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DRAFT - 01/25/96
Registration No. 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-8B-2
REGISTRATION STATEMENT OF UNIT INVESTMENT TRUSTS
WHICH ARE CURRENTLY ISSUING SECURITIES
Pursuant to Section 8(b) of the Investment
Company Act of 1940
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT GI-2
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(Name of Unit Investment Trust)
Issuer of periodic payment plan certificates only
for purposes of information provided herein
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I.
ORGANIZATION AND GENERAL INFORMATION
1. (a) Furnish name of the trust and the Internal Revenue
Service Employer Identification Number.
The Prudential Variable Contract Account GI-2 (the
"Account"). There is no Identification Number.
(b) Furnish title of each class or series of securities
issued by the trust.
Group Variable Universal Life Insurance Contracts (the
"Contracts"). A contract is held by an employer,
association, sponsoring organization or trust who defines
the individual employees or members who are eligible to
participate in the Contract. An eligible employer or
member who obtains insurance through the Contract (the
"participant") is issued a Certificate which sets forth his
or her rights and benefits under that Contract. Unless
specifically stated otherwise, this registration statement
will describe the Certificates issued to individual
participants pursuant to the Contracts.
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2. Furnish name and principal business address and zip code and
the Internal Revenue Service Employer Identification Number of
each depositor of the trust.
The Prudential Insurance Company of America ("The Prudential")
Prudential Plaza
Newark, New Jersey 07102-3777
IRS Employer Identification Number: 22-1211670
3. Furnish name and principal business address and zip code and
the Internal Revenue Service Employer Identification Number of
each custodian or trustee of the trust indicating for which
class or series of securities each custodian or trustee is
acting.
The Prudential will hold in its own custody all of the
securities of the account.
4. Furnish name and principal business address and zip code and
the Internal Revenue Service Employer Identification Number of
each principal underwriter currently distributing securities
of the trust.
Prudential Retirement Services, Inc. ("PRSI") will act as the
principal underwriter of the Contracts. The Contracts are not
yet being issued.
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Prudential Retirement Services, Inc. (the "Principal Underwriter")
751 Broad Street, New Newark, N.J. 07102
IRS Employer Identification Number: 22-298-6018
5. Furnish name of state or other sovereign power, the laws of
which govern with respect to the organization of the Trust.
New Jersey
6. (a) Furnish the dates of execution and termination of any
indenture or agreement currently in effect under the
terms of which the trust was organized and issued or
proposes to issue securities.
The Account was established pursuant to a resolution of the
Board of Directors of The Prudential adopted on June 14,
1988. The Account will continue in existence until its
complete liquidation and the distribution of its assets to
the persons entitled to receive them. The resolution also
authorizes the issuance of the Contracts.
(b) Furnish the dates of execution and termination of any
indenture or agreement currently in effect pursuant to
which the proceeds of
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payments on securities issued or to be issued by the trust
are held by the custodian or trustee.
There is no custodian or any such agreement.
7. Furnish in chronological order the following information with
respect to each change of name of the trust since January 1,
1930. If the name has never been changed, so state.
The Account has never had any other name.
8. State the date on which the fiscal year of the trust ends.
The fiscal year of the Account ends on December 31.
MATERIAL LITIGATION
9. Furnish a description of any pending legal proceedings,
material with respect to the security holders of the trust by
reason of the nature of the claim or the amount thereof, to
which the trust, the depositor, or the principal underwriter
is a party or of which the assets of the trust are the
subject, including the substance of the claims involved in such
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proceeding and the title of the proceeding. Furnish a
similar statement with respect to any pending administrative
proceeding commenced by a governmental authority or any such
proceeding or legal proceeding known to be contemplated by a
governmental authority. Include any proceeding which,
although immaterial itself, is representative of, or one of, a
group which in the aggregate is material.
No pending litigation or administrative proceeding, and no
litigation or administrative proceeding known to be
contemplated by a governmental authority would have a material
effect upon the Account.
II.
GENERAL DESCRIPTION OF THE
TRUST AND SECURITIES OF THE TRUST
GENERAL INFORMATION CONCERNING THE SECURITIES OF THE TRUST AND THE
RIGHTS OF HOLDERS
10. Furnish a brief statement with respect to the following
matters for each class or series of securities issued by
the trust:
(a) Whether the securities are of the registered or bearer
type:
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The Certificates that are to be issued pursuant to the
Contracts are of the registered type in that all
Certificates are issued to and bear the name of the
participant, and the records concerning the participants
are maintained by or on behalf of The Prudential.
(b) Whether the securities are of the cumulative or
distributive type.
The Certificates are essentially of the cumulative type,
providing for no direct distribution of income, dividends
or capital gains from investments. Such amounts are
reflected in the payment of cash surrender value upon
surrender of the Certificates and in the payment of the
death benefit upon death of the covered person. The
Certificates are "participating" in the insurance sense,
however, in that the Contracts under which they are issued
are eligible to be credited with part of The Prudential's
divisible surplus attributable to the Contract
("dividends"), as determined annually by The Prudential's
Board of Directors.
(c) The rights of security holders with respect to
withdrawal or redemption.
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A participant is entitled to return the Certificate for
cancellation and a refund within the "free-look" period.
The "free-look" period is a minimum of 30 days after the
participant receives the Certificate. Some states may
allow a longer period of time during which a Certificate
may be returned for a refund. Upon the participant's
timely exercise of his "free-look" privilege, the
participant will receive a refund of all premium payments
made, plus or minus any change due to investment experience
in the value of the invested portion of the premiums,
calculated as if no charges had been made against the
Account or the securities underlying the Account. However,
if applicable law so requires, the participant who
exercises his or her short-term cancellation right will
receive a refund of all premium payments made with no
adjustment for investment experience prior to the
cancellation.
A participant may surrender his or her Certificate for its
full cash surrender value at any time while the covered
person is living. The cash surrender value (before any
applicable transaction charge) of a Certificate is equal to
the participant's Certificate fund, less any Certificate
debt. There is a transaction charge for surrendering a
Certificate equal to the lesser of $20 or 2% of the amount
received upon surrender. The Certificate fund on any day
equals the sum
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of the amounts invested in the subaccounts,
the amount invested in the Fixed Account, and the loan
account. Cash surrender value will change daily,
reflecting the increases or decreases in the value of the
Fund portfolios in which the assets of the subaccounts have
been invested, interest credited on any amounts allocated
to the Fixed Account and the loan amount, and interest
accrued on any loan and the daily asset charge for
mortality and expense risks assessed against the variable
investment options. The Certificate fund value will also
reflect the frequency and amount of net premiums paid,
transfers, partial withdrawals, loans, and the charges
assessed in connection with the Certificate as described in
Item 13(a). Upon request, The Prudential will tell a
participant the cash surrender value of his or her
Certificate.
In addition to surrendering the Certificate, a participant
may withdraw a portion of the Certificate's cash surrender
value during the lifetime of the covered person without
surrendering the Certificate. There is no limit on the
number of partial withdrawals a participant can make each
year, but there is a transaction fee for each withdrawal
equal to the lesser of $20 or 2% of the amount withdrawn.
The minimum amount of any partial withdrawal is $250. The
maximum amount of any partial withdrawal is the
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amount that would reduce the Certificate fund (less any
Certificate debt) to an amount equal to the next month's charges
as described in Item 13(a). A partial surrender will reduce
the cash surrender value and the death benefit, but it will
not reduce the face amount of coverage.
The Prudential will generally pay the cash surrender value
or the amount of any partial withdrawal within 7 days after
receipt at the address designated in the Contract of all
the documents required for such a payment. The amount of
payment will be determined as of the end of the valuation
period in which the necessary documents are received.
However, The Prudential may delay payments of proceeds from
the Account 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 or partial withdrawal
allocated to the Fixed Account, The Prudential expects to
pay the cash surrender value or partial withdrawal promptly
upon request. However, The Prudential has the right to
delay payment of such cash surrender value for up to six
months (or a shorter period if required by
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applicable law). The Prudential will pay interest of at least
3% a year if it delays such a payment for more than 30 days (or a
shorter period if required by applicable law).
Upon the death of the covered person under the Certificate,
the designated beneficiary is entitled to receive the death
benefit. The death benefit is described in Item 10(i) and
17(a).
(d) The rights of security holders with respect to
conversion, transfer, partial redemption, and similar
matters.
A participant's right to convert his or her Certificate to
alternative forms of insurance upon termination of coverage
under the Contract is described in Item 10(e).
A participant's right to make partial withdrawals is
described in Item 10(c).
If his or her Certificate is not in default, a participant
may change the way in which premiums are allocated among
the selected
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investment option(s). The minimum amount that
a participant may allocate to any subaccount or the Fixed
Account is 10% and all allocations must be in whole
percentages. For example, a participant may allocate 33%
of net premiums to a selected subaccount, but may not
allocate 33 1/3%. Of course, the total allocation to all
selected investment options must equal 100%. There is no
charge for reallocating future premiums.
If his or her Certificate is not in default, a participant
may transfer amounts from one subaccount to another
subaccount, or to the Fixed Account. There is no limit on
the number of transfers among subaccounts or to the Fixed
Account. The Prudential may, however, reserve under
certain group contracts the right to impose a charge of up
to $20 for each transfer in a Certificate year after the
twelfth transfer in that Certificate year. If this charge
is imposed, it will be deducted pro rata from the
investment options based on the participant's balances
after the transfer.
Transfers will take effect as of the end of the valuation
period in which a proper transfer request is received at
The Prudential Group Insurance Office designated in the
Contract. The request may be in terms of dollars, such as
a request to transfer $10,000
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from one subaccount to another, or may be in terms of a percentage
reallocation among subaccounts. For transfer requests in terms of
dollars, the minimum amount that may be transferred from
any one investment option is $250 or the entire balance in
that investment option, whichever is less. For transfer
requests in percentage terms, as with premium
reallocations, the percentages must be in whole numbers and
no allocation may be less than 10%.
Transfers from the Fixed Account to the subaccounts are
currently permitted once each Certificate year. The amount
of that transfer cannot exceed $5,000 or 25% of the balance
in the Fixed Account, whichever is greater. Such transfer
requests will take effect as of the end of the valuation
period in which a proper transfer request is received at a
Prudential Group Insurance Office. These limits are
subject to change in the future.
Some group contracts permit a participant to transfer
amounts by telephone provided he or she is enrolled to use
The Prudential's telephone transfer system. The Prudential
cannot guarantee that participants will be able to get
through to complete a telephone transfer during peak
periods such as periods of drastic economic or market
change.
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Some contracts may permit a participant to elect a dollar
cost averaging feature. Dollar cost averaging enables a
participant to systematically reallocate specified dollar
amounts from the Money Market subaccount to the other
subaccounts at regular intervals. By allocating an
identified sum on a regularly scheduled basis as opposed to
reallocating the total amount at one particular time, a
participant may be less susceptible to the impact of market
fluctuations. Dollar cost averaging may be selected by
establishing a Money Market Fund subaccount value of at
least $3,000. The minimum transfer amount is $250. All
dollar cost averaging transfers will be made effective as
of the end of the first valuation period following the
first of the month. Election of this arrangement may occur
at any time by properly completing the dollar cost
averaging election form, returning it to The Prudential so
it is received by the tenth of the month, to be effective
the following month, and ensuring that sufficient value is
in the Money Market subaccount. Dollar cost averaging will
terminate when any of the following occurs: (1) the number
of designated transfers has been completed; (2) the Money
Market subaccount value is insufficient to complete the
next transfer; (3) The Prudential receives a written
request for termination by the tenth of the month in order
to cancel the transfer scheduled to take effect the
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following month; or (4) the Certificate is lapsed,
surrendered or otherwise terminated. There is currently no
charge for dollar cost averaging. The Prudential reserves
the right to charge for this program. The Prudential does
not intend to profit from any such charge.
A participant may obtain loans using the Certificate as
collateral. See Item 21.
(e) If the trust is the issuer of periodic payment plan
Certificates, the substance of the provisions of any
indenture or agreement with respect to lapses or
defaults by security holders in making principal
payments, and with respect to reinstatement:
A participant will not be required to pay any minimum
premiums, provided the balance in the Certificate fund is
sufficient to pay the monthly charges. If it is not, the
Participant's insurance is in default and will lapse if a
grace period expires without a sufficient payment being
made.
