PROSPECTUS
DISCOVERY LIFE PLUS [LOGO]
MAY 1, 1997
PRUCO LIFE INSURANCE COMPANY
OF NEW JERSEY
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE CONTRACTS
This prospectus describes the DISCOVERY(R) Life Plus Contract*, a variable life
insurance contract (the "Contract") issued by Pruco Life Insurance Company of
New Jersey ("Pruco Life of New Jersey"), a stock life insurance company that is
an indirect wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"). The Contract requires payment of a premium of at least
$10,000 upon issuance.
The Contract provides lifetime insurance coverage, as long as the Contract is
not surrendered or in default beyond its days of grace, and also provides a cash
surrender value if the Contract is surrendered during the insured's lifetime.
The death benefit will be the face amount of insurance stated in the Contract or
under certain circumstances a higher amount. The cash surrender value of the
Contract varies daily to reflect investment performance, and the imposition of
charges. There is no guaranteed minimum cash surrender value, and if investment
performance is sufficiently poor for a sufficiently long time, the cash
surrender value could decline to zero.
Following a deduction for applicable premium taxes, the premium payment will be
allocated as the owner directs in one or more of the following ways. It may be
allocated to one or more of the subaccounts of the Pruco Life of New Jersey
Single Premium Variable Life Account (the "Account"), to a FIXED-RATE OPTION or
to a real estate investment option funded by another separate account of Pruco
Life of New Jersey. The assets of each subaccount will be invested in a
corresponding portfolio of The Prudential Series Fund, Inc. (the "Series Fund").
The attached prospectus for the Series Fund and the Series Fund's statement of
additional information describe the investment objectives of and risks of
investing in the fifteen portfolios of the Series Fund currently available to
Contract owners: the MONEY MARKET PORTFOLIO, the DIVERSIFIED BOND PORTFOLIO, the
GOVERNMENT INCOME PORTFOLIO, two ZERO COUPON BOND PORTFOLIOS with different
liquidation dates--2000 and 2005, the CONSERVATIVE BALANCED PORTFOLIO, the
FLEXIBLE MANAGED PORTFOLIO, the HIGH YIELD BOND PORTFOLIO, the STOCK INDEX
PORTFOLIO, the EQUITY INCOME PORTFOLIO, the EQUITY PORTFOLIO, the PRUDENTIAL
JENNISON PORTFOLIO, the SMALL CAPITALIZATION STOCK PORTFOLIO, the GLOBAL
PORTFOLIO, and the NATURAL RESOURCES PORTFOLIO. Interest is credited daily upon
any portion of the premium payment allocated to the fixed-rate option at a rate
periodically declared by Pruco Life of New Jersey in its sole discretion.
Selection of the real estate investment option involves allocation of part or
all of the premium payment to the Pruco Life of New Jersey Variable Contract
Real Property Account (the "REAL PROPERTY ACCOUNT"), a separate account of Pruco
Life of New Jersey that, through a partnership, invests primarily in income-pro
New Jersey Single Premium Variable Life Account.
The Contract is a Modified Endowment Contract under federal tax law. Any policy
loan, surrender or other pre-death distribution may result in adverse tax
consequences, and, if the insured is less than age 59 1/2, a 10% tax penalty.
----------
THE REPLACEMENT OF LIFE INSURANCE IS GENERALLY NOT IN THE INTEREST OF THE
CUSTOMER. IN MOST CASES, WHEN A CUSTOMER REQUIRES ADDITIONAL COVERAGE,
SUPPLEMENTING THE EXISTING POLICY BY PURCHASING ADDITIONAL INSURANCE OR A
NEW POLICY SHOULD BE REQUESTED, THEREBY PROTECTING THE BENEFITS OF THE ORIGINAL
POLICY. IF YOU ARE CONSIDERING REPLACING A POLICY, YOU SHOULD COMPARE THE
BENEFITS AND COSTS OF SUPPLEMENTING YOUR EXISTING POLICY WITH THE BENEFITS AND
COSTS OF PURCHASING THE CONTRACT DESCRIBED IN THIS PROSPECTUS AND YOU SHOULD
CONSULT WITH A QUALIFIED TAX ADVISOR.
----------
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ATTACHED TO
A CURRENT PROSPECTUS FOR THE PRUDENTIAL SERIES FUND, INC. IT IS ALSO ATTACHED TO
A CURRENT PROSPECTUS FOR THE PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL
PROPERTY ACCOUNT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 445-4571
*DISCOVERY is a registered mark of Prudential.
SPVL-2 Ed 5-97
Catalog No. 640168Y
<PAGE>
<TABLE>
PROSPECTUS CONTENTS
<CAPTION>
PAGE
----
<S> <C>
DEFINITIONS OF SPECIAL TERMS USED IN THIS PROSPECTUS ......................................... 1
BRIEF DESCRIPTION OF THE CONTRACT ............................................................ 2
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY, PRUCO LIFE
OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT, AND THE VARIABLE INVESTMENT
OPTIONS AVAILABLE UNDER THE CONTRACT ...................................................... 5
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY ................................................ 5
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT ............................. 5
THE PRUDENTIAL SERIES FUND, INC. .......................................................... 5
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT .......................... 6
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS ......................................... 6
REQUIREMENTS FOR ISSUANCE OF A CONTRACT .................................................. 6
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK" ............................................. 7
ALLOCATION OF THE PREMIUM PAYMENT ........................................................ 7
TRANSFERS ................................................................................ 7
SURRENDERS ............................................................................... 8
LOANS .................................................................................... 8
CHARGES .................................................................................. 9
AMOUNT OF LIFE INSURANCE ................................................................. 11
LAPSE AND REINSTATEMENT .................................................................. 13
ADDITIONAL PREMIUM PAYMENTS .............................................................. 13
LIVING NEEDS BENEFIT ..................................................................... 13
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS, AND ACCUMULATED PREMIUMS ......... 14
WHEN PROCEEDS ARE PAID ................................................................... 15
REPORTS TO CONTRACT OWNERS ............................................................... 15
TAX TREATMENT OF CONTRACT BENEFITS ....................................................... 15
THE FIXED-RATE OPTION .................................................................... 16
VOTING RIGHTS ............................................................................ 17
SALE OF THE CONTRACT AND SALES COMMISSIONS ............................................... 17
SUBSTITUTION OF SERIES FUND SHARES ....................................................... 18
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS ...................... 18
OTHER GENERAL CONTRACT PROVISIONS ........................................................ 18
STATE REGULATION ......................................................................... 19
ADDITIONAL INFORMATION ................................................................... 19
EXPERTS .................................................................................. 19
LITIGATION ............................................................................... 19
FINANCIAL STATEMENTS ..................................................................... 19
DIRECTORS AND OFFICERS ....................................................................... 20
FINANCIAL STATEMENTS OF PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT ........ A1
FINANCIAL STATEMENTS OF PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY ........................... B1
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE PROSPECTUS AND STATEMENT OF ADDITIONAL
INFORMATION FOR THE SERIES FUND, AND THE PROSPECTUS FOR THE REAL PROPERTY ACCOUNT.
</TABLE>
<PAGE>
DEFINITIONS OF SPECIAL TERMS USED IN THIS
PROSPECTUS
AMOUNT CREDITED UNDER THE FIXED-RATE OPTION--An investment
CONTRACT--See Contract fund below. option under which Pruco Life of New
Jersey guarantees that interest will
CASH SURRENDER VALUE--The amount be added to the amount allocated at a
payable to the Contract owner upon rate declared periodically in advance.
surrender of the Contract, equal to
the Contract fund minus any applicable MONTHLY DATE--The Contract date and
contingent deferred sales charge and the same date in each subsequent
any Contract debt. month.
CONTRACT ANNIVERSARY--The same day and PRUCO LIFE OF NEW JERSEY SINGLE
month as the Contract date in each PREMIUM VARIABLE LIFE ACCOUNT (THE
later year. "ACCOUNT")--A separate account of
Pruco Life of New Jersey registered as
CONTRACT DATE--The date Pruco Life of a unit investment trust under the
New Jersey received the initial Investment Company Act of 1940.
premium payment and certain required
documentation. PRUCO LIFE OF NEW JERSEY VARIABLE
CONTRACT REAL PROPERTY ACCOUNT (THE
CONTRACT FUND--The total value "REAL PROPERTY ACCOUNT")--A separate
attributable to a specific Contract, account of Pruco Life of New Jersey
representing amounts in all the which, through a partnership, invests
subaccounts, amounts allocated to the primarily in income-producing real
fixed-rate option, amounts invested in property.
the Real Property Account, and the
principal amount and any accrued SUBACCOUNT--A division of the Account,
interest credited with respect to any the assets of which are invested in
Contract loan. At times throughout shares of the corresponding portfolio
this prospectus, when an alternative of the Series Fund.
identification may be desirable for
complete clarity or to further TARGET LOAN AMOUNT--The amount, equal
describe the role of the Contract to 10% of the initial premium for each
fund, we refer to the Contract fund as completed Contract year, that may be
"the amount credited under the borrowed as a first loan in any year
Contract". The term should not be at the most favorable net cost to the
confused with The Prudential Series Contract owner.
Fund, Inc. (the "Series Fund") defined
below. THE PRUDENTIAL SERIES FUND, INC. (THE
"SERIES FUND")--A mutual fund with
CONTRACT OWNER--The person who separate portfolios, one or more of
purchases a DISCOVERY Life Plus which may be chosen as an underlying
Contract and pays the premium. investment for the Contract.
CONTRACT YEAR--A year that starts on VALUATION PERIOD--The period of time
the Contract date or on a Contract from one determination of the value of
anniversary. the amount invested in a subaccount to
the next. Such determinations are made
DISCOVERY LIFE--A fixed life insurance when the net asset values of the
contract issued by Pruco Life of New portfolios of the Series Fund are
Jersey that is similar to DISCOVERY calculated, which is generally at 4:15
Life Plus except that the owner may p.m. New York City time on each day
not invest the Contract fund in during which the New York Stock
variable investment options. Exchange is open.
FACE AMOUNT--The initial amount of VARIABLE INVESTMENT OPTIONS--The
life insurance as shown on the cover subaccounts and the Real Property
page of the Contract. Account.
1
<PAGE>
BRIEF DESCRIPTION OF THE CONTRACT
The DISCOVERY Life Plus Contract (the "Contract") provides a way to invest in
one or more securities portfolios with different investment objectives, while at
the same time providing lifetime insurance protection. The Discovery Life Plus
Contract is a variable whole life insurance contract. It is called a "variable"
contract because the value of the Contract depends upon the investment results
of the investment option[s] selected. Under current law, no tax is payable upon
any increase in the value of the Contract until amounts are distributed under
the Contract. The owner may surrender the Contract in full and in that way
withdraw the full cash surrender value of the Contract. Neither partial
surrenders nor Contract splits are permitted. The Contract owner may, however,
borrow against the value of the Contract. See LOANS, page 8.
Because the Contract is a Modified Endowment Contract under federal tax law,
loans and other distributions made during the insured's lifetime are includible
in gross income on an income-first basis. A 10% penalty tax may be imposed on
income distributed before the insured attains age 59-1/2. See TAX TREATMENT OF
CONTRACT BENEFITS, page 15.
The Contract is purchased by making an initial premium payment. Generally, the
minimum initial payment is $10,000. For insureds aged 76 through 85, the minimum
initial payment is $50,000. Pruco Life Insurance Company of New Jersey ("Pruco
Life of New Jersey") deducts the amount needed to pay state and/or local premium
taxes attributable to the Contract and allocates the remainder to the variable
investment option[s] selected by the owner and/or to the fixed-rate option. The
assets of each subaccount are invested in a corresponding portfolio of The
Prudential Series Fund, Inc. (the "Series Fund"), a series mutual fund for which
The Prudential Insurance Company of America ("Prudential") is the investment
advisor. The Series Fund currently has fifteen portfolios available for
investment by Contract owners. The MONEY MARKET PORTFOLIO is invested in
short-term debt obligations similar to those purchased by money market funds;
the DIVERSIFIED BOND PORTFOLIO is invested primarily in high quality medium-term
corporate and government debt securities; the GOVERNMENT INCOME PORTFOLIO is
invested primarily in U.S. Government securities including intermediate and
long-term U.S. Treasury securities and debt obligations issued by agencies of or
instrumentalities established, sponsored or guaranteed by the U.S. Government;
the ZERO COUPON BOND PORTFOLIOS 2000 and 2005 are invested primarily in debt
obligations of the United States Treasury and investment grade corporations that
have been issued without interest coupons or stripped of their unmatured
interest coupons, interest coupons that have been stripped from such debt
obligations, and receipts and certificates for such stripped debt obligations
and stripped coupons; the CONSERVATIVE BALANCED PORTFOLIO is invested in a mix
of money market instruments, fixed income securities, and common stocks, in
proportions believed by the investment manager to be appropriate for an investor
who desires diversification of investment and who prefers a relatively lower
risk of loss and a correspondingly reduced chance of high appreciation; the
FLEXIBLE MANAGED PORTFOLIO is invested in a mix of money market instruments,
fixed income securities, and common stocks, in proportions believed by the
investment manager to be appropriate for an investor who desires diversification
of investment and who is willing to accept a relatively high level of loss in an
effort to achieve greater appreciation; the HIGH YIELD BOND PORTFOLIO is
invested primarily in high yield fixed-income securities of medium to lower
quality, also known as high risk bonds; the STOCK INDEX PORTFOLIO is invested in
common stocks selected to duplicate the price and yield performance of the
Standard & Poor's 500 Composite Stock Price Index; the EQUITY INCOME PORTFOLIO
is invested primarily in common stocks and convertible securities that provide
favorable prospects for investment income returns above those of the Standard &
Poor's 500 Stock Index or the NYSE Composite Index; the EQUITY PORTFOLIO is
invested primarily in common stocks; the PRUDENTIAL JENNISON PORTFOLIO is
invested primarily in equity securities of established companies with
above-average growth prospects; the SMALL CAPITALIZATION STOCK PORTFOLIO is
invested primarily in equity securities of publicly-traded companies with small
market capitalization; the GLOBAL PORTFOLIO is invested primarily in common
stocks and common stock equivalents (such as convertible debt securities) of
foreign and domestic issuers; and the NATURAL RESOURCES PORTFOLIO is invested
primarily in common stocks and convertible securities of natural resource
companies, and in securities (typically debt securities or preferred stock) the
terms of which are related to the market value of a natural resource. Further
information about the Series Fund portfolios can be found under THE PRUDENTIAL
SERIES FUND, INC. on page 5.
The Contract owner may also invest a portion of the premium payment in The Pruco
Life of New Jersey Variable Contract Real Property Account (the "Real Property
Account"), which, through a partnership, invests primarily in income-producing
real property. If a Contract owner elects to invest in the real estate
investment option, the assets will be maintained in a subaccount of the Real
Property Account related to the Contract that provides the mechanism and
maintains the records whereby various Contract charges are made. The investment
objectives of the Real Property Account and the partnership are described
briefly under PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
on page 6.
2
<PAGE>
All of the premium payment may be allocated to one subaccount, to the fixed-rate
option funded by Pruco Life of New Jersey's general account or to the Real
Property Account. Alternatively, the premium payment may be divided among any of
the subaccounts, the fixed-rate option, and the Real Property Account.
The value of the Contract will vary to reflect the investment results of the
variable investment option[s] in which money is invested and the amount of
interest credited on amounts allocated to the fixed-rate option. The total
amount attributable to a Contract held in the variable investment options and
under the fixed-rate option, plus the principal amount of any Contract loan, is
referred to herein interchangeably as the "Contract fund" or "the amount
credited under the Contract".
The purchaser of a Contract decides what the amount of the initial premium will
be (so long as it is at least $10,000; $50,000 for issue ages 76 through 85) and
from this amount the initial amount of life insurance (i.e., the face amount) is
determined. Although the cash surrender value of the Contract (i.e., the
Contract fund minus any Contract debt and any applicable sales charge deducted
upon surrender) will begin to vary immediately to reflect the investment results
of any amount invested in the variable investment options, the amount of life
insurance will ordinarily not change for several years and may not change at
all. If investment results are sufficiently favorable, however, the amount of
insurance will eventually increase and thereafter will vary in amount reflecting
investment results and the application of factors that vary with the insured's
attained age. But it will never be less than the face amount. See AMOUNT OF LIFE
INSURANCE, page 11.
Pruco Life of New Jersey deducts certain charges from premium payments and from
the amounts held in the designated investment options. In addition, Pruco Life
of New Jersey makes certain additional charges if a Contract is surrendered
during the first 6 Contract years. All these charges, which are largely designed
to cover insurance costs and risks as well as sales and administrative expenses,
are fully described under CHARGES on page 9. In brief, and subject to that
fuller description, the following diagram outlines the charges which may be
made:
3
<PAGE>
-----------------------------------------------------------------
PREMIUM PAYMENT
-----------------------------------------------------------------
|
|
----------------------------------------------------
o Less charge for premium taxes. (Under
certain circumstances, this charge may be
reduced or eliminated, see item 1 under
Charges, page 9).
----------------------------------------------------
|
|
- --------------------------------------------------------------------------------
INVESTED PREMIUM AMOUNT
o To be invested in one or a combination of:
o One or more of the fifteen available portfolios of the Series Fund.
o The Real Property Account.
o The Fixed Rate Option.
- --------------------------------------------------------------------------------
|
|
- --------------------------------------------------------------------------------
DAILY CHARGES
o A daily charge equivalent to an annual rate of up to 0.35% is
deducted from the assets of each of the variable investment
options for administrative expenses.
o A daily charge equivalent to an annual rate of up to 0.9% is
deducted from the assets of each of the variable investment
options for mortality and expense risks.
o Management fees and expenses are deducted from the assets of
the Series Fund and the Real Property Account.
- --------------------------------------------------------------------------------
|
|
- --------------------------------------------------------------------------------
MONTHLY CHARGES
o A charge for insurance protection is deducted monthly.
Generally, this charge is imposed in an amount equal to 0.05%
of the Contract fund per month. However, if the Contract fund
falls so low as to make a charge of 0.05% per month
inadequate, the charge may be increased to the amount
permitted by the 1980 Commissioners Standard Ordinary
Mortality Table ("1980 CSO Table").
- --------------------------------------------------------------------------------
|
|
- --------------------------------------------------------------------------------
POSSIBLE ADDITIONAL CHARGES
o If the Contract is surrendered during the first 6 years, a
contingent deferred sales charge is assessed; the maximum
contingent deferred sales charge during the first year is 9%
of the amount credited under the Contract. Thereafter, this
charge decreases by one percent per year until, in the sixth
Contract year, it is equal to 4% of the amount credited under
the Contract. In the seventh and subsequent Contract years
there is no charge. The sales charge will never be greater
than 9% of the initial premium payment.
