUNT
The increase (decrease) in net assets retained in the Account represents
the net contributions (withdrawals) of Pruco Life of New Jersey to
(from) the Account. Effective October 13, 1998 Pruco Life of New Jersey
no longer maintains a position in the account. Previously, Pruco Life of
New Jersey maintained a position in the Account for liquidity purposes
including unit purchases and redemptions, fund share transactions and
expense processing.
NOTE 8: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts), for the
years ended December 31, 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------------
MONEY MARKET DIVERSIFIED BOND
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: ......... 1,394,252 1,651,137 1,852,551 1,817,938 3,461,354 957,470
Contract Owner
Redemptions: ........... (1,583,513) (1,575,664) (2,279,240) (2,374,019) (3,523,454) (1,208,781)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
EQUITY FLEXIBLE MANAGED
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: ......... 1,053,096 4,007,348 2,872,723 2,928,417 16,398,289 7,728,571
Contract Owner
Redemptions: ........... (3,213,126) (5,431,230) (4,155,330) (6,981,728) (51,572,419) (10,193,317
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
CONSERVATIVE BALANCED HIGH YIELD BOND
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: ......... 2,742,649 3,568,780 4,308,577 10,923,909 33,003,985 415,705
Contract Owner
Redemptions: ........... (5,207,302) (4,841,159) (5,775,601) (12,518,142) (21,070,995) (440,795)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
STOCK INDEX EQUITY INCOME
PORTFOLIO PORTFOLIO
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: ......... 10,650,541 25,612,492 1,448,957 214,150 724,545 651,898
Contract Owner
Redemptions: ........... (12,168,789) (14,154,931) (982,534) (494,521) (492,449) (352,895)
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
-------------------------------------------------------------------------------------
GLOBAL PRUDENTIAL
PORTFOLIO JENNISON PORTFOLIO
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Contract Owner
Contributions: ......... 31,717,854 84,626,033 3,871,182 4,934,733 1,808,411 862,419
Contract Owner
Redemptions: ........... (35,712,959) (53,280,086) (575,706) (810,425) (520,419) (284,443)
</TABLE>
A30
<PAGE>
NOTE 9: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
in the Series Fund for the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
-------------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Purchases ................ $ 2,157,046 $ 285,296 $ 343,856 $ 1,048,953 $ 583,087
Sales .................... $ (2,520,612) $ (2,091,082) $(17,965,888) $(22,131,232) $(10,901,371)
<CAPTION>
PORTFOLIOS (CONTINUED)
-------------------------------------------------------------------------------------
HIGH YIELD STOCK EQUITY PRUDENTIAL
BOND INDEX INCOME GLOBAL JENNISON
---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Purchases ................ $ 780,770 $ 9,032,528 $ 401,468 $ 701,472 $ 12,573,470
Sales .................... $ (4,814,050) $(17,443,512) $ (1,750,590) $ (9,113,462) $ (478,067)
</TABLE>
A31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of the PruSelect III Variable Life Subaccounts of
Pruco Life of New Jersey Variable Appreciable Account
and the Board of Directors of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of the subaccounts (Money Market
Portfolio, Diversified Bond Portfolio, Equity Portfolio, Flexible Managed
Portfolio, Conservative Balanced Portfolio, High Yield Bond Portfolio, Stock
Index Portfolio, Equity Income Portfolio, Global Portfolio and Prudential
Jennison Portfolio ) of the PruSelect III Variable Life Subaccounts of Pruco
Life of New Jersey Variable Appreciable Account at December 31, 1999, the
results of each of their operations and the changes in each of their net assets
for each of the three years in the period then ended, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of Pruco Life Insurance Company of New
Jersey's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of fund shares owned at December 31, 1999,
provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
March 17, 2000
A32
<PAGE>
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Financial Position
As of June 30, 2000 and December 31, 1999 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 2000: $604,283; and
1999: $604,223) $ 587,498 $ 585,271
Held to maturity, at amortized cost (fair value, 2000: $6,997; and
1999: $6,938) 7,470 7,470
Policy loans 147,180 143,815
Short-term investments 79,084 27,473
Other long-term investments 4,027 2,520
----------- -----------
Total investments 825,259 766,549
Cash 660 117
Deferred policy acquisition costs 126,866 129,184
Accrued investment income 11,955 12,492
Receivables from affiliate 17,889 16,231
Other assets 8,739 474
Separate Account assets 1,859,915 1,827,484
----------- -----------
TOTAL ASSETS $ 2,851,283 $ 2,752,531
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances $ 424,566 $ 414,917
Future policy benefits and other policyholder liabilities 107,641 105,861
Cash collateral for loaned securities 39,348 17,900
Securities sold under agreements to repurchase 14,198 --
Income taxes payable 27,099 27,829
Other liabilities 17,213 7,571
Separate Account liabilities 1,859,915 1,827,484
----------- -----------
Total liabilities 2,489,980 2,401,562
----------- -----------
Contingencies - (See Footnote 2)
Stockholder's Equity
Common stock, $5 par value;
400,000 shares, authorized;
issued and outstanding at
June 30, 2000 and December 31, 1999 2,000 2,000
Paid-in-capital 125,000 125,000
Retained earnings 239,787 230,057
Accumulated other comprehensive loss (5,484) (6,088)
----------- -----------
Total stockholder's equity 361,303 350,969
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 2,851,283 $ 2,752,531
=========== ===========
</TABLE>
See Notes to Financial Statements
B1
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Operations and Comprehensive Income (Unaudited)
Three and Six Months Ended June 30, 2000 and 1999 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Premiums $ 3,275 $ 3,150 $ 1,786 $ 1,466
Policy charges and fee income 27,457 26,186 13,531 13,418
Net investment income 27,074 24,575 13,358 12,649
Realized investment losses, net (1,549) (2,139) (238) (1,792)
Asset management fees 4,185 3,250 2,144 1,755
Other income 104 164 58 66
-------- -------- -------- --------
Total revenues 60,546 55,186 30,639 27,562
-------- -------- -------- --------
BENEFITS AND EXPENSES
Policyholders' benefits 14,412 14,426 6,692 5,820
Interest credited to policyholders' account
balances 9,521 8,925 5,111 4,645
General, administrative and other expenses 21,643 21,623 9,483 13,186
-------- -------- -------- --------
Total benefits and expenses 45,576 44,974 21,286 23,651
-------- -------- -------- --------
Income from operations before income taxes 14,970 10,212 9,353 3,911
-------- -------- -------- --------
Income tax provision 5,240 3,574 3,274 1,269
-------- -------- -------- --------
NET INCOME $ 9,730 $ 6,638 $ 6,079 $ 2,642
-------- -------- -------- --------
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities,
net of reclassification adjustment 604 (3,979) (189) (2,410)
-------- -------- -------- --------
TOTAL COMPREHENSIVE INCOME $ 10,334 $ 2,659 $ 5,890 $ 232
======== ======== ======== ========
</TABLE>
See Notes to Financial Statements
B2
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Changes in Stockholder's Equity (Unaudited)
Periods ended June 30, 2000 and December 31, 1999 and 1998 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated
other Total
Common Paid-in- Retained comprehensive stockholder's
stock capital earnings income (loss) equity
----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $ 2,000 $ 125,000 $ 185,437 $ 2,956 $ 315,393
Net income -- -- 31,823 -- 31,823
Change in net unrealized
investment losses, net of
reclassification and taxes -- -- -- (1,363) (1,363)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 $ 2,000 $ 125,000 $ 217,260 $ 1,593 $ 345,853
Net income -- -- 12,797 -- 12,797
Change in net unrealized
investment losses, net of
reclassification and taxes -- -- -- (7,681) (7,681)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 $ 2,000 $ 125,000 $ 230,057 $ (6,088) $ 350,969
Net income -- -- 9,730 -- 9,730
Change in net unrealized
investment gains, net of
reclassification and taxes -- -- -- 604 604
----------- ----------- ----------- ----------- -----------
Balance, June 30, 2000 $ 2,000 $ 125,000 $ 239,787 $ (5,484) $ 361,303
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
B3
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 2000 and 1999 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended,
June 30,
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,730 $ 6,638
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Policy charges and fee income (4,948) (4,411)
Interest credited to policyholders' account balances 9,521 8,925
Realized investment losses (gains), net 1,549 2,139
Amortization and other non-cash items 1,059 10,633
Change in:
Future policy benefits and other policyholders' liabilities 1,781 3,734
Accrued investment income 537 457
Policy loans (3,365) (3,260)
Payable to/Receivable from affiliates, net (1,659) (16,703)
Deferred policy acquisition costs 2,318 (8,957)
Income taxes payable (729) 906
Other, net 1,376 15,204
--------- ---------
Cash Flows From Operating Activities 17,170 15,305
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 237,982 559,840
Payments for the purchase of:
Fixed maturities:
Available for sale (241,776) (510,634)
Held to maturity 0 (7,470)
Cash collateral for loaned securities, net 21,448 (29,709)
Securities sold under agreements to repurchase, net 14,198 (13,048)
Other long-term investments (1,508) (690)
Short term investments, net (51,608) (6,964)
--------- ---------
Cash Flows (Used in) Investing Activities (21,264) (8,675)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 109,057 113,275
Withdrawals (104,420) (119,187)
--------- ---------
Cash Flows From (Used in) Financing Activities 4,637 (5,912)
--------- ---------
Net (decrease) increase in Cash 543 718
Cash, beginning of year 117 45
--------- ---------
CASH, END OF PERIOD $ 660 $ 763
========= =========
</TABLE>
See Notes to Financial Statements
B4
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements (Unaudited)
--------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The accompanying interim financial statements have been prepared pursuant to the
rules and regulations for reporting on Form 10-Q on the basis of accounting
principles generally accepted in the United States. These interim financial
statements are unaudited but reflect all adjustments which, in the opinion of
management, are necessary to provide a fair presentation of the results of
operations and financial condition of the Pruco Life Insurance Company of New
Jersey ("the Company"), for the interim periods presented. The Company is a
wholly-owned subsidiary of the Pruco Life Insurance Company ("Pruco Life") which
in turn is a wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"). All such adjustments are of a normal recurring nature,
with the exception of certain related party transactions, as described in
Footnote 3. The results of operations for any interim period are not necessarily
indicative of results for a full year. Certain amounts in the Company's prior
year financial statements have been reclassified to conform to the 2000
presentation. These financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999.