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At the time of default, The Prudential will send a notice
to the participant at the last known address on file with
The Prudential, specifying the amount of premium required
to keep the Certificate in force and the date the payment
is due. The grace period expires on the later of 61 days
from the date of default or 30 days from the date notice
was mailed. If The Prudential does not receive the
required amount within the grace period, the participant's
insurance will lapse. If the covered person dies during
the grace period, the death benefit will be reduced by any
past due monthly charges and any Certificate debt.
(f) The substance of the provisions of any indenture or
agreement with respect to voting rights, together with
the names of any persons other than security holders
given the right to exercise voting rights pertaining to
the trust's securities or the underlying securities and
the relationship of such persons to the trust.
The underlying securities held by the Account will be
shares in The Prudential Series Fund, Inc. ("Fund")
described in Item 12. The Prudential is the legal owner of
those shares and as such has the right to vote on any
matter voted on at Fund shareholders meetings. However,
The Prudential will, as required by law, vote
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the shares of the Fund at any regular and special shareholders
meetings it is required to hold in accordance with voting
instructions received from participants. The Fund will not
hold annual shareholders meetings when not required to do
so under Maryland law or the Investment Company Act of
1940. Fund shares for which no timely instructions from
participants are received, and any shares attributable to
general account investments of The Prudential, will be
voted in the same proportion as shares for which
instructions are received. Should the applicable federal
securities laws or regulations, or their current
interpretation, change so as to permit The Prudential to
vote shares of the Fund in its own right, it may elect to
do so.
Matters on which participants may give voting instructions
include the following: (1) election of the Board of
Directors of the Fund; (2) ratification of the independent
accountant of the Fund; (3) approval of the investment
advisory agreement for a portfolio of the Fund
corresponding to the participant's selected subaccount(s);
(4) any change in the fundamental investment policy of a
portfolio corresponding to the participant's selected
subaccount(s); and (5) any other matter requiring a vote of
the shareholders of the Fund. With respect to approval of
the investment advisory
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agreement or any change in a portfolio's fundamental
investment policy, participants participating in such
portfolios will vote separately by portfolio on
the matter, pursuant to the requirements of
Rule 18f-2 under the 1940 Act.
The number of Fund shares for which instructions may be
given by a participant is determined by dividing the
portion of the value of the Certificate derived from
participation in a subaccount, by the value of one share in
the corresponding portfolio of the Fund. The number of
votes for which each participant may give The Prudential
instructions will be determined as of the record date
chosen by the Board of Directors of the fund. The
Prudential will furnish participants with proper forms and
proxies to enable them to give these instructions. The
Prudential 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.
The Prudential 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
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or investment objectives of one or more of the Fund's portfolios,
or to approve or disapprove an investment advisory contract for
the Fund. In addition, The Prudential itself may disregard
voting instructions that would require changes in the
investment policy or investment advisor of one or more of
the Fund's portfolios, provided that The Prudential
reasonably disapproves such changes in accordance with
applicable federal regulations. The Prudential would
disapprove such a change only if it were contrary to state
law, prohibited by state regulatory authorities or if The
Prudential decided that the change would result in overly
speculative or unsound investments. If The Prudential does
disregard voting instructions, it will advise participants
of that action and its reasons for such action in the next
annual or semi-annual report to participants.
Participants also share with the owners of all Prudential
contracts and policies the right to vote in elections for
members of the Board of Directors of The Prudential.
(g) Whether security holders must be given notice of any
change in:
(1) the composition of the assets of the trust;
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The Prudential reserves the right, subject to
compliance with the law as currently applicable or
subsequently changed:
(i) to add or withdraw eligible investment subaccounts
as underlying securities;
(ii) to combine two or more subaccounts;
(iii) to substitute a new portfolio or fund of any
other registered investment company for the
portfolio in which a subaccount currently
invests;
(iv) to transfer assets determined by The Prudential
to be assigned the Certificates from the Account
to another separate account by withdrawing the
same percentage of each investment in the
Account, with the appropriate adjustments to
avoid odd lots and fractions;
(v) to operate the Account as another form of
registered investment company or unregistered
entity; and
(vi) to combine the Account with other separate
accounts.
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In no event will any of the changes described above be made
without notice to the Contract owners and Certificate
owners in accordance with the Investment Company Act of
1940 and without obtaining any necessary prior approval of
the Securities and Exchange Commission.
(2) the terms and conditions of the securities issued by the trust;
No change in the terms and conditions of the
Certificates and Contracts that will affect any rights
of participants or Contract owners can be made without
notice to the Contract owner and the participant.
(3) the provisions of any indenture or agreement of the trust;
No change in the resolution establishing the Account or
in any agreement relating to the manner in which it is
operated will be made without notice to Contract owners
or Certificate owners if such change would adversely
affect any right or benefit to which they are entitled.
(4) the identity of the depositor, trustee or custodian;
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The Prudential is considered to be the depositor. The
Account has no trustee or custodian. No change in the
identity of the depositor will be made without notice
to Contract holders and participants.
(h) Whether the consent of security holders is required in
order for action to be taken concerning any changes in:
(1) the composition of the assets of the trust.
Consent of the Contract owners and/or Certificate
owners is not required when changing the underlying
securities of the Account. However, to change such
securities, approval of the Securities and Exchange
Commission is generally required by Section 26(b) of
the Investment Company Act of 1940.
(2) the terms and conditions of the securities issued
by the trust.
No changes in the terms and conditions of the Contracts
and the Certificates issued thereunder that affect a
Contract owner's or Certificate owner's rights will be
made without notice to such owners. The Prudential
reserves the right to
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amend the Contracts and Certificates issued thereunder
without the consent of the Contract owner or Certificate
owner as may be necessary to comply with applicable law.
(3) the provisions of any indenture or agreement of the
trust;
No.
(4) the identity of the depositor, trustee or
custodian;
No.
(i) Any other principal feature of the securities issued by
the trust or any other principal right, privilege or
obligation not covered by subdivisions (a) to (g) or by
any other item in this form.
(1) ISSUANCE OF A CERTIFICATE. Each Contract will
specify the members or employees who are eligible
to apply for insurance protection under that group
contract. Eligible group members wishing to obtain
insurance coverage through the group contract must
complete the appropriate application. If the
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application is accepted, The Prudential will issue
a Certificate to that individual (the participant)
which will describe the rights, benefits, coverage,
and obligations with respect to the coverage. The
minimum face amount for a Certificate is $10,000.
The maximum age at which a Certificate may
initially be issued is 75. The maximum age beyond
which a person may no longer be covered under a
Certificate is 95. At age 95, the participant will
receive the cash surrender value of the
Certificate.
Generally, the participant is the covered person under
a Certificate. Some Contracts, however, may permit a
participant who has a Certificate naming himself or
herself as the covered person to also apply for a
second Certificate naming his or her spouse as the
covered person. Under each Certificate, the
participant is the only person eligible to exercise the
rights provided under the Certificate.
Some Contracts provide for underwriting, and others may
provide some or all coverage on a guaranteed issue
basis. As described in Item 13(a), the cost of
insurance may be higher
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for insurance issued on a guaranteed issue basis because
The Prudential may assume more risk.
(2) PREMIUM PAYMENTS. Participants generally have
flexibility in determining the amount and timing of
premium payments. There will be no set premium
payment that must be paid to avoid lapse.
Similarly, there will generally be no set premium
payment that, if made, will guarantee against
lapse, except that certain contracts may provided
that, if scheduled premiums are paid for a
specified period, not to exceed two years,
following issuance of Certificate, the Certificate
will not lapse in that period regardless of
independent performance or charges.
In addition to any premium paid on a routine basis, for
example through salary deduction, a participant may
make additional premium payments at any time. Any such
payment must be at least $250.
The method by which premiums will be paid will be set
forth in the Contract or Certificate. Some
participants will make payments to the Contract owner
(or its agent), which will then remit them to The
Prudential as premium payments. Other
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participants will make payments directly to The Prudential.
The Prudential will then allocate premium payments it
receives to individual Certificate funds according to
the instructions received from participants.
Due to the payment of additional premiums, or
investment growth, the total amount of insurance may
have to be increased for the insurance under the group
contract to continue to qualify as life insurance for
federal tax purposes. In addition, if a participant
makes premium payments in excess of certain limits, the
tax status of the insurance may change to that of a
"modified endowment contract" under Section 7702A of
the Internal Revenue Code. The Prudential reserves the
right not to accept premium payments which would cause
a participant's insurance to fail to qualify as life
insurance under applicable tax laws, or which would
increase the death benefit by more than it increases
the Certificate fund.
(3) GENERAL DESCRIPTION OF BASIC CERTIFICATE BENEFITS.
A death benefit is payable upon the death of the
covered person. The death benefit is generally the
face amount of the Certificate, PLUS the value of
the Certificate fund, LESS any Certificate debt
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outstanding. If the insurance is kept in force for
several years and/or substantial premium payments
are made, the Certificate fund may grow to a point
where it is necessary to increase the death benefit
in order to ensure that the insurance will satisfy
the Internal Revenue Code's definition of life
insurance. In that case, the death benefit (before
the subtraction of Certificate debt) will at least
equal the applicable IRC "corridor percentage" of
the Certificate Fund based upon the covered
person's attained age.
The death benefit will be paid in a lump sum, unless
the participant or the beneficiary has arranged with
The Prudential for the death benefit to be paid in
another mode of settlement.
(4) RIGHTS OF PARTICIPANTS WHO CEASE TO BE MEMBERS OF
THE GROUP ELIGIBLE TO PARTICIPATE IN THE CONTRACT.
The terms of each Contract determine the effect on
a participant's insurance coverage of the
participant ceasing to be an eligible group member.
Some Contracts may provide that insurance coverage
will continue even if the participant is no longer
an eligible member of the group. Under such
Contracts, within 31 days after The Prudential
receives written notice that the participant
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is no longer eligible under the group Contract, The
Prudential will notify the participant that The
Prudential will now mail quarterly premium
reminders directly to the participant, who will
remit premium payment directly to The Prudential.
The notice will also explain the charges applicable
to portable Certificates. These charges may be
higher than those paid by the participant while he
or she was still an eligible group member, but will
not exceed the maximum charges described in Item
13.
Under other Contracts, the portability privileges
described in this Item 10(i)(4) will not be available.
Participants under those Contracts will have the
options described in Item 10(i)(5).
(5) RIGHTS OF PARTICIPANTS UPON TERMINATION OF THE
CONTRACT. The Contract owner may decide to
terminate its participation in the Contract with
The Prudential. In addition, The Prudential may
terminate the Contract owner's participation in the
Contract if, during any twelve month period, the
aggregate face amount of all Certificates, or the
number of Certificates, issued under the Contract
falls below the minimum permissible levels established
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by The Prudential or the Contract owner
fails to timely remit premiums to The Prudential.
Whichever party terminates participation in the
Contract must provide ninety days written notice to
the other party, as well as to all participants
before terminating participation in the Contract.
Termination of participation in the Contract means
that the Contract owner will no longer remit
premiums to The Prudential under the Contract and
that no new Certificates will be issued under the
Contract.
When the Contract terminates, the effect on individual
participants depends on whether the Contract owner
replaces the Contract with another life insurance
contract(s) that accumulate(s) cash value. If the
Contract owner does enter into such a contract,
Certificates with less than $1,000 of Cash Surrender
Value will be terminated and the cash surrender value
of each Certificate will be transferred to the new
contract. If a Certificate has $1,000 or more of Cash
Surrender Value, the Participant must elect to transfer
Cash Surrender Value to the new carrier or will be
treated as having elected portability on Contracts
which permit portability.
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If the sponsoring entity does not enter into a new life
insurance contract(s) that accumulate(s) cash value,
participants will have the following options.
Participants whose Contracts do not contain the
portability provisions discussed in Item 10(i)(4) and
whose coverage is ending because they are no longer
eligible group members will also have the following
options.
(a) Conversion. A participant may elect to convert the
Certificate to an individual life insurance policy
upon termination of Certificate coverage without
showing evidence of insurability. If a participant
elects this option, he or she must apply for the
individual contract and pay the first premium
within 31 days after the coverage under the
Contract ends. The participant may select any form
of individual life insurance (other than term
insurance) that The Prudential normally makes
available to covered persons who are the same age
and requesting the same amount of insurance.