- --------------------------------------------------------------------------------
Because of the charges listed above, and in particular because of the
significant charges deducted upon early surrender, prospective purchasers should
purchase a Contract only if they intend and have the financial capability to
keep it in force for a substantial period.
Funds may be transferred among the subaccounts and to the fixed-rate option and
the Real Property Account up to four times each year. There are limitations on
transfers out of the fixed-rate option and into and out of the Real Property
Account. See TRANSFERS, page 7.
For a limited time, a Contract may be returned for a refund in accordance with
the terms of its "free-look" provision. See SHORT-TERM CANCELLATION RIGHT OR
"FREE LOOK", page 7.
This Brief Description of the Contract is intended to provide a broad overview
of the more significant features of the Contract. More detailed information will
be found in subsequent sections of this prospectus and in the Contract document.
That document, together with its attached application, constitutes the entire
agreement between the owner and Pruco Life of New Jersey and should be retained
by the owner.
4
<PAGE>
GENERAL INFORMATION ABOUT PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY,
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT,
AND THE VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACT
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
Pruco Life Insurance Company of New Jersey ("Pruco Life of New Jersey") is a
stock life insurance company, organized in 1982 under the laws of the State of
New Jersey. It is licensed to sell life insurance and annuities only in the
States of New Jersey and New York. These Contracts are not offered in any state
in which the necessary approvals have not yet been obtained.
Pruco Life of New Jersey is a wholly-owned subsidiary of Pruco Life Insurance
Company, which in turn is a wholly-owned subsidiary of Prudential, a mutual
insurance company founded in 1875 under the laws of the State of New Jersey. As
of December 31, 1996, Prudential has invested over $127 million in Pruco Life of
New Jersey through its subsidiary Pruco Life Insurance Company in connection
with Pruco Life of New Jersey's organization and operation. Prudential intends
from time to time to make additional capital contributions to Pruco Life of New
Jersey as needed to enable it to meet its reserve requirements and expenses in
connection with its business. However, Prudential is under no obligation to make
such contributions and its assets do not back the benefits payable under the
Contract. Pruco Life of New Jersey's financial statements begin on page B-1 and
should be considered only as bearing upon Pruco Life of New Jersey's ability to
meet its obligations under the Contracts.
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
The Pruco Life of New Jersey Single Premium Variable Life Account (the
"Account") was established on April 15, 1985 under New Jersey law as a separate
investment account. The Account meets the definition of a "separate account"
under the federal securities laws. The Account holds assets that are segregated
from all of Pruco Life of New Jersey's other assets.
The obligations to Contract owners and beneficiaries arising under the Contract
are general corporate obligations of Pruco Life of New Jersey. Pruco Life of New
Jersey is also the legal owner of the assets in the Account. Pruco Life of New
Jersey will 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.
The Account is registered with the Securities and Exchange Commission ("SEC")
under the Investment Company Act of 1940 ("1940 Act") as a unit investment
trust, which is a type of investment company. This does not involve any
supervision by the SEC of the management or investment policies or practices of
the Account. For state law purposes, the Account is treated as a part or
division of Pruco Life of New Jersey. There are currently fifteen subaccounts
within the Account, each of which invests in a single corresponding portfolio of
the Series Fund. Additional subaccounts may be added in the future. The
Account's financial statements begin on page A-1.
THE PRUDENTIAL SERIES FUND, INC.
The Prudential Series Fund, Inc. (the "Series Fund") is registered under the
1940 Act as an open-end diversified management investment company. Its shares
are currently sold only to separate accounts of Prudential and certain other
insurers that offer variable life insurance and variable annuity contracts. On
October 31, 1986, the Pruco Life Series Fund, Inc., an open-end, diversified
management investment company which sold its shares only to separate accounts of
Pruco Life of New Jersey and Pruco Life Insurance Company, was merged into the
Series Fund. Prior to that date, the Account invested only in shares of the
Pruco Life Series Fund, Inc. The Account will purchase and redeem shares from
the Series Fund at net asset value. Shares will be redeemed to the extent
necessary for Pruco Life of New Jersey to provide benefits under the Contract
and to transfer assets from one subaccount to another, as requested by Contract
owners. Any dividend or capital gain distribution received from a portfolio of
the Series Fund will be reinvested immediately at net asset value in shares of
that portfolio and retained as assets of the corresponding subaccount.
5
<PAGE>
Prudential is the investment advisor for the assets of each of the portfolios of
the Series Fund. Prudential's principal business address is Prudential Plaza,
Newark, New Jersey 07102-3777. Prudential has a Service Agreement with its
wholly-owned subsidiary The Prudential Investment Corporation ("PIC"), which
provides that, subject to Prudential's supervision, PIC will furnish investment
advisory services in connection with the management of the Series Fund. In
addition, Prudential has entered into a Subadvisory Agreement with its
wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio. Further detail is provided in
the prospectus and statement of additional information for the Series Fund.
Prudential, PIC, and Jennison are registered as investment advisors under the
Investment Advisers Act of 1940.
As an investment advisor, Prudential charges the Series Fund a daily investment
management fee as compensation for its services. In addition to the investment
management fee, each portfolio incurs certain expenses such as accounting and
custodian fees. SEE EXPENSES INCURRED BY THE SERIES FUND, page 10.
It is conceivable that in the future it may become disadvantageous for both
variable life insurance and variable annuity contract separate accounts to
invest in the same underlying mutual fund. Although neither the companies which
invest in the Series Fund, nor the Series Fund currently foresees any such
disadvantage, the Series Fund's Board of Directors intends to monitor events in
order to identify any material conflict between variable life insurance and
variable annuity contract owners and to determine what action, if any, should be
taken in response thereto. Material conflicts could result from such things as:
(1) changes in state insurance law; (2) changes in federal income tax law; (3)
changes in the investment management of any portfolio of the Series Fund; or (4)
differences between voting instructions given by variable life insurance and
variable annuity contract owners.
A FULL DESCRIPTION OF THE SERIES FUND, ITS INVESTMENT OBJECTIVES, MANAGEMENT,
POLICIES, AND RESTRICTIONS, ITS EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN--INCLUDING ANY RISKS ASSOCIATED WITH INVESTMENT IN THE HIGH YIELD BOND
PORTFOLIO, AND ALL OTHER ASPECTS OF ITS OPERATION IS CONTAINED IN THE ATTACHED
PROSPECTUS FOR THE SERIES FUND AND IN ITS STATEMENT OF ADDITIONAL INFORMATION,
WHICH SHOULD BE READ IN CONJUNCTION WITH THIS PROSPECTUS. THERE IS NO ASSURANCE
THAT THE INVESTMENT OBJECTIVES WILL BE MET.
PRUCO LIFE OF NEW JERSEY VARIABLE CONTRACT REAL PROPERTY ACCOUNT
The Pruco Life of New Jersey Variable Contract Real Property Account (the "Real
Property Account") is a separate account of Pruco Life of New Jersey that,
through a general partnership formed by Prudential and two of its subsidiaries,
invests primarily in income-producing real property such as office buildings,
shopping centers, agricultural land, hotels, apartments or industrial
properties. It also invests in mortgage loans and other real estate-related
investments, including sale-leaseback transactions. The objectives of the Real
Property Account and the partnership are to preserve and protect capital,
provide for compounding of income as a result of reinvestment of cash flow from
investments, and provide for increases over time in the amount of such income
through appreciation in the value of assets.
The partnership has entered into an investment management agreement with
Prudential, under which Prudential selects the properties and other investments
held by the partnership. Prudential charges the partnership a daily fee for
investment management which amounts to 1.25% per year of the average daily gross
assets of the partnership.
A FULL DESCRIPTION OF THE REAL PROPERTY ACCOUNT, ITS MANAGEMENT, POLICIES, AND
RESTRICTIONS, ITS CHARGES AND EXPENSES, THE RISKS ATTENDANT TO INVESTMENT
THEREIN, THE PARTNERSHIP'S INVESTMENT OBJECTIVES, AND ALL OTHER ASPECTS OF THE
REAL PROPERTY ACCOUNT'S AND THE PARTNERSHIP'S OPERATIONS IS CONTAINED IN THE
ATTACHED PROSPECTUS FOR THE REAL PROPERTY ACCOUNT, WHICH SHOULD BE READ TOGETHER
WITH THIS PROSPECTUS BY ANY CONTRACT OWNER CONSIDERING THE REAL PROPERTY ACCOUNT
AS AN INVESTMENT OPTION. THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVES
WILL BE MET.
DETAILED INFORMATION FOR PROSPECTIVE CONTRACT OWNERS
REQUIREMENTS FOR ISSUANCE OF A CONTRACT
For insureds below the age of 76, the minimum initial premium payment is
$10,000. For insureds aged 76 through 85, the minimum initial premium payment is
$50,000. Before issuing any Contract, Pruco Life of New Jersey requires evidence
of insurability which may include a medical examination. The Contract will only
be issued on insureds who are classified as standard risks following Pruco Life
of New Jersey's regular underwriting process. Insurance protection will begin on
the date the initial payment and completed application are received. On the date
the initial payment is received in the Home Office specified in the Contract,
the amount credited under the Contract
6
<PAGE>
begins to vary to reflect the investment results of the variable investment
option[s] which have been chosen or the interest rate declared for the
fixed-rate option. If the application is not approved, because the current
underwriting requirements are not met, the premium payment will promptly be
returned. The Company reserves the right to change these requirements on a
non-discriminatory basis.
SHORT-TERM CANCELLATION RIGHT OR "FREE LOOK"
Generally, a Contract may be returned for a refund within 10 days after it is
received by the Contract owner, within 45 days after Part I of the application
for insurance is signed or within 10 days after Pruco Life of New Jersey mails
or delivers a Notice of Withdrawal Right, whichever is latest. Some states allow
a longer period of time during which a Contract may be returned for a refund. A
refund can be requested by mailing or delivering the Contract to the
representative who sold it or to the Home Office specified in the Contract. A
Contract returned according to this provision shall be deemed void from the
beginning. The Contract owner will then receive a refund of all premium payments
made, plus or minus any change due to investment experience. However, if
applicable law so requires, the Contract owner who exercises his or her
short-term cancellation right will receive a refund of all premium payments
made, with no adjustment for investment experience.
ALLOCATION OF THE PREMIUM PAYMENT
The Contract owner determines how the initial premium payment, after the
deduction for any applicable state and/or local premium taxes, will be allocated
among the subaccounts, the fixed-rate option, and the Real Property Account. The
owner may choose to allocate nothing to a particular subaccount or to the
fixed-rate option or the Real Property Account, but any allocation made must be
at least 10% and may not be a fractional percent.
Additionally, a feature called Dollar Cost Averaging is available to Contract
owners who make an allocation to the Money Market Subaccount. Under this
feature, automatic flat dollar amounts will be transferred monthly from the
Money Market Subaccount into other investment options available under the
Contract, excluding the fixed-rate option, but including the Real Property
Account. At issue, the minimum amount initially designated for transfer under
this feature must be the greater of $10,000 and 10% of the initial premium
payment. After issue, Pruco Life of New Jersey will accept an amount less than
$10,000 provided it brings the balance in any current Dollar Cost Averaging
account up to $10,000. Monthly transfers must be at least 3% of the amount
allocated to the Dollar Cost Averaging account, with a minimum of $20
transferred into any one investment option. These amounts are subject to change
at Pruco Life of New Jersey's discretion. The minimum transfer amount will only
be recalculated upon an increase in the amount allocated to the account.
Each automatic monthly transfer will take effect as of the end of the valuation
period on the Monthly Date, provided the New York Stock Exchange ("NYSE") is
open on that date. If the NYSE is not open on the Monthly Date, the transfer
will take effect as of the end of the valuation period on the next day that the
NYSE is open. If the Monthly Date does not occur in a particular month (e.g.,
February 30), the transfer will take effect as of the end of the valuation
period on the last day of the month that the NYSE is open. Automatic monthly
transfers will continue until the amount designated for Dollar Cost Averaging
has been transferred, or until the Contract owner gives notification of a change
in allocation or cancellation of the account. Currently, there is no charge for
using the Dollar Cost Averaging account.
TRANSFERS
The Contract owner may transfer the portion of the Contract fund allocated to
any of the subaccounts, the fixed-rate option or the Real Property Account
without charge and without any federal income tax liability. Transfers must be
in amounts of $300 or more or the total amount in the subaccounts, if less, and
must not cause the amount credited in any subaccount to be less than $300,
unless the entire amount in that subaccount is transferred. The Contract owner
may transfer amounts by proper written notice to the Home Office, or by
telephone, provided the Contract owner is enrolled to use the Telephone Transfer
System. A Contract owner will automatically be enrolled to use the Telephone
Transfer System unless the Contract is jointly owned or the Contract owner
elects not to have this privilege. Telephone transfers are not available if
Pruco Life of New Jersey has received proper notice that the Contract is
assigned. See ASSIGNMENT, page 18. Pruco Life of New Jersey has adopted
procedures designed to ensure that requests by telephone are genuine. Pruco Life
of New Jersey will not be held liable for following telephone instructions that
it reasonably believes to be genuine. Pruco Life of New Jersey cannot guarantee
that owners will be able to get through to complete a telephone transfer during
peak periods such as periods of drastic economic or market change.
Transfers among subaccounts will take effect as of the end of the valuation
period in which a proper transfer request is received at the Home Office. The
owner may make up to four transfers a year, either among the subaccounts or from
the subaccounts to the fixed-rate option or the Real Property Account.
7
<PAGE>
In addition, the entire amount of the Contract fund in the subaccounts may be
transferred to the fixed-rate option at any time. A Contract owner who wishes to
convert his or her variable Contract to a fixed-benefit Contract must request a
complete transfer of funds to the fixed-rate option and should also change his
or her allocation instructions regarding any future premiums.
On the liquidation date of a Zero Coupon Bond Subaccount, all the shares held by
it in the corresponding portfolio of the Series Fund will be redeemed and the
proceeds of the redemption applicable to each Contract will be transferred to
the Money Market Subaccount unless the Contract owner directs that it be
transferred to another subaccount. A transfer that occurs upon the liquidation
date of a Zero Coupon Bond Subaccount will not be counted as one of the four
permissible transfers in a Contract year.
Transfers from the fixed-rate option to the subaccounts are currently permitted
once each Contract year and only during the 30-day period beginning on the
Contract anniversary. The maximum amount which may currently be transferred out
of the fixed-rate option each year is the greater of: (a) 25% of the amount in
the fixed-rate option and (b) $5,000. Such transfer requests received prior to
the Contract anniversary will be effected on the Contract anniversary. Transfer
requests received within the 30-day period beginning on the Contract anniversary
will be effected as of the end of the valuation period in which a proper
transfer request is received at the Home Office. These limits are subject to
change in the future. Transfers to and from the Real Property Account are
subject to restrictions described in a separate prospectus for that investment
option.
SURRENDERS
The Contract owner may surrender the Contract at any time for its full cash
surrender value (which takes into account the contingent deferred sales charge,
if any, and any Contract debt). Neither partial surrenders nor Contract splits
are permitted. To surrender a Contract, the owner must deliver or mail it,
together with a written request in a form that meets Pruco Life of New Jersey's
needs, to a Pruco Life of New Jersey Home Office. The cash surrender value of
the surrendered Contract will be determined as of the date such notice is
received in the Home Office. See When Proceeds Are Paid, page 15. Surrender of
the Contract may have tax consequences. See TAX TREATMENT OF CONTRACT BENEFITS,
page 15.
LOANS
The Contract owner may borrow from Pruco Life of New Jersey up to the "loan
value" of the Contract using only the Contract as security for the loan.
Contractually, loans will be made only on or after the first Contract
anniversary. However, as an administrative practice, Pruco Life of New Jersey
allows loans to be made during the first Contract year. This practice may
change. The loan value of a Contract is 90% of an amount equal to its Contract
fund, reduced by any charges due upon surrender. However, Pruco Life of New
Jersey will, on a non-contractual basis, increase the loan value by permitting a
Contract owner to borrow up to 100% of the portion of the Contract fund
attributable to the fixed-rate option (or any portion of the Contract fund
attributable to a prior loan supported by the fixed-rate option), reduced by any
charges due upon surrender. Loans will be treated as distributions for tax
purposes. See TAX TREATMENT OF CONTRACT BENEFITS, page 15.
When a loan is taken, the amounts allocated to the subaccount[s], the fixed-rate
option or the Real Property Account will be reduced by the amount of any loan.
The reduction will generally be made in the same proportions as the value in
each subaccount, the fixed-rate option, and the Real Property Account bears to
the total value of the Contract. As explained below, however, the principal
amount of the loan continues to be part of the Contract owner's total Contract
fund.
Pruco Life of New Jersey will charge interest at the rate of 6% per year on any
outstanding loan and, if the interest is not paid on the Contract anniversary,
the amount of the interest will be added to the loan. Although the amount of the
loan will be withdrawn from the variable investment options and the fixed-rate
option, Pruco Life of New Jersey will nevertheless credit the amount withdrawn
with interest daily at an effective annual rate of either 5.5% or 4%. The loan
plus the interest credited thereon to the Contract owner remain part of the
Contract fund. Determination of the applicable interest rate credited to the
Contract owner on the loan amount is made as follows. The loan amount is divided
into two parts, the "target loan amount" and the remainder. The target loan
amount for any Contract year is 10% of the initial premium for each Contract
year. Thus in the first year it is 10% of the premium payment, in the second
year 20% of the premium payment, and so on. Any borrowed amount that is part of
the target loan amount is credited with interest daily at an effective annual
rate of 5.5%. Amounts borrowed in excess of the target loan amount, and second
loans in any year, are credited daily with interest at an effective annual rate
of 4%. Thus the net cost of the loan to the Contract owner is about 0.5% per
year on the target loan amount and 2% per year on amounts in excess of the
target loan amount and on second loans in any year; however, since the amount
borrowed is not invested in the variable investment option[s] the cash surrender
value does not, to that extent, participate in either
8
<PAGE>
favorable or unfavorable investment performance. Upon each Contract anniversary
any outstanding loan up to the new target loan amount will be credited interest
at the 5.5% rate even if some of that loan had been credited interest at 4% in
the prior year.
Repayment of a loan does not restore the Contract fund or cash surrender value
to what it would have been had no loan been taken, since the loaned amount did
not reflect investment experience during the period the loan was outstanding.
This may also have an effect on the death benefit.
In addition, it should be recognized that a Contract loan will increase the
difference between the gross investment return in the underlying portfolio[s] of
the Series Fund and the net return in the selected subaccount[s]. This is
because the cost of insurance charge (see item 4 under CHARGES, below) is not
reduced by the making of a Contract loan while the amount in the subaccount[s]
from which such charges are deducted is reduced by the amount of the loan.