2. CONTINGENCIES
Various lawsuits against the Company have arisen in the course of the Company's
business. In certain of these matters, large and/or indeterminate amounts are
sought.
On October 28, 1996, the Company entered into a Stipulation of Settlement with
attorneys for the plaintiffs in a consolidated class action lawsuit pending in a
Multi-District Litigation proceeding in the U.S. District Court for the District
of New Jersey. The class action suit involved alleged improprieties in
connection with the sale, servicing and operation of permanent life insurance
policies from 1982 through 1995. Pursuant to the settlement, the Company has
participated in a remediation program pursuant to which relief was offered to
policyowners who were misled when they purchased permanent life insurance
policies in the United States from 1982 to 1995. Prudential has agreed to
indemnify the Company for any liability incurred in connection with that
litigation.
The balance of the Company's litigation is subject to many uncertainties, and
given the complexity and scope, the outcomes cannot be predicted with precision.
Management believes that any ultimate liability that could result from such
litigation would not have a material adverse effect on the Company's financial
position.
3. RELATED PARTY TRANSACTIONS
The Company has extensive transactions and relationships with Prudential and
other affiliates. It is possible that the terms of these transactions are not
the same as those that would result from transactions among wholly unrelated
parties.
Expense Charges and Allocations
All of the Company's expenses are allocations or charges from Prudential or
other affiliates. These expenses can be grouped into the following categories:
general and administrative expenses, retail distribution expenses and asset
management fees.
The Company's general and administrative expenses are charged to the Company
using allocation methodologies based on business processes. Management believes
that the methodology is reasonable and reflects costs incurred by Prudential to
process transactions on behalf of the Company. Prudential and the Company
operate under service and lease agreements whereby services of officers and
employees, supplies, use of equipment and office space are provided by
Prudential.
Late in 1998, Prudential undertook a review of its expense allocation
methodology. This review resulted in increased allocations to the Company
compared with 1998 levels, reflecting higher expense allocations to products
requiring more complex business processes and more transactions, such as
variable products which allow policyholders to make changes in their investment
portfolio. Implementation of the revised allocation methodology was
substantially completed in the second quarter of 1999.
The Company is allocated estimated distribution expenses from Prudential's
retail agency network for both its domestic life and annuity products. The
Company has capitalized the majority of these distribution expenses as deferred
policy acquisition costs ("DAC"). At April 1, 2000 Prudential and the Company
agreed to revise the estimate of allocated distribution expenses to reflect a
market based pricing arrangement.
B5
<PAGE>
Pruco Life Insurance Company of New Jersey
Notes to Financial Statements (Unaudited)
--------------------------------------------------------------------------------
3. RELATED PARTY TRANSACTIONS (continued)
The Company is charged an asset management fee by Prudential Global Asset
Management ("PGAM") for managing the Separate Account investment portfolio.
These fees are a component of general, administrative and other expenses.
In addition, the Company receives asset management fee income from policyholder
account balances invested in the Prudential Series Fund ("PSF"), as shown in the
Statement of Operations.
Corporate Owned Life Insurance
The Company has sold a Corporate Owned Life Insurance ("COLI") policy to
Prudential. The cash surrender value included in Separate Accounts was $200.0
million and $199.0 million at June 30, 2000 and December 31, 1999, respectively.
Reinsurance
The Company currently has a reinsurance agreement in place with Prudential ("the
reinsurer"). The reinsurance agreement is a yearly renewable term agreement in
which the Company may offer and the reinsurer may accept reinsurance on any life
in excess of the Company's maximum limit of retention. The Company is not
relieved of its primary obligation to the policyholder as a result of these
reinsurance transactions. These agreements had no material effect on net income
for the periods ended June 30, 2000 and December 31, 1999.
Debt Agreements
In July 1998, the Company established a revolving line of credit facility with
Prudential Funding Corporation, a wholly-owned subsidiary of Prudential. There
is no outstanding debt relating to this credit facility as of June 30, 2000 or
December 31, 1999.
4. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires that companies recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. SFAS No. 133 does not apply to most traditional
insurance contracts. However, certain hybrid contracts that contain features
which may affect settlement amounts similarly to derivatives may require
separate accounting for the "host contract" and the underlying "embedded
derivative" provisions. The latter provisions would be accounted for as
derivatives as specified by the statement.
SFAS No. 133 provides, if certain conditions are met, that a derivative may be
specifically designated as (1) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment
(fair value hedge), (2) a hedge of the exposure to variable cash flows of a
forecasted transaction (cash flow hedge), or (3) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security or a foreign-currency-denominated
forecasted transaction (foreign currency hedge).
Under SFAS No. 133, the accounting for changes in fair value of a derivative
depends on its intended use and designation. For a fair value hedge, the gain or
loss is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item. For a cash flow hedge, the effective
portion of the derivative's gain or loss is initially reported as a component of
other comprehensive income and subsequently reclassified into earnings when the
forecasted transaction affects earnings. For a foreign currency hedge, the gain
or loss is reported in other comprehensive income as part of the foreign
currency translation adjustment. For all other derivatives not designated as
hedging instruments, the gain or loss is recognized in earnings in the period of
change. The Company is required to adopt this Statement, as amended, as of
January 1, 2001 and is currently assessing the effect of the new standard.