Premiums will be based on the form
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and amount of insurance elected by the participant, as
well as the covered person's risk class and age.
If the insurance is ending because the participant
is no longer eligible to participate in the
Contract, the amount of insurance under the
individual policy cannot be more than the face
amount of the Certificate under the group contract.
If the participant's insurance is ending because
the group contract is terminating, the amount of
insurance under any individual life insurance
selected may, depending on applicable state law, be
limited to the lesser of (a) the face amount of the
Certificate under the group contract less the
amount of any group insurance the participant
becomes eligible for in the next 45 days; or
(b) $10,000.
If a covered person dies within 31 days after the
insurance ends under the Contract, and the
participant had the right to convert to an
individual policy, a death benefit equal to the
amount of individual insurance on the covered
person the participant could have purchased upon
conversion will be payable by The Prudential.
<PAGE>
-31-
(b) Paid-Up Insurance. The participant may elect to
purchase paid-up insurance on the covered person
with the cash surrender value of the Certificate.
The Certificate must have at least $1,000 of cash
surrender value for this option to be available.
The insurance amount will depend on the cash
surrender value on the date of termination, and the
age of the covered person. The participant must
elect this option within 31 days of the date on
which the Certificate coverage would end. The
election will take effect immediately after the
date on which the Certificate coverage ends.
(c) Payment of Cash Surrender Value. The participant
may receive the cash surrender value by
surrendering the Certificate and making a proper
written request.
The above options apply whether the participant or
a spouse is the covered person under the
Certificate. Participants who do not choose any of
the above options will be provided with Paid-Up
Insurance, if their Certificate has at least $1,000
of cash surrender value, and if not, will be paid
the cash surrender value.
<PAGE>
-32-
(6) ADDITIONAL INSURANCE BENEFITS. In addition to the
basic plan of variable universal life coverage, one
or more of the following additional benefits may be
available to participants through their Contracts:
accelerated death benefit, accidental death and
dismemberment benefit, extended death protection
during total disability. Under some Contracts,
some or all of these benefits may be provided to
all participants, while under other Contracts, the
individual participant may elect whether to receive
some or all of these benefits for an additional
change.
(7) CHANGES IN FACE AMOUNT. Some group contracts may
allow participants to elect to increase the face
amount of their insurance at certain times. Other
group contracts may provide for increasing face
amounts based on factors such as salary increases.
Additional underwriting requirements may have to be
satisfied in either case.
Some group contracts may also permit participants to
decrease the face amount of their insurance at certain
times. In no event, however, may the face amount be
decreased below
<PAGE>
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$10,000 or below the minimum amount
required to maintain the insurance's status as life
insurance under the federal tax laws.
An increase or decrease in face amount may create the
potential for the insurance to be treated as a modified
endowment contract under the Internal Revenue Code.
This is particularly true of decreases in face amount
during the first seven years that insurance is in
force. In addition, a decrease in coverage may limit
the amount of premiums that a participant may
contribute in the future.
INFORMATION CONCERNING THE SECURITIES UNDERLYING THE TRUST'S SECURITIES.
11. Describe briefly the kind or type of securities comprising
the unit of specified securities in which security holders
have an interest.
The participant will not be the owner of the securities held
in the Account, although the value of these securities will be
used to calculate the participant's Certificate benefits. The
securities are owned by The Prudential and are held in the
Account pursuant to the insurance laws of New Jersey that
govern the operation of separate accounts. The
<PAGE>
-34-
securities held in the Account will be shares of The Prudential
Series Fund ("Fund") discussed in Item 12. The Fund is a registered,
open-end diversified management investment company of the
series type within the meaning of Section 18(4)(2) of the
Investment Company Act of 1940 and Rule 18f-2 thereunder. The
investment adviser of the Fund is The Prudential, a registered
investment adviser under the Investment Advisers Act of 1940.
12. If the trust is the issuer of periodic payment plan
Certificates and if any underlying securities were issued
by another investment company, furnish the following
information for each such company.
(a) Name of company;
The Prudential Series Fund, Inc. ("Fund").
Each of the seven subaccounts of the Account will invest in
one of the following seven portfolios of the Fund:
Money Market Portfolio
Bond Portfolio
Common Stock Portfolio
High Dividend Stock Portfolio
Global Equity Portfolio
<PAGE>
-35-
Aggressively Managed Flexible Portfolio
Growth Stock Portfolio
Additional subaccounts and portfolios may be added in the
future. There are currently other portfolios of the Fund
in which the Account does not invest.
(b) Name and principal business address of the depositor;
Not applicable.
(c) Name and principal business address of trustee or
custodian;
Chemical Bank, 4 New York Plaza, New York, NY 10004 is the
custodian of the assets held by all the series fund
portfolios, except the Global Equity Portfolio, and is
authorized to use the facilities of the Depository Trust
Company and the facilities of the book-entry system of the
Federal Reserve Bank with respect to securities held by
these portfolios. Brown Brothers Harriman & Co. ("Brown
Brothers"), 40 Water Street, Boston, MA 02109, is the
custodian of the assets of the Global Equity Portfolio.
Brown Brothers employs subcustodians, who were approved by
the directors of the Series Fund in accordance with
regulations of the Securities and
<PAGE>
-36-
Exchange Commission, for the purpose of providing custodial
service for the Global Equity Portfolio's foreign assets held
outside the United States. Morgan Guaranty Trust Company, 60
Wall Street, New York, NY 10260 is the custodian of the assets
held in connection with repurchase agreements entered into by
the portfolios and is authorized to use the facilities of the
book-entry system of the Federal Reserve Bank.
(d) Name and principal business address of principal
underwriter;
The principal underwriter for the Series Fund is Pruco
Securities Corporation, 1111 Durham Avenue, South
Plainfield, New Jersey 07080.
(e) The period during which the securities of such company
have been the underlying securities.
No underlying securities have yet been acquired by the
Account.
INFORMATION CONCERNING LOADS, FEES, CHARGES AND EXPENSES.
<PAGE>
-37-
13. (a) Furnish the following information with respect to
each load, fee, expense or charge to which:
(1) principal payments; (2) underlying securities;
(3) distributions; (4) cumulated or reinvested
distributions or income; and (5) redeemed or
liquidated assets of the trust's securities are
subject: (A) the nature of such load, fee,
expense, or charge; (B) the amount thereof; (C) the
name of the person to whom such amounts are paid
and his relationship to the trust; (d) the nature
of the services performed by such person in
consideration for such load, fee, expense or
charge.
(1) PRINCIPAL PAYMENTS. Premiums paid under the
Certificates are subject to the following charges,
some of which are made before premiums are invested
in the Account, some of which are deducted from the
Account and some of which are deducted only upon
the occurrence of certain transactions (I.E.,
surrender, withdrawal or lapse).
(a) CHARGES FOR TAXES ATTRIBUTABLE TO PREMIUMS. A
charge if deducted from each premium payment to
compensate The Prudential for local, state and
federal taxes attributable to premium payments.
The charge is made up of two parts. The first part
currently equals 2.25% of the premium
<PAGE>
-38 -
received by The Prudential and is for state and local
taxes on premium payments. The second part currently
equals .25% of the premium received and is for federal
income taxes measured by premiums. The Prudential
believes that this second charge is a reasonable
estimate of the increased cost for premium-based
federal income taxes resulting from a change in the
Internal Revenue Code in 1990. The Prudential does
not expect to make a profit from these charges.
These charges may be increased if The Prudential's
taxes related to premium payments are increased.
(b) PROCESSING FEE. A charge of up to $2 may be
deducted from each premium payment from a
participant to cover the costs of collecting and
processing premiums.
(c) SALES CHARGE. A sales charge may be deducted to
pay part of the costs The Prudential incurs in
selling the Contracts and Certificates and the
coverage under the Contracts and Certificates,
including commissions, advertising and the printing
and distribution of prospectuses and sales
<PAGE>
-39-
literature. The maximum charge is equal to 3.5% of
each premium payment.
The Prudential may reduce or waive the sales
charges under certain Contracts, where it is
expected that the Contract will involve reduced
sales expenses. The Prudential determines both the
eligibility for such reduced or waived charges, as
well as the amount of such reductions, by
considering the following factors: (1) the size of
the group; (2) the total amount of premium payments
expected to be received; (3) the expected
persistency of the individual Certificates; (4) the
purpose for which the Contract is purchased and
whether that purpose makes it likely that expenses
will be reduced; and (5) any other circumstances
which The Prudential believes to be relevant in
determining whether reduced sales expenses may be
expected. Some of the reductions in or waivers of
charges for these sales may be contractually
guaranteed; other reductions or waivers may be
withdrawn or modified by The Prudential on a
uniform basis. The Prudential's reductions in, or
waivers of, charges for these
<PAGE>
-40-
sales will not be unfairly discriminatory to the
interests of any individual participants.
(d) COST OF INSURANCE. On each Contract monthiversary,
The Prudential will deduct from each participant's
Certificate fund a charge for the cost of the
participant's insurance. When a covered person
dies, the amount paid to the beneficiary is larger
than the Certificate fund. The cost of insurance
charges are designed to enable The Prudential to
pay this larger death benefit. The charge is
determined by multiplying the "net amount at risk"
under a Certificate (the amount by which the
Certificate's death benefit, computed as if there
was no Certificate debt, exceeds the Certificate
fund) by the cost of insurance rate applicable to
the covered person. The maximum rate that The
Prudential may charge is that based upon the
Commissioners' Extended Term Mortality Table (Male
Last Birthday) (the "CET Table"), which is
approximately 130% of the 1980 CSO Table. Where a
Contract provides for additional insurance
benefits, the cost of those benefits may be taken
into account in determining the cost of insurance
rate or a separate monthly charge may be made
<PAGE>
-41-
for such additional insurance benefits as described
in (f) below.
(e) MONTHLY ADMINISTRATIVE EXPENSE CHARGE. An
administrative charge is deducted from each
participant's Certificate fund on each
monthiversary. It is intended to compensate The
Prudential for administrative expenses incurred for
maintaining records, and communicating with
contractholders and Participants. The charge is
currently from $0 to $4 per month depending on the
expected administration methods for the Contract
pursuant to which the Certificates are issued. The
charge is guaranteed not to exceed $6 per month.
(f) ADDITIONAL INSURANCE BENEFIT CHARGES. If a
Contract provides for certain additional benefits
described in Item 10(i)(6) and the cost of those
benefits is not taken into account in determining
the cost of insurance rate as described in (d)
above, The Prudential will deduct the charges for
any such additional benefits on each contract
monthiversary.
<PAGE>
-42-
(g) MORTALITY AND EXPENSE RISK CHARGE. Each day a
charge is deducted from the assets of each of the
subaccounts in an amount currently equal to an
effective annual rate of 0.45%. The charge is
guaranteed not to exceed an effective annual rate
of .90%. This charge is intended to compensate The
Prudential for assuming the mortality and expense
risks of the insurance provided through the group
contract. The mortality risk assumed is that
covered persons may live for shorter periods of
time than The Prudential estimated when it
determined what mortality charge to make. The
expense risk assumed is that expenses incurred in
issuing and administering the insurance will be
greater than The Prudential estimated in fixing its
administrative charges. The Prudential will
realize a profit from this risk charge to the
extent it is not needed to provide benefits and pay
expenses under the Certificates. This charge is
not assessed on amounts allocated to the Fixed
Account.
(h) SURRENDER OR PARTIAL WITHDRAWAL CHARGE. An
administrative processing charge equal to the
lesser of $20 or 2% of the amount surrendered or
withdrawn will be
<PAGE>
-43-
made for each surrender or partial withdrawal.
See Item 10(c).
(i) TRANSFER CHARGES. No charge is currently assessed
in connection with transfers among subaccounts or
the fixed-rate option. The Prudential may reserve
the right under certain Contracts to make an
administrative processing charge of up to $20 for
each transfer after the twelfth with respect to the
same Certificate in a Certificate Year. See Item
10(d).
(j) OTHER TAXES. A charge may be deducted to cover
federal, state or local taxes (other than "taxes
attributable to premiums discussed in Item
13(a)(1)(a)) that are imposed on the operations of
the Account. Currently, no such taxes are imposed
and no charges made.