CHARGES
1. DEDUCTION FROM PREMIUM PAYMENTS. Upon purchase of this Contract, a premium
tax is generally payable. Based on the statutory rate, Pruco Life of New Jersey
will deduct the maximum amount of premium taxes applicable to the particular
Contract from the initial premium payment. These statutory rates vary by state
and local jurisdiction. The most common level of premium taxes is 2% of the
premium. The tax rates in those jurisdictions that impose a tax generally range
from 0.75% to 5% (but in some instances may exceed 5%). The amount remaining
after the deduction of premium taxes will be allocated to the investment
option[s] as the owner directs. However, if (a) the sum of the initial premiums
under the Contract and all other DISCOVERY Life Plus and DISCOVERY Life
Contracts issued on the same insured equal $50,000 or more, or (b) Contracts are
purchased on all children of a parent or all grandchildren of a grandparent,
each Contract has an initial premium of $25,000 or more and the total initial
premiums add up to $50,000 or more, Pruco Life of New Jersey will deduct for
initial and additional premium taxes only the portion of the applicable state
premium taxes which is in excess of 4% of the premium, and any applicable local
premium taxes. If total premiums under the Contract and all other Discovery Life
Plus and DISCOVERY Life Contracts issued on the same insured equal or exceed
$50,000, any premium taxes previously deducted will be used to increase the
Contract fund on the most recent Contract. Thus, in many cases, if a Contract is
purchased with an initial premium of $50,000 or more, there will be no deduction
from the payment and the entire amount will be invested as the owner directs.
During 1996, 1995 and 1994, Pruco Life of New Jersey received no money in
charges for payment of state premium taxes.
2. SALES CHARGES ON SURRENDERS. A contingent deferred sales charge may be
imposed upon surrender of this Contract. This charge compensates Pruco Life of
New Jersey for paying all of the expenses of selling and distributing the
Contracts, including sales commissions, printing of prospectuses, preparation of
sales literature, and other promotional activities. As stated earlier, on page
3, no sales charge will be made if the Contract is surrendered after the sixth
Contract year. If the Contract is surrendered in the first year, the charge will
be 9% of the amount credited under the Contract. For each year after the first
that the Contract is in effect, the contingent deferred sales charge as a
percentage of the Contract fund is reduced by 1% until it reaches 4% in year 6.
However, in no event will the sales charge be greater than 9% of the initial
premium payment. If there is an outstanding loan, the amount of any deferred
sales charge will be computed as if the loan had been repaid immediately before
the surrender. No deferred sales charge is applicable to the death benefit, no
matter when that may become payable. During 1996, 1995 and 1994, Pruco Life of
New Jersey received a total of $2,163, $556 and $343,915, respectively, in sales
charges on surrenders of the Contracts.
3. ADMINISTRATIVE CHARGE. There is a charge imposed to reimburse Pruco Life of
New Jersey for the expenses it incurs in administering the Contracts, which
includes such things as underwriting the Contract, conducting any medical
examinations, establishing and maintaining records, and providing reports to
Contract owners. This charge will be assessed by deducting, from the assets of
each of the variable investment options, a percentage of those assets equivalent
to an effective annual rate of up to 0.35% (.00095723%, daily). During 1996,
1995 and 1994, Pruco Life of New Jersey received a total of approximately
$157,141, $149,296 and $148,697, respectively, in annual administrative charges
under the Contracts. This administrative charge is guaranteed never to be
increased above an effective annual rate of 0.35% over the life of the
Contracts.
4. CHARGE FOR INSURANCE PROTECTION. Immediately after the Contract is issued the
amount of insurance payable upon death of the insured (the face amount) will be
substantially higher than the initial premium payment. As the insured grows
older, and if investment results (or interest credited) have been reasonably
favorable, the difference between the Contract fund and the amount payable to
the beneficiary in the event of the insured's death will become smaller. But the
death benefit will always be higher than the Contract fund. To enable Pruco Life
of New Jersey to pay this additional amount, it makes a monthly charge
commencing on the Contract date, the date the
9
<PAGE>
Contract is issued. The National Association of Insurance Commissioners
publishes mortality tables from which it can be determined what an appropriate
monthly charge for this purpose should be, depending upon the insured's age and
sex (except where unisex rates apply). One set of such tables is known as the
1980 CSO Table. Although Pruco Life of New Jersey has the contractual right to
charge maximum cost of insurance rates, based on the 1980 CSO Table, the actual
cost of insurance charge will generally be lower than that specified by the 1980
CSO Table. Except as explained in the next paragraph, the charge will be imposed
on each of the Contract's Monthly dates (i.e., the Contract date and the same
day of each succeeding month) in an amount equal to 0.05% per month of the
Contract fund on such dates. The sum of 12 monthly mortality charges is likely
to be between 0.6% and 0.65% per Contract year of the Contract fund. The exact
percentage is uncertain because the Contract fund varies in amount daily. If the
Contract fund remains level throughout the entire Contract year, the sum of the
charges would be 0.6% of the Contract fund. If the Contract fund declined
uniformly throughout the year, the sum would be less than 0.6%. If the Contract
fund increased uniformly throughout the year, the sum would be greater than
0.6%. (For example, at a 12% gross rate of return, the sum of the monthly
charges would be approximately 0.65%.)
The monthly insurance charge generally will be assessed at a rate of 0.05% per
month of the Contract fund, unless as a result of very unfavorable investment
experience, the Contract fund falls so low as to make a monthly charge based
upon a rate of 0.05% per month inadequate. In that event, the charge may be
increased to the amount permitted by the 1980 CSO Table. This higher charge
would generally be assessed only when the Contract fund is at least 40% lower
than that which would exist were a net rate of 6% earned in the applicable
variable investment option[s] and maximum mortality charges based on the 1980
CSO Table deducted. In practice, this will require that the return average
somewhat less than 6% for several years or that a substantial depreciation in
the Contract fund occur in a particular year. For example, for a male who buys a
Contract at age 35, investment results could average a net return of 2.22% per
year for about 19 years before Pruco Life of New Jersey will make a higher cost
of insurance charge. As another example, for a male who buys a Contract at age
40 and experiences an average net return of 6% per year for 8 years, it would
take a loss of about 43% in the ninth year (which could occur if the assets were
held in the Equity Subaccount and there was a substantial market drop) in order
to bring about an increase in the insurance charge.
5. CHARGES FOR ASSUMING MORTALITY AND EXPENSE RISKS. Pruco Life of New Jersey
makes a charge for assuming the risk that its estimates of longevity and of the
expenses it expects to incur, over the lengthy periods that this Contract may be
in effect--estimates that are the basis for the level of the other charges it
makes under the Contracts--will turn out to be incorrect. The mortality and
expense risk charge will be made by deducting daily, from the assets of each of
the subaccounts and/or the Real Property Account, a percentage of those assets
equivalent to an effective annual rate of up to 0.9% (.00245475%, daily). During
1996, 1995 and 1994, Pruco Life of New Jersey received a total of approximately
$402,978, $382,860 and $381,325, respectively, in mortality and expense risk
charges under the Contracts.
6. EXPENSES INCURRED BY THE SERIES FUND. Subject to certain caps and offsets,
the charges and expenses of the Series Fund are indirectly borne by the Contract
owners. Investment management fees for the available Series Fund portfolios are
briefly described under THE PRUDENTIAL SERIES FUND, INC. on page 12. Further
detail about management fees and other Series Fund expenses is provided in the
attached prospectus for the Series Fund and its statement of additional
information. Higher charges and expenses are incurred if the Real Property
Account is selected, as described in the attached prospectus for the Real
Property Account.
The Account purchases shares of the Series Fund at net asset value. The net
asset value of those shares reflects investment management fees and expenses
already deducted from the assets of the Series Fund. More detailed information
is contained in the attached prospectus for the Series Fund.
The total expenses of each portfolio for the year 1996 expressed as a percentage
of the average assets during the year are shown below:
10
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
| | OTHER EXPENSES | TOTAL EXPENSES
| INVESTMENT | (AFTER EXPENSE | (AFTER EXPENSE
PORTFOLIO | ADVISORY FEE | REIMBURSEMENT)* | REIMBURSEMENT)*
- ----------------------------------------|----------------|------------------|------------------
<S> <C> <C> <C>
MONEY MARKET PORTFOLIO* | 0.40% | 0% | 0.40%
DIVERSIFIED BOND PORTFOLIO* | 0.40% | 0% | 0.40%
GOVERNMENT INCOME PORTFOLIO | 0.40% | 0.06% | 0.46%
ZERO COUPON BOND PORTFOLIOS* | 0.40% | 0% | 0.40%
CONSERVATIVE BALANCED PORTFOLIO* | 0.55% | 0% | 0.40%
FLEXIBLE MANAGED PORTFOLIO | 0.60% | 0% | 0.40%
HIGH YIELD BOND PORTFOLIO | 0.55% | 0.08% | 0.63%
STOCK INDEX PORTFOLIO | 0.35% | 0.05% | 0.40%
EQUITY INCOME PORTFOLIO | 0.40% | 0.05% | 0.45%
EQUITY PORTFOLIO* | 0.45% | 0% | 0.40%
PRUDENTIAL JENNISON PORTFOLIO | 0.60% | 0.06% | 0.66%
SMALL CAPITALIZATION STOCK PORTFOLIO | 0.40% | 0.16% | 0.56%
GLOBAL PORTFOLIO | 0.75% | 0.17% | 0.92%
NATURAL RESOURCES PORTFOLIO | 0.45% | 0.07% | 0.52%
- ----------------------------------------------------------------------------------------------
</TABLE>
* Some investment management fees and expenses charged to the Series Fund may be
higher than those that were previously charged to the Pruco Life Series Fund,
Inc. (0.4%), in which the Account previously invested. For the Money Market,
Diversified Bond, Zero Coupon Bond 2000, Conservative Balanced, Flexible
Managed, Zero Coupon Bond Portfolio 2005, and Equity Portfolios, Pruco Life will
make daily adjustments that will offset the effect on Contract owners of any
higher investment management fees and expenses charged against the Series Fund.
Pruco Life also makes, on a non-guaranteed basis, daily adjustments to ensure
that the portfolio expenses indirectly borne by a Contract owner investing in
the Zero Coupon Bond Portfolio 2005 will not exceed the investment management
fee.
Without such adjustments the portfolio expenses indirectly borne by a Contract
owner, expressed as a percentage of the average daily net assets by portfolio,
would have been 0.44% for the Money Market Portfolio, 0.45% for the Diversified
Bond Portfolio, 0.52% for the Zero Coupon Bond Portfolio 2000, 0.53% for the
Zero Coupon Bond Portfolio 2005, 0.59% for the Conservative Balanced Portfolio,
0.64% for the Flexible Managed Portfolio, and 0.50% for the Equity Portfolio in
1996. Pruco Life does not intend to discontinue the adjustments for the Zero
Coupon Bond Portfolio 2005 in the future, although it retains the right to do
so. No such offset will be made with respect to the remaining portfolios.
7. TOTAL CHARGES AND CONTRACT VALUES. As may be seen from the foregoing
description, the amount credited under the Contract at the outset of the
Contract will be less than the initial premium payment by the amount of the
premium tax payable, unless the initial premium payment satisfies Pruco Life of
New Jersey's standards for elimination or reduction of the premium tax charge as
explained in item 1 above. Thereafter, assuming a total Series Fund expense
ratio of 0.51% (taking into account any applicable offsets described under THE
PRUDENTIAL SERIES FUND, INC. on page 12), a cost of insurance charge of 0.05%
per month and no Contract debt, the amount credited under the Contract will vary
at a rate that is approximately 2.41% to 2.36% lower than the gross investment
return of the underlying portfolio of the Series Fund in which the assets held
under the Contract are invested.
8. TAXES ON PRUCO LIFE OF NEW JERSEY. The Account 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 of New Jersey. No charge is currently being made
against the Account for company federal income taxes (excluding any charge for
taxes attributable to premiums). Pruco Life of New Jersey will review the
question of a charge to the Account for company federal income taxes
periodically. Such a charge may be made in future years for any company federal
income taxes that would be attributable to the Account.
Under current law, Pruco Life of New Jersey may incur state and local taxes (in
addition to premium taxes) in several states. At present, these taxes are not
significant and they are not charged against the Account. If there is a material
change in the applicable state or local laws, the imposition of any such taxes
upon Pruco Life of New Jersey that are attributable to the Account may result in
a corresponding charge against the Account.
AMOUNT OF LIFE INSURANCE
As stated earlier, when the Contract is issued Pruco Life of New Jersey will
determine what the initial amount of life insurance will be for the initial
premium payment. That amount will be shown on the cover page of the Contract and
is called the "face amount". The face amount will be calculated by Pruco Life of
New Jersey as the amount of whole life insurance that can be provided for the
insured by the initial premium, after the deduction of any applicable state and
local premium taxes. This calculation is based on the 1980 CSO Table and an
interest rate of at least 6%. The amount payable to the beneficiary upon the
insured's death will never be less than the face amount as long as the Contract
remains in force, except that it will be reduced by the amount of any
outstanding loan plus interest. But the Contract's death benefit may be higher
than the face amount, depending upon the length of time the Contract is in force
and the Contract's investment results.
11
<PAGE>
1. SOME TYPICAL FACE AMOUNTS. The following table shows for insureds of various
ages what the face amount of insurance will be for an initial premium payment of
$10,000 or $50,000. The table assumes that at issuance the fixed-rate option is
not being credited more than 6% (if a higher rate is being credited under the
fixed-rate option, the face amount will be slightly higher) and, for the $10,000
premium payment, assumes a total state and local premium tax rate of 2%.
- --------------------------------------------------------------------------------
AGE OF | FACE AMOUNT | FACE AMOUNT
INSURED | FOR $10,000 | FOR $50,000
ON THE | PREMIUM | PREMIUM
CONTRACT |-----------------------------|----------------------------------
DATE | MALE | FEMALE | MALE | FEMALE
- ---------------|--------------|--------------|----------------|-----------------
5 | $231,211 | $298,154 | $1,179,644 | $1,521,193
15 | $151,173 | $198,359 | $ 771,290 | $1,012,032
25 | $104,157 | $129,799 | $ 531,412 | $ 662,236
35 | $ 66,654 | $ 82,561 | $ 340,069 | $ 421,229
45 | $ 42,601 | $ 52,980 | $ 217,353 | $ 270,304
55 | $ 28,260 | $ 35,032 | $ 144,183 | $ 178,734
65 | $ 19,832 | $ 23,624 | $ 101,180 | $ 120,529
75 | $ 14,982 | $ 16,631 | $ 76,439 | $ 84,850
- --------------------------------------------------------------------------------
In some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain Contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 18.
2. INCREASE IN DEATH BENEFIT DUE TO FAVORABLE INVESTMENT EXPERIENCE. It is
likely that the amount of insurance will not change for several years after the
Contract date. Then, if investment experience is sufficiently favorable (by
which is generally meant an average annual net return of greater than 6%), the
death benefit may increase. The Contract provides that the death benefit will
never be less than the face amount or a stated multiple (which changes every
year with the attained age of the insured) of the Contract fund. The latter
ensures that the Contract will always have a death benefit large enough to be
treated as life insurance for tax purposes under current law. Representative
multiples for insureds are shown in the table below.
------------------------------------------------------------
| DEATH BENEFIT IS NO LESS THAN
| THE CONTRACT FUND TIMES THE
AGE OF | FOLLOWING MULTIPLE (ASSUMES NO
INSURED | LOAN)
|-----------------------------------------
| MALE | FEMALE
------------------|-------------------|---------------------
5 | 4.80 | 7.50
15 | 4.80 | 7.50
25 | 4.56 | 6.11
35 | 3.76 | 4.52
45 | 2.27 | 2.64
55 | 1.55 | 1.82
65 | 1.23 | 1.40
75 | 1.09 | 1.15
85 | 1.05 | 1.05
95 | 1.02 | 1.02
-----------------------------------------------------------
Thus, for a male age 55 who purchased a Contract with a face amount of $133,307
when he was 35 for a premium payment of $20,000, if the Contract fund has
increased to $122,604 due to a gross return in the selected Series Fund
portfolios of 12%, the death benefit payable will be $196,166 at the end of 20
years, based on the assumptions reflected in the table on page T1. If the
Contract fund were to drop subsequently because of unfavorable investment
results, the death benefit would also drop, but not below the face amount. In
some states the figures in the above table for males will apply to both males
and females. The table does not apply to certain Contracts issued to employers
and employee organizations based on unisex rates. See LEGAL CONSIDERATIONS
RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS, page 18.
12
<PAGE>
LAPSE AND REINSTATEMENT
If the investment results of a Contract's variable investment option[s] have
been so unfavorable that the net cash surrender value on any Monthly date has
decreased to zero or less, the Contract will go into default.
Should this happen, Pruco Life of New Jersey will send the Contract owner a
notice of default setting forth the payment necessary to keep the Contract in
force. This payment must be received at the Pruco Life of New Jersey Home Office
within the 61 day grace period after the notice of default is mailed or the
Contract will lapse. A Contract that lapses with an outstanding Contract loan
may have tax consequences. See TAX TREATMENT OF CONTRACT BENEFITS on page 15.
A Contract that has lapsed may be reinstated within 3 years after the date of
default unless the Contract has been surrendered for its cash surrender value.
To reinstate a lapsed Contract, Pruco Life of New Jersey requires renewed
evidence of insurability, and submission of certain payments due under the
Contract.
A Contract that has lapsed has no value and provides no benefits.
ADDITIONAL PREMIUM PAYMENTS
After the Contract has been in force for several years, the Contract owner may
be allowed the option of paying additional premium payments in order to increase
his or her Contract fund. Such premium payments are allowed when they will not
cause the Contract to fail to qualify as life insurance for tax purposes and
will not then increase the amount of insurance. Upon request, Pruco Life of New
Jersey will tell the Contract owner whether an additional premium payment can be
made and its maximum amount. If the owner does make an additional premium
payment, the amount of that payment, less any applicable premium taxes which may
be payable, will increase the Contract fund but not the death benefit. These
premium payments will not increase the maximum possible deferred sales charge.
An additional premium payment will not be accepted by Pruco Life of New Jersey
if it would, through the application of the multiples shown on page 11,
immediately result in an increase in the death benefit.
Several factors affect when additional premium payments may be made. For
example, the Contract years in which a female issue age 55 may make additional
payments depend upon investment performance. Based upon a hypothetical gross
annual rate of return of 8% in the selected Series Fund portfolio[s], and upon
the assumptions reflected in the table on page T1, an additional payment may
first be made in year 12, and additional payments may be made as late as year
20.
LIVING NEEDS BENEFIT
Contract applicants may elect to add the Living NEEDS BENEFIT SM to their
Contracts at issue, subject to Pruco Life of New Jersey's receipt of
satisfactory evidence of insurability. The benefit may vary state-by-state. It
can generally be added only to Contracts with face amounts of $50,000 or more or
when the aggregate face amounts of the insured's eligible contracts equal
$50,000 or more.