B6
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Financial Position
December 31, 1999 and 1998 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Fixed maturities
Available for sale, at fair value (amortized cost, 1999: $604,223; and 1998: $617,758) $ 585,271 $ 622,990
Held to maturity, at amortized cost (fair value, 1999: $6,938) 7,470 --
Policy loans 143,815 139,443
Short-term investments 27,473 53,761
Other long-term investments 2,520 2,421
----------- -----------
Total investments 766,549 818,615
Cash 117 45
Deferred policy acquisition costs 129,184 113,923
Accrued investment income 12,492 12,209
Receivables from affiliate 16,231 --
Other assets 474 15,379
Separate Account assets 1,827,484 1,450,986
----------- -----------
TOTAL ASSETS $ 2,752,531 $ 2,411,157
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Policyholders' account balances $ 414,917 $ 414,546
Future policy benefits and other policyholder liabilities 105,861 89,832
Cash collateral for loaned securities 17,900 34,424
Securities sold under agreements to repurchase -- 27,210
Income taxes payable 27,829 25,325
Payables to affiliate -- 3,492
Other liabilities 7,571 19,489
Separate Account liabilities 1,827,484 1,450,986
----------- -----------
Total liabilities 2,401,562 2,065,304
----------- -----------
Contingencies - (See Footnote 11)
Stockholder's Equity
Common stock, $5 par value;
400,000 shares, authorized;
issued and outstanding at
December 31, 1999 and 1998 2,000 2,000
Paid-in-capital 125,000 125,000
Retained earnings 230,057 217,260
Accumulated other comprehensive (loss) income (6,088) 1,593
----------- -----------
Total stockholder's equity 350,969 345,853
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 2,752,531 $ 2,411,157
=========== ===========
</TABLE>
See Notes to Financial Statements
B7
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Operations and Comprehensive Income
Years Ended December 31, 1999, 1998, and 1997 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- --------
<S> <C> <C> <C>
REVENUES
Premiums $ 6,742 $ 7,282 $ 6,832
Policy charges and fee income 52,714 53,152 56,687
Net investment income 47,600 47,032 46,324
Realized investment (losses) gains, net (5,013) 8,446 1,707
Asset management fees 7,407 5,641 5,287
Other income 386 114 --
--------- --------- --------
Total revenues 109,836 121,667 116,837
--------- --------- --------
BENEFITS AND EXPENSES
Policyholders' benefits 26,237 30,679 39,727
Interest credited to policyholders' account balances 18,846 19,038 19,372
General, administrative and other expenses 45,065 22,557 27,541
--------- --------- --------
Total benefits and expenses 90,148 72,274 86,640
--------- --------- --------
Income from operations before income taxes 19,688 49,393 30,197
--------- --------- --------
Income tax provision 6,891 17,570 10,974
--------- --------- --------
NET INCOME $ 12,797 $ 31,823 $ 19,223
========= ========= ========
Net unrealized investment (losses) gains on securities,
net of reclassification adjustment and taxes (7,681) (1,363) 924
--------- --------- --------
TOTAL COMPREHENSIVE INCOME $ 5,116 $ 30,460 $ 20,147
========= ========= ========
</TABLE>
See Notes to Financial Statements
B8
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Changes in Stockholder's Equity
Years Ended December 31, 1999, 1998, and 1997 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Accumulated
other Total
Common Paid - in - Retained comprehensive stockholder's
stock capital earnings income (loss) equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 2,000 $ 125,000 $ 166,214 $ 2,032 $ 295,246
Net income -- -- 19,223 -- 19,223
Change in net unrealized
investment (losses) gains,
net of reclassification and taxes -- -- -- 924 924
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 2,000 125,000 185,437 2,956 315,393
Net income -- -- 31,823 -- 31,823
Change in net unrealized
investment (losses) gains,
net of reclassification and taxes -- -- -- (1,363) (1,363)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 2,000 125,000 217,260 1,593 345,853
Net income -- -- 12,797 -- 12,797
Change in net unrealized
investment (losses) gains,
net of reclassification and taxes -- -- -- (7,681) (7,681)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 $ 2,000 $ 125,000 $ 230,057 $ (6,088) $ 350,969
=========== =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
B9
<PAGE>
Pruco Life Insurance Company of New Jersey
Statements of Cash Flows
Years Ended December 31, 1999, 1998, and 1997 (In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,797 $ 31,823 $ 19,223
Adjustments to reconcile net income to net cash (used in)
provided by
operating activities:
Policy charges and fee income (11,399) (5,180) (7,841)
Interest credited to policyholders' account balances 18,846 19,038 19,372
Realized investment losses (gains), net 5,013 (8,446) (1,707)
Amortization and other non-cash items 18,092 2,497 (342)
Change in:
Future policy benefits and other policyholders' liabilities 16,029 5,304 8,277
Accrued investment income (283) 1,866 (1,167)
Policy loans (4,372) (12,137) (13,388)
Payable to affiliates (19,723) (815) (1,752)
Deferred policy acquisition costs (15,261) (12,298) 5,340
Income taxes payable 2,504 (9,826) 9,006
Other, net 2,987 (8,954) 2,812
--------- --------- ---------
Cash Flows From Operating Activities 25,230 2,872 37,833
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Available for sale 702,380 1,001,096 645,355
Payments for the purchase of:
Fixed maturities:
Available for sale (695,198) (1,029,988) (679,709)
Held to maturity (7,470) -- --
Other long term investments, net 99 (854) 1,629
Cash collateral for loaned securities, net (16,524) 761 33,663
Securities sold under agreements to repurchase, net (27,210) 27,210 --
Short term investments, net 26,296 (1,297) (35,461)
--------- --------- ---------
Cash Flows Used in Investing Activities (17,627) (3,072) (34,523)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 256,842 298,391 134,020
Withdrawals (264,373) (298,149) (141,255)
--------- --------- ---------
Cash Flows (Used in) From Financing Activities (7,531) 242 (7,235)
--------- --------- ---------
Net increase (decrease) in Cash 72 42 (3,925)
Cash, beginning of year 45 3 3,928
--------- --------- ---------
CASH, END OF PERIOD $ 117 $ 45 $ 3
========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 480 $ 27,083 $ 1,896
========= ========= =========
</TABLE>
See Notes to Financial Statements
B10
<PAGE>
Notes to Financial Statements
1. BUSINESS
Pruco Life Insurance Company of New Jersey ("the Company") is a stock life
insurance company organized in 1982 under the laws of the state of New Jersey.
It is licensed to sell individual life insurance, variable life insurance,
variable annuities, and fixed annuities ("the Contracts") only in the states of
New Jersey and New York.
The Company is a wholly owned subsidiary of Pruco Life Insurance Company ("Pruco
Life"), a stock life insurance company organized in 1971 under the laws of the
state of Arizona. Pruco Life, in turn, is a wholly owned subsidiary of The
Prudential Insurance Company of America (Prudential), a mutual insurance company
founded in 1875 under the laws of the state of New Jersey. Prudential is
currently considering reorganizing itself into a publicly traded stock company
through a process known as "demutualization." On February 10, 1998, Prudential's
Board of Directors authorized management to take the preliminary steps necessary
to allow Prudential to demutualize. On July 1, 1998, legislation was enacted in
New Jersey that would permit this conversion to occur and that specified the
process for conversion. Demutualization is a complex process involving
development of a plan of reorganization, adoption of a plan by Prudential's
Board of Directors, a public hearing, approval by two-thirds of the qualified
policyholders who vote on the plan review and approval by the New Jersey
Department of Banking and Insurance. Prudential's management is in the process
of developing a proposed plan of demutualization, although there can be no
assurance that Prudential's Board of Directors will approve such a plan.
Prudential's decision whether to demutualize is not expected to have a material
effect on the Company's operations.
The Company is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other entities
engaged in marketing insurance products, and individual annuities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements include the accounts of the Company, a stock life
insurance company. The financial statements have been prepared in accordance
with accounting principles generally accepted in the United States ("GAAP"). The
Company has extensive transactions and relationships with Prudential and other
affiliates, as more fully described in Footnote 13. Due to these relationships,
it is possible that the terms of those transactions are not the same as those
that would result from transactions among wholly unrelated parties.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, in particular deferred policy acquisition costs ("DAC")
and future policy benefits, and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
Investments
Fixed maturities classified as "available for sale" are carried at estimated
fair value. The amortized cost of fixed maturities is written down to estimated
fair value if a decline in value is considered to be other than temporary.
Unrealized gains and losses on fixed maturities "available for sale" including
the effect on DAC and policyholders' account balances that would result from the
realization of unrealized gains and losses, net of income taxes, are included in
a separate component of equity, "Accumulated other comprehensive income."
Policy loans are carried at unpaid principal balances.
Short-term investments, including highly liquid debt instruments purchased with
an original maturity of twelve months or less and are carried at amortized cost,
which approximates fair value.
Realized investment gains (losses), net, are computed using the specific
identification method. Costs of fixed maturities are adjusted for impairments
considered to be other than temporary.
Cash
Cash includes cash on hand, amounts due from banks, and money market
instruments.
B11
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred Policy Acquisition Costs
The costs which vary with and that are related primarily to the production of
new insurance business are deferred to the extent that they are deemed
recoverable from future profits. Such costs include certain commissions, costs
of policy issuance and underwriting, and certain variable field office expenses.
Deferred policy acquisition costs are subject to recoverability testing at the
time of policy issue and loss recognition testing at the end of each accounting
period. Deferred policy acquisition costs are adjusted for the impact of
unrealized gains or losses on investments as if these gains or losses had been
realized, with corresponding credits or charges included in equity.
Policy acquisition costs related to interest-sensitive products and certain
investment-type products are deferred and amortized over the expected life of
the contracts (periods ranging from 15 to 30 years) in proportion to estimated
gross profits arising principally from investment results, mortality and expense
margins, and surrender charges based on historical and anticipated future
experience, which is updated periodically. The effect of changes to estimated
gross profits on unamortized deferred acquisition costs is reflected in "General
and administrative expenses" in the period such estimated gross profits are
revised.
Securities loaned
Securities loaned are treated as financing arrangements and are recorded at the
amount of cash received as collateral. The Company obtains collateral in an
amount equal to 102% and 105% of the fair value of the domestic and foreign
securities, respectively. The Company monitors the market value of securities
loaned on a daily basis with additional collateral obtained as necessary.
Non-cash collateral received is not reflected in the statements of financial
position because the debtor typically has the right to redeem the collateral on
short notice. Substantially all of the Company's securities loaned are with
large brokerage firms.
Securities sold under agreements to repurchase
Securities sold under agreements to repurchase are treated as financing
arrangements and are carried at the amounts at which the securities will be
subsequently reacquired, including accrued interest, as specified in the
respective agreements. Assets to be repurchased are the same, or substantially
the same, as the assets transferred and the transferor, through right of
substitution, maintains the right and ability to redeem the collateral on short
notice. The market value of securities to be repurchased is monitored and
additional collateral is obtained, where appropriate, to protect against credit
exposure.
Securities lending and securities repurchase agreements are used to generate net
investment income and facilitate trading activity. These instruments are
short-term in nature (usually 30 days or less). Securities loaned are
collateralized principally by U.S. Government and mortgage-backed securities.