(2) UNDERLYING SECURITIES. The Fund's investment
adviser, The Prudential, charges the Fund a daily
investment advisory fee as compensation for The
Prudential's services. The annual investment
management fee for each of the available portfolios
of the Fund are as follows (expressed as a
percentage of
<PAGE>
-44-
average daily net assets of each
portfolio): .40% for the Money Market Portfolio;
.40% for the Bond Portfolio; .40% for the High
Dividend Stock Portfolio; .45% for the Common Stock
Portfolio; .60% for the Aggressively Managed
Flexible Portfolio; .60% for the Growth Stock
Portfolio; and .75% for the Global Equity
Portfolio. In addition to the investment
management fee, each portfolio incurs certain
expenses, such as accounting and custodian fees.
(3) DISTRIBUTIONS. None.
(4) CUMULATED OR REINVESTED DISTRIBUTIONS OF INCOME.
The Account does not make distributions of income
to participants. All investment income and capital
gains are reinvested in fund shares at net asset
value.
(5) REDEEMED OR LIQUIDATED ASSETS. As described above
in Item 13(a)(1)(h), The Prudential will charge the
lesser of $20 of 2% of the amount surrendered or
withdrawn for a surrender or each partial
withdrawal from the Certificate fund.
<PAGE>
-45-
(b) For each installment payment type of periodic payment
plan Certificate of the trust, furnish the following
information with respect to sales load and other
deductions from principal payments.
Not applicable.
(c) State the amount of total deductions as a
percentage of the net amount invested for each
type of security issued by the trust. State
each different sales charge available as a
percentage of the public offering price and as
a percentage of the net amount invested. List
any special purchase plans or methods
established by rule or exemptive order that
reflect scheduled variations in, or
elimination of, the sales load, and identify
each class of individuals or transactions to
which such plans apply.
The total amount of deductions is not a fixed
percentage of the net amount invested.
From each premium payment, The Prudential will
deduct a charge for state and federal taxes
attributable to premium payments equal
<PAGE>
-46-
to 2.50% of the premium payment (see Item 13(a)(1)(a)),
a sales charge equal to a maximum of 3.5% of the
premium payment (see Item 13(a)(1)(c)) and a
processing fee of up to $2 (see Item 13(a)(1)(b)).
Each month, The Prudential will deduct from the
Certificate fund a charge for the cost of
insurance (see Item 13(a)(1)(d)), a charge for
administrative expenses (see Item 13(a)(1)(e)),
and charges for additional insurance benefits
(see Item 13(a)(1)(f), if any. In addition, each
day The Prudential will deduct a charge from the
assets of each of the subaccounts, currently
equivalent to an annual effective rate of .45%
and guaranteed not to exceed an annual effective
rate of .90%, for mortality and expense risks.
See Item 13(a)(1)(g). For each surrender of
partial withdrawal, The Prudential will charge
the lesser of $20 or 2% of the amount surrendered
or withdrawn. See Item 13(a)(1)(h). The
Prudential may charge up to $20 for each transfer
after the fourth in a Certificate year. See Item
13(a)(1)(i). The Prudential may charge up to $20
in connection with each loan or additional
statement request. See Item 13(e).
<PAGE>
-47-
There are no special purchase plans or methods
established by rule or exemptive order.
(d) Explain fully the reasons for any difference
in the price at which securities are offered
generally to the public, and the price at
which securities are offered for any class of
transactions to any class or group of
individuals, including officers, directors, or
employees of the depositor, trustee, custodian
or principal underwriter.
There is no set premium amount under the
Certificates. A participant may select the
amount and timing of premium payments so long as
he or she maintains a balance in the Certificate
fund equal to or greater than the amount needed
to pay the next month's charges under the
Certificate. The amount of the next month's
charges will not be the same for all participants
and will depend on the Certificate's face amount,
the age of the covered person, the covered
person's risk classification, whether the
participant has elected any optional additional
insurance benefits, whether the Certificate is
issued on a "guaranteed issue" basis without
individualized underwriting, and the
administrative change established for
Certificates issued pursuant to a particular
group Contract.
<PAGE>
-48-
The Prudential may reduce or waive the sales
charges and/or other charges under certain group
contracts, where it is expected that the group
contract will involve reduced sales or
administrative expenses. The Prudential
determines both the eligibility for such reduced
or waived charges, as well as the amount of such
reductions, by considering the following factors:
(1) the size of the group; (2) the total amount
of premium payments expected to be received;
(3) the expected persistency of the individual
Certificates; (4) the purpose for which the group
contract is purchased and whether that purpose
makes it likely that expenses will be reduced;
and (5) any other circumstances which The
Prudential believes to be relevant in determining
whether reduced sales or administrative expenses
may be expected. Some of the reductions in or
waivers of charges for these sales may be
contractually guaranteed; other reductions or
waivers may be withdrawn or modified by The
Prudential on a uniform basis. The Prudential's
reductions in, or waivers of, charges for these
sales will not be unfairly discriminatory to the
interests of any individual participants. Aside
from these differences, there is no difference in
the offering price of Contracts or the charges
paid by individual participants under a Contract.
<PAGE>
-49-
(e) Furnish a brief description of any loads,
fees, expenses or charges not covered in Item
13(a) which may be paid by security holders in
connection with the trust or its securities.
(Assignment, reinstatement, replacing lost
Certificates, etc.)
An administrative processing charge of up to $20
may be made in connection with each loan or
additional statement request.
(f) State whether the depositor, principal
underwriter, custodian or trustee, or any
affiliated person of the foregoing may receive
profits or other benefits not included in
answer to Item 13(a) or 13(d) through the sale
or purchase of the trust's securities or
interests in such securities, or underlying
securities or interests in underlying
securities, and describe fully the nature and
extent of such profits or benefits.
Neither The Prudential nor any affiliated persons
of The Prudential may receive any profit or any
other benefit from premium payments under the
Certificates or the investments held in the
Account not included in the answers to Items
13(a) or 13(d) through the sale or purchase of
the Contracts or Certificates or shares of the
Funds, except that (1) The Prudential may receive
a
<PAGE>
-50-
profit to the extent that the cost of insurance
charges exceed the actual amount needed to pay
benefits; (2) favorable mortality or expense
experience may cause the insurance provided under
the Contracts to be profitable to The Prudential;
(3) on loans, The Prudential will derive a profit
on the difference between interest charged and
interest credited; (4) The Prudential may
compensate certain other persons, including PRSI
and agents of The Prudential, for services
rendered in connection with the distribution of
the Contracts and Certificates but such payments
will be made from The Prudential's General
Account and (5) The Prudential may receive fees
from the Funds for providing investment advisory
services.
(g) State the percentage that the aggregate annual
charges and deductions for maintenance and
other expenses of the trust bear to the
dividend and interest income from the trust
property during the period covered by the
financial statements filed herewith.
Not applicable.
INFORMATION CONCERNING THE OPERATIONS OF THE TRUST
<PAGE>
-51-
14. Describe the procedure with respect to
applications (if any) and the authentication of
the trust's securities, and state the substance
of the provisions of any indenture or agreement
pertaining thereto.
The Contracts will be offered to employers,
associations, organizations or trusts who wish to
make variable universal life insurance coverage
available to all or a portion of their employees or
members. An eligible group member desiring coverage
under a Contract must complete an application on a
form provided by The Prudential and if the applicant
meets prescribed standards a Certificate will be
issued. This process may involve in some cases
procedures such as medical examinations and may
require that further information be provided before
a determination can be made. Certificates will be
issued pursuant to established underwriting
standards and in accordance with state insurance
laws. Such laws prohibit unfair discrimination
among Contract and Certificate owners, but recognize
that premiums may be based upon factors such as age,
sex (except where unisex rates are used) and
underwriting classification.
15. Describe the procedure with respect to the
receipt of payments from purchasers of the
trust's securities and the handling of the
proceeds
<PAGE>
-52-
thereof, and state the substance of the
provisions of any indenture or agreement
pertaining thereto.
The procedures for submitting premium payments will
depend on the specific terms of any particular
Contract. Under some Contracts premium payments may
be submitted to the Contract owner or its agent who
then transmits the payment to The Prudential. Other
Contracts may provide that premium payments are sent
directly to The Prudential.
With respect to the first premium payment, once The
Prudential receives the payment it deducts charges
for taxes attributable to premiums, a processing fee
and a sales charge, and the first monthly charges
(cost of insurance charge and administrative expense
charge). The remainder of the premium payment is
allocated to the Fixed Account for 30 days as of the
Certificate date (the effective date of coverage
under a Certificate), and then to investment options
specified by the participant (as described below).
To the extent that The Prudential receives premiums
prior to the Certificate date, there will be a
period during which the premiums will not be
invested.
<PAGE>
-53-
With respect to subsequent premium payments, The
Prudential will deduct charges for taxes
attributable to premiums, a processing fee and any
sales charge. The entire remaining portion of such
premium will be allocated to the investment options
selected by the participant as of the end of the
valuation period in which The Prudential receives
such premium payments.
A participant may have net premiums allocated among
the seven (7) current subaccounts and/or the Fixed
Account. Although a participant may elect to
allocate nothing to any particular subaccount or
option, no less than 10% of the net premium may be
allocated to any subaccount or option selected by
the participant. All percentage allocations must be
in whole numbers. Each subaccount will invest
solely in the shares of one and only one of the
portfolios of the Fund. Accordingly, the net
investment results of each investment subaccount
will vary with the investment experience of the
shares of the Fund portfolio which constitute the
underlying investment of that subaccount. A
Certificate's cash surrender value and the amount of
the death benefit will depend upon the investment
performance of the investment option[s] in which the
Certificate participates.
<PAGE>
-54-
Amounts allocated to the Fixed Account will accrue
interest daily at an effective rate that The
Prudential declares periodically. Currently, The
Prudential declares a new rate four times a year.
Each declared rate applies to Contracts that are
having an anniversary within the next quarter and
will apply for the following Contract year to all
amounts allocated to the Fixed Account pursuant to
such Contracts. Different payments under the same
Contract may earn different interest crediting
rates. This rate will not be less than 4%, but may
at The Prudential's sole discretion be set at a
higher rate. The payment of this interest is
supported by assets in The Prudential's general
account, but the participant has no right to share
in the investment experience of those assets.
For a discussion of the participant's ability to
transfer funds from one investment option to
another, see Item 10(d).
16. Describe the procedure with respect to the
acquisition of underlying securities and the
disposition thereof, and state the substance of
the provisions of any indenture or agreement
pertaining thereto.
On each business day, The Prudential will make only
one purchase or sale of Fund shares with respect to
each subaccount of the Account.
<PAGE>
-55-
This purchase or sale will be at net asset value and
will represent a netting of all activities of the subaccount.
There may be days of no activity in a given subaccount.
The activities that will be reflected in the daily
purchase or sale include:
(a) Transfer of any net premiums received on that
date into the Account and allocation among the
subaccounts based upon the instructions of the
participant.
(b) Reallocation of the Certificate fund among the
subaccounts and transfers of permitted amounts
from the Fixed Account to the subaccounts as
of the end of any valuation period in which a
proper transfer request of the participant is
received.
(c) Transfer of any repayment of principal of a
loan into the Account and allocation of the
transfer to the Fixed Account and subaccounts
according to the participant's existing
allocation instructions.
<PAGE>
-56-
(d) Transfer of any loan out of the Account and
the Fixed Account deducted from the
subaccounts and the Fixed Account in
proportion to the amount in each such account
as of the date of the loan.
(e) Transfer of amounts out of the Certificate
fund in order to provide for the payment of
any monthly charges made on that date for the
cost of insurance, administrative expense, and
additional insurance benefits. See Item
13(a)(1).
(f) Transfer of any annual interest credited on
that date on loan accounts into the Account
and allocation of the transfer to the Fixed
Account and subaccounts according to the
participant's existing allocation
instructions.
(g) Upon reinstatement of a Certificate, the
transfer of the Certificate fund into the
Account and allocation among subaccounts and
the Fixed Account as of the date the last
requirement for reinstatement is met.
(h) Transfer of the Certificate fund out of the
Account upon receipt of proper notice of the
death of the covered person.