The LIVING NEEDS BENEFIT allows the Contract owner to elect to receive an
accelerated payment of all or part of the Contract's death benefit, adjusted to
reflect current value, at a time when certain special needs exist. The adjusted
death benefit will always be less than the death benefit, but will generally be
greater than the Contract's cash surrender value. Depending upon state
regulatory approval, one or both of the following options may be available. A
Pruco Life of New Jersey representative should be consulted as to whether
additional options may be available.
TERMINAL ILLNESS OPTION. This option is available if the insured is diagnosed as
terminally ill with a life expectancy of 6 months or less. When satisfactory
evidence is provided, Pruco Life of New Jersey will provide an accelerated
payment of the portion of the death benefit selected by the Contract owner as a
LIVING NEEDS Benefit. The Contract owner may (1) elect to receive the benefit in
a single sum or (2) receive equal monthly payments for 6 months. If the insured
dies before all of the payments have been made, the present value of the
remaining payments will be paid to the beneficiary designated in the Living
Needs Benefit claim form in a single sum.
NURSING HOME OPTION. This option is available after the insured has been
confined to an eligible nursing home for 6 months or more. When satisfactory
evidence is provided, including certification by a licensed physician, that the
insured is expected to remain in the nursing home until death, Pruco Life of New
Jersey will provide an accelerated payment of the portion of the death benefit
selected by the Contract owner as a LIVING NEEDS Benefit. The Contract owner may
(1) elect to receive the benefit in a single sum or (2) receive equal monthly
payments for a specified number of years (not more than 10 nor less than 2),
depending upon the age of the insured. If the insured dies before all of the
payments have been made, the present value of the remaining payments will be
paid to the beneficiary designated in the LIVING NEEDS BENEFIT claim form in a
single sum.
All or part of the Contract's death benefit may be accelerated under the LIVING
NEEDS BENEFIT. If the benefit is only partially accelerated, a death benefit of
at least $25,000 must remain under the Contract. Pruco Life of New Jersey
reserves the right to determine the minimum amount that may be accelerated.
13
<PAGE>
The LIVING NEEDS BENEFIT is available only to the extent regulatory approval has
been obtained. If desired by a Contract owner, the benefit must be requested on
the Contract's application. There is no charge for adding the benefit to the
Contract. However, an administrative charge (not to exceed $150) will be made at
the time the LIVING NEEDS BENEFIT is paid.
No benefit will be payable if the Contract owner is required to elect it in
order to meet the claims of creditors or to obtain a government benefit. Pruco
Life of New Jersey can furnish details about the amount of LIVING NEEDS BENEFIT
that is available to an eligible Contract owner under a particular Contract, and
the adjusted premium payments that would be in effect if less than the entire
death benefit is accelerated.
The Contract owner should consider whether adding this settlement option is
appropriate in his or her given situation. Adding the LIVING NEEDS BENEFIT to
the Contract has no adverse consequences; however, electing to use it could.
With the exception of certain business-related policies, the recently enacted
Health Insurance Portability and Accountability Act of 1996 excludes from income
the LIVING NEEDS BENEFIT if the insured is terminally ill or chronically ill as
defined in the tax law (although the exclusion in the latter case may be
limited). Contract owners should consult with a qualified tax advisor before
electing to receive this benefit. Receipt of a LIVING NEEDS BENEFIT payment may
also affect a Contract owner's eligibility for certain government benefits or
entitlements.
ILLUSTRATIONS OF CASH SURRENDER VALUES, DEATH BENEFITS,
AND ACCUMULATED PREMIUMS
The tables in this prospectus have been prepared to help show how values under
this Contract change with investment performance of the Account. The tables
assume that no portion of the Contract fund is allocated to the fixed-rate
option or the Real Property Account. The tables illustrate how cash surrender
values (reflecting the deduction of deferred sales charges, if any) and death
benefits under Contracts issued on an insured of a given age would vary over
time if the return on the assets held in the Series Fund portfolios were a
uniform, gross, after tax, annual rate of 0%, 4%, 8%, and 12%. The death
benefits and cash surrender values would be different from those shown if the
returns averaged 0%, 4%, 8%, and 12% but fluctuated over and under those
averages throughout the years. For the hypothetical returns of 0% and 4%, the
tables also show when the Contract would go into default, at which time
additional payments would be needed to keep it in force.
The amounts shown for the death benefit and cash surrender value as of each
Contract anniversary reflect the fact that the net investment return on the
assets held in the subaccounts is lower than the gross after tax return of the
portfolios. This is because these tables assume a total Series Fund expense
ratio of 0.51% (taking into account the offsets described under Expenses
incurred BY THE PRUDENTIAL SERIES FUND, Inc. on page 12) and also reflect the
daily charge to the Account for the cost of administration, which is equivalent
to an effective annual charge of 0.35%, and the daily charge to the Account for
assuming mortality and expense risks, which is equivalent to an effective annual
charge of 0.9%. The actual fees and expenses of the portfolios associated with a
particular Contract may be more or less than 0.51% and will depend on which
subaccounts are selected. Based on the above assumptions, gross annual rates of
return of 0%, 4%, 8%, and 12% thus correspond in the tables to approximate net
annual rates of return of 1.74%, 2.26%, 6.26%, and 10.26%.
The tables on pages T1 and T3 also reflect the fact that Pruco Life of New
Jersey generally makes its monthly charge for providing insurance protection at
an amount equal to 0.05% per month (approximately 0.6% to 0.65% per year) of the
assets in the subaccounts attributable to the Contract, even though it has the
contractual right to charge a higher amount. Where the amount credited under a
Contract falls to such a level as to make this monthly charge inadequate in
Pruco Life of New Jersey's judgment (i.e., where the Contract fund value is at
least 40% below that which would exist were a net rate of 6% earned in the
applicable subaccounts and maximum mortality charges deducted), Pruco Life of
New Jersey will deduct the maximum monthly mortality charge. See CHARGE FOR
INSURANCE PROTECTION, page 17. The 0% and 4% columns in the tables on pages T1
and T3 reflect the deduction of these larger mortality charges in later years in
accordance with this standard. The tables on pages T2 and T4 reflect the
deduction of the maximum cost of insurance charge at all times, even though
Pruco Life of New Jersey does not currently intend to charge the maximum
contractual cost of insurance rates other than under the circumstances where the
Contract fund value falls to a specified level, as explained above. All of the
tables reflect the deduction of a sales charge in the calculation of the cash
surrender value during the first 6 Contract years.
The tables also reflect the fact that no charges for federal or state income
taxes are currently made against the Account. If such a charge is made in the
future, it will take a higher gross rate of return than it does now to produce
the net after-tax returns shown in the tables.
14
<PAGE>
<TABLE>
ILLUSTRATIONS
-----------------
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<CAPTION>
DEATH BENEFIT CASH SURRENDER VALUE
----------------------------------------------------- ----------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ----------------------------------------------------- ----------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307 $17,421 $18,130 $ 18,902 $ 19,682
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307 $17,202 $18,631 $ 20,117 $ 21,744
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307 $16,984 $19,144 $ 21,480 $ 24,004
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307 $16,767 $19,669 $ 22,932 $ 26,585
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307 $16,551 $20,206 $ 24,479 $ 29,447
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307 $16,336 $20,755 $ 26,128 $ 32,613
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307 $16,621 $21,976 $ 28,748 $ 37,234
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307 $16,067 $22,338 $ 30,364 $ 40,808
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307 $15,318 $22,707 $ 32,072 $ 44,726
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307 $14,539 $23,081 $ 33,876 $ 49,020
15 $ 36,019 $133,307 $133,307 $133,307 $ 149,620 $10,087 $25,047 $ 44,536 $ 77,523
20 $ 43,822 $133,307 $133,307 $133,307 $ 196,166 $ 4,137 $26,417 $ 58,550 $ 122,604
25 $ 53,317 $ (2) $133,307 $133,307 $ 269,516 $ (2) $22,005 $ 76,973 $ 193,896
30 $ 64,868 $ $133,307 $133,307 $ 383,300 $ $12,178 $101,195 $ 306,640
35 $ 78,922 $ $133,300(2) $154,332 $ 562,555 $ $ (2) $133,044 $ 484,961
40 $ 96,020 $ $133,300 $192,424 $ 843,743 $ $ $174,930 $ 767,039
45 $116,824 $ $133,300 $246,109 $1,298,135 $ $ $230,008 $1,213,210
- ----------------
(1) ILLUSTRATED VALUES ASSUME 2% STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT LOAN, AND THE DEDUCTION OF THE MONTHLY COST OF
INSURANCE CHARGE IN ACCORDANCE WITH THE STANDARD EXPLAINED IN THE PROSPECTUS. THE CASH SURRENDER VALUES REFLECT THE CONTINGENT
DEFERRED SALES CHARGES APPLICABLE TO SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE FACE AMOUNT IS BASED UPON THE ASSUMPTION
THAT AT ISSUANCE THE FIXED-RATE OPTION IS NOT BEING CREDITED MORE THAN 6%.
(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 4%, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 34 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%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT
YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE 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>
T-1
<PAGE>
<TABLE>
DISCOVERY LIFE PLUS CONTRACT
MALE ISSUE AGE 35
$20,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<CAPTION>
DEATH BENEFIT CASH SURRENDER VALUE
----------------------------------------------------- ----------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ----------------------------------------------------- ----------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 20,800 $133,307 $133,307 $133,307 $ 133,307 $17,303 $18,012 $ 18,773 $ 19,553
2 $ 21,632 $133,307 $133,307 $133,307 $ 133,307 $16,946 $18,377 $ 19,864 $ 21,471
3 $ 22,497 $133,307 $133,307 $133,307 $ 133,307 $16,568 $18,731 $ 21,071 $ 23,597
4 $ 23,397 $133,307 $133,307 $133,307 $ 133,307 $16,166 $19,072 $ 22,344 $ 26,013
5 $ 24,333 $133,307 $133,307 $133,307 $ 133,307 $15,736 $19,395 $ 23,685 $ 28,684
6 $ 25,306 $133,307 $133,307 $133,307 $ 133,307 $15,275 $19,697 $ 25,096 $ 31,635
7 $ 26,319 $133,307 $133,307 $133,307 $ 133,307 $15,236 $20,591 $ 27,401 $ 35,977
8 $ 27,371 $133,307 $133,307 $133,307 $ 133,307 $14,535 $20,633 $ 28,713 $ 39,293
9 $ 28,466 $133,307 $133,307 $133,307 $ 133,307 $13,807 $20,640 $ 30,077 $ 42,932
10 $ 29,605 $133,307 $133,307 $133,307 $ 133,307 $13,048 $20,608 $ 31,497 $ 46,929
15 $ 36,019 $133,307 $133,307 $133,307 $ 142,473 $ 8,683 $19,727 $ 39,510 $ 73,820
20 $ 43,822 $133,307 $133,307 $133,307 $ 186,791 $ 2,795 $16,959 $ 49,181 $ 116,744
25 $ 53,317 $ (2) $133,307 $133,307 $ 256,568 $ (2) $10,711 $ 60,658 $ 184,581
30 $ 64,868 $ $133,300(2) $133,307 $ 364,813 $ $ (2) $ 74,418 $ 291,850
35 $ 78,922 $ $133,300 $133,307 $ 535,261 $ $ $ 91,419 $ 461,432
40 $ 96,020 $ $133,300 $133,307 $ 802,488 $ $ $114,843 $ 729,534
45 $116,824 $ $133,300 $160,874 $1,233,162 $ $ $150,349 $1,152,488
- ----------------
(1) ILLUSTRATED VALUES ASSUME 2% STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT LOAN, AND THE DEDUCTION OF MAXIMUM MONTHLY COST OF
INSURANCE CHARGES. THE CASH SURRENDER VALUES REFLECT THE CONTINGENT DEFERRED SALES CHARGES APPLICABLE TO SURRENDERS WITHIN THE
FIRST 6 CONTRACT YEARS. THE FACE AMOUNT IS BASED UPON THE ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE OPTION IS NOT BEING
CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0% AND THE DEDUCTION OF MAXIMUM COST OF INSURANCE CHARGES, THE CONTRACT WOULD GO INTO DEFAULT IN
POLICY YEAR 22 UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS MADE. BASED ON A GROSS RETURN OF 4% AND THE DEDUCTION OF MAXIMUM COST
OF INSURANCE CHARGES, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 30 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%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT
YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE 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>
T-2
<PAGE>
<TABLE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING CURRENT SCHEDULE OF MORTALITY CHARGES (1)
<CAPTION>
DEATH BENEFIT CASH SURRENDER VALUE
----------------------------------------------------- ----------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ----------------------------------------------------- ----------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468 $88,882 $ 92,648 $ 96,624 $100,600
2 $108,160 $357,468 $357,468 $357,468 $ 357,468 $87,766 $ 95,058 $102,640 $111,122
3 $112,486 $357,468 $357,468 $357,468 $ 357,468 $86,655 $ 97,674 $109,591 $122,654
4 $116,986 $357,468 $357,468 $357,468 $ 357,468 $85,548 $100,352 $116,999 $135,636
5 $121,665 $357,468 $357,468 $357,468 $ 357,468 $84,445 $103,091 $124,894 $150,239
6 $126,532 $357,468 $357,468 $357,468 $ 357,468 $83,348 $105,893 $133,307 $166,395
7 $131,593 $357,468 $357,468 $357,468 $ 357,468 $84,799 $112,123 $146,671 $189,968
8 $136,857 $357,468 $357,468 $357,468 $ 357,468 $82,825 $113,971 $154,920 $208,206
9 $142,331 $357,468 $357,468 $357,468 $ 357,468 $78,165 $115,850 $163,633 $228,194
10 $148,024 $357,468 $357,468 $357,468 $ 360,146 $72,919 $117,759 $172,836 $250,101
15 $180,094 $357,468 $357,468 $357,468 $ 510,236 $40,510 $127,788 $227,222 $395,532
20 $219,112 $ (2) $357,468 $357,468 $ 731,873 $ (2) $138,672 $298,723 $625,532
25 $266,584 $ $357,468(2) $432,003 $1,088,199 $ $150,482(2) $392,729 $989,271
- ----------------
(1) ILLUSTRATED VALUES ASSUME NO DEDUCTION FOR STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT LOAN, AND THE DEDUCTION OF THE MONTHLY
COST OF INSURANCE CHARGE IN ACCORDANCE WITH THE STANDARD EXPLAINED IN THE PROSPECTUS. THE CASH SURRENDER VALUES REFLECT THE
CONTINGENT DEFERRED SALES CHARGES APPLICABLE TO SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE FACE AMOUNT IS BASED UPON THE
ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE OPTION IS NOT BEING CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0%, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 20 UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS
MADE. BASED ON A GROSS RETURN OF 4%, 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%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT
YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE 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>
T-3
<PAGE>
<TABLE>
DISCOVERY LIFE PLUS CONTRACT
FEMALE ISSUE AGE 55
$100,000 INITIAL PREMIUM PAYMENT
USING MAXIMUM CONTRACTUAL MORTALITY CHARGES (1)
<CAPTION>
DEATH BENEFIT CASH SURRENDER VALUE
----------------------------------------------------- ----------------------------------------------------
ASSUMING HYPOTHETICAL GROSS (AND NET) ASSUMING HYPOTHETICAL GROSS (AND NET)
PREMIUM ANNUAL INVESTMENT RETURN OF ANNUAL INVESTMENT RETURN OF
END OF ACCUMULATED ----------------------------------------------------- ----------------------------------------------------
POLICY AT 4% INTEREST 0% GROSS 4% GROSS 8% GROSS 12% GROSS 0% GROSS 4% GROSS 8% GROSS 12% GROSS
YEAR PER YEAR (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET) (-1.74% NET) (2.26% NET) (6.26% NET) (10.26% NET)
- ------ -------------- ------------ ----------- ----------- ------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $104,000 $357,468 $357,468 $357,468 $ 357,468 $87,705 $91,352 $ 95,325 $ 99,299
2 $108,160 $357,468 $357,468 $357,468 $ 357,468 $85,258 $92,544 $100,125 $108,394
3 $112,486 $357,468 $357,468 $357,468 $ 357,468 $82,660 $93,670 $105,595 $118,472
4 $116,986 $357,468 $357,468 $357,468 $ 357,468 $79,905 $94,692 $111,370 $130,091
5 $121,665 $357,468 $357,468 $357,468 $ 357,468 $76,975 $95,591 $117,464 $142,995
6 $126,532 $357,468 $357,468 $357,468 $ 357,468 $73,838 $96,334 $123,882 $157,334
7 $131,593 $357,468 $357,468 $357,468 $ 357,468 $72,626 $99,870 $134,662 $178,627
8 $136,857 $357,468 $357,468 $357,468 $ 357,468 $68,095 $99,128 $140,478 $194,878
9 $142,331 $357,468 $357,468 $357,468 $ 357,468 $63,261 $98,059 $146,476 $212,816
10 $148,024 $357,468 $357,468 $357,468 $ 357,468 $58,068 $96,610 $152,651 $232,661
15 $180,094 $357,468 $357,468 $357,468 $ 473,866 $25,607 $82,375 $186,953 $367,338
20 $219,112 $ (2) $357,468 $357,468 $ 679,461 $ (2) $47,533 $228,114 $580,735
25 $266,584 $ $ (2) $357,468 $1,009,765 $ $ (2) $278,031 $917,968
- ----------------
(1) ILLUSTRATED VALUES ASSUME NO DEDUCTION FOR STATE AND/OR LOCAL PREMIUM TAXES, NO CONTRACT LOAN, AND THE DEDUCTION OF MAXIMUM
MONTHLY COST OF INSURANCE CHARGES. THE CASH SURRENDER VALUES REFLECT THE CONTINGENT DEFERRED SALES CHARGES APPLICABLE TO
SURRENDERS WITHIN THE FIRST 6 CONTRACT YEARS. THE FACE AMOUNT IS BASED UPON THE ASSUMPTION THAT AT ISSUANCE THE FIXED-RATE
OPTION IS NOT BEING CREDITED MORE THAN 6%.