Securities sold under repurchase agreements are collateralized principally by
cash. The carrying amounts of these instruments approximate fair value because
of the relatively short period of time between the origination of the
instruments and their expected realization.
Separate Account Assets and Liabilities
Separate Account assets and liabilities are reported at estimated fair value and
represent segregated funds which are invested for certain policyholders and
other customers. Separate Account assets include common stocks, fixed
maturities, real estate related securities, and short-term investments. The
assets of each account are legally segregated and are not subject to claims that
arise out of any other business of the Company. Investment risks associated with
market value changes are borne by the customers, except to the extent of minimum
guarantees made by the Company with respect to certain accounts. The investment
income and gains or losses for Separate Accounts generally accrue to the
policyholders and are not included in the Consolidated Statements of Operations.
Mortality, policy administration and surrender charges on the accounts are
included in "Policy charges and fee income."
B12
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Separate Accounts represent funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
policyholders, with the exception of the Pruco Life of New Jersey Modified
Guaranteed Annuity Account. The Pruco Life of New Jersey Modified Guaranteed
Annuity Account is a non-unitized Separate Account, which funds the Modified
Guaranteed Annuity Contract and the Market Value Adjustment Annuity Contract.
Owners of the Pruco Life of New Jersey Modified Guaranteed Annuity and the
Market Value Adjustment Annuity Contracts do not participate in the investment
gain or loss from assets relating to such accounts. Such gain or loss is borne,
in total, by the Company.
Insurance Revenue and Expense Recognition
Premiums from insurance policies are generally recognized when due. Benefits are
recorded as an expense when they are incurred. For individual annuities in
payout status, a liability for future policy benefits is recorded for the
present value of expected future payments based on historical experience.
Amounts received as payment for interest sensitive life, investment contracts
and variable annuities are reported as deposits to "Policyholders' account
balances." Revenues from these contracts are reflected as "Policy charges and
fee income" and consist primarily of fees assessed during the period against the
policyholders' account balances for mortality charges, policy administration
charges, and surrender charges. In addition, interest earned from the investment
of these account balances is reflected in "Net investment income." Benefits and
expenses for these products include claims in excess of related account
balances, expenses of contract administration, interest credited and
amortization of DAC.
Asset Management Fees
The Company receives asset management fee income from Separate Account
policyholder account balances invested in the Prudential Series Fund ("PSF").
Derivative Financial Instruments
Derivatives are financial instruments whose values are derived from interest
rates, foreign exchange rates, various financial indices, or the value of
securities or commodities. Derivative financial instruments used by the Company
are futures and can be exchange-traded or contracted in the over-the-counter
market. The Company uses derivative financial instruments to seek to reduce
market risk from changes in interest rates and to alter interest rate or
currency exposures arising from mismatches between assets and liabilities. All
derivatives used by the Company are for other than trading purposes.
To qualify as a hedge, derivatives must be designated as hedges for existing
assets, liabilities, firm commitments, or anticipated transactions which are
identified and probable to occur, and effective in reducing the market risk to
which the Company is exposed. The effectiveness of the derivatives must be
evaluated at the inception of the hedge and throughout the hedge period.
When derivatives qualify as hedges, the changes in the fair value or cash flows
of the derivatives and the hedged items are recognized in earnings in the same
period. If the Company's use of derivatives does not meet the criteria to apply
hedge accounting, the derivatives are recorded at fair value in "Other
liabilities" in the Statements of Financial Position, and changes in their fair
value are recognized in earnings in "Realized investment gains, net" without
considering changes in the hedged assets or liabilities. Cash flows from
derivative assets and liabilities are reported in the operating activities
section in the Statements of Cash Flows.
Income Taxes
The Company is a member of the consolidated federal income tax return of
Prudential and files separate company state and local tax returns. Pursuant to
the tax allocation arrangement, total federal income tax expense is determined
on a separate company basis. Members with losses record tax benefits to the
extent such losses are recognized in the consolidated federal tax provision.
Deferred income taxes are generally recognized, based on enacted rates, when
assets and liabilities have different values for financial statement and tax
reporting purposes. A valuation allowance is recorded to reduce a deferred tax
asset to that portion that is expected to be realized.
B13
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities" which requires that companies recognize all
derivatives as either assets or liabilities in the balance sheet and measure
those instruments at fair value. SFAS No. 133 does not apply to most traditional
insurance contracts. However, certain hybrid contracts that contain features
which may affect settlement amounts similarly to derivatives may require
separate accounting for the "host contract" and the underlying "embedded
derivative" provisions. The latter provisions would be accounted for as
derivatives as specified by the statement.
SFAS No. 133 provides, if certain conditions are met, that a derivative may be
specifically designated as (1) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm commitment
(fair value hedge), (2) a hedge of the exposure to variable cash flows of a
forecasted transaction (cash flow hedge), or (3) a hedge of the foreign currency
exposure of a net investment in a foreign operation, an unrecognized firm
commitment, an available-for-sale security or a foreign-currency-denominated
forecasted transaction (foreign currency hedge).
Under SFAS No. 133, the accounting for changes in fair value of a derivative
depends on its intended use and designation. For a fair value hedge, the gain or
loss is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item. For a cash flow hedge, the effective
portion of the derivative's gain or loss is initially reported as a component of
other comprehensive income and subsequently reclassified into earnings when the
forecasted transaction affects earnings. For a foreign currency hedge, the gain
or loss is reported in other comprehensive income as part of the foreign
currency translation adjustment. For all other derivatives not designated as
hedging instruments, the gain or loss is recognized in earnings in the period of
change. The Company is required to adopt this Statement, as amended, as of
January 1, 2001 and is currently assessing the effect of the new standard.
In October 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-7, "Deposit Accounting: Accounting for
Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk" ("SOP
98-7"). This statement provides guidance on how to account for insurance and
reinsurance contracts that do not transfer insurance risk. SOP 98-7 is effective
for fiscal years beginning after June 15, 1999. The adoption of this statement
is not expected to have a material effect on the Company's financial position or
results of operations.
Reclassifications
Certain amounts in the prior years have been reclassified to conform to current
year presentation.
B14
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
3. INVESTMENTS
Fixed Maturities
The following tables provide additional information relating to fixed maturities
as of December 31:
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 9,489 $ -- $ 63 $ 9,426
Foreign government bonds 5,000 -- 68 4,932
Corporate Securities 588,695 681 19,499 569,877
Mortgage-backed securities 1,039 -- 3 1,036
----------- ----------- ----------- -----------
Total fixed maturities available for sale $ 604,223 $ 681 $ 19,633 $ 585,271
Fixed Maturities held to maturity
Corporate Securities $ 7,470 -- $ 532 $ 6,938
----------- ----------- ----------- -----------
Total fixed maturities held to maturity $ 7,470 $ -- $ 532 $ 6,938
=========== =========== =========== ===========
<CAPTION>
1998
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Fixed maturities available for sale
U.S. Treasury securities and obligations of
U.S. government corporations and agencies $ 51,663 $ 260 $ 318 $ 51,605
Foreign government bonds 34,744 887 236 35,395
Corporate securities 529,844 7,273 2,633 534,484
Mortgage-backed securities 1,507 -- 1 1,506
----------- ----------- ----------- -----------
Total fixed maturities available for sale $ 617,758 $ 8,420 $ 3,188 $ 622,990
=========== =========== =========== ===========
</TABLE>
B15
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The amortized cost and estimated fair value of fixed maturities, categorized by
contractual maturities at December 31, 1999, are shown below:
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
-------------------------- --------------------------
Amortized Estimated Fair Amortized Estimated Fair
Cost Value Cost Value
----------- -------------- --------- --------------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Due in one year or less $ 78,150 $ 76,922 $ -- $ --
Due after one year through five years 187,710 183,686 -- --
Due after five years through ten years 268,224 257,241 7,470 6,938
Due after ten years 70,139 67,422 -- --
----------- ----------- ----------- -----------
Total $ 604,223 $ 585,271 $ 7,470 $ 6,938
=========== =========== =========== ===========
</TABLE>
Actual maturities will differ from contractual maturities because, in certain
circumstances, issuers have the right to call or prepay obligations.
Proceeds from the sale of fixed maturities available for sale during 1999, 1998,
and 1997 were $698.8 million, $990.7 million, and $635.4 million, respectively.
Gross gains of $3.5 million, $8.8 million, and $2.9 million, and gross losses of
$8.0 million, $1.8 million, and $1.2 million were realized on those sales during
1999, 1998, and 1997, respectively. Proceeds from maturities of fixed maturities
available for sale during 1999, 1998, and 1997 were $3.6 million, $10.4 million,
and $10.0 million, respectively. During the years ended December 31, 1999, 1998,
and 1997, there were no securities classified as held to maturity that were
sold.
Special Deposits
Fixed maturities of $.5 million at both December 31, 1999 and 1998 respectively,
were on deposit with governmental authorities or trustees as required by certain
insurance laws.