<PAGE>
-57-
(i) Upon surrender of a Certificate, transfer of
the cash surrender value and any surrender
charge out of the Account. Upon a partial
withdrawal, transfer of the applicable portion
of the cash surrender value and applicable
charges out of the Account.
(j) Transfer of the mortality and expense risk
charge out of the subaccounts proportionately
on a daily basis. See Item 13(a)(1)(h).
(k) From time to time, transfer of any of The
Prudential's funds in the Account (whether
such funds were deposited there as seed money
for the Account or accumulated there through
Contract charges) out of the Account to The
Prudential's general account.
17. (a) Describe the procedure with respect to
withdrawal or redemption by security
holders.
The participant may surrender the Certificate at
any time while the covered person is still living
and the Certificate is in force and receive its
cash surrender value by submitting a written
request for surrender directly to The Prudential
or through the Contract holder, depending on the
terms of any particular group Contract. The
Prudential will determine the cash surrender
value as of the
<PAGE>
-58-
end of the valuation period in which such a
request is received by The Prudential at the
address specified in the Certificate. Payment
will be made within seven days from the time
that The Prudential receives the surrender request
unless postponed as described in Item 10(c).
Partial withdrawals will be processed in the same
way.
The Prudential will pay a death benefit to the
beneficiary within seven days after it receives
due proof of death and all other requirements
necessary to make payment. The death benefit is
determined as of the date of death. Payment of
the death benefit may be delayed under the
conditions stated in Item 10(c).
Participants may obtain loans as described in
Item 21.
(b) Furnish the names of any persons who may
redeem or repurchase, or are required to
redeem or repurchase, the trust's securities
or underlying securities from security
holders, and the substance of the provisions
of any indenture or agreement pertaining
thereto.
The Prudential is required to honor surrender
requests as described in Items 10(c) and 17(a).
With respect to the Account's
<PAGE>
-59-
underlying securities, the Fund will be required to
redeem Fund shares at net asset value and to make
payment therefor within seven days unless
postponed as described in Item 10(c).
(c) Indicate whether repurchased or redeemed
securities will be cancelled or may be resold.
If a Certificate is surrendered, it will be
cancelled.
18. (a) Describe the procedure with respect to the
receipt, custody and disposition of the
income and other distributable funds of the
trust and state the substance of the
provisions of any indenture or agreement
pertaining thereto.
All income of the Account will be reinvested in
the appropriate shares of the Fund and will be
added to the assets of the Account. Pursuant to
the terms of a Contract and the Certificate
issued thereunder, The Prudential will make
distributions from a Certificate fund in
connection with death benefits, surrenders,
partial withdrawals and loans. See Items 10(c),
10(i) and 21.
<PAGE>
-60-
(b) Describe the procedure, if any, with respect
to the reinvestment of distributions to
security holders and state the substance of
the provisions of any indenture or agreement
pertaining thereto.
Not applicable.
(c) If any reserves or special funds are created
out of income or principal, state with respect
to each such reserve or fund the purpose and
ultimate disposition thereof, and describe the
manner of same.
No reserve or special fund is created by the
Account although the net premiums alloted to the
Account are considered for insurance purposes a
reserve with respect to the Contracts
participating in the Account.
(d) Submit a schedule showing the periodic and
special distributions which have been made to
security holders during the three years
covered by the financial statements filed
herewith. State for each such distribution
the aggregate amount and amount per share. If
distributions from sources other than current
income have been made, identify each such
other source and indicate whether such
<PAGE>
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distribution represents the return of
principal payments to security holders. If
payments other than cash were made describe
the nature thereof, the account charged and
the basis of determining the amount of such
charge.
Not applicable.
19. Describe the procedure with respect to the
keeping of records and accounts of the trust, the
making of reports and the furnishing of
information to security holders, and the
substance of the provisions of any indenture or
agreement pertaining hereto.
The Prudential has responsibility for administration
of the Certificates. It will maintain the records
and books of the Account. It also will maintain
records of the name, address, taxpayer
identification number, and other pertinent
information for each Contract holder and participant
and records with respect to the Certificate fund,
cash surrender value and the death benefit of each
Certificate.
Once each Contract year, The Prudential will send
each participant a statement for his or her
Certificate showing the amount of the current death
benefit, the cash surrender value, the Certificate
fund, the
<PAGE>
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portion of the Certificate fund in each
subaccount and the Fixed Account, premiums paid and
the monthly charges deducted since the last report,
and any Certificate debt (including interest charged
for the preceding contract year). The Contract
owner and each participant will also receive an
annual report and semi-annual reports containing
financial statements for the Account and a list of
portfolio securities of the Fund, as required by the
Investment Company Act of 1940.
20. State the substance of the provisions of any
indenture or agreement concerning the trust with
respect to the following:
(a) Amendments to such indenture or agreement;
Not applicable.
(b) The extension or termination of such indenture
or agreement;
Not applicable.
(c) The removal or resignation of the trustee or
custodian, or the failure of the trustee or
custodian to perform its duties, obligations
and functions;
<PAGE>
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Not applicable.
(d) The appointment of a successor trustee and the
procedure if a successor trustee is not appointed;
Not applicable.
(e) The removal or resignation of the depositor,
or the failure of the depositor to perform its
duties, obligations and functions;
The Prudential acts as the depositor. There are
no provisions relating to the removal or
resignation of the depositor or the failure of
the depositor to perform its duties, obligations
and functions.
(f) The appointment of a successor depositor and
the procedure if a successor depositor is not
appointed.
There are no provisions relating to the
appointment of a successor depositor or the
procedure if a successor depositor is not
appointed.
<PAGE>
-64-
21. (a) State the substance of the provisions of
any indenture or agreement with respect to
loans to security holders.
A participant who has held a Certificate under
the Contract for at least one year may borrow up
to the loan value of the Certificate from The
Prudential. The loan value of a Certificate
(before any applicable transaction charge) is
determined by multiplying the Certificate fund by
85% and then subtracting an estimate of the next
month's charges. The minimum amount that may be
borrowed at any one time is $250. A loan will
not be permitted if existing Certificate debt
exceeds the loan value. The Prudential reserves
the right to charge up to a $20 fee for each loan
made.
Interest charged on any loan will accrue daily at
an annual rate determined each year by The
Prudential, which rate is currently 5.5%.
Interest payments on any loan are due at the end
of each contract year. If interest is not paid
when due, it will be added to the principal
amount of the loan. The Prudential will notify a
participant 31 days before the interest on the
loan becomes due.
When a loan is made, an amount equal to the loan
will be taken out of each of the Participant's
investment options on a pro-rata
<PAGE>
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basis. At the same time, a loan account will
be started for the Participant and will be
credited with an amount equal to the loan.
The Prudential will credit the amount in the loan
account at an annual rate of 1.5% less than the
interest rate on the loan unless a smaller spread
is required by state law. Interest credited because
of the loan account will be allocated to the
Participant's investment options on each contract
anniversary in accordance with the Participant's existing
premium allocation instruction.
A participant may repay a part or all of the loan
at any time. The minimum amount of any repayment
is $250 or the principal amount of the loan plus
outstanding interest, whichever is less. Loans
may be repaid by payment or by withdrawing
amounts from the Certificate fund. If a loan is
repaid by using the Certificate fund, The
Prudential will treat such repayment as a partial
withdrawal from the Certificate fund and will
charge a fee equal to the lesser of $20 or 2% of
the amount of the withdrawal. Amounts
attributable to loan repayments made by payment
will be applied to a participant's funding
options according to the Participant's existing
allocation instructions. The balance in a
participant's loan account will be reduced by the
amount of any loan repayment.
<PAGE>
-66-
A participant's loan amount plus accrued interest
("Certificate debt") may not exceed the value of
the Certificate fund. In the event that the
Certificate debt exceeds this amount, The
Prudential will notify the Participant that the
Certificate will lapse on the later of 61 days
from the date of default or 30 days from the date
notice was mailed. The notice will state the
amount that the participant must pay in order to
prevent the Certificate from lapsing.
Should a death benefit become payable while a
loan is outstanding, or should the Certificate be
surrendered while a loan is outstanding, any
proceeds otherwise payable will be reduced to
reflect the amount of the loan and any accrued
interest.
(b) Furnish a brief description of any procedure
or arrangement by which loans are made
available to security holders by the
depositor, principal underwriter, trustee or
custodian, or any affiliated person of the
foregoing. The following items should be
covered: (1) the name of each person who
makes such agreements or arrangements with
security holders; (2) the rate of interest
payable on such loans; (3) the period for
which loans may be made; (4) costs or charges
for default in repayment at maturity;
(5) other material provisions of the agreement
or arrangements.
<PAGE>
-67-
The Prudential usually will make a loan within
seven days after receipt of a proper written
request. The terms of the loan privilege
including interest rates, effects of not repaying
the loan at the time of surrender or when a death
benefit becomes payable and other material
provisions, are set forth in Item 21(a).
(c) If such loans are made, furnish the aggregate
amount of loans outstanding at the end of the
last fiscal year, the amount of interest
collected during the last fiscal year
allocated to the depositor, principal
underwriter, trustee or custodian or
affiliated person of the foregoing and the
aggregate amount of loans in default at the
end of the last fiscal year covered by
financial statements filed herewith.
Not applicable.
22. State the substance of the provisions of any
indenture or agreement with respect to
limitations on the liabilities of the depositor,
trustee or custodian, or any other party to such
indenture or agreement.
There are no provisions limiting the liability of
the depositor. There is no trustee or custodian of
the Account. See Item 48.
<PAGE>
-68-
23. Describe any bonding arrangement for officers,
directors, partners or employees of the depositor
or principal underwriter of the trust, including
the amount of coverage and the type of bond.
The officers, directors and employees of The
Prudential are covered by Form 25 blanket bond for
fidelity risks. The amount of coverage is $100
million, with a deductible of $5 million.
24. State the substance of any other material
provisions of any indenture or agreement
concerning the trust or its securities and a
description of any other material functions or
duties of the depositor, trustee or custodian not
stated in Item 10 or Items 14 to 23 inclusive.
ASSIGNMENT. The participant may assign any and all
rights benefits or privileges that he or she has
under the Certificate provided the assignment is
written, signed by the participant and The
Prudential receives a copy of such assignment at The
Prudential Group Insurance Office specified in the
Certificate. The Prudential is not responsible for
determining the validity or sufficiency of any
assignment.
<PAGE>
-69-
INCONTESTIBILITY. After a participant's Certificate
has been in force during a covered person's lifetime
for two years or, with respect to any change in the
Certificate that requires The Prudential's approval
and could increase its liability, after the change
has been in effect during the insured's lifetime for
two years from the effective date of the change, The
Prudential will not contest payment of the death
proceeds under the Certificate.
MISSTATEMENT OF AGE. If a covered person's stated
age is incorrect in the Certificate, The Prudential
will adjust the death benefits payable, as required
by law, to reflect the correct age.
SUICIDE EXCLUSION. Generally, if a covered person,
whether sane or insane, dies by suicide within two
years from the effective date of the Certificate,
The Prudential will pay no more under the
Certificate than the sum of the premiums paid. If a
covered person, whether sane or insame, dies by
suicide within two years from the effective date of
an increase in the face amount of insurance that was
requested after issue and required approval, The
Prudential will pay, with respect to the amount of
the increase, no more than the sum of the monthly
charges attributable to the increase.
<PAGE>
-70-
III.
ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
ORGANIZATION AND OPERATION OF DEPOSITOR
25. State the form of organization of the depositor
of the trust, the name of the state or other
sovereign power under the laws of which the
depositor was organized and the date of
organization.
The Prudential is a mutual life insurance company
organized in 1875 under the laws of New Jersey.
26. (a) Furnish the following information with
respect to all fees received by the
depositor of the trust in connection with
the exercise of any functions or duties
concerning securities of the trust during
the period covered by the financial
statements filed herewith:
Not applicable.
<PAGE>
-71-
(b) Furnish the following information with respect
to any fee or any participation in fees
received by the depositor from any underlying
investment company or any affiliated person or
investment adviser of such company: (1) the
nature of such fee or participation; (2) the
name of the person making payment; (3) the
nature of the services rendered in
consideration for such fee or participation;
(4) the aggregate amount received during the
last fiscal year covered by the financial
statements filed herewith.