(2) BASED ON A GROSS RETURN OF 0% AND THE DEDUCTION OF MAXIMUM COST OF INSURANCE CHARGES, THE CONTRACT WOULD GO INTO DEFAULT IN
POLICY YEAR 18 UNLESS AN ADDITIONAL PREMIUM PAYMENT WAS MADE. BASED ON A GROSS RETURN OF 4% AND THE DEDUCTION OF MAXIMUM COST
OF INSURANCE CHARGES, THE CONTRACT WOULD GO INTO DEFAULT IN POLICY YEAR 24 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%, 4%, 8%, AND 12% OVER A PERIOD OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL CONTRACT
YEARS. NO REPRESENTATIONS CAN BE MADE BY PRUCO LIFE 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>
T-4
<PAGE>
WHEN PROCEEDS ARE PAID
Pruco Life of New Jersey will generally pay any death benefit, cash surrender
value or loan proceeds within 7 days after receipt at the Home Office of all the
documents required for such a payment. Other than the death benefit, which is
determined as of the date of death, the amount will be determined as of the end
of the valuation period in which the necessary documents are received. However,
Pruco Life of New Jersey may delay payment of proceeds from the subaccount[s]
and the portion of the death benefit due under the Contract in excess of the
face amount if the disposal or valuation of the Account's assets is not
reasonably practicable because the New York Stock Exchange is closed for other
than a regular holiday or weekend, trading is restricted by the SEC or the SEC
declares that an emergency exists.
With respect to the amount of any cash surrender value allocated to the
fixed-rate option, Pruco Life of New Jersey expects to pay the cash surrender
value promptly upon request. However, Pruco Life of New Jersey has the right to
delay payment of such cash surrender value for up to 6 months (or a shorter
period if required by applicable law). Pruco Life of New Jersey will pay
interest of at least 3% a year if it delays such a payment for 30 days or more
(or a shorter period if required by applicable law).
REPORTS TO CONTRACT OWNERS
Once each Contract year, Contract owners will be sent statements that provide
certain information pertinent to their own Contract. These statements detail
values and transactions made and specific Contract data that apply only to each
particular Contract. On request, a Contract owner will be sent a current
statement in a form similar to that of the annual statement described above, but
Pruco Life of New Jersey may limit the number of such requests or impose a
reasonable charge if such requests are made too frequently.
Contract owners will be sent annual and semi-annual reports of the Series Fund
showing the financial condition of the portfolios and the investments held in
each.
If a single individual or company invests in the Series Fund through more than
one variable insurance contract, then the individual or company will receive
only one copy of each annual and semi-annual report issued by the Series Fund.
However, if such individual or company wishes to receive multiple copies of any
such report, a request may be made by calling the toll-free telephone number
listed on the cover page of this prospectus.
TAX TREATMENT OF CONTRACT BENEFITS
Each prospective purchaser is urged to consult with a qualified tax advisor. The
following discussion is not intended as tax advice, and it is not a complete
statement of what the effect of federal income taxes will be under all
circumstances. Rather, it provides information about how Pruco Life of New
Jersey believes the current laws apply in the most commonly occurring
circumstances. There is no guarantee, however, that the current federal income
tax laws, regulations or interpretations will not change.
TREATMENT AS LIFE INSURANCE. The Contract will be treated as "life insurance,"
as long as it satisfies certain definitional tests set forth in Section 7702 of
the Code and as long as the underlying investments for the Contract satisfies
diversification requirements under Section 817(h) of the Code. (For further
detail on diversification requirements, see DIVIDENDS, DISTRIBUTIONS, AND TAXES
in the attached prospectus for the Series Fund.)
Pruco Life of New Jersey believes that the Contract meets these definitional and
diversification requirements and accordingly will be treated as life insurance
for tax purposes. This means that: (1) except as noted below, the Contract owner
should not be taxed on any part of the Contract fund, including additions
attributable to interest, dividends or appreciation, until amounts are
distributed under the Contract; and (2) the death benefit should be excludible
from the gross income of the beneficiary under Section 101(a) of the Code.
However, Section 7702 of the Code which defines life insurance for tax purposes
gives the Secretary of the Treasury authority to prescribe regulations to carry
out the purposes of the Section. In this regard, proposed regulations governing
mortality charges were issued in 1991 and proposed regulations relating to the
definition of life insurance were issued in 1992. None of these proposed
regulations has yet been finalized. Additional regulations under Section 7702
may also be promulgated in the future. Moreover, in connection with the issuance
of temporary regulations relating to diversification requirements under Section
817(h), the Treasury Department announced that such regulations do not provide
guidance concerning the extent to which Contract owners may direct their
investments to particular divisions of a separate account. Such guidance will be
included in regulations or rulings under Section 817(d) relating to the
definition of a variable contract.
Pruco Life of New Jersey intends to comply with final regulations issued under
Sections 7702 and 817. Therefore, it reserves the right to make such changes as
it deems necessary to assure that the Contract continues to qualify as
15
<PAGE>
life insurance for tax purposes. Any such changes will apply uniformly to
affected Contract owners and will be made only after advance written notice to
affected Contract owners.
PRE-DEATH DISTRIBUTIONS. Section 7702A of the Code provides rules regarding the
federal income tax treatment of loans and other pre-death distributions from the
Contract if issued after June 20, 1988. It provides that, with respect to life
insurance policies issued after June 20, 1988, which, like the Contract, provide
for the payment of premiums faster than would be allowed under a policy
providing for paid-up insurance after the payment of seven level annual
premiums: (1) policy loans are treated as distributions; (2) all distributions
from the policy before the death of the insured are generally includible in
gross income on an income first basis (i.e., distributions are includible in
income to the extent the Contract fund exceeds the gross premiums paid for the
Contract increased by the amount of any loans previously includible in income
and reduced by any untaxed amounts previously received other than the amount of
any loans excludible from income). In addition, pre-death distributions from
such Contracts (including full surrenders) will be subject to a penalty of 10
percent of the amount includible in income unless the amount is distributed on
or after age 591?@2, on account of the taxpayer's disability, or as a life
annuity. It is presently unclear how the penalty tax provisions apply to
Contracts owned by nonnatural persons such as corporations.
Under certain circumstances, Modified Endowment Contracts issued during any
calendar year will be treated as a single contract for purposes of applying the
above rules.
Section 7702A does not change the treatment of death benefit proceeds under the
Contract. Accordingly, as stated previously, such amounts are excludible from
the gross income of the beneficiary. Also, Section 7702A does not change the
general rule that a Contract owner is not taxed on any part of the Contract
fund, including additions attributable to interest, dividends or appreciation,
unless amounts are distributed.
WITHHOLDING. The taxable portion of any amounts received under the Contract will
be subject to withholding to meet federal income tax obligations if the Contract
owner fails to elect that no taxes be withheld or in certain other
circumstances. Contract owners who do not provide a social security number or
other taxpayer identification number will not be permitted to elect out of
withholding. All recipients of such amounts may be subject to penalties under
the estimated tax payment rules if withholding and estimated tax payments are
not sufficient.
OTHER TAX CONSIDERATIONS. Transfer of the Contract to a new owner or assignment
of the Contract may have tax consequences depending on the circumstances. In the
case of a transfer of the contract for a valuable consideration, the death
benefit may be subject to federal income taxes under section 101(a) of the Code.
In addition, designation of a beneficiary who is either 371?@2 years younger
than the Contract owner or a grandchild of the Contract owner may have
Generation Skipping Transfer tax consequences under Section 2601 of the Code.
The individual situation of each owner or beneficiary will determine the federal
estate taxes and the state and local estate, inheritance, and other taxes due if
the owner or insured dies.
Deductions for interest paid or accrued on Contract debt or on other loans
incurred or continued to purchase or carry the Contract will be disallowed under
Section 264 of the Code. For business-owned life insurance, Section 264(a)(1) of
the Code also precludes business Contract owners from deducting premium
payments. The code also imposes an indirect tax upon additions to the Contract
fund or the receipt of death benefits under business-owned life insurance
policies under certain circumstances by way of the corporate alternative minimum
tax.
THE FIXED-RATE OPTION
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED-RATE
OPTION UNDER THE CONTRACT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS AN INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940. ACCORDINGLY, INTERESTS IN THE
FIXED-RATE OPTION ARE NOT SUBJECT TO THE PROVISIONS OF THESE ACTS, AND PRUCO
LIFE OF NEW JERSEY HAS BEEN ADVISED THAT THE STAFF OF THE SECURITIES AND
EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING
TO THE FIXED-RATE OPTION. DISCLOSURE REGARDING THE FIXED-RATE OPTION MAY,
HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF FEDERAL
SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN
PROSPECTUSES.
As explained earlier, a Contract owner may elect to allocate, either initially
or by transfer, all or part of the amount credited under the Contract to a
fixed-rate option, and the amount so allocated or transferred becomes part of
Pruco Life of New Jersey's general assets. Sometimes this is referred to as
Pruco Life of New Jersey's general account, which consists of all assets owned
by Pruco Life of New Jersey other than those in the Account and in other
separate accounts that have been or may be established by Pruco Life of New
Jersey. Subject to applicable law, Pruco Life of New Jersey has sole discretion
over the investment of the assets of the general account, and Contract owners do
not share in the investment experience of those assets. Instead, Pruco Life of
New Jersey
16
<PAGE>
guarantees that the part of the Contract fund allocated to the fixed-rate option
will accrue interest daily at an effective annual rate that Pruco Life of New
Jersey declares periodically, but not less than an effective annual rate of 3%.
Currently, declared interest rates remain in effect from the date money is
allocated to the fixed-rate option until the third Contract anniversary
following the date of the allocation. Thereafter, a new crediting rate will be
declared each year, and will remain in effect for the calendar year. Pruco Life
of New Jersey reserves the right to change this practice. Pruco Life of New
Jersey is not obligated to credit interest at a higher rate than 3%, although in
its sole discretion it may do so. Different crediting rates may be declared for
different portions of the Contract fund allocated to the fixed-rate option. On
request, a Contract owner will be advised of the interest rates that currently
apply to his or her Contract.
Transfers from the fixed-rate option are subject to strict limits. (See
TRANSFERS, page 7). The payment of any cash surrender value attributable to the
fixed-rate option may be delayed up to 6 months (see WHEN PROCEEDS AREPAID, page
15).
VOTING RIGHTS
As stated above, all of the assets held in the subaccounts of the Account will
be invested in shares of the corresponding portfolios of the Series Fund. Pruco
Life of New Jersey is the legal owner of those shares and as such has the right
to vote on any matter voted on at Series Fund shareholders meetings. However,
Pruco Life of New Jersey will, as required by law, vote the shares of the Series
Fund at any regular and special shareholders meetings it is required to hold in
accordance with voting instructions received from Contract owners. The Series
Fund will not hold annual shareholders meetings when not required to do so under
Maryland law or the Investment Company Act of 1940. Series Fund shares for which
no timely instructions from Contract owners are received, and any shares
attributable to general account investments of Pruco Life of New Jersey will be
voted in the same proportion as shares in the respective portfolios for which
instructions are received. Should the applicable federal securities laws or
regulations, or their current interpretation, change so as to permit Pruco Life
of New Jersey to vote shares of the Series Fund in its own right, it may elect
to do so.
Matters on which Contract owners may give voting instructions include the
following: (1) election of the Board of Directors of the Series Fund; (2)
ratification of the independent accountant of the Series Fund; (3) approval of
the investment advisory agreement for a portfolio of the Series Fund
corresponding to the Contract owner's selected subaccount[s]; (4) any change in
the fundamental investment policy of a portfolio corresponding to the Contract
owner's selected subaccount[s]; and (5) any other matter requiring a vote of the
shareholders of the Series Fund. With respect to approval of the investment
advisory agreement or any change in a portfolio's fundamental investment policy,
Contract owners participating in such portfolios will vote separately on the
matter, pursuant to the requirements of Rule 18f-2 under the 1940 Act.
The number of Series Fund shares for which instructions may be given by a
Contract owner is determined by dividing the portion of the value of the
Contract derived from participation in a subaccount, by the value of one share
in the corresponding portfolio of the Series Fund. The number of votes for which
each Contract owner may give Pruco Life of New Jersey instructions will be
determined as of the record date chosen by the Board of Directors of the Series
Fund. Pruco Life of New Jersey will furnish Contract owners with proper forms
and proxies to enable them to give these instructions. Pruco Life of New Jersey
reserves the right to modify the manner in which the weight to be given voting
instructions is calculated where such a change is necessary to comply with
current federal regulations or interpretations of those regulations.
Pruco Life of New Jersey may, if required by state insurance regulations,
disregard voting instructions if such instructions would require shares to be
voted so as to cause a change in the sub-classification or investment objectives
of one or more of the Series Fund's portfolios, or to approve or disapprove an
investment advisory contract for the Series Fund. In addition, Pruco Life of New
Jersey itself may disregard voting instructions that would require changes in
the investment policy or investment advisor of one or more of the Series Fund's
portfolios, provided that Pruco Life of New Jersey reasonably disapproves such
changes in accordance with applicable federal regulations. If Pruco Life of New
Jersey does disregard voting instructions, it will advise Contract owners of
that action and its reasons for such action in the next annual or semi-annual
report to Contract owners.
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 213 Washington
Street, Newark, New Jersey 07102-2992. The Contract is
17
<PAGE>
sold by registered representatives of Prusec who are also authorized by state
insurance departments to do so. The Contract may also be sold through other
broker-dealers authorized by Prusec and applicable law to do so. Registered
representatives of such other broker-dealers may be paid on a different basis
than described below. The maximum commission that will be paid to the
representative is 3% of the premium received, and the amount paid to the
broker-dealer to cover both the individual representative's commission and other
distribution expenses will not exceed 5.5% of the premium. The representative
may be required to return all or part of the first year commission if the
Contract is not continued through the first year. Representatives who meet
certain productivity, profitability, and persistency standards with regard to
the sale of the Contract will be eligible for additional compensation.
Sales expenses in any year are not equal to the deduction for sales load in that
year. Pruco Life of New Jersey expects to recover its total sales expenses over
the periods the Contracts are in effect. To the extent that the sales charges
are insufficient to cover total sales expenses, the sales expenses will be
recovered from Pruco Life of New Jersey's surplus, which may include the amounts
derived from the mortality and expense risk charge, described in Item 5 under
Charges, page 9.
SUBSTITUTION OF SERIES FUND SHARES
Although Pruco Life of New Jersey believes it to be unlikely, it is possible
that in the judgment of its management, one or more of the portfolios of the
Series Fund may become unsuitable for investment by Contract owners because of
investment policy changes, tax law changes or the unavailability of shares for
investment. In that event, Pruco Life of New Jersey may seek to substitute the
shares of another portfolio or of an entirely different mutual fund. Before this
can be done, the approval of the SEC, and possibly one or more state insurance
departments, will be required. Contract owners will be notified of such
substitution.
LEGAL CONSIDERATIONS RELATING TO SEX-DISTINCT PREMIUMS AND BENEFITS
The Contract generally employs mortality tables that distinguish between males
and females. Thus, initial amounts of insurance that a given premium will buy,
cost of insurance charges, and benefits under Contracts issued on males and
females of the same age will generally differ. However, in those states that
have adopted regulations prohibiting sex-distinct insurance rates, initial
amounts of insurance, cost of insurance charges and benefits will be based on
male mortality tables whether the insured is male or female. In addition,
employers and employee organizations considering purchase of a Contract should
consult their legal advisors to determine whether purchase of a Contract based
on sex-distinct actuarial tables is consistent with Title VII of the Civil
Rights Act of 1964 or other applicable law. Pruco Life of New Jersey may offer
the Contract with unisex mortality rates to such prospective purchasers.
OTHER GENERAL CONTRACT PROVISIONS
BENEFICIARY. The beneficiary is designated and named in the application by the
Contract owner. Thereafter, the owner may change the beneficiary, provided it is
in accordance with the terms of the Contract. Should the insured die with no
surviving beneficiary, the insured's estate will become the beneficiary.
INCONTESTABILITY. After the Contract has been in force during the insured's
lifetime for 2 years from the Contract date, Pruco Life of New Jersey will not
contest its liability under the Contract in accordance with its terms.
MISSTATEMENT OF AGE OR SEX. If the insured's stated age or sex (except where
unisex rates apply) or both are incorrect in the Contract, Pruco Life of New
Jersey will adjust the benefits payable, as required by law, to reflect what the
premium would have purchased for the correct age and sex.
SUICIDE EXCLUSION. Generally, if the insured, whether sane or insane, dies by
suicide within 2 years from the Contract date, Pruco Life of New Jersey will pay
no more under the Contract than the sum of the premiums paid.
ASSIGNMENT. This Contract may not be assigned if such assignment would violate
any federal, state or local law or regulation. Generally, the Contract may not
be assigned to another insurance company without Pruco Life of New Jersey's
consent. Pruco Life of New Jersey assumes no responsibility for the validity or
sufficiency of any assignment, and it will not be obligated to comply with any
assignment unless it has received a copy at its Home Office.
SETTLEMENT OPTIONS. The Contract grants to most owners, or to the beneficiary, a
wide variety of optional ways of receiving Contract proceeds, other than in a
lump sum. Any Pruco Life of New Jersey representative authorized to sell this
Contract can explain these options upon request.
18
<PAGE>
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.
ADDITIONAL INFORMATION
A registration statement has been filed with the SEC under the Securities Act of
1933, relating to the offering described in this prospectus. This prospectus
does not include all of the information set forth in the registration statement.
Certain portions have been omitted pursuant to the rules and regulations of the
SEC. The omitted information may, however, be obtained from the SEC's principal
office in Washington, D.C., upon payment of a prescribed fee.
Further information may also be obtained from Pruco Life of New Jersey's office.
The address and telephone number are set forth on the cover of this prospectus.
EXPERTS
The financial statements included in this prospectus for the year ended December
31, 1996 have been audited by Price Waterhouse LLP, independent accountants, as
stated in their reports appearing herein, and are included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing. Price Waterhouse LLP's principal business address is 1177 Avenue of
the Americas, New York, New York 10036.
The financial statements included in this prospectus for years ended December
31, 1995 and December 31, 1994 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing. Deloitte & Touche LLP's principal business
address is Two Hilton Court, Parsippany, New Jersey 07054-0319.
On March 12, 1996, Deloitte & Touche LLP was dismissed as the independent
accountants of Pruco Life of New Jersey. There have been no disagreements with
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statements disclosure or auditing scope or procedure which, if not
resolved to the satisfaction of the accountant, would have caused them to make a
reference to the matter in their reports.
Actuarial matters included in this prospectus have been examined by Paul A.
Haley, FSA, MAAA, CLU, ChFC, Vice President and Assistant Actuary of Prudential
whose opinion is filed as an exhibit to the registration statement.
LITIGATION
Several actions have been brought against Pruco Life of New Jersey (the
"Company") alleging that the Company and its agents engaged in improper life
insurance sales practices. The Prudential Insurance Company of America has
agreed to indemnify the Company for losses, if any, resulting from such
litigation. No other significant litigation is being brought against the Company
that would have a material effect on its financial position.
FINANCIAL STATEMENTS
The financial statements of Pruco Life of New Jersey included herein should be
distinguished from the financial statements of the Account and should be
considered only as bearing upon the ability of Pruco Life of New Jersey to meet
its obligations under the Contracts.