Investment Income and Investment Gains and Losses
Net investment income arose from the following sources for the years ended
December 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Fixed maturities - AFS & HTM $ 39,538 $ 39,478 $ 37,563
Policy loans 7,641 7,350 6,596
Short-term investments 2,516 3,502 3,023
Other 60 (842) 333
--------- --------- ---------
Gross investment income 49,755 49,488 47,515
Less investment expenses (2,155) (2,456) (1,191)
--------- --------- ---------
Net investment income $ 47,600 $ 47,032 $ 46,324
========= ========= =========
</TABLE>
Realized investment gains (losses), net, including charges for other than
temporary reductions in value, for the years ended December 31, were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Realized investment gains $ 6,436 $ 17,957 $ 2,898
Realized investment losses (11,449) (9,511) (1,191)
--------- --------- ---------
Realized investment (losses) gains, net $ (5,013) $ 8,446 $ 1,707
========= ========= =========
</TABLE>
B16
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
3. INVESTMENTS (continued)
Net Unrealized Investment Gains
Net unrealized investment gains on fixed maturities available for sale are
included in the Statements of Financial Position as a component of "Accumulated
other comprehensive income". Changes in these amounts include adjustments to
avoid including in "Other comprehensive income (loss)" those items that are
included as part of "net income" for a period that also had been part of "Other
comprehensive income (loss)" in earlier periods. The amounts for the years ended
December 31, net of tax, are as follows:
<TABLE>
<CAPTION>
Accumulated
other
comprehensive
income (loss)
Deferred Deferred related to net
Unrealized gains policy Policyholders' income tax unrealized
(losses)on acquisition Account (liability) investment
investments costs Balances benefit gains (losses)
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 4,170 $ (1,209) $ 330 $ (1,259) $ 2,032
Net investment gains on investments
arising during the period 4,788 (1,676) 3,112
Reclassification adjustment for (losses)
included in net income (1,706) 597 (1,109)
Impact of net unrealized investment (losses)
on deferred policy acquisition costs (2,170) 759 (1,411)
Impact of net unrealized investment gains on
policyholders' account balances 519 (187) 332
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 $ 7,252 $ (3,379) $ 849 $ (1,766) $ 2,956
Net investment gains on investments
arising during the period 4,966 (1,662) 3,304
Reclassification adjustment for (losses)
included in net income (6,985) 2,338 (4,647)
Impact of net unrealized investment (losses)
on deferred policy acquisition costs (166) 58 (108)
Impact of net unrealized investment gains on
policyholders' account balances 138 (50) 88
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 $ 5,233 $ (3,545) $ 987 $ (1,082) $ 1,593
Net investment (losses) on investments
arising during the period (28,794) 10,366 (18,428)
Reclassification adjustment for gains
included in net income 4,610 (1,660) 2,950
Impact of net unrealized investment
gains on deferred policy acquisition costs 14,681 (5,285) 9,396
Impact of net unrealized investment (losses)
on policyholders' account balances (2,499) 900 (1,599)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 $ (18,951) $ 11,136 $ (1,512) $ 3,239 $ (6,088)
=========== =========== =========== =========== ===========
</TABLE>
B17
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
4. DEFERRED POLICY ACQUISITION COSTS
The balance of and changes in deferred policy acquisition costs for the year
ended December 31, are as follows:
1999
------------
(In Thousands)
Balance, beginning of year $ 113,923
Capitalization of commissions, sales and issue expenses 13,439
Amortization (12,859)
Change in unrealized investment losses 14,681
---------
Balance, end of year $ 129,184
=========
5. POLICYHOLDERS' LIABILITIES
Future policy benefits and other policyholder liabilities at December 31 are as
follows:
1999 1998
--------- ---------
(In Thousands)
Life insurance $ 100,686 $ 84,825
Annuities 5,175 5,007
--------- ---------
$ 105,861 $ 89,832
========= =========
Life insurance liabilities include reserves for death and endowment policy
benefits. Annuity liabilities include reserves for immediate annuities.
The following table highlights the key assumptions generally utilized in
calculating these reserves:
<TABLE>
<CAPTION>
Product Mortality Interest Rate Estimation Method
-------------------- ------------------------- ------------- --------------------------
<S> <C> <C> <C>
Life insurance Generally rates 2.5% to 7.5% Net level premium based
guaranteed in calculating on non-forfeiture interest
cash surrender values rate
Individual immediate 1983 Individual Annuity 3.5% to 8.75% Present value of expected
annuities Mortality Table with future payment based on
certain modifications historical experience
</TABLE>
Policyholders' account balances at December 31, are as follows:
1999 1998
--------- ---------
(In Thousands)
Individual annuities $ 150,687 $ 148,327
Interest-sensitive life contracts 264,230 266,219
--------- ---------
$ 414,917 $ 414,546
========= =========
Policyholders' account balances for interest-sensitive life and individual
annuities are equal to policy account values plus unearned premiums. The policy
account values represent an accumulation of gross premium payments plus credited
interest less withdrawals, expenses, mortality charges.
B18
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
5. POLICYHOLDERS' LIABILITIES (continued)
Certain contract provisions that determine the policyholder account balances are
as follows:
<TABLE>
<CAPTION>
Product Interest Rate Withdrawal / Surrender Charges
--------------------------------- ------------- ------------------------------
<S> <C> <C>
Interest sensitive life contracts 4.0% to 5.4% Various up to 10 years
Individual annuities 3.0% to 5.6% 0% to 8% for up to 8 years
</TABLE>
6. REINSURANCE
The Company participates in reinsurance with Prudential in order to provide
greater diversification of business, provide additional capacity for future
growth and limit the maximum net loss potential arising from large risks.
Reinsurance ceded arrangements do not discharge the Company or the insurance
subsidiaries as the primary insurer, except for cases involving a novation.
Ceded balances would represent a liability of the Company in the event the
reinsurers were unable to meet their obligations to the Company under the terms
of the reinsurance agreements. The likelihood of a material reinsurance
liability reassumed by the Company is considered to be remote.
Reinsurance amounts included in the Statement of Operations for the year ended
December 31 are below.
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Reinsurance premiums ceded - affiliated $ (17) $ (28) $ (12)
========= ========= =========
Policyholders' benefits ceded $ 0 $ 0 $ 0
========= ========= =========
</TABLE>
Reinsurance recoverables, included in "Other assets" in the Company's Statements
of Financial Position, at December 31 include amounts recoverable on unpaid and
paid losses and were as follows:
1999 1998
--------- ---------
(In Thousands)
Life insurance - affiliated $ 16 $ 31
========= =========
B19
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
7. INCOME TAXES
The components of income taxes for the years ended December 31, are as follows:
1999 1998 1997
--------- --------- ---------
(In Thousands)
Current tax expense (benefit):
U.S $ 6,769 $ 14,786 $ 12,880
State and local 178 523 399
--------- --------- ---------
Total 6,947 15,309 13,279
--------- --------- ---------
Deferred tax expense (benefit):
U.S (54) 2,198 (2,305)
State and local (2) 63 --
--------- --------- ---------
Total (56) 2,261 (2,305)
--------- --------- ---------
Total income tax expense $ 6,891 $ 17,570 $ 10,974
========= ========= =========
The Company's income tax expense for the years ended December 31, differs
from the amount computed by applying the expected federal income tax rate of
35% to income from operations before income taxes for the following reasons:
1999 1998 1997
--------- --------- ---------
(In Thousands)
Expected federal income tax expense $ 6,891 $ 17,288 $ 10,569
State and local income taxes 115 381 259
Other (115) (99) 146
--------- --------- ---------
Total income tax expense $ 6,891 $ 17,570 $ 10,974
========= ========= =========
Deferred tax assets and liabilities at December 31, resulted from the items
listed in the following table:
1999 1998
--------- ---------
(In Thousands)
Deferred tax assets:
Insurance reserves $ 9,711 $ 10,016
Net unrealized (gains) losses on 6,823 (1,884)
securities
Investment gains 2,083 --
--------- ---------
Deferred tax assets $ 18,617 $ 8,132
--------- ---------
Deferred tax liabilities:
Deferred acquisition costs 37,174 28,509
Investment gains -- 963
Other 879 2,375
--------- ---------
Deferred tax liabilities 38,053 31,847
--------- ---------
Net deferred tax liability $ 19,436 $ 23,715
========= =========
Management believes that based on its historical pattern of taxable income, the
Company will produce sufficient income in the future to realize its deferred tax
assets after valuation allowance. Adjustments to the valuation allowance will be
made if there is a change in management's assessment of the amount of the
deferred tax asset that is realizable. At December 31, 1999 and 1998,
respectively, the Company had no federal or state operating loss carryforwards
for tax purposes.
B20
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
7. INCOME TAXES (continued)
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns through 1992. The Service has begun
their examination of the years 1993 through 1995.