The Prudential receives from the Fund fees for
performing investment advisory services. The
annual investment management fee charged for each
available portfolio of the Fund (expressed as a
percentage of Daily Net Assets) is as follows:
.40% for the Money Market portfolio; .40% for the
Bond Portfolio; .40% for the High Dividend Stock
Portfolio; .45% for the Common Stock Portfolio;
.60% for the Aggressively Managed Flexible
Portfolio; .65% for the Growth Stock Portfolio;
and .75% for the Global Equity Portfolio. For
further information see the Registration
Statement of the Fund, No. 2-80896, which is
hereby incorporated by reference to the extent
necessary.
<PAGE>
-72-
27. Describe the general character of the business
engaged in by the depositor including a statement
as to any business other than that of depositor
of the trust. If the depositor acts or has acted
in any capacity with respect to any investment
company or companies other than the trust, state
the name or names of such company or companies,
their relationship, if any, to the trust, and the
nature of the depositor's activities therewith.
If the depositor has ceased to act in such named
capacity, state the date of and circumstances
surrounding such cessation.
The Prudential is a mutual life insurance company
organized under the laws of New Jersey. The
Prudential and its subsidiaries provide life
insurance and a variety of other financial services.
The Prudential and its life insurance company
subsidiaries have established a variety of separate
accounts for the purpose of issuing variable life
insurance contracts and variable annuity contracts.
Some of these separate accounts are registered as
unit investment trusts under the 1940 Act and others
are registered as management investment companies
under the 1940 Act. The Prudential and its
subsidiaries have established The Prudential
Variable Appreciable Account, The Prudential
Individual Variable Contract Account, The
<PAGE>
-73-
Prudential Variable Contract Accounts-2, -10, -11
and -24, The Prudential Qualified Individual Variable
Contract Account, Prudential's Investment Plan Account,
Prudential's Annuity Plan Account, Prudential's
Annuity Plan Account-2, Pruco Life Flexible Premium
Variable Annuity Account, Pruco Life Variable
Insurance Account, Pruco Life Variable Appreciable
Account, Pruco Life Single Premium Variable Annuity
Account, Pruco Life Single Premium Variable Life
Account, Pruco Life PRUvider Variable Account, Pruco
Life Variable Universal Account, Pruco Life of New
Jersey Variable Insurance Account, Pruco Life of New
Jersey Variable Appreciable Account, Pruco Life of
New Jersey Single Premium Variable Annuity Account
and Pruco Life of New Jersey Single Premium Variable
Life Account.
The Prudential is registered as an investment
advisor under the Investment Advisors Act of 1940.
It serves as investment advisor to The Prudential
Series Fund, Inc., Prudential's Gibraltar Fund and
The Prudential Securities, Inc. family of investment
companies. Subsidiaries of The Prudential serve as
manager of The Prudential Institutional Fund and as
sub-advisers for various of its Portfolios.
<PAGE>
-74-
OFFICIALS AND AFFILIATED PERSONS OF DEPOSITOR
28. (a) Furnish as at latest practicable date the
following information with respect to the
depositor of the trust, with respect to
each officer, director, or partner of the
depositor, and with respect to each natural
person directly or indirectly owning,
controlling or holding with power to vote
five percent or more of the outstanding
voting securities of the depositor.
See Item 28(b) for information regarding each
officer, director or partner of The Prudential.
The Prudential is a mutual life insurance
company. It is owned by its policyholders.
The trust has not yet issued any Contracts,
Certificates or securities.
(b) Furnish a brief statement of the business
experience during the last five years of each
officer, director or partner of the depositor.
DIRECTORS OF THE PRUDENTIAL
<PAGE>
-75-
FRANKLIN E. AGNEW, Director -- Business
Consultant and former Senior Vice President of
H.J. Heinz. Address: One Mellon Bank Center,
Suite 2120, Pittsburgh, PA 15219.
FREDERIC K. BECKER, Director -- President of
Wilentz, Goldman, and Spitzer (law firm).
Address: 90 Woodbridge Center Drive, Woodbridge,
NJ 07095.
WILLIAM W. BOESCHENSTEIN, Director -- Director,
Owens-Corning Fiberglas Corporation. Address
Fiberglas Tower, Toledo, OH 43659.
LISLE C. CARTER, JR., Director -- Former Senior
Vice President and General Counsel, United Way of
America. Address: 1307 Fourth Street, S.W.,
Washington, D.C. 20024
JAMES G. CULLEN, Director -- President, Bell
Atlantic Corporation since 1993; Prior to 1993:
President, New Jersey Bell. Address: 1301 North
Court House Road, 11th Floor, Alexandria, VA
22201.
<PAGE>
-76-
CAROLYNE K. DAVIS, Director -- Health Care
Advisor, Ernst & Young. Address: 1200
Nineteenth St., N.W., 4th Floor, Washington, D.C.
20024.
ROGER A. ENRICO, Director -- Vice Chairman,
PepsiCo., Inc. since 1993; 1991 to 1993:
Chairman and Chief Executive Officer, Pepsi Co.
Worldwide Foods; Prior to 1991: President and
Chief Executive Officer, Pepsi Co. Worldwide
Beverages. Address: 7701 Legacy Drive, Plano,
TX 75024.
ALLAN D. GILMOUR, Director -- Former Vice
Chairman, Ford Motor Company. Address:
Prudential Plaza, Newark, NJ 07102-3777.
WILLIAM H. GRAY, III, Director -- President and
Chief Executive Officer, United Negro College
Fund, Inc. since 1991; Prior to 1991: United
States Representative for Pennsylvania's 2nd
District. Address: 500 East 62nd Street, New
York, NY 10021.
JON F. HANSEN, Director -- Chairman, Hampshire
Management Co. Address: 235 Moore Street, Suite
200, Hackensack, NJ 07601.
<PAGE>
-77-
CONSTANCE J. HORNER, Director -- Guest Scholar,
The Brookings Institution since 1993; 1991 to
1993: Assistant to the President and Director of
Presidential Personnel, U.S. Government; Prior to
1991: Deputy Secretary, Department of Health and
Human Services. Address: 1775 Massachusetts
Ave., N.W., Washington, D.C. 20036-2188.
ALLEN F. JACOBSON, Director -- Former Chairman
and Chief Executive Officer, Minnesota Mining &
Manufacturing Co. Address: 30 Seventh Street
East, St. Paul, MN 55101-4901.
GARNETT L. KEITH, JR., Director and Vice Chairman
-- Vice Chairman of The Prudential. Address:
Prudential Plaza, Newark, NJ 07102-3777.
BURTON G. MALKIEL, Director -- Chemical Bank
Chairman's Professor of Economics, Princeton
University. Address: Princeton University,
Department of Economics, 110 Fisher Hall,
Prospect Avenue, Princeton, NJ 08544-1021.
JOHN R. OPEL, Director -- Prior to 1994:
Chairman of the Executive Committee,
International Business Machines
<PAGE>
-78-
Corporation. Address: 590 Madison Avenue, New York,
NY 10022
ARTHUR F. RYAN, Chairman of the Board, President
and Chief Executive Officer -- Chairman of the
Board, President and Chief Executive Officer, The
Prudential since 1994; prior to 1994: President
and Chief Operation Officer, Chase Manhattan
Corporation. Address: 751 Broad Street, Newark,
NJ 07102-3777.
CHARLES R. SITTER, Director -- President and
Director, Exxon Corporation since 1993; Prior to
1993: Director, Exxon Corporation. Address:
225 John W. Carpenter Freeway, Irving, TX 75062.
DONALD L. STAHELI, Director -- Chairman and Chief
Executive Officer, Continental Grain Company
since 1994; Prior to 1994: Chairman Continental
Grain Company. Address: 277 Park Avenue, New
York, NY 10172.
RICHARD M. THOMSON, Director -- Chairman of the
Board and Chief Executive Officer, The Toronto-
Dominion Bank.
<PAGE>
-79-
Address: P.O. Box 1, Toronto-Dominion Centre, Toronto,
Ontario, M5K 1A2, Canada.
P. ROY VAGELOS, M.D., Director -- Chairman,
Regeneron Pharmaceuticals since 1995; Prior to
1995: Chairman, President and Chief Executive
Officer, Merck & Co., Inc. Address: 126 East
Lincoln Avenue, Rahway, NJ 07065.
STANLEY C. VAN NESS, Director -- Attorney, Picco
Mack Herbert Kennedy Jaffe Perrella and Yoskin
(law firm). Address: One State Street Square,
Suite 1000, Trenton, NJ 08607-1388.
PAUL A. VOLCKER, Director -- Chairman, James D.
Wolfensohn, Inc. Address: 599 Lexington Avenue,
New York, NY 10022.
JOSEPH H. WILLIAMS, Director -- Chairman of the
Board, The William Companies since 1994; Prior to
1994: Chairman and Chief Executive Officer, The
Williams Companies. Address: P.O. Box 2400,
Tulsa, OK 74102
OTHER EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<PAGE>
-80-
MARK B. GRIER, Chief Financial Officer -- Chief
Financial Officer of The Prudential since 1995.
Prior to 1995: Executive Vice President and Head
of Global Markets, Chase Manhattan Corporation.
SUSAN L. BLOUNT, Vice President and Secretary --
Vice President and Secretary of The Prudential
since 1995; Prior to 1995: Assistant General
Counsel for Prudential Residential Services
Company.
MARTIN PFINSGRAFF, Vice President and Treasurer -
- Vice President and Treasurer of The Prudential
since 1991; Prior to 1991: Senior Vice
President, Mellon Bank.
COMPANIES OWNING SECURITIES OF DEPOSITOR
29. Furnish as at latest practical date the following
information with respect to each company which
directly or indirectly owns, controls or holds
with power to vote five percent or more of the
outstanding voting securities of the depositor.
<PAGE>
-81-
The Prudential is a mutual life insurance company
and there is no company which directly or indirectly
owns, controls or holds the power to vote five
percent or more of the outstanding securities of the
depositor.
CONTROLLING PERSONS.
30. Furnish as at latest practicable date the
following information with respect to any person,
other than those covered by Items 28, 29, and 42
who directly or indirectly controls the
depositor.
None.
COMPENSATION OF OFFICERS AND DIRECTORS OF DEPOSITOR.
Compensation of Officers of Depositor.
31. Furnish the following information with respect to
the remuneration for services paid by the
depositor during the last fiscal year covered by
financial statements filed herewith:
<PAGE>
-82-
(a) Directly to each of the officers or partners
of the depositor directly receiving the three
highest amounts of remuneration:
Not applicable. The Account has not yet
commenced operations.
(b) Directly to all officers or partners of the
depositor as a group exclusive of persons
whose remuneration is included under Item
31(a), stating separately the aggregate amount
paid by the depositor itself and the aggregate
amount paid by all the subsidiaries.
Not applicable. The Account has not yet
commenced operations.
(c) Indirectly or through subsidiaries to each of
the officers or partners of the depositor.
Not applicable. The Account has not yet
commenced operations.
Compensation of Directors.
32. Furnish the following information with respect to
the remuneration for services, exclusive of
remuneration reported under Item 31, paid by the
<PAGE>
-83-
depositor during the last fiscal year covered by
financial statements filed herewith:
(a) The aggregate direct remuneration to
directors;
Not applicable, see Item 31.
(b) Indirectly or through subsidiaries to
directors.
Not applicable. See Item 31.
Compensation to Employees.
33. (a) Furnish the following information with
respect to the aggregate amount of
remuneration for services of all employees
of the depositor (exclusive of persons
whose remuneration is reported in Items 31
and 32) who received remuneration in excess
of $10,000 during the last fiscal year
covered by financial statements filed
herewith from the depositor and any of its
subsidiaries.
Not applicable. See Item 31.
<PAGE>
-84-
(b) Furnish the following information with respect
to the remuneration for services paid directly
during the last fiscal year covered by
financial statements filed herewith to the
following classes of persons (exclusive of
those persons covered by Item 33(a)):
(1) sales managers, branch managers, district
managers and other persons supervising the
sale of registrant's securities; (2) salesmen,
sales agents, canvassers and other persons
making solicitations but not in a supervisory
capacity; (3) administrative and clerical
employees; and (4) others (specify). If a
person is employed in more than one capacity,
classify according to predominant type of
work.