19
<PAGE>
DIRECTORS AND OFFICERS
The directors and major officers of Pruco Life of New Jersey, listed with their
principal occupations during the past5 years, are shown below.
DIRECTORS OF PRUCO LIFE OF NEW JERSEY
WILLIAM M. BETHKE, Director.--President, Prudential Capital Markets Group since
1992.
IRA J. KLEINMAN, Director.--Executive Vice President, International Insurance
Group since 1997; 1995 to 1997: Chief Marketing and Product Development Officer,
Prudential Individual Insurance Group; 1993 to 1995: President, Prudential
Select; Prior to 1993: Senior Vice President of Prudential.
MENDEL A. MELZER, Director.--Chief Investment Officer, Mutual Funds and
Annuities, Prudential Investments since 1996; 1995 to 1996: Chief Financial
Officer of the Money Management Group of Prudential; 1993 to 1995: Senior Vice
President and Chief Financial Officer of Prudential Preferred Financial
Services; Prior to 1993: Managing Director, Prudential Investment Corporation.
ESTHER H. MILNES, President and Director.--Vice President and Actuary,
Prudential Individual Insurance Group since 1996; 1993 to 1996: Senior Vice
President and Chief Actuary, Prudential Insurance and Financial Services; Prior
to 1993: Vice President and Associate Actuary of Prudential.
I. EDWARD PRICE, Vice Chairman and Director.--Senior Vice President and Actuary,
Prudential Individual Insurance Group since 1995; 1994 to 1995: Chief Executive
Officer, Prudential International Insurance; 1993 to 1994: President, Prudential
International Insurance; Prior to 1993: Senior Vice President and Company
Actuary of Prudential.
WILLIAM F. YELVERTON, Chairman and Director.--Chief Executive Officer,
Prudential Individual Insurance Group since 1995; Prior to 1995: Chief Executive
Officer, New York Life Worldwide.
OFFICERS WHO ARE NOT DIRECTORS
SUSAN L. BLOUNT, Secretary.--Vice President and Secretary of Prudential since
1995; Prior to 1995: Assistant General Counsel for Prudential Residential
Services Company.
C. EDWARD CHAPLIN, Treasurer.--Vice President and Treasurer of Prudential since
1995; 1993 to 1995: Managing Director and Assistant Treasurer of Prudential;
1992 to 1993: Vice President and Assistant Treasurer, Banking and Cash
Management for Prudential.
LINDA S. DOUGHERTY, Vice President, Comptroller and Chief Accounting
Officer.--Vice President and Comptroller, Prudential Individual Insurance Group
since 1997; Prior to 1997: Vice President, Accounting, Prudential.
JAMES C. DROZANOWSKI, Senior Vice President.--Vice President and Operations
Executive, Prudential Individual Insurance Group since 1996; 1995 to 1996: Vice
President, Credit Card Division, Chase Manhatten Bank; prior to 1995: Chase
Manhattan Bank.
CLIFFORD E. KIRSCH, Chief Legal Officer.--Chief Counsel, Variable Products, Law
Department of Prudential since 1995; 1994 to 1995: Associate General Counsel
with Paine Webber; Prior to 1994: Assistant Director in the Division of
Investment Management with the Securities and Exchange Commission.
FRANK P. MARINO, Senior Vice President.--Vice President, Policyowner Relations
Department, Prudential Individual Insurance Group since 1996; Prior to 1996:
Senior Vice President, Prudential Mutual Fund Services.
MARIO A. MOSSE, Senior Vice President.--Vice President, Annuity Services,
Prudential Investments since 1996; Prior to 1996, Vice President, Chase
Manhattan Bank.
SHIRLEY H. SHAO, Senior Vice President and Chief Actuary.--Vice President and
Associate Actuary, Prudential.
KAREN L. SHAPIRO, Senior Vice President.--Vice President, Prudential Individual
Insurance Group since 1996; Vice President and Associate General Counsel,
Prudential Securities Incorporated 1993 to 1996; Prior to 1993: Senior Associate
with Shaw, Pittman, Potts and Trowbridge.
The business address of all directors and officers of Pruco Life of New Jersey
is 213 Washington Street, Newark, New Jersey 07102-2992.
* SUBSIDIARY OF PRUDENTIAL
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of
Pruco Life of New Jersey Single Premium Variable Life 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 Money Market Subaccount,
Diversified Bond Subaccount, Equity Subaccount, Flexible Managed Subaccount,
Conservative Balanced Subaccount, Zero Coupon Bond 2000 Subaccount, High Yield
Bond Subaccount, Stock Index Subaccount, Equity Income Subaccount, Natural
Resources Subaccount, Global Subaccount, Government Income Subaccount, Zero
Coupon Bond 2005 Subaccount, Prudential Jennison Subaccount and Small
Capitalization Stock Subaccount of Pruco Life of New Jersey Single Premium
Variable Life Account at December 31, 1996, and the results of each of their
operations and the changes in each of their net assets for the year then ended,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of Pruco Life Insurance Company of New
Jersey's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of shares owned in The Prudential Series Fund, Inc. at December 31,
1996, provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
New York, New York
March 31, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners of
Pruco Life of New Jersey Single
Premium Variable Life Account and the
Board of Directors of
The Prudential Insurance Company of America
Newark, New Jersey
We have audited the accompanying statements of changes in net assets of Pruco
Life of New Jersey Single Premium Variable Life Account of Pruco Life Insurance
Company of New Jersey (comprising, respectively, the Money Market, Diversified
Bond, Equity, Flexible Managed, Conservative Balanced, Zero Coupon Bond 2000,
High Yield Bond, Stock Index, Equity Income, Natural Resources, Global,
Government Income, Zero Coupon Bond 2005, Prudential Jennison, and Small
Capitalization Stock subaccounts) for the periods presented for each of the two
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the changes in net assets of each of the respective subaccounts
constituting the Pruco Life of New Jersey Single Premium Variable Life Account
for the respective stated periods in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Parsippany, New Jersey
February 15, 1996
See Notes to the Financial Statements
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3]............................................ $ 2,045,168 $ 3,024,788 $ 7,236,867 $ 11,043,855 $ 17,041,765
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 1,968,695 $ 3,019,330 $ 7,244,748 $ 10,983,103 $ 16,761,298
Equity of Pruco Life Insurance Company of New
Jersey........................................ 76,473 5,458 (7,881) 60,752 280,467
-------------- -------------- -------------- -------------- --------------
$ 2,045,168 $ 3,024,788 $ 7,236,867 $ 11,043,855 $ 17,041,765
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Number of Contract owner units outstanding...... 1,177,871.876 1,328,433.465 1,727,634.159 3,600,191.091 6,360,106.702
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Unit Value...................................... $ 1.67140 $ 2.27285 $ 4.19345 $ 3.05070 $ 2.63538
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 104,053 $ 194,018 $ 165,956 $ 328,708 $ 674,390
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4B].............. 24,781 37,907 84,699 134,656 207,116
Reimbursement for excess expenses [Note 4C]..... (846) (1,493) (7,465) (27,191) (33,255)
-------------- -------------- -------------- -------------- --------------
NET EXPENSES...................................... 23,935 36,414 77,234 107,465 173,861
-------------- -------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS)...................... 80,118 157,604 88,722 221,243 500,529
-------------- -------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 0 0 646,721 1,042,553 1,042,887
Realized gain (loss) on shares redeemed
[average cost basis].......................... 0 14,389 228,498 221,247 214,639
Net unrealized gain (loss) on investments....... 0 (73,579) 117,818 (203,564) 60,028
-------------- -------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 0 (59,190) 993,037 1,060,236 1,317,554
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 80,118 $ 98,414 $ 1,081,759 $ 1,281,479 $ 1,818,083
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A1
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3] $ 299,926 $ 1,652,542 $ 1,054,870 $ 1,181,173 $ 589,162
-------------- -------------- -------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners $ 298,590 $ 1,650,264 $ 1,077,891 $ 1,193,080 $ 591,773
Equity of Pruco Life Insurance Company of New
Jersey 1,336 2,278 (23,021) (11,907) (2,611)
-------------- -------------- -------------- -------------- --------------
$ 299,926 $ 1,652,542 $ 1,054,870 $ 1,181,173 $ 589,162
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Number of Contract owner units outstanding 117,666.423 808,168.711 372,544.529 395,490.458 209,356.864
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Unit Value $ 2.53760 $ 2.04198 $ 2.89332 $ 3.01671 $ 2.82662
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
<CAPTION>
ZERO
COUPON
GOVERNMENT BOND
GLOBAL INCOME 2005
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3] $ 845,703 $ 170,205 $ 115,536
-------------- -------------- --------------
NET ASSETS, representing:
Equity of Contract owners $ 829,167 $ 164,792 $ 94,421
Equity of Pruco Life Insurance Company of New
Jersey 16,536 5,413 21,115
-------------- -------------- --------------
$ 845,703 $ 170,205 $ 115,536
-------------- -------------- --------------
-------------- -------------- --------------
Number of Contract owner units outstanding 635,021.789 95,303.685 46,458.853
-------------- -------------- --------------
-------------- -------------- --------------
Unit Value $ 1.30573 $ 1.72912 $ 2.03235
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY
2000 BOND INDEX INCOME
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 13,240 $ 156,769 $ 16,189 $ 37,911
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4B] 3,899 20,360 10,731 13,869
Reimbursement for excess expenses [Note 4C] (359) 0 0 0
-------------- -------------- -------------- --------------
NET EXPENSES 3,540 20,360 10,731 13,869
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 9,700 136,409 5,458 24,042
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received 0 0 11,410 37,439
Realized gain (loss) on shares redeemed
[average cost basis] 1,347 (1,765) 45,690 33,765
Net unrealized gain (loss) on investments (11,192) 21,477 101,882 106,009
-------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS (9,845) 19,712 158,982 177,213
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (145) $ 156,121 $ 164,440 $ 201,255
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
ZERO
COUPON
NATURAL GOVERNMENT BOND
RESOURCES GLOBAL INCOME 2005
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend distributions received $ 2,761 $ 20,675 $ 10,891 $ 5,731
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4B] 4,796 9,410 2,110 1,326
Reimbursement for excess expenses [Note 4C] 0 0 0 (137)
-------------- -------------- -------------- --------------
NET EXPENSES 4,796 9,410 2,110 1,189
-------------- -------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) (2,035) 11,265 8,781 4,542
-------------- -------------- -------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received 55,713 13,311 0 1,247
Realized gain (loss) on shares redeemed
[average cost basis] 10,746 16,057 144 1,156
Net unrealized gain (loss) on investments 25,357 86,388 (7,299) (8,307)
-------------- -------------- -------------- --------------
NET GAIN (LOSS) ON INVESTMENTS 91,816 115,756 (7,155) (5,904)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 89,781 $ 127,021 $ 1,626 $ (1,362)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A2
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF NET ASSETS
December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------
SMALL
PRUDENTIAL CAPITALIZATION
JENNISON STOCK
-------------- --------------
<S> <C> <C>
ASSETS
Investment in shares of The Prudential Series
Fund, Inc. Portfolios at net asset value [Note
3]............................................ $ 257,535 $ 189,463
-------------- --------------
NET ASSETS, representing:
Equity of Contract owners....................... $ 241,216 $ 197,586
Equity of Pruco Life Insurance Company of New
Jersey........................................ 16,319 (8,123)
-------------- --------------
$ 257,535 $ 189,463
-------------- --------------
-------------- --------------
Number of Contract owner units outstanding...... 171,526.346 140,454.667
-------------- --------------
-------------- --------------
Unit Value...................................... $ 1.40629 $ 1.40676
-------------- --------------
-------------- --------------
</TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
SUBACCOUNTS
------------------------------
SMALL
PRUDENTIAL CAPITALIZATION
JENNISON STOCK
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME
Dividend distributions received................. $ 524 $ 1,069
EXPENSES
Charges to Contract owners for assuming
mortality risk and expense risk and for
administration [Notes 4A and 4B].............. 2,798 1,661
Reimbursement for excess expenses [Note 4C]..... 0 0
-------------- --------------
NET EXPENSES...................................... 2,798 1,661
-------------- --------------
NET INVESTMENT INCOME (LOSS)...................... (2,274) (592)
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Capital gains distributions received............ 0 2,969
Realized gain (loss) on shares redeemed
[average cost basis].......................... 19,426 8,078
Net unrealized gain (loss) on investments....... 6,197 8,362
-------------- --------------
NET GAIN (LOSS) ON INVESTMENTS.................... 25,623 19,409
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 23,349 $ 18,817
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A3
<PAGE>
(This page intentionally left blank.)
A4
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
MONEY DIVERSIFIED
MARKET BOND
---------------------------------------------- ----------------------------------------------
1996 1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ 80,118 $ 100,770 $ 63,182 $ 157,604 $ 167,368 $ 155,075
Capital gains distributions
received........................ 0 0 0 0 6,914 7,032
Realized gain (loss) on shares
redeemed
[average cost basis]............ 0 0 0 14,389 8,909 1,263
Net unrealized gain (loss) on
investments..................... 0 0 0 (73,579) 351,648 (320,009)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS......... 80,118 100,770 63,182 98,414 534,839 (156,639)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6].......................... (671,181) 263,890 (244,736) (222,850) (277,174) (767,709)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7].......................... 73,753 (3,810) (31,990) (2,737) (5,203) (4,966)
-------------- -------------- -------------- -------------- -------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ (517,310) 360,850 (213,544) (127,173) 252,462 (929,314)
NET ASSETS:
Beginning of year................. 2,562,478 2,201,628 2,415,172 3,151,961 2,899,499 3,828,813
-------------- -------------- -------------- -------------- -------------- -------------
End of year....................... $ 2,045,168 $ 2,562,478 $ 2,201,628 $ 3,024,788 $ 3,151,961 $ 2,899,499
-------------- -------------- -------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------- -------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A5
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
FLEXIBLE
EQUITY MANAGED
---------------------------------------------- --------------
1996 1995 1994 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 88,722 $ 57,796 $ 58,894 $ 221,243
Capital gains distributions
received 646,721 229,686 215,201 1,042,553
Realized gain (loss) on shares
redeemed
[average cost basis] 228,498 166,736 104,549 221,247
Net unrealized gain (loss) on
investments 117,818 1,063,119 (293,926) (203,564)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 1,081,759 1,517,337 84,718 1,281,479
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6] (379,318) (190,256) (94,354) (1,020,555)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7] (45,449) 36,853 (6,951) 30,020
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 656,992 1,363,934 (16,587) 290,944
NET ASSETS:
Beginning of year 6,579,875 5,215,941 5,232,528 10,752,911
-------------- -------------- -------------- --------------
End of year $ 7,236,867 $ 6,579,875 $ 5,215,941 $ 11,043,855
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
CONSERVATIVE
BALANCED
----------------------------------------------
1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 222,891 $ 180,874 $ 500,529 $ 495,383 $ 412,567
Capital gains distributions
received 449,666 289,966 1,042,887 558,781 180,224
Realized gain (loss) on shares
redeemed
[average cost basis] 224,877 77,644 214,639 362,614 136,852
Net unrealized gain (loss) on
investments 1,269,373 (990,977) 60,028 1,094,057 (1,089,272)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 2,166,807 (442,493) 1,818,083 2,510,835 (359,629)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6] (1,372,071) (308,218) (1,492,000) (2,824,644) (1,263,406)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7] 2,167 (134,119) 262,861 (34,268) (6,607)
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 796,903 (884,830) 588,944 (348,077) (1,629,642)
NET ASSETS:
Beginning of year 9,956,008 10,840,838 16,452,821 16,800,898 18,430,540
-------------- -------------- -------------- -------------- --------------
End of year $ 10,752,911 $ 9,956,008 $ 17,041,765 $ 16,452,821 $ 16,800,898
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A6
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
ZERO COUPON HIGH
BOND YIELD
2000 BOND
---------------------------------------------- ----------------------------------------------
1996 1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ 9,700 $ 11,454 $ 14,999 $ 136,409 $ 140,050 $ 104,022
Capital gains distributions
received........................ 0 12,977 506 0 0 0
Realized gain (loss) on shares
redeemed
[average cost basis]............ 1,347 5,577 3,691 (1,765) (4,446) (4,705)
Net unrealized gain (loss) on
investments..................... (11,192) 30,792 (46,137) 21,477 71,255 (148,585)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS......... (145) 60,800 (26,941) 156,121 206,859 (49,268)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6].......................... (44,303) 20,698 (46,949) (70,031) 175,799 (69,722)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7].......................... (2,158) (3,333) 1,193 1,391 1,447 (777)
-------------- -------------- -------------- -------------- -------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ (46,606) 78,165 (72,697) 87,481 384,105 (119,767)
NET ASSETS:
Beginning of year................. 346,532 268,367 341,064 1,565,061 1,180,956 1,300,723
-------------- -------------- -------------- -------------- -------------- -------------
End of year....................... $ 299,926 $ 346,532 $ 268,367 $ 1,652,542 $ 1,565,061 $ 1,180,956
-------------- -------------- -------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------- -------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A7
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
STOCK EQUITY
INDEX INCOME
---------------------------------------------- --------------
1996 1995 1994 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 5,458 $ 5,799 $ 5,923 $ 24,042
Capital gains distributions
received 11,410 4,961 800 37,439
Realized gain (loss) on shares
redeemed
[average cost basis] 45,690 20,663 26,101 33,765
Net unrealized gain (loss) on
investments 101,882 131,836 (33,405) 106,009
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 164,440 163,259 (581) 201,255
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6] 173,470 100,961 (89,546) (102,250)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7] (20,762) (32,188) (23,885) (29,880)
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 317,148 232,032 (114,012) 69,125
NET ASSETS:
Beginning of year 737,722 505,690 619,702 1,112,048
-------------- -------------- -------------- --------------
End of year $ 1,054,870 $ 737,722 $ 505,690 $ 1,181,173
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
NATURAL
RESOURCES
----------------------------------------------
1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 26,640 $ 16,741 $ (2,035) $ 225 $ (734)
Capital gains distributions
received 46,824 37,048 55,713 14,350 6,890
Realized gain (loss) on shares
redeemed
[average cost basis] 7,776 12,270 10,746 12,359 3,595
Net unrealized gain (loss) on
investments 85,258 (62,466) 25,357 47,533 (28,200)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 166,498 3,593 89,781 74,467 (18,449)
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6] 222,468 92,943 243,946 (134,408) 69,185
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7] 18,457 (5,084) (53,149) 30,885 9,118
-------------- -------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 407,423 91,452 280,578 (29,056) 59,854
NET ASSETS:
Beginning of year 704,625 613,173 308,584 337,640 277,786
-------------- -------------- -------------- -------------- --------------
End of year $ 1,112,048 $ 704,625 $ 589,162 $ 308,584 $ 337,640
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A8
<PAGE>
FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------
GOVERNMENT
GLOBAL** INCOME
---------------------------------------------- ----------------------------------------------
1996 1995 1994 1996 1995 1994
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ 11,265 $ 3,066 $ (604) $ 8,781 $ 10,421 $ 13,163
Capital gains distributions
received........................ 13,311 11,123 35 0 0 0
Realized gain (loss) on shares
redeemed
[average cost basis]............ 16,057 5,316 0 144 (889) (1,648)
Net unrealized gain (loss) on
investments..................... 86,388 30,138 (20,456) (7,299) 27,507 (30,859)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS......... 127,021 49,643 (21,025) 1,626 37,039 (19,344)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6].......................... 62,567 290,860 324,291 (16,098) (80,153) (103,004)
-------------- -------------- -------------- -------------- -------------- -------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7].......................... 14,160 (39,696) 37,882 1,190 (21,183) 13,379
-------------- -------------- -------------- -------------- -------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS............................ 203,748 300,807 341,148 (13,282) (64,297) (108,969)
NET ASSETS:
Beginning of year................. 641,955 341,148 0 183,487 247,784 356,753
-------------- -------------- -------------- -------------- -------------- -------------
End of year....................... $ 845,703 $ 641,955 $ 341,148 $ 170,205 $ 183,487 $ 247,784
-------------- -------------- -------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------- -------------- -------------
**Commenced
Business
on 5/1/94
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A9
<PAGE>
<TABLE>
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------
ZERO COUPON
BOND PRUDENTIAL
2005 JENNISON*
---------------------------------------------- --------------
1996 1995 1994 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 4,542 $ 4,414 $ 5,177 $ (2,274)
Capital gains distributions
received 1,247 2,195 27 0
Realized gain (loss) on shares
redeemed
[average cost basis] 1,156 7,462 8,733 19,426
Net unrealized gain (loss) on
investments (8,307) 13,800 (27,609) 6,197
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS (1,362) 27,871 (13,672) 23,349
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6] (11,155) (15,081) (55,758) (8,785)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7] 16,343 (898) (3,099) 2,584
-------------- -------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 3,826 11,892 (72,529) 17,148
NET ASSETS:
Beginning of year 111,710 99,818 172,347 240,387
-------------- -------------- -------------- --------------
End of year $ 115,536 $ 111,710 $ 99,818 $ 257,535
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
*Commenced
Business
on 5/1/95
<CAPTION>
SMALL
CAPITALIZATION
STOCK*
------------------------------
1995 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (855) $ (592) $ (153)
Capital gains distributions
received 0 2,969 1,003
Realized gain (loss) on shares
redeemed
[average cost basis] (81) 8,078 0
Net unrealized gain (loss) on
investments 8,465 8,362 4,644
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM OPERATIONS 7,529 18,817 5,494
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
[Note 6] 221,057 76,342 95,349
-------------- -------------- --------------
NET INCREASE (DECREASE) IN NET
ASSETS
RESULTING FROM EQUITY TRANSFERS
[Note 7] 11,801 (19,680) 13,141
-------------- -------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS 240,387 75,479 113,984
NET ASSETS:
Beginning of year 0 113,984 0
-------------- -------------- --------------
End of year $ 240,387 $ 189,463 $ 113,984
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES A11 THROUGH A14.