8. EQUITY
Reconciliation of Statutory Surplus and Net Income Accounting practices used to
prepare statutory financial statements for regulatory purposes differ in certain
instances from GAAP. The following table reconciles the Company's statutory net
income and surplus as of and for the years ended December 31, determined in
accordance with accounting practices prescribed or permitted by the New Jersey
Department of Banking and Insurance with net income and equity determined using
GAAP.
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
(In Thousands)
<S> <C> <C> <C>
Statutory net income $ 20,221 $ 18,704 $ 18,306
Adjustments to reconcile to net income on a GAAP basis:
Amortization and capitalization of deferred acquisition costs 580 12,464 (3,170)
Deferred premium (314) 534 198
Insurance revenues and expenses 983 (808) 2,324
Income taxes (139) (2,973) 2,517
Valuation of investments (3,199) 5,896 1,707
Amortization of IMR (2,089) (2,102) (1,850)
Asset management fees (2,050) -- --
Other, net (1,196) 108 (809)
--------- --------- ---------
GAAP net income $ 12,797 $ 31,823 $ 19,223
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1999 1998
--------- ---------
(In Thousands)
<S> <C> <C>
Statutory surplus $ 274,437 $ 252,530
Adjustments to reconcile to equity on a GAAP basis:
Valuation of investments (9,644) 20,799
Deferred acquisition costs 129,184 113,923
Deferred premium (1,159) (1,473)
Insurance liabilities (23,889) (18,141)
Income Taxes (17,977) (21,716)
Asset management fees (2,050) --
Other, net 2,067 (69)
--------- ---------
GAAP stockholder's equity $ 350,969 $ 345,853
========= =========
</TABLE>
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values presented below have been determined using available
information and valuation methodologies. Considerable judgment is applied in
interpreting data to develop the estimates of fair value. Accordingly, such
estimates presented may not be realized in a current market exchange. The use of
different market assumptions and/or estimation methodologies could have a
material effect on the estimated fair values. The following methods and
assumptions were used in calculating the fair values (for all other financial
instruments presented in the table, the carrying value approximates estimated
fair value).
B21
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
Fixed maturities
Estimated fair values for fixed maturities are based on quoted market prices or
estimates from independent pricing services.
Policy loans
The estimated fair value of policy loans is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan
repayments.
Investment contracts
Estimated fair values of investment contracts are derived by using the
policyholder's account balance.
Derivative financial instruments
The fair value of futures is estimated based on market quotes for transactions
with similar terms.
The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
----------- ----------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities:
Available for sale $ 585,271 $ 585,271 $ 622,990 $ 622,990
Held to maturity 7,470 6,938 -- --
Policy loans 143,815 136,990 139,443 146,504
Short-term investments 27,473 27,473 53,761 53,761
Cash 117 117 45 45
Separate Accounts assets 1,827,484 1,827,484 1,450,986 1,450,986
Financial Liabilities:
Investment contracts $ 92,096 $ 92,096 $ 87,948 $ 87,948
Cash collateral for loaned securities 17,900 17,900 34,424 34,424
Securities sold under agreements
to repurchase -- -- 27,210 27,210
Separate Accounts liabilities 1,827,484 1,827,484 1,450,986 1,450,986
Derivatives 597 597 -- --
</TABLE>
10. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS
Futures
The Company uses exchange-traded Treasury futures to reduce market risks from
changes in interest rates and to manage the duration of assets to better match
the duration of liabilities supported by those assets. The Company enters into
exchange-traded futures with regulated futures commissions merchants who are
members of a trading exchange. The fair value of futures is estimated based on
market quotes for a transaction with similar terms.
Under exchange-traded futures, the Company agrees to purchase a specified number
of contracts with other parties and to post variation margin on a daily basis in
an amount equal to the difference in the daily market values of those contracts.
Treasury futures move substantially in value as interest rates change and can be
used to either modify or hedge existing interest rate risk. This strategy
protects against the risk that cash flow requirements may necessitate
liquidation of investments at unfavorable prices resulting from increases in
interest rates. This strategy can be a more cost effective way of temporarily
reducing the Company's exposure to a market decline than selling fixed income
securities and purchasing a similar portfolio when such a decline is believed to
be over.
B22
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
10. DERIVATIVE AND OFF-BALANCE SHEET CREDIT-RELATED INSTRUMENTS (continued)
If futures meet hedge accounting criteria, changes in their fair value are
deferred and recognized as an adjustment to the carrying value of the hedged
item. Deferred gains or losses from the hedges for interest-bearing financial
instruments are amortized as a yield adjustment over the remaining lives of the
hedged item. Futures that do not qualify as hedges are carried at fair value
with changes in value reported in current period earnings. The notional and fair
value of futures contracts was $46.4 million and $(.6) million at December 31,
1999, respectively. There were no open futures contracts at December 31, 1998.
Credit Risk
The current credit exposure of the Company's derivative contracts is limited to
the fair value at the reporting date. Credit risk is managed by entering into
transactions with creditworthy counterparties and obtaining collateral where
appropriate and customary. The Company also attempts to minimize its exposure to
credit risk through the use of various credit monitoring techniques. All of the
net credit exposure for the Company from derivative contracts is with
investment-grade counterparties. As of December 31, 1999 100% of the notional
consisted of interest rate derivatives.
11. CONTINGENCIES
Various lawsuits against the Company have arisen in the course of the Company's
business. In certain of these matters, large and/or indeterminate amounts are
sought.
On October 28, 1996, the Company entered into a Stipulation of Settlement with
attorneys for the plaintiffs in a consolidated class action lawsuit pending in a
Multi-District Litigation proceeding in the U.S. District Court for the District
of New Jersey. The class action suit involved alleged improprieties in
connection with the sale, servicing and operation of permanent life insurance
policies from 1982 through 1995. Pursuant to the settlement, the Company has
participated in a remediation program pursuant to which relief was offered to
policyowners who were misled when they purchased permanent life insurance
policies in the United States from 1982 to 1995. Prudential has agreed to
indemnify the Company for any liability incurred in connection with that
litigation.
The balance of the Company's litigation is subject to many uncertainties, and
given the complexity and scope, the outcomes cannot be predicted with precision.
Management believes that any ultimate liability which could result from such
litigation would not have a material adverse effect on the Company's financial
position.
12. DIVIDENDS
The Company is subject to New Jersey law which requires any shareholder dividend
or distribution must be filed with the New Jersey Commissioner of Insurance.
Cash dividends may only be paid out of earned surplus derived from realized net
profits.
13. RELATED PARTY TRANSACTIONS
Service Agreements
Prudential and the Company operate under service and lease agreements whereby
services of officers and employees, supplies, use of equipment and office space
are provided by Prudential. Prudential periodically reviews its methods for
determining the level of administrative expenses charged to the Company. Late in
1998, Prudential revised its allocation methodology to more closely align
allocations based on business processes, resulting in increased allocations from
1998 levels. Management believes that the updated methodology is reasonable and
better reflects actual costs incurred by Prudential to process transactions on
behalf of the Company. The net cost of these services allocated to the Company
were $28.3 million, $23.5 million and $16.2 million for the years ended December
31, 1999, 1998, and 1997, respectively.
In addition, the Company received allocated distribution expenses from
Prudential's retail agency network. Beginning in 1999, market based distribution
transfer pricing was the basis for allocating costs to each product line that
distributes products through Prudential's retail agency channels. A majority of
these distribution expenses have been capitalized by the Company as DAC.
The Company receives asset management fees from Pruco Life for its policyholder
account balances invested in the Prudential Series Fund ("PSF") managed by Pruco
Life. The Company received from Pruco Life its allocable shares of such
compensation in the amount of $7.4 million, $5.6 million, and $5.3 million,
during 1999, 1998, and 1997, respectively, recorded as "Asset management fee
income" in the Statements of Operations and Comprehensive Income.
B23
<PAGE>
Notes to Financial Statements
--------------------------------------------------------------------------------
13. RELATED PARTY TRANSACTIONS (continued)
The Company pays an asset management fee to Prudential Global Asset Management
("PGAM") for managing the Separate Account investment portfolio. The expense for
the year was $3.0 million, which is shown in general, administrative and other
expenses.
The Company has sold a Corporate Owned Life Insurance ("COLI") policy to
Prudential. The cash surrender value included in Separate Accounts at December
31, 1999 was $199.0 million.
Reinsurance
The Company currently has a reinsurance agreement in place with Prudential ("the
reinsurer"). The reinsurance agreement is a yearly renewable term agreement in
which the Company may offer and the reinsurer may accept reinsurance on any life
in excess of the Company's maximum limit of retention. The Company is not
relieved of its primary obligation to the policyholder as a result of these
reinsurance transactions. These agreements had no material effect on net income
for the years ended December 31, 1999, 1998, and 1997.
Debt Agreements
In July 1998, the Company established a revolving line of credit facility with
Prudential Funding Corporation, a wholly-owned subsidiary of Prudential. There
is no outstanding debt relating to this credit facility as of December 31, 1999.