Not applicable. See Item 31.
Compensation to Other Persons
34. Furnish the following information with respect to
the aggregate amount of compensation for services
paid any person (exclusive of persons whose
remuneration is reported in Items 31, 32, and 33)
whose aggregate compensation in connection with
services rendered with respect to the trust in
all capacities exceeded $10,000 during the last
<PAGE>
-85-
fiscal year covered by financial statements filed
herewith from the depositor and any of its
subsidiaries:
Not applicable. See Item 31.
IV.
DISTRIBUTION AND REDEMPTION OF SECURITIES
Distribution of Securities.
35. Furnish the names of the States in which sales of
the trust's securities: (a) currently being
made, (b) are presently proposed to be made, and
(c) have been discontinued, indicating by
appropriate letter the status with respect to
each State.
The Contracts have not yet been offered for sale.
The Prudential presently proposes to sell the
Contracts in states where it is licensed to do all
business and where there is permissive legislation
or regulations for the sale of group variable life
insurance such as the Contracts.
<PAGE>
-86-
36. If sales of the trust's securities have at any
time since January 1, 1936 been suspended for
more than a month describe briefly the reasons
for such suspension.
Not applicable.
37. (a) Furnish the following information with
respect to each instance where subsequent
to January 1, 1937, any Federal or State
governmental officer, agency, or regulatory
body denied authority to distribute
securities of the trust, excluding a denial
which was merely a procedural step prior to
any determination by such officer, etc. and
which denial was subsequently rescinded:
(1) name of officer, agency or body; (2)
date of denial; (3) brief statement of
reason given for denial.
Not applicable.
(b) Furnish the following information with regard
to each instance where, subsequent to January
1, 1937, the authority to distribute
securities of the trust has been revoked by
any Federal or State governmental officer,
agency or regulatory body: (1) name of
<PAGE>
-87-
officer, agency or body; (2) date of
revocation; (3) brief statement of reason
given for revocation.
Not applicable.
38. (a) Furnish a general description of the method
of distribution of securities of the trust.
The Contracts and Certificates will be
distributed through the principal underwriter for
the Account, Prudential Retirement Services, Inc.
("PRSI"), an indirect wholly-owned subsidiary of
The Prudential, pursuant to a distribution
agreement. PRSI, organized in 1988, 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. The Contracts and
Certificates will be sold by registered
representatives of PRSI who are also authorized
by state insurance departments to do so. The
Contracts and Certificates may also be sold
through other broker-dealers authorized by PRSI
and applicable law to do so.
(b) State the substance of any current selling
agreement between each principal underwriter
and the trust or the depositor, including a
<PAGE>
-88-
statement as to the inception and termination
dates of the agreement, any renewal and
termination provisions, and any assignment provisions.
See Exhibit A(3)(a).
(c) State the substance of any current agreements
or arrangements of each principal underwriter
with dealers, agents, salesmen, etc. with
respect to commissions and overriding
commissions, territories, franchises,
qualifications and revocations. If the trust
is the issuer of periodic payment plan
Certificates, furnish schedules of commissions
and the bases thereof. In lieu of a statement
concerning schedules of commissions, such
schedules of commissions may be filed as
Exhibit A(3)(c).
See Exhibits A(3)(b) and A(3)(c).
INFORMATION CONCERNING PRINCIPAL UNDERWRITER.
39. (a) State the form of organization of each
principal underwriter of securities of the
trust, the name of the State or other sovereign
<PAGE>
-89-
power under the laws of which each underwriter was
organized and the date of the organization.
Prudential Retirement Services, Inc. ("PRSI") is
a corporation organized under the laws of New
Jersey in 1988.
(b) State whether any principal underwriter
currently distributing securities of the trust
is a member of the National Association of
Securities Dealers, Inc.
PRSI is a member of the National Association of
Securities Dealers, Inc.
40. (a) Furnish the following information with
respect to all fees received by each
principal underwriter of the trust from the
sale of securities of the trust and any
other functions in connection therewith
exercised by such underwriter in such
capacity or otherwise during the period
covered by the financial statements filed
herewith.
Not applicable.
<PAGE>
- 90 -
(b) Furnish the following information with respect
to any fee or any participation in fees
received by each principal underwriter from
any underlying investment company or any
affiliated person or investment adviser of
such company: (1) the nature of such fee or
participation; (2) the name of the person
making payment; (3) the nature of the services
rendered in consideration for such fee or
participation; (4) the aggregate amount
received during the last fiscal year covered
by the financial statements filed herewith.
Not applicable.
41. (a) Describe the general character of the
business engaged in by each principal
underwriter, including a statement as to
any business other than the distribution of
securities of the trust. If a principal
underwriter acts or has acted in any
capacity with respect to any investment
company or companies other than the trust,
state the name or names of such company or
companies, their relationship, if any, to
the trust and the nature of such
activities. If a principal underwriter has
ceased to act in such named capacity, state
the date of and the circumstances
surrounding such cessation.
<PAGE>
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PRSI is engaged in the sale of the stock of The
Prudential Institutional Fund, an open-end, no-
load registered management company, and the sale
of group variable annuity contracts funded by The
Prudential Variable Contract Account-10
("VCA-10"), The Prudential Variable Contract
Account-11 ("VCA-11"), and The Prudential
Variable Contract Account-24 ("VCA-24"). VCA-10
and VCA-11 are separate accounts of The
Prudential registered as open-end management
companies under the 1940 Act.
(b) Furnish as at latest practicable date the
address of each branch office of each
principal underwriter currently selling
securities of the trust and furnish the name
and residence address of the person in charge
of such office.
Not applicable.
(c) Furnish the number of individual salesmen of
each principal underwriter through whom any of
the securities of the trust were distributed
for the last fiscal year of the trust covered
by the financial statements filed herewith and
furnish the aggregate amount of compensation
received by such salesmen in such year.
(Segregate full-time and part-time salesmen.)
<PAGE>
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Not applicable.
42. Furnish as at latest practicable date the
following information with respect to each
principal underwriter currently distributing
securities of the trust and with respect to each
of the officers, directors or partners of such
underwriter.
Not applicable.
43. Furnish, for the last fiscal year covered by the
financial statements filed herewith, the amount
of brokerage commissions received by any
principal underwriter who is a member of a
national securities exchange and who is currently
distributing the securities of the trust or
effecting transactions for the trust in the
portfolio securities of the trust.
Not applicable.
OFFERING PRICE OR ACQUISITION VALUATION OF SECURITIES
OF THE TRUST
44. (a) Furnish the following information with
respect to the method of valuation used by
the trust for purposes of determining the
offering
<PAGE>
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price to the public of securities
issued by the trust or the valuation of
shares or interests in the underlying
securities acquired by the holder of a
periodic payment plan Certificate: (1) the
source of quotations used to determine the
value of portfolio securities; (2) whether
opening, closing, bid, asked or any other
price is used; (3) whether price is as of
the day of sale or as of any other time;
(4) a brief description of the methods used
by registrant for determining other assets
and liabilities including accrual for
expenses and taxes (including taxes on
unrealized appreciation); (5) other items
which registrant adds to the net asset
value in computing offering price of its
securities; and (6) whether adjustments are
made for fractions: (i) before adding
distributor's compensation (load); and
(ii) after adding distributor's
compensation (load).
The amount of premium payments under a
Certificate is described in Items 10(i) and
13(d).
Premium payments transferred to the Account are
allocated to the subaccounts of the Account in
accordance with instructions received from the
Participant. The amount allocated to each
subaccount will be invested at net asset value in
the shares of the Fund in which that subaccount
invests. For information on the
<PAGE>
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method of determining the net asset value of Fund
shares, see the registration statement for the Fund,
Registration No. 2-80896, which is incorporated
by reference to the extent necessary.
The calculation of the cash surrender value of a
Certificate is described at Item 10(c). The
valuation of the Account's assets depends on the
valuation of the shares of the Fund held in the
Account.
(b) Furnish a specimen schedule showing the
components of the offering price of the
trust's securities as at the latest
practicable date.
Not applicable.
(c) If there is any variation in the offering
price of the trust's securities to any person
or classes of persons other than underwriters,
state the nature and amount of such variation
and indicate the person or classes of persons
to whom such offering is made.
See Item 13(d).
<PAGE>
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45. Furnish the following information with respect to
any suspension of the redemption rights of the
securities issued by the trust during the three
fiscal years covered by the financial statements
filed herewith: (a) by whose action redemption
rights were suspended; (b) the number of days'
notice given to security holders prior to
suspension of redemption rights; (c) reason for
suspension; (d) period during which suspension
was in effect.
Not applicable.
REDEMPTION VALUATION OF SECURITIES OF THE TRUST
46. (a) Furnish the following information with
respect to the method of determining the
redemption or withdrawal valuation of
securities issued by the trust:
(1) The source of quotations used to determine
the value of portfolio securities.
The Account will invest only in shares of the
Fund at net asset value. See Item 44(a).
<PAGE>
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(2) Whether opening, closing, bid, asked or any
other price is used.
This information is included in the
registration statement for the Fund on Form
N-1A, Reg. No. 2-80896, which has been
incorporated by reference to the extent
necessary. See Item 44(a).
(3) Whether price is as of the day of sale or
as of any other time.
For surrenders or partial withdrawals, as of
the end of the valuation period in which a
request for surrender or partial withdrawal is
received. For the death benefit, as of the
date of death.
(4) A brief description of the methods used by
registrant for determining other assets and
liabilities including accrual for expenses
and taxes (including taxes on unrealized
appreciation).
See Items 13(a), 17(a) and 44(a).
<PAGE>
- 97 -
(5) Other items which registrant deducts from
the net asset value in computing redemption
value of its securities.
See Items 13(a) and 17(a).
(6) Whether adjustments are made for fractions.
Subaccount units are sold and redeemed in
decimal shares.
(b) Furnish a specimen schedule showing the
components of the redemption price to the
holders of the trust's securities as at the
latest practicable date.
Not applicable.
PURCHASE AND SALE OF INTERESTS IN UNDERLYING SECURITIES
FROM AND TO SECURITY HOLDERS
47. Furnish a statement as to the procedure with
respect to the maintenance of a position in the
underlying securities or interests in the
underlying securities, the extent and nature
thereof and the person who maintains such a
position. Include a description of the procedure
<PAGE>
- 98 -
with respect to the purchase of underlying
securities or interests in the underlying
securities from security holders who exercise
redemption or withdrawal rights and the sale of
such underlying securities and interests in the
underlying securities to other security holders.
State whether the method of valuation of such
underlying securities or interests in underlying
securities differs from that set forth in Items
44 and 46. If any item of expenditure included
in the determination of the valuation is not or
may not actually be incurred or expended, explain
the nature of such item and who may benefit from
the transaction.
The Account may be regarded as maintaining a
position in the Fund shares since it purchases Fund
shares at net asset value in connection with net
premiums allocated to the Account in accordance with
instructions from participants and redeems Fund
shares at net asset value for the purpose of meeting
obligations under the Certificates. All of the
assets of the Account will always be invested in
Fund shares. The Prudential may also hold some of
its assets in the Account as the result of its
initial deposit of funds into the Account and
through the cumulation of charges made against the
Account. See Item 16 regarding the procedure with
respect to the acquisition and disposition of
underlying securities by the Account. There is no
procedure for the
<PAGE>
- 99 -
purchase of underlying securities or interests therein
from participants who exercise surrender rights.
V.
INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Furnish the following information as to each
trustee or custodian of the trust:
(a) Name and principal business address;
There is no trustee or custodian, unless The
Prudential is regarded as a trustee.
(b) Form of organization;
The Prudential is a mutual life insurance
company.
(c) State or other sovereign power under the laws
of which the trustee or custodian was
organized;
<PAGE>
- 100 -
The Prudential was organized under the laws of
the State of New Jersey.
(d) Name of governmental supervising or examining
authority.
Department of Insurance of the State of New
Jersey.
49. State the basis for payment of fees or expenses
of the trustee or custodian for services rendered
with respect to the trust and its securities, and
the aggregate amount thereof for the last fiscal
year. Indicate the person paying such fees or
expenses. If any fees or expenses are prepaid,
state the unearned amounts.
Not applicable.