A10
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUCO LIFE OF NEW JERSEY SINGLE PREMIUM VARIABLE LIFE ACCOUNT
FOR THE YEAR ENDED DECEMBER 31, 1996
NOTE 1: GENERAL
Pruco Life of New Jersey Single Premium Variable Life Account (the "Account")
was established on April 15, 1985 under New Jersey law as a separate investment
account of Pruco Life Insurance Company of New Jersey ("Pruco Life of New
Jersey") which is a wholly-owned subsidiary of Pruco Life Insurance Company (an
Arizona domiciled company) and is indirectly wholly-owned by The Prudential
Insurance Company of America ("Prudential"). The assets of the Account are
segregated from Pruco Life of New Jersey's other assets.
The Account is registered under the Investment Company Act of 1940, as amended,
as a unit investment trust. There are fifteen subaccounts within the Account,
each of which invests only in a corresponding portfolio of The Prudential Series
Fund, Inc. (the "Series Fund"). The Series Fund is a diversified open-end
management investment company, and is managed by Prudential.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are prepared in conformity with generally
accepted accounting principles (GAAP). The preparation of the financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
Investments--The investments in shares of the Series Fund 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
ex-dividend date.
Equity of Pruco Life Insurance Company of New Jersey--Pruco Life of New Jersey
maintains a position in the Account for the purpose of administering activity in
the Account. The activity includes unit transactions, fund share transactions,
and expense processing. Pruco Life of New Jersey monitors the balance daily and
transfers funds based upon anticipated activity. At times, Pruco Life of New
Jersey may owe an amount to the Account, which is reflected in Pruco Life of New
Jersey's equity as a negative balance. The position does not have an effect on
the Contract owner's account or the related unit value.
A11
<PAGE>
NOTE 3: INVESTMENT INFORMATION FOR THE PRUDENTIAL SERIES FUND, INC. PORTFOLIOS
The net asset value per share for each portfolio of the Series Fund, the number
of shares of each portfolio held by the subaccounts of the Account and the
aggregate cost of investments in such shares at December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
PORTFOLIOS
----------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Number of shares: 204,517 273,355 268,381 620,873 1,098,260
Net asset value
per share: $ 10.00000 $ 11.06543 $ 26.96489 $ 17.78763 $ 15.51706
Cost: $ 2,045,168 $ 2,931,703 $ 5,557,632 $ 9,637,394 $ 15,141,419
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Number of shares: 23,220 210,047 44,425 63,813 29,808
Net asset value
per share: $ 12.91693 $ 7.86749 $ 23.74471 $ 18.50982 $ 19.76541
Cost: $ 287,618 $ 1,719,955 $ 781,948 $ 1,009,719 $ 523,418
<CAPTION>
PORTFOLIOS (CONTINUED)
----------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
------------- ------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Number of shares: 47,366 15,168 9,428 17,980 13,737
Net asset value
per share: $ 17.85474 $ 11.22109 $ 12.25430 $ 14.32319 $ 13.79187
Cost: $ 749,632 $ 174,094 $ 109,864 $ 242,872 $ 176,456
</TABLE>
NOTE 4: CHARGES AND EXPENSES
A. Mortality Risk and Expense Risk Charges
The mortality risk and expense risk charges at an effective annual rate of
0.90% are applied daily against the net assets representing equity of
Contract owners held in each subaccount. Mortality risk is that Contract
holders may not live as long as estimated and expense risk is that the cost
of issuing and administering the policies may exceed the estimated expenses.
For 1996, the amount of these charges paid to Pruco Life of New Jersey was
$402,978.
B. Administration Charges
The administration charges at an effective annual rate of 0.35% are applied
daily against the net assets representing equity of Contract owners held in
each subaccount. Administration charges include costs associated with
issuing the Contract, establishing and maintaining records, and providing
reports to Contract owners. For 1996, the amount of these charges paid to
Pruco Life of New Jersey was $157,141.
C. Expense Reimbursement
Pursuant to a prior merger agreement, the Account is reimbursed by Pruco
Life of New Jersey for expenses in excess of 0.40% of the average daily net
assets incurred by the Money Market, Diversified Bond, Equity, Flexible
Managed, Conservative Balanced and Zero Coupon Bond 2000 Portfolios of the
Series Fund. In addition, the Account is reimbursed by Pruco Life of New
Jersey on a non-guaranteed basis, for expenses incurred by the Series Fund
in excess of the effective rate of 0.40% of the average daily net assets of
the Zero Coupon Bond 2005 Portfolio. For 1996, the amount of these
reimbursements totaled $70,746.
D. Deferred Sales Charge
Subsequent to a Contract owner redemption, a deferred sales charge is
imposed upon surrenders of certain variable life insurance contracts to
compensate Pruco Life of New Jersey for sales and other
A12
<PAGE>
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 sixth year of the Contract. No sales charge will
be imposed on death benefits. For 1996, the amount of these charges paid to
Pruco Life of New Jersey was $2,163.
NOTE 5: TAXES
Pruco Life of New Jersey is taxed as a "life insurance company" under the
Internal Revenue Code and the operations of the Account form a part of and are
taxed with those of Pruco Life of New Jersey. Under current federal law, no
federal income taxes are payable by the Account. As such, no provision for tax
liability has been recorded.
NOTE 6: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PREMIUM PAYMENTS
AND OTHER OPERATING TRANSFERS
Contract owner activity in the subaccounts of the Account, for the year ended
December 31, 1996, was as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions,
net: $ 1,104,334 $ 98,710 $ 749,403 $ 550,894 $ 677,265
Contract Owner
Redemptions: $ (1,942,106) $ (206,768) $ (1,066,410) $ (1,376,773) $ (2,048,355)
Net Transfers
from(to) other
subaccounts or
fixed rate
option: $ 166,591 $ (114,792) $ (62,311) $ (194,676) $ (120,910)
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions,
net: $ 3,434 $ 121,562 $ 204,156 $ 235,549 $ 117,604
Contract Owner
Redemptions: $ (45,148) $ (211,410) $ (295,534) $ (303,270) $ (62,480)
Net Transfers
from(to) other
subaccounts or
fixed rate
option: $ (2,589) $ 19,817 $ 264,848 $ (34,529) $ 188,822
<CAPTION>
SUBACCOUNTS (CONTINUED)
--------------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions,
net: $ 130,796 $ 4,701 $ 17,409 $ 250,131 $ 113,169
Contract Owner
Redemptions: $ (209,358) $ (11,314) $ (19,513) $ (272,256) $ (107,112)
Net Transfers
from(to) other
subaccounts or
fixed rate
option: $ 141,129 $ (9,485) $ (9,051) $ 13,340 70,285
</TABLE>
NOTE 7: NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM EQUITY TRANSFERS
The increase (decrease) in net assets resulting from equity transfers represents
the net contributions (withdrawals) of Pruco Life of New Jersey to (from)
Account.
A13
<PAGE>
NOTE 8: UNIT ACTIVITY
Transactions in units (including transfers among subaccounts), for the year
ended December 31, 1996, were as follows:
<TABLE>
<CAPTION>
SUBACCOUNTS
---------------------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 770,463.206 44,945.176 193,180.694 195,494.663 275,196.277
Contract Owner
Redemptions: (1,186,528.661) (144,478.958) (294,416.910) (548,496.946) (869,449.404)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 1,386.569 73,459.564 175,960.495 84,060.417 114,750.436
Contract Owner
Redemptions: (19,752.339) (107,775.429) (112,058.922) (123,885.778) (23,154.417)
<CAPTION>
SUBACCOUNTS (CONTINUED)
---------------------------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Contract Owner
Contributions: 225,664.073 2,764.920 9,007.283 191,489.532 136,383.183
Contract Owner
Redemptions: (173,474.487) (12,256.635) (13,949.962) (205,417.047) (81,878.579)
</TABLE>
NOTE 9: PURCHASES AND SALES OF INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments in the
Series Fund, Inc. were as follows:
<TABLE>
<CAPTION>
PORTFOLIOS
--------------------------------------------------------------------------------
MONEY DIVERSIFIED FLEXIBLE CONSERVATIVE
MARKET BOND EQUITY MANAGED BALANCED
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases......... $ 814,000 $ 11,000 $ 374,000 $ 122,000 $ 75,000
Sales............. $ (1,424,000) $ (273,000) $ (876,000) $ (1,220,000) $ (1,478,000)
<CAPTION>
PORTFOLIOS (CONTINUED)
--------------------------------------------------------------------------------
ZERO
COUPON HIGH
BOND YIELD STOCK EQUITY NATURAL
2000 BOND INDEX INCOME RESOURCES
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases......... $ 0.00 $ 66,000 $ 359,000 $ 147,000 $ 253,000
Sales............. $ (50,000) $ (155,000) $ (182,000) $ (293,000) $ (67,000)
<CAPTION>
PORTFOLIOS (CONTINUED)
--------------------------------------------------------------------------------
ZERO
COUPON SMALL
GOVERNMENT BOND PRUDENTIAL CAPITALIZATION
GLOBAL INCOME 2005 JENNISON STOCK
-------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1996
Purchases......... $ 267,000 $ 0.00 $ 13,000 $ 259,000 $ 169,000
Sales............. $ (195,000) $ (18,000) $ (9,000) $ (268,000) $ (114,000)
</TABLE>
A14
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF FINANCIAL POSITION
DECEMBER 31,
1996 1995
---------- ----------
(000'S)
ASSETS
Fixed maturities - Available for sale $ 555,898 $ 513,433
Policy loans 113,918 98,194
Short term investments 17,002 45,308
---------- ----------
Total invested assets 686,818 656,935
---------- ----------
Cash 3,928 --
Deferred policy acquisition costs 106,965 96,031
Premiums due 401 344
Accrued investment income 12,908 11,579
Receivable from affiliates -- 3,616
Federal income tax receivable -- 69
Other assets 1,335 281
Separate Account assets 883,261 789,427
---------- ----------
TOTAL ASSETS $1,695,616 $1,558,282
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Future policy benefits and other policyholders' $ 100,663 $ 92,045
liabilities
Policyholders' account balances 375,448 375,193
Federal income tax payable 1,970 --
Deferred federal income tax payable 24,175 23,809
Payable to affiliate 6,059 5,375
Other liabilities 11,990 6,279
Separate Account liabilities 880,065 787,566
---------- ----------
TOTAL LIABILITIES 1,400,370 1,290,267
---------- ----------
CONTINGENCIES - NOTE 9
STOCKHOLDER'S EQUITY
Common Stock, $5 par value;
400,000 shares,
authorized; issued and
outstanding at December 31, 1996 and 1995 2,000 2,000
Paid-in-capital 125,000 125,000
Net unrealized investment gains (less deferred income 2,032 6,588
tax)
Retained earnings 166,214 134,427
---------- ----------
TOTAL STOCKHOLDER'S EQUITY 295,246 268,015
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $1,695,616 $1,558,282
========== ==========
SEE NOTES TO THE FINANCIAL STATEMENTS
B-1
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF OPERATIONS
YEAR ENDED
DECEMBER 31,
1996 1995 1994
----------------------------
(000'S)
REVENUES
Premiums $ 1,345 $ 1,042 $ 1,869
Policy charges and fee income 58,571 59,515 55,021
Net investment income 43,784 43,530 42,357
Realized investment gains(losses) 1,221 3,592 (8,310)
Other income 4,047 3,900 3,201
----------------------------
TOTAL REVENUES 108,968 111,579 94,138
----------------------------
BENEFITS AND EXPENSES
Policyholders' benefits 28,653 26,331 22,788
Interest credited to policyholders' account 20,069 21,364 22,151
balances
Other operating costs and expenses 12,848 21,881 23,716
----------------------------
TOTAL BENEFITS AND EXPENSES 61,570 69,576 68,655
----------------------------
Income before income tax provision 47,398 42,003 25,483
Income tax provision 15,611 15,002 9,483
----------------------------
NET INCOME $ 31,787 $ 27,001 $ 16,000
============================
SEE NOTES TO THE FINANCIAL STATEMENTS
B-2
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
--------------------------------
(000'S)
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of year $ 2,000 $ 2,000 $ 2,000
Issued during year -- -- --
--------------------------------
Balance, end of year 2,000 2,000 2,000
--------------------------------
PAID IN CAPITAL
Balance, beginning of year 125,000 125,000 125,000
Paid in during year -- -- --
--------------------------------
Balance, end of year 125,000 125,000 125,000
--------------------------------
NET UNREALIZED INVESTMENT GAINS (LESS DEFERRED
INCOME TAX)
Balance, beginning of year 6,588 -- --
Adoption of SFAS 115 -- (11,189) --
Net change in unrealized investment gains(losses) (4,556) 17,777 --
--------------------------------
Balance, end of year 2,032 6,588 --
--------------------------------
RETAINED EARNINGS
Balance, beginning of year 134,427 107,426 91,426
Net income 31,787 27,001 16,000
--------------------------------
Balance, end of year 166,214 134,427 107,426
--------------------------------
TOTAL STOCKHOLDER'S EQUITY $ 295,246 $ 268,015 $234,426
================================
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
B-3
<PAGE>
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996 1995 1994
---------------------------------
(000'S)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 31,787 $ 27,001 $ 16,000
Adjustments to reconcile net income to net cash from
operating activities:
Increase in future policy benefits and other policyholders' 8,618 900 3,936
liabilities
General account policy fee income (9,963) (11,931) (7,744)
Interest credited to policyholders' account balances 20,069 21,364 22,151
Net decrease (increase) in Separate Accounts (1,335) 260 (310)
Net realized investment (gains)losses (1,221) (3,592) 8,310
Amortization and other non-cash items 8,908 (6,839) 3,778
Change in:
Accrued investment income (1,329) (317) (679)
Premiums due (57) 41 26
Receivable from affiliates 3,616 (1,789) (132)
Deferred policy acquisition costs (10,934) 9,074 4,727
Other assets (985) 1,287 2,759
Payable to affiliate 684 807 (3,798)
Federal income tax payable 1,970 8,328 (7,869)
Deferred federal income tax payable 366 3,460 (1,183)
Other liabilities 5,711 (304) 2,988
---------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES 55,905 47,750 42,960
---------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale/maturity of:
Fixed maturities:
Held to maturity -- -- 705,888
Available for sale 901,775 553,681 --
Payments for the purchase of:
Fixed maturities:
Held to maturity -- -- (658,008)
Available for sale (956,483) (522,757) --
Policy loans (15,724) (12,917) (15,511)
Net proceeds (payments) of short term investments 28,306 (3,613) (12,095)
---------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES (42,126) 14,394 20,274
---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Policyholders' account balances:
Deposits 16,754 18,348 22,336
Withdrawals (net of transfers to/from separate accounts) (26,605) (80,509) (85,590)
---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES (9,851) (62,161) (63,254)
---------------------------------
Net increase(decrease) in Cash 3,928 (17) (20)
Cash, beginning of year -- 17 37
---------------------------------
CASH , END OF YEAR $ 3,928 $ 0 $ 17
=================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid $ 11,673 $ 7,900 $ 17,679
=================================
</TABLE>
SEE NOTES TO THE FINANCIAL STATEMENTS
B-4
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRINCIPLES
A. GENERAL
Pruco Life Insurance Company of New Jersey (the Company), a stock life insurance
company domiciled in New Jersey, is an indirect subsidiary of The Prudential
Insurance Company of America (Prudential), a mutual life insurance company, and
a direct subsidiary of Pruco Life Insurance Company (Pruco Life), a stock life
insurance company domiciled in the state of Arizona. The Company markets
individual life insurance and annuities through Prudential's sales force.