B24
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholder of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statements of financial position and the
related statements of operations, of changes in stockholder's equity and of cash
flows present fairly, in all material respects, the financial position of Pruco
Life Insurance Company of New Jersey (an indirect, wholly-owned subsidiary of
the Prudential Insurance Company of America) at December 31, 1999 and 1998, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
March 21, 2000
B25
<PAGE>
PRUSELECT(SM) III
Variable Life
Insurance
[OBJECT OMITTED]
Pruco Life Insurance Company of New Jersey
213 Washington Street, Newark, NJ 07102-2992
Telephone 800 286-7754
CVUL - 3NJ Ed. 10/2000
<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.
REPRESENTATION WITH RESPECT TO CHARGES
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey")
represents that the fees and charges deducted under the Variable Universal Life
Insurance Contracts registered by this registration statement, in the aggregate,
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Pruco Life of New Jersey.
UNDERTAKING WITH RESPECT TO INDEMNIFICATION
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
New Jersey, being the state of organization of Pruco Life of New Jersey, permits
entities organized under its jurisdiction to indemnify directors and officers
with certain limitations. The relevant provisions of New Jersey law permitting
indemnification can be found in Section 14A:3-5 of the New Jersey Statutes
Annotated. The text of Pruco Life of New Jersey's By-law, Article V, which
relates to indemnification of officers and directors, is filed as Exhibit
1.A.(6)(c) to this registration statement.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") 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.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 84 pages.
The undertaking to file reports.
The representation with respect to charges.
The undertaking with respect to indemnification.
The signatures.
Written consents of the following persons:
1. PricewaterhouseCoopers, LLP
2. Clifford E. Kirsch, Esq.
3. Nancy D. Davis, FSA, MAAA
The following exhibits:
1. The following exhibits correspond to those required by paragraph A of
the instructions as to exhibits in Form N-B-2:
A. (1) (a) Resolution of Board of Directors of Pruco Life Insurance
Company of New Jersey establishing the Pruco Life of New
Jersey Variable Appreciable Account. (Note 4)
(b) Amendment of Separate Account Resolution. (Note 6)
(2) Not Applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between Pruco Securities
Corporation and Pruco Life Insurance Company of New
Jersey. (Note 4)
(b) Proposed form of Agreement between Pruco Securities
Corporation and independent brokers with respect to the
Sale of the Contracts. (Note 6)
(c) Schedule of Sales Commissions. (Note 7)
(d) Participation Agreements and Amendments:
(i)(a) AIM Variable Insurance Funds, Inc. (Note 6)
(b) Amendment to the AIM Variable Insurance
Funds, Inc. Participation Agreement. (Note
7)
(ii)(a) American Century Variable Portfolios, Inc.
(Note 6)
(b) Amendment to the American Century Variable
Insurance Funds, Inc. Participation
Agreement. (Note 1)
(iii)(a) Dreyfus Variable Investment Fund. (Note 1)
(b) Amendment to the Dreyfus Variable Investment
Fund Participation Agreement. (Note 1)
(iv)(a) Franklin Templeton Variable Insurance
Products Trust. (Note 10)
(b) Amendment to the Franklin Templeton Variable
Insurance Products Trust Participation
Agreement. (Note 1)
(v)(a) Goldman Sachs Variable Insurance Trust.
(Note 1)
(vi)(a) INVESCO Variable Investment Funds, Inc.
(Note 1)
(vii)(a) Janus Aspen Series. (Note 1)
II-2
<PAGE>
(viii)(a) MFS Variable Insurance Trust. (Note 6)
(b) Amendment to the MFS Variable Insurance
Trust Participation Agreement. (Note 7)
(ix)(a) Oppenheimer Variable Account Funds. (Note 1)
(x)(a) T. Rowe Price International Series, Inc.
(Note 6)
(b) Amendment to the T. Rowe Price International
Series, Inc. Participation Agreement. (Note
7)
(4) Not Applicable.
(5) Variable Universal Life Insurance Contract. (Note 6)
(6) (a) Articles of Incorporation of Pruco Life Insurance
Company of New Jersey, as amended March 11, 1983. (Note
4)
(b) Certificate of Amendment of the Articles of
Incorporation of Pruco Life Insurance Company of New
Jersey, February 12, 1998. (Note 5)
(c) By-laws of Pruco Life Insurance Company of New Jersey,
as amended August 4, 1999. (Note 6)
(7) Not Applicable.
(8) Not Applicable.
(9) Not Applicable.
(10) (a) New Jersey Application Form for Variable Universal Life
Insurance Contract. (Note 6)
(b) Supplement to the Application for Variable Universal
Life Insurance Contract. (Note 6)
(11) Not Applicable.
(12) Memorandum describing Pruco Life Insurance Company of New
Jersey's issuance, transfer, and redemption procedures for
the Contracts pursuant to Rule 6e-3(T)(b)(12)(iii). (Note 6)
(13) (a) Rider for Flexible Term Insurance Benefit. (Note 6)
(b) Endorsement for new PS III Contract issued as a result
of exchange of insureds. (Note 9)
(c) Endorsement for new PS III Contract issued as a result
of exchange of PS I or PS II Contracts. (Note 9)
(d) Endorsement defining Active Investment Option at issue.
(Note 1)
(e) Endorsement defining Active Investment Option post
issue. (Note 1)
2. See Exhibit 1.A.(5).
3. Opinion and Consent of Clifford E. Kirsch, Esq., 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.
(a) Ira J. Kleinman, Esther H. Milnes,
I. Edward Price (Note 2)
(b) James J. Avery, Jr. (Note 3)
(c) William J. Eckert, IV (Note 1)
(d) David R. Odenath, Jr. (Note 8)
(Note 1) Filed herewith.
(Note 2) Incorporated by reference to Form N-4, Registration No. 333-18117,
filed December 18, 1996 on behalf of the Pruco Life of New Jersey
Flexible Premium Variable Annuity Account.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 10 to Form
S-1, Registration No. 33-20018, filed April 9, 1998 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 26 to Form
S-6, Registration No. 2-89780, filed April 28, 1997 on behalf of the
Pruco Life of New Jersey Variable Appreciable Account.
II-3
<PAGE>
(Note 5) Incorporated by reference to Post-Effective Amendment No. 12 to Form
S-1, Registration No. 33-20018, filed April 19, 1999 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 6) Incorporated by reference to Registrant's Form S-6, filed August 13,
1999.
(Note 7) Incorporated by reference to Pre-Effective Amendment No. 1 to this
Registration Statement, filed November 3, 1999.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 13 to Form
S-1, Registration No. 33-20018, filed April 12, 2000 on behalf of the
Pruco Life of New Jersey Variable Contract Real Property Account.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 1 to this
Registration Statement, filed April 26, 2000.
(Note 10) Incorporated by reference to Form S-6, Registration No. 333-94115,
filed January 5, 2000 on behalf of the Pruco Life of New Jersey
Variable Appreciable Account.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Pruco Life of New Jersey Variable Appreciable Account, certifies that this
Amendment is filed solely for one or more of the purposes specified in Rule
485(b)(1) under the Securities Act of 1933 and that no material event requiring
disclosure in the prospectus, other than one listed in Rule 485(b)(1), has
occurred since the effective date of the most recent Post-Effective Amendment to
the Registration Statement which included a prospectus and has caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized and its seal hereunto affixed and attested, all in the city of
Newark and the State of New Jersey, on this 11th day of October, 2000.
(Seal) PRUCO LIFE OF NEW JERSEY VARIABLE APPRECIABLE 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. 2 to the Registration Statement has been signed below by the
following persons in the capacities indicated on this 11th day of October, 2000.
SIGNATURE AND TITLE
/s/ *
--------------------------------------------
Esther H. Milnes
President and Director
/s/ *
--------------------------------------------
William J. Eckert, IV
Vice President and Chief Accounting Officer
/s/ *
--------------------------------------------
James J. Avery, Jr.
Director
/s/ * *By: /s/ Thomas C. Castano
-------------------------------------------- -------------------------
David R. Odenath, Jr. Thomas C. Castano
Director (Attorney-in-Fact)
/s/ *
--------------------------------------------
Ira J. Kleinman
Director
/s/ *
--------------------------------------------
I. Edward Price
Director
II-5
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment to the registration statement on Form S-6 (the
"Registration Statement") of our report dated March 17, 2000, relating to the
financial statements of the Pruselect III Variable Life Subaccounts of Pruco
Life of New Jersey Variable Appreciable Account, which appears in such
Prospectus.
We also consent to the use in the Prospectus constituting part of this
Registration Statement of our report dated March 21, 2000, relating to the
financial statements of Pruco Life Insurance Company of New Jersey, which
appears in such Prospectus.
We also consent to the references to us under the heading "Experts" in the
Prospectus.
PricewaterhouseCoopers LLP
New York, New York
October 11, 2000
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Consent of PricewaterhouseCoopers LLP, independent accountants. Page II-6
1.A.3.d.ii.b Amendment to the American Century Variable Portfolios, Inc. Page II-8
Participation Agreement.