50. State whether the trustee or custodian or any
other person has or may create a lien on the
assets of the trust, and, if so, give full
particulars, outlining the substance of the
provisions of any indenture or agreement with
respect thereto.
There is no custodian. No other person has or may
create a lien on the assets of the Account.
<PAGE>
- 101 -
VI.
INFORMATION CONCERNING INSURANCE
OF HOLDERS OF SECURITIES
51. Furnish the following information with respect to
insurance of holders of securities:*
(a) The name and address of the insurance company;
See Item 2.
(b) The types of policies and whether individual
or group policies;
The policies are group-sponsored variable
universal life insurance. An employer,
association, sponsoring organization or trust
enters into a Contract with The Prudential
setting forth the terms under which specified
employees or members of the group may apply for
insurance under the Contract. An eligible group
member obtaining
- -----------------
* The Certificates are themselves the securities being issued in
this case and the responses to the questions set forth above
refer to the insurance that is provided by the "security" that
is being registered.
<PAGE>
- 102 -
insurance through the Contract
(a "participant") receives a Certificate
describing the coverage.
A participant has flexibility concerning the
amount and frequency of premium payments. A
participant may generally select the frequency
and amount of additional premium payments, so
long as he or she maintains a balance in the
Certificate fund equal to or greater than the
amount needed to pay the next month's charges
under the Certificate.
Net premiums may be allocated to one or more
subaccounts of the Account or to the Fixed
Account. The Account currently consists of seven
subaccounts. Each Contract owner will select the
subaccounts that will be made available to
participants in the Contract.
The Certificates provide for payment of a death
benefit upon death of the covered person (who may
be the participant or that participant's spouse)
equal to the face amount of the Certificate, PLUS
the value of the Certificate fund, LESS any
outstanding Certificate debt. The Certificate
fund represents the amounts of net premiums
invested in the subaccounts and in the Fixed
<PAGE>
- 103 -
Account, plus any earnings thereon. Because net
premiums may be invested in a variety of
investment options, the value of a participant's
Certificate fund will vary with the investment
experience of those investment options.
Favorable investment performance generally will
result in an increase in the death benefit and
cash surrender value of the Certificate while
unfavorable investment performance will result in
decreases in the death benefit (but never below
the face amount stated in the Certificate) and in
the cash surrender value of the Certificate.
(c) The types of risks covered person and
excluded;
Under the Contracts and Certificates issued
thereunder, The Prudential assumes the risk
that covered persons covered by the
Certificates may die before anticipated and
that the charge for this mortality risk may
prove insufficient. The Prudential assumes an
expense risk that deductions for expenses may
not be adequate.
(d) The coverage of the policies;
<PAGE>
- 104 -
See paragraph (b) of this Item 51. The
minimum amount of coverage under a Certificate
is $10,000.
(e) The beneficiaries of such policies and the
uses to which the proceeds of policies must
be put;
The beneficiary (or beneficiaries) of a
Certificate is the beneficiary designated by
the participant on a form approved by The
Prudential. If no beneficiary is living at
the covered person's death, and the covered
person is the participant, the proceeds will
be payable to the participant's estate. There
is no limitation on the use of the proceeds.
(f) The terms and manner of cancellation and of
reinstatement;
See Item 10(i)(5) with respect to cancellation of
the Contracts.
See Items 10(c), 10(e) and 10(i)(4-5) with
respect to cancellation and reinstatement of
Certificates issued pursuant to a Contract.
(g) The method of determining the amount of
premiums to be paid by holders of securities.
<PAGE>
-105-
See Items 10(i), 13(d) and 44(a).
(h) The amount of aggregate premiums paid to the
insurance company during the last fiscal year;
Not applicable.
(i) Whether any person other than the insurance
company receives any part of such premiums,
the name of each such person and the amounts
involved, and the nature of the services
rendered therefor;
No person other than The Prudential receives the
premiums. The Prudential has entered into a
distribution agreement with PRSI pursuant to
which certain compensation may be paid. The
Prudential may, from time to time, enter into
reinsurance treaties with other insurers whereby
such insurers may agree to reimburse The
Prudential for mortality costs and certain
expenses. However, any such arrangements or
contracts do not affect the Certificates or the
benefits paid thereunder.
(j) The substance of any other material provisions
of any indenture or agreement of the trust
relating to insurance.
<PAGE>
-106-
Not applicable.
VII.
POLICY OF REGISTRANT
52. (a) Furnish the substance of the provisions of
any indenture or agreement with respect to
the conditions upon which and the method of
selection by which particular portfolio
securities must or may be eliminated from
assets of the trust or must or may be
replaced by other portfolio securities. If
an investment adviser or other person is to
be employed in connection with such
selection, elimination or substitution,
state the name of such person, the nature
of any affiliation to the depositor,
trustee or custodian, and any principal
underwriter, and the amount of the
remuneration to be received for such
services. If any particular person is not
designated in the identure or agreement,
describe briefly the method of selection of
such person.
In accordance with Rule 6e-3(T), The
Prudential may be required by the insurance
regulators of one or more jurisdictions in
which the Contracts are sold to substitute the
<PAGE>
-107-
shares of another mutual fund for the shares
of one or more of the Funds to be held by the
Account. Such substitution may be required
pursuant to insurance law or regulation, where
there is a material change in investment
policy of a Fund, or a change in the
investment adviser of a Fund. The Prudential
shall not substitute another security for the
underlying securities of the Account unless
the Securities and Exchange Commission shall
have approved such substitution.
(b) Furnish the following information with respect
to each transaction involving the elimination
of any underlying security during the period
covered by the financial statements filed
herewith: (1) title of security; (2) date of
elimination; (3) reasons for elimination;
(4) the use of the proceeds from the sale of
the eliminated security; (5) title of security
substituted, if an; (6) whether depositor,
principal underwriter, trustee or custodian or
any affiliated person of the foregoing were
involved in the transaction; and
(7) compensation or remuneration received by
each such person directly or indirectly as a
result of the transaction.
Not applicable.
<PAGE>
-108-
(c) Describe the policy of the trust with respect
to the substitution and elimination of the
underlying securities of the trust with
respect to: (1) the grounds for elimination
and substitution; (2) the type of securities
which may be substituted for any underlying
security; (3) whether the acquisition of such
substituted security or securities would
constitute the concentration of investment in
a particular industry or group of industries
or would conform to a policy of concentration
of investment in a particular industry or
group of industries; (4) whether such
substituted securities may be the securities
of any other investment company; and (5) the
substance of the provisions of any indenture
or agreement which authorize or restrict the
policy of the registrant in this regard.
See Items 10(g)(1), 10(h)(1) and 52(a).
(d) Furnish a description of any policy (exclusive
of policies covered by paragraphs (a) and (b)
herein) of the trust which is deemed a matter
of fundamental policy and which is elected to
be treated as such.
None.
<PAGE>
-109-
REGULATED INVESTMENT COMPANY
53. (a) State the taxable status of the trust.
The earnings of the Account are taxed as part of
the operations of The Prudential. Under the
current provisions of the Code, The Prudential
does not expect to incur federal income taxes on
earnings of the Account to the extent the
earnings are credited under the Contracts. Based
on this, no charge is being made currently to the
Account for The Prudential's federal income
taxes. The Prudential will review the question
of a charge to the Account for The Prudential's
federal income taxes periodically. Such a charge
may be made in future years for any federal
income taxes that would be attributable to the
Contracts.
Under current laws The Prudential may incur state
and local taxes (in addition to premium taxes) in
several states. At present, these taxes are not
significant and they are not charged against the
Contracts or the Account. If there is a material
change in applicable state or local tax laws,
charges for such taxes, if any, that are
attributable to the Account may be made.
<PAGE>
-110-
(b) State whether the trust qualified for the last
taxable year as a regulated investment company
as defined in Section 851 of the Internal
Revenue Code of 1954, and state its present
intention with respect to such qualification
during the current taxable year.
The Account is not so qualified and does not
intend to so qualify.
VIII.
FINANCIAL AND STATISTICAL INFORMATION
54. If the trust is not the issuer of periodic
payment plan Certificates, furnish the following
information with respect to each class or series
of its securities.
Not applicable.
55. If the trust is the issuer of periodic payment
plan Certificates, a transcript of a hypothetical
account shall be filed in approximately the
following form on the basis of the Certificate
calling for the smallest amount of payments. The
schedule shall cover a Certificate of the type
currently being sold assuming that such
Certificate had been sold at a
<PAGE>
-111-
date approximately ten years prior to the date of registration
or at the appropriate date of organization of the
trust.
Not applicable.
56. If the trust is the issuer of periodic payment
plan Certificates, furnish by years for the
period covered by the financial statements filed
herewith in respect of Certificates sold during
such period, the following information for each
fully paid type and each installment payment type
of periodic payment plan Certificate currently
being issued by the trust.
Not applicable.
57. If the trust is the issuer of periodic payment
plan Certificates, furnish by years for the
period covered by the financial statements filed
herewith the following information for each
installment payment type of periodic payment plan
Certificate currently being issued by the trust.
Not applicable.
<PAGE>
-112-
58. If the trust is the issuer of periodic payment
plan Certificates, furnish the following
information for each installment type of periodic
payment plan Certificate outstanding as at the
latest practicable date.
Not applicable.
59. Financial Statements
(a) Financial Statements of the Trust
Not applicable. The Account is newly organized.
(b) Financial Statements of the Depositor
The required financial statements of The
Prudential will be filed by pre-effective
amendment to the registration statement on Form
S-6 filed on behalf of the Account and the
Contracts (the "1933 Act registration
statement").
<PAGE>
-113-
IX.
EXHIBITS
A. (1) Resolution of Board of Directors of The
Prudential Insurance Company of America
establishing The Prudential Variable
Contract Account GI-2. (Note 3).
(2) Not applicable.
(3) Distributing Contracts:
(a) Distribution Agreement between
Prudential Retirement Securities, Inc.
and The Prudential Insurance Company of
America. (Note 4).
(b) Proposed Form of Agreement between
Prudential Retirement Securities, Inc.
and independent brokers with respect to
the Sale of the Group Contracts and
Certificates. (Note 4).
(c) Schedules of Sales Commissions. (Note 4).
<PAGE>
-114-
(4) Not applicable.
(5) (a) Group Contract. (Note 3).
(b) Individual Certificate. (Note 3).
(6) (a) Charter of The Prudential Insurance
Company of America, as amended
February 26, 1988. (Note 1).
(b) By-laws of The Prudential Insurance
Company of America, as amended January
10, 1995. (Note 2).
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) (a) Application Form for Group Contract.
(Note 3).
(b) Enrollment Form for Certificate. (Note 4).
<PAGE>
-115-
(11) Memorandum describing the Company's
issuance, transfer and redemption
procedures for group variable universal
life insurance contracts pursuant to Rule
6e3(T)(b)(12)(iii). (Note 3).
B. (1) Not applicable.
(2) Not applicable.
C. Not applicable.
(Note 1) Incorporated by reference to Post-Effective
Amendment No. 2 to Form S-6, Reg. No. 33-
20000, filed March 2, 1989, on behalf of
The Prudential Variable Appreciable
Account.
(Note 2) Incorporated by reference to Post-Effective
Amendment No. 26 to Form N-3, Reg. No.
2-76580, filed May 1, 1995, on behalf of
The Prudential Variable Appreciable
Account-10.
<PAGE>
-116-
(Note 3) Incorporated by reference to the
Registration Statement on Form S-6 filed
contemporaneously herewith on behalf of The
Prudential Variable Contract Account GI-2.
(Note 4) To be filed by a pre-effective amendment to
the Registration Statement on Form S-6,
filed contemporaneously herewith on behalf
of The Prudential Variable Contract Account
GI-2.
SIGNATURE
Pursuant to the requirements of the Investment
Company Act of 1940 the Depositor of the Registrant has
caused this registration statement to be duly signed on
behalf of the Registrant in ______________________
__________________________ on the ____ day of 1996.
THE PRUDENTIAL VARIABLE CONTRACT
ACCOUNT GI-2
_________________________________
(Registrant)
By: THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
________________________________
(Name of Sponsor)
<PAGE>
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By: ________________________________________
[Name of officer of The Prudential]
Vice President
Attest:___________________
[Name]
[Title]