B. BASIS OF PRESENTATION
The Financial Accounting Standards Board (FASB) issued Interpretation No. 40,
"Applicability of Generally Accepted Accounting Principles to Mutual Life
Insurance and Other Enterprises", as amended by Statement of Financial
Accounting Standards (SFAS) No. 120, "Accounting and Reporting by Mutual Life
Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration
Participating Contracts", effective for fiscal years beginning after December
15, 1995. Financial statements of mutual life insurance companies, and their
wholly owned stock life insurance subsidiaries, for periods beginning after
December 15, 1995 which are prepared on the basis of statutory accounting
practices will no longer be characterized as in conformity with generally
accepted accounting principles (GAAP). As a result, the Company has prepared its
1996 financial statements in accordance with all applicable GAAP pronouncements.
The 1995 and 1994 financial statements, which were previously prepared on the
statutory basis of accounting, have been restated in accordance with GAAP. The
cumulative effect of adopting GAAP as of January 1, 1994 was an increase in
retained earnings of $63.6 million. See Note 7 for a reconciliation of the
Company's surplus and net income determined in accordance with statutory
accounting practices with equity and net income determined on a GAAP basis.
On January 1, 1995, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," which expanded the use of fair value
accounting for those securities that a company does not have positive intent and
ability to hold to maturity. Implementation of this statement decreased
stockholder's equity by $11.2 million net of deferred income tax benefit of $6.3
million. In 1994 prior to the adoption of SFAS 115, all fixed maturities were
carried at amortized cost.
C. INVESTMENTS
Fixed Maturities - Where the Company may not have the positive intent to hold
fixed maturities until maturity, the securities are classified as "Available for
Sale." These securities are reported at market value based principally on their
quoted market prices. The associated unrealized gains and losses, net of income
taxes and deferred policy acquisition costs, are included as a component of
equity or if deemed to be other than temporary, are included as a realized loss.
Policy Loans are stated primarily at unpaid principal balances.
Realized Investment Gains and Losses are reported based on specific
identification of the investments sold.
Short-term investments are fixed maturities that mature within one year, and are
reported at estimated fair value.
D. REVENUE RECOGNITION AND RELATED EXPENSES
Universal life contracts are long duration life insurance contracts that involve
significant mortality and morbidity risk with both fixed and guaranteed terms.
Investment contracts, such as deferred annuities, are long duration contracts
that do not subject the insurance enterprise to risks arising from policyholder
mortality or morbidity. Amounts received as payments for these contracts are
reported as deposits to policyholders' account balances. Revenues from these
contracts consist primarily of amounts assessed during the period against
policyholders' account balances for mortality charges, policy administration
fees and surrender charges. Policy benefits and claims that are charged to
expenses include benefit claims incurred in the period in excess of related
policyholders' account balances.
Premiums, policy benefits and claims from individual life policies and payout
annuities, generally are recognized in operations when due.
B-5
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
E. DEFERRED POLICY ACQUISITION COSTS
Acquisition costs consist of commissions and other costs which vary with and are
primarily related to the production or acquisition of new business. Acquisition
costs related to universal life products and investment-type contracts are
deferred and amortized in proportion to total estimated gross profits arising
principally from investment results, mortality, expense margins and surrender
charges based on historical and anticipated future experience. As required,
amortization expense also includes the impact of revised estimates to expected
gross profits, which is the basis for amortizing deferred policy acquisition
costs. Amortization of deferred policy acquisition costs, including the impact
of revised estimates of gross profits, was $(2.2) million, $8.9 million, and
$11.0 million for the years ended December 31, 1996, 1995, and 1994,
respectively. Deferred policy acquisition costs are analyzed to determine if
they are recoverable from future income, including investment income. If such
costs are determined to be unrecoverable, they are expensed at the time of
determination. The effect on the deferred policy acquisition asset that would
result from realization of unrealized investment gains(losses) is recognized
with an offset to unrealized investment gains(losses) in stockholder's equity.
F. FUTURE POLICY BENEFITS AND POLICYHOLDERS' ACCOUNT BALANCES
Benefit reserve liabilities for payout annuities such as matured deferred
annuities and supplementary contracts represent the present values of estimated
future benefits payments and related expenses. Present values for matured
deferred annuity contracts are computed using interest rates ranging from 6.5%
to 8.75%. The mortality assumption for these contracts is the 83 IAM tables.
Reserves for supplementary contracts are stated at interest rates that vary from
7.25% to 8.25% using mortality and morbidity assumptions either from company
experience or various actuarial tables.
When liabilities for future policy benefits plus the present value of expected
future gross deposits are insufficient to provide expected future policy
benefits and expenses, unrecoverable deferred policy acquisition costs are
written off and thereafter, if required, a premium deficiency reserve is
established as a charge to income.
Policyholders' account balances for universal life and investment-type contracts
are equal to the policy account values. The policy account values represent an
accumulation of gross deposits plus interest credited less expense and mortality
charges and withdrawals.
Interest crediting rates on life insurance products range from 3.4% to 6.6%.
G. SEPARATE ACCOUNTS
Separate Accounts represent funds for which investment income and investment
gains and losses accrue directly to, and investment risk is borne by, the
policyholders. All Separate Account assets are carried at market value. Deposits
to all Separate Accounts are reported as increases in Separate Account
liabilities, which equal the Separate Account policy account fund values.
Charges assessed against policyholders' account balances for mortality, policy
administration and surrender charges are included in policy charges and fee
income. Mortality and expense risk charges are applied against the
policyholders' account balance. The Separate Account assets are legally
segregated and are not subject to claims that arise out of any other business of
the Company.
H. ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
B-6
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
2. FIXED MATURITIES
Gross unrealized gains and losses for securities, by major security type, are as
follows:
<TABLE>
<CAPTION>
DECEMBER, 31, 1996
- ------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and $ 29,386 $ 1 $ 174 $ 29,213
agencies
Foreign government bonds 38,853 420 52 39,221
Corporate securities 483,439 5,108 1,133 487,414
Mortgage-backed securities 50 -- -- 50
- ------------------------------------------------------------------------------------------------------
Total $551,728 $ 5,529 $1,359 $555,898
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
(000's) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. government corporations and $ 81,806 $ 1,287 $ -- $ 83,093
agencies
Foreign government bonds 25,849 1,128 -- 26,977
Corporate securities 353,514 11,130 340 364,304
Mortgage-backed securities 36,872 2,192 5 39,059
- ------------------------------------------------------------------------------------------------------
Total $498,041 $15,737 $ 345 $513,433
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-7
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
The amortized cost and estimated fair value of fixed maturities at December 31,
1996, categorized by contractual maturity, are shown below. Actual maturities
will differ from contractual maturities because borrowers may prepay obligations
with or without call or prepayment penalties.
DECEMBER 31, 1996
- ---------------------------------------------------------------------------
Estimated
Amortized Fair
(000's) Cost Value
- ---------------------------------------------------------------------------
AVAILABLE FOR SALE
Due in one year or less $ 43,723 $ 43,951
Due after one year through five years 444,883 448,048
Due after five years through ten years 57,989 58,586
Due after ten years 5,083 5,263
Mortgage-backed securities 50 50
- ---------------------------------------------------------------------------
Total $551,728 $555,898
- ---------------------------------------------------------------------------
Proceeds from the sale of fixed maturities during 1996, 1995, and 1994 were
$869.6 million, $535.3 million, and $672.8 million, respectively. Gross gains of
$5.2 million, $6.8 million, and $3.3 million and gross losses of $4.0 million,
$3.2 million, and $11.6 million were realized on those sales during 1996, 1995,
and 1994, respectively.
B-8
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
<TABLE>
<CAPTION>
3. NET INVESTMENT INCOME
YEAR ENDED
DECEMBER 31,
Net investment income consists of: 1996 1995 1994
----------------------------------
Gross investment income (000'S)
<S> <C> <C> <C>
Fixed maturities $ 36,193 $ 36,861 $ 36,565
Policy loans 5,761 5,029 4,290
Short term investments 2,504 2,290 2,364
Other 28 51 44
----------------------------------
44,486 44,231 43,263
Investment expenses (702) (701) (906)
----------------------------------
Net investment income $ 43,784 $ 43,530 $ 42,357
==================================
4. INVESTMENT GAINS(LOSSES)
YEAR ENDED
DECEMBER 31,
1996 1995 1994
----------------------------------
(000'S)
Fixed maturities:
Realized investment gains $ 5,232 $ 6,785 $ 3,327
Realized investment losses (4,011) (3,193) (11,637)
----------------------------------
Realized investment gains(losses) $ 1,221 $ 3,592 ($ 8,310)
==================================
YEAR ENDED
DECEMBER 31,
1996 1995 1994
----------------------------------
(000'S)
<S> <C> <C> <C>
Net unrealized investment gains, beginning of period $ 6,588 $ -- $ --
Net unrealized investment gains(losses) on fixed maturities (11,222) 32,875 --
Deferred income tax benefit(provision) 4,040 (11,835) --
Deferred policy acquisition costs (net of deferred income 2,626 (3,263) --
taxes)
----------------------------------
Net change in unrealized investment gains(losses) (4,556) 17,777 --
Adoption of SFAS 115 -- (11,189) --
----------------------------------
Net unrealized investment gains, end of period $ 2,032 $ 6,588 $ --
==================================
</TABLE>
B-9
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
5. FAIR VALUE INFORMATION
The fair value amounts have been determined by the Company using available
information and reasonable valuation methodologies. Considerable judgment is
applied, as necessary, in interpreting data to develop the estimates of fair
value. Accordingly, the estimates presented may not be realized in a current
market exchange. The use of different market assumptions and/or estimation
methodologies could have a material effect on the estimated fair values.
The following methods and assumptions were used in calculating the fair values.
Fixed Maturities - Fair values for fixed maturities are based on quoted market
prices or estimates from independent pricing services.
Policy Loans - The estimated fair value is calculated using a discounted cash
flow model based upon current U.S. Treasury rates and historical loan repayment.
Policyholders' Account Balances - Fair values for policyholders' account
balances are equal to the policy account values.
Short-term Investments - Fair values for short-term investments are based on
quoted market prices or estimates from independent pricing services.
The following table discloses the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- ---------- -------------- ----------
(000'S)
<S> <C> <C> <C> <C>
Financial Assets:
Fixed maturities -- Available
for sale $555,898 $555,898 $513,433 $513,433
Policy loans 113,918 110,262 98,194 99,057
Short-term investments 17,002 17,002 45,308 45,308
Financial Liabilities:
Policyholders'
account balances $375,448 $375,448 $375,193 $375,193
</TABLE>
B-10
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
6. INCOME TAXES
The Company is a member of a group of affiliated companies which join in filing
a consolidated federal income tax return in addition to separate company state
and local tax returns. The Internal Revenue Code limits the amount of nonlife
insurance losses that may offset life insurance company taxable income.
Companies operating outside the United States are taxed under applicable foreign
statutes.
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 when assets and liabilities have
different values for financial statement and tax reporting purposes.
The components of income taxes are as follows:
YEAR ENDED
DECEMBER 31,
1996 1995 1994
------------------------------
(000'S)
Current income tax provision:
Federal income tax $ 13,589 $ 13,868 $ 9,431
State and local income tax (907) 1,380 1,235
------------------------------
Total current income tax 12,682 15,248 10,666
Deferred income tax provision (benefit):
Federal income tax 2,848 (239) (1,150)
State and local income tax 81 (7) (33)
------------------------------
Total deferred income tax 2,929 (246) (1,183)
------------------------------
Total income tax provision $ 15,611 $ 15,002 $ 9,483
==============================
The income tax provision is different from the amount computed using the
expected federal income tax rate of 35% for the following reasons:
YEAR ENDED
DECEMBER 31,
1996 1995 1994
---------------------------------
(000'S)
Expected federal income tax expense $ 16,589 $ 14,702 $ 8,919
State income taxes (826) 1,373 1,202
Other (152) (1,073) (638)
---------------------------------
Total income tax provision $ 15,611 $ 15,002 $ 9,483
=================================
B-11
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
The components of net deferred income taxes payable are as follows:
YEAR ENDED
DECEMBER 31,
1996 1995
------- -------
DEFERRED INCOME TAX ASSETS (000'S)
Insurance liabilities $ 6,189 $ 6,966
Other -- 276
------- -------
Total deferred income tax assets $ 6,189 $ 7,242
------- -------
DEFERRED INCOME TAX LIABILITIES
Deferred acquisition costs $28,424 $25,322
Net investment gains 1,940 5,729
------- -------
Total deferred income tax liabilities 30,364 31,051
------- -------
Deferred federal income tax payable $24,175 $23,809
======= =======
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns through 1989. The Service is examining
the years 1990 through 1992. Discussions are being held with the Service with
respect to proposed adjustments. However, management believes there are adequate
defenses against, or sufficient reserves to provide for, such adjustments.
B-12
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
7. STOCKHOLDER'S EQUITY RECONCILIATION
The reconciliation of statutory net income to GAAP net income, and statutory
surplus to GAAP equity as of December 31, 1996, 1995, and 1994 are as follows:
1996 1995 1994
---------------------------------
(000'S)
Statutory net income $ 24,774 $ 25,567 $ 16,309
Deferred acquisition costs 5,656 (2,589) (4,727)
Deferred premium 221 (58) 241
Insurance liabilities 1,154 4,366 4,614
Income taxes (2,883) 510 8,518
Interest maintenance reserve (765) 1,285 (10,327)
Separate accounts and other 3,630 (2,080) 1,372
---------------------------------
GAAP net income $ 31,787 $ 27,001 $ 16,000
=================================
Statutory surplus $ 216,019 $ 191,607 $ 163,066
Investment valuation 4,170 15,392 --
Deferred acquisition costs 106,965 96,031 105,105
Deferred premium (2,205) (2,426) (2,368)
Insurance liabilities (21,501) (25,062) (23,882)
Income taxes (21,829) (21,510) (13,015)
Asset valuation reserve and interest
maintenance reserve 13,598 13,966 5,512
Other 29 17 8
---------------------------------
GAAP stockholder's equity $ 295,246 $ 268,015 $ 234,426
=================================
The New York State Insurance Department ("Department") recognizes only statutory
accounting for determining and reporting the financial condition and results of
operations of an insurance company, for determining its solvency under the New
York Insurance Law, and for determining whether its financial condition warrants
the payment of a dividend to its stockholders. No consideration is given by the
Department to financial statements prepared in accordance with generally
accepted accounting principles in making such determinations.
B-13
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
DECEMBER 31, 1996, 1995, AND 1994
8. RELATED PARTY TRANSACTIONS
A. SERVICE AGREEMENTS
The Company, Prudential, Pruco Life, and Pruco Securities Corporation, an
indirect wholly-owned subsidiary of Prudential, operate under service and lease
agreements whereby services of officers and employees, supplies, use of
equipment and office space are provided. The net cost of these services
allocated to the Company were $12 million, $16 million, and $15 million for the
years ended December 31, 1996, 1995, and 1994, respectively.
B. PENSION PLANS
The Company is an indirect wholly-owned subsidiary of Prudential which sponsors
several defined benefit pension plans that cover substantially all of its
employees. Benefits are generally based on career average earnings and credited
length of service. Prudential's funding policy is to contribute annually the
amount necessary to satisfy the Internal Revenue Service contribution
guidelines.
No pension expense for contributions to the plan was allocated to the Company in
1996, 1995, or 1994 because the plan was subject to the full funding limitation
under the Internal Revenue Code.
C. POSTRETIREMENT LIFE AND HEALTH BENEFITS
Prudential also sponsors certain life insurance and health care benefits for its
retired employees. Substantially all employees may become eligible to receive a
benefit if they retire after age 55 with at least 10 years of service.
Prudential elected to amortize its obligation over twenty years. A provision for
contributions to the postretirement fund is included in the net cost of services
allocated to the Company discussed above for the years ended December 31, 1996,
1995, and 1994.
D. REINSURANCE
The Company currently has one reinsurance agreement in place with Prudential
(the reinsurer). This contract 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 of $2.5 million. The Company is not
relieved of its primary obligation to the policyholder as a result of this
reinsurance transaction. This agreement had no material effect on net income for
the years ended December 31, 1996, 1995, and 1994.
9. CONTINGENCIES
Several actions have been brought against the Company on behalf of those persons
who purchased life insurance policies based on complaints about sales practices
engaged in by Prudential, the Company and agents appointed by Prudential and the
Company. Prudential has agreed to indemnify the Company for any and all losses
resulting from such litigation.
10. DIVIDENDS
The Company is subject to New Jersey law which limits the amount of dividends
that insurance companies may pay to stockholders. The maximum dividend which may
be paid in any twelve month period without prior approval of the New Jersey
Commissioner of Insurance is limited to the greater of 10% of surplus as of
December 31 of the preceding year or the net gain from operations of the
preceding calendar year. Cash dividends may only be paid out of surplus derived
from realized net profits. Based on these limitations and the Company's surplus
position at December 31, 1996, the Company would be permitted a maximum of $25
million in dividend distributions in 1997, all of which could be paid in cash,
without approval from The State of New Jersey Department of Insurance.
B-14
<PAGE>
Report of Independent Accountants
To the Board of Directors of
Pruco Life Insurance Company of New Jersey
In our opinion, the accompanying statement of financial position and the related
statements of operations, of stockholder's equity and of cash flows present
fairly, in all material respects, the financial position of Pruco Life Insurance
Company of New Jersey at December 31, 1996, and the results of its operations
and its cash flows for the year in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/
PRICE WATERHOUSE LLP
New York, New York
April 11, 1997
B-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Board of Directors of
Pruco Life Insurance Company of New Jersey
Newark, New Jersey
We have audited the accompanying statement of financial position of Pruco Life
Insurance Company of New Jersey as of December 31, 1995, and the related
statements of operations, stockholder's equity and cash flows for the years
ended December 31, 1995 and 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements presents fairly, in all
material respects, the financial position of Pruco Life Insurance Company of New
Jersey as of December 31, 1995, and the results of operations and cash flows for
the years ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the financial statements, the Company has
retroactively adopted all applicable generally accepted accounting principles
relating to stock life insurance subsidiaries of mutual life insurance companies
and has changed, as of January 1, 1995, the method of accounting for fixed
maturity investments.
/s/
Deloitte & Touche LLP
Parsippany, NJ
December 19, 1996
B-16
<PAGE>
[DISCOVERY(R) LIFE PLUS LOGO]
SINGLE PREMIUM VARIABLE LIFE ACCOUNT
VARIABLE LIFE INSURANCE CONTRACTS
PRUCO LIFE INSURANCE COMPANY OF NEW JERSEY
213 Washington Street
Newark, New Jersey 07102-2992
Telephone: (800) 445-4571
A Subsidiary of
PRUDENTIAL [LOGO]