1.A.3.d.iii.a Dreyfus Variable Investment Funds Participation Agreement. Page II-
1.A.3.d.iii.b Amendment to the Dreyfus Variable Investment Fund Participation Page II-
Agreement.
1.A.3.d.iv.b Amendment to the Franklin Templeton Variable Insurance Products Page II-
Trust Participation Agreement.
1.A.3.d.v.a Goldman Sachs Variable Insurance Trust Participation Agreement. Page II-
1.A.3.d.vi.a INVESCO Variable Investment Funds, Inc. Participation Agreement. Page II-
1.A.3.d.vii.a Janus Aspen Series Participation Agreement. Page II-
1.A.3.d.ix.a Oppenheimer Variable Account Funds Participation Agreement. Page II-
1.A.13.d Endorsement defining Active Investment Option at issue. Page II-
1.A.13.e Endorsement defining Active Investment Option post issue. Page II-
3. Opinion and Consent of Clifford E. Kirsch, Esq., as to the legality
of the securities being registered. Page II-
6. Opinion and Consent of Nancy D. Davis, FSA, MAAA, as to actuarial
matters pertaining to the securities being registered. Page II-
7. Power of Attorney. Page II-
</TABLE>
II-7
<PAGE>
ENDORSEMENTS
(Only we can endorse this contract.)
ALTERATION OF TEXT
This endorsement modifies certain provisions of the policy to which it is
attached, as follows:
The following definition is added to Definitions:
ACTIVE INVESTMENT OPTION.--An active investment option is an investment option
that has been allocated an invested premium amount or a loan repayment or
transfer at any time while this contract is in force (see "TRANSFERS", "LOANS",
AND "PREMIUM PAYMENT/Allocations"). An active investment option remains active
even if the current value of the investment option is zero.
The third paragraph under "PREMIUM PAYMENT/Allocations" is replaced with the
following:
The initial allocation of invested premium amounts is shown on a contract data
page. Subject to the limitation stated below, you may change the allocation for
future invested premium amounts at any time if the contract is not in default.
To change your allocation, simply notify us in a form that meets our needs. The
change will take effect on the date we receive your notice; we will send you a
confirmation of the transaction. We will not permit a change in the allocation
that would cause the number of active investment options to exceed sixteen.
The following sentence is added to the end of the first paragraph under
"TRANSFERS":
We will not permit a transfer that would cause the number of active investment
options to exceed sixteen.
Pruco Life Insurance Company of New Jersey,
BY /s/ Susan J. Blount SPECIMEN
SECRETARY
PLIY 135--2000
II-
<PAGE>
[LOGO] Prudential
Insured Endorsement for Policy No.
ENDORSEMENTS
(Only we can endorse this contract.)
ALTERATION OF TEXT
This endorsement modifies certain provisions of the policy to which it is
attached, as follows:
The following definition is added to Definitions:
ACTIVE INVESTMENT OPTION.--An active investment option is an investment option
that has been allocated an invested premium amount or a loan repayment or
transfer at any time while this contract is in force (see "TRANSFERS", "LOANS",
AND "PREMIUM PAYMENT/Allocations"). An active investment option remains active
even if the current value of the investment option is zero.
The third paragraph under "PREMIUM PAYMENT/Allocations" is replaced with the
following:
The initial allocation of invested premium amounts is shown on a contract data
page. Subject to the limitation stated below, you may change the allocation for
future invested premium amounts at any time if the contract is not in default.
To change your allocation, simply notify us in a form that meets our needs. The
change will take effect on the date we receive your notice; we will send you a
confirmation of the transaction. We will not permit a change in the allocation
that would cause the number of active investment options to exceed sixteen.
The following sentence is added to the end of the first paragraph under
"TRANSFERS":
We will not permit a transfer that would cause the number of active investment
options to exceed sixteen.
ENDORSEMENT ATTACHED TO AND MADE A PART OF THE CONTRACT
Pruco Life Insurance Company of New Jersey,
BY /s/ Susan J. Blount SPECIMEN
SECRETARY
Effective Date JUNE 1, 2000
PLIY 137--2000
II-
<PAGE>
EXHIBIT 3
October 11, 2000
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 January 13, 1984 of Pruco Life of New Jersey Variable
Appreciable 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 Statutes of New Jersey. I am
responsible for oversight of the preparation and review of the Registration
Statements on Form S-6, as amended, filed by Pruco Life of New Jersey with the
Securities and Exchange Commission (Registration Number: 333-85117) 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 variable life
insurance contracts is not chargeable with liabilities arising out of
any other business Pruco Life of New Jersey may conduct.
(4) The 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,
/s/
---------------------------------
Clifford E. Kirsch
II-
<PAGE>
EXHIBIT 6
October 11, 2000
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
Insurance Company of New Jersey ("Pruco Life of New Jersey") of variable
universal life insurance contracts (the "Contracts") under the Securities Act of
1933. The prospectus included in Post-Effective Amendment No. 2 to Registration
Statement No. 333-85117 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 cash surrender values and death benefits included
in the prospectus section entitled "Illustrations of Surrender Values,
Death Benefits, and Accumulated Premiums," 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 premiums and benefits, as shown in
the illustrations, appear more favorable to a prospective purchaser of
a Contract for male age 45, than to prospective purchasers of
Contracts on males of other ages or on females.
(2) The examples shown in the section of the prospectus entitled "Changing
the Type of Death Benefit" are consistent with the provisions of the
Contract.
(3) The chart included in the section of the prospectus entitled "Riders"
is consistent with the provisions of the Contract.
(4) The charts included in the sections of the prospectus entitled: "How a
Type A (Fixed) Contract's Death Benefit Will Vary," "How a Type B
(Variable) Contract's Death Benefit Will Vary," and "How a Type C
(Return of Premium) Contract's Death Benefit Will Vary," are
consistent with the provisions of the Contract.
(5) The deduction in an amount equal to 1.25% of each premium is a
reasonable charge in relation to the additional income tax burden
imposed upon Pruco Life of New Jersey and its parent company, The
Prudential Insurance Company of America, as the result of the
enactment of Section 848 of the Internal Revenue Code. In reaching
that conclusion a number of factors were taken into account that, in
my opinion, were appropriate and which resulted in a projected
after-tax rate of return that is a reasonable rate to use in
discounting the tax benefit of the deductions allowed in Section 848
in taxable years subsequent to the year in which the premiums are
received.
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,
/s/
------------------------------
Nancy D. Davis, FSA, MAAA
Vice President and Actuary
The Prudential Insurance Company of America
II-
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, WILLIAM J. ECKERT, IV of Newark, New Jersey, Senior Vice President and
Chief Accounting Officer of Pruco Life Insurance Company of New Jersey, do
hereby make, constitute and appoint as my true and lawful attorneys in fact
CLIFFORD E. KIRSCH, THOMAS C. CASTANO, RICHARD E. MEADE, AND ARTHUR WOODS, or
any of them severally for me in my name, place and stead to sign, where
applicable: Annual Reports on Form 10-K, registration statements on the
appropriate forms prescribed by the Securities and Exchange Commission, and any
other periodic documents and reports required under the Investment Company Act
of 1940, the Securities Act of 1933, and the Securities Exchange Act of 1934,
and all amendments thereto executed on behalf of Pruco Life Insurance Company
and filed with the Securities and Exchange Commission for the following:
The Pruco Life of New Jersey Variable Appreciable Account and flexible
premium variable life insurance contracts, to the extent they represent
participating interests in said Account;
The Pruco Life of New Jersey Variable Insurance Account and scheduled
premium variable life insurance contracts, to the extent they represent
participating interests in said Account;
The Pruco Life of New Jersey Single Premium Variable Life Account and
flexible premium variable life insurance contracts, to the extent they
represent participating interests in said Account;
The Pruco Life of New Jersey Single Premium Variable Annuity Account and
single payment variable annuity contracts, to the extent they represent
participating interests in said Account;
The Pruco Life of New Jersey Variable Contract Real Property Account and
individual variable life insurance contracts and variable annuity
contracts, to the extent they represent participating interests in said
Account;
The Pruco Life of New Jersey Modified Guaranteed Annuity Account and
modified guaranteed annuity contracts, to the extent they represent
participating interests in said Account; and
The Pruco Life of New Jersey Flexible Premium Variable Annuity Account and
flexible premium variable annuity contracts, to the extent they represent
participating interests in said Account.
II-
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 11th day of October,
2000.
/s/
---------------------------
William J. Eckert, IV
State of New Jersey )
) SS
County of Essex )
On this 11th day of October, 2000, before me personally appeared WILLIAM J.
ECKERT, IV known to me to be the person mentioned and described in and who
executed the foregoing instrument and he duly acknowledged to me that he
executed the same.
My commission expires:
Donna Rodriques
Notary Public of New Jersey
My commission expires Nov. 11, 2003
/s/
------------------------------
Notary Public
II-
