As filed with the SEC on January 28, 2000.
File No. 333-
File No. 811-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT
[Exact Name of Registrant]
PRUDENTIAL INSURANCE COMPANY OF AMERICA
[Name of Depositor]
3 Gateway Center, 12th Floor
Newark, NJ 07102-4077
Depositor's Telephone Number: (973) 802-6997
C. Christopher Sprague, Esg.
Assistant General Counsel
The Prudential Insurance Company of America
3 Gateway Center, 12th Floor
Newark, New Jersey 07102-4077
[Name and Address of Agent for Service of Process]
Copies to:
Christopher E. Palmer, Esq.
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.
Title of Securities Being Registered: Interests in Group Variable Annuity
Contracts.
<PAGE>
SUBJECT TO COMPLETION -- JANUARY 28, 2000
PROSPECTUS ________________, 2000
DISCOVERY PREMIER
GROUP RETIREMENT ANNUITY
This prospectus describes the Prudential DISCOVERY PREMIERSM Group Variable
Annuity Contracts* (the "Contracts"). The Contracts are group variable annuity
contracts sold by The Prudential Insurance Company of America to retirement
plans qualifying for federal tax benefits under sections 401, 403(b), 408 or 457
of the Internal Revenue Code of 1986 as amended (the "Code") and to
non-qualified defined contribution annuity plans. In this Prospectus, The
Prudential Insurance Company of America may be referred to as either
"Prudential" or as "we" or "us". We may refer to a participant under a
retirement plan as "you."
As a plan participant, you can allocate contributions made on your behalf in a
number of ways. You can allocate contributions to one or more of the 38
Subaccounts. Each Subaccount invests in one of the following portfolios of The
Prudential Series Fund, Inc. (the "Prudential Series Fund") or other listed
portfolios (collectively, the "Funds"):
<TABLE>
THE PRUDENTIAL SERIES FUND, INC.
<CAPTION>
<S> <C> <C>
Money Market Portfolio Flexible Managed Portfolio Equity Portfolio
Diversified Bond Portfolio High Yield Bond Portfolio Prudential Jennison Portfolio
Government Income Portfolio Stock Index Portfolio Global Portfolio
Conservative Balanced Portfolio Equity Income Portfolio 20/20 Focus Portfolio
Small Capitalization Stock Portfolio
AIM VARIABLE INSURANCE FUNDS, INC. ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
AIM V.I. Government Securities Fund AIM V.I. Value Fund Premier Growth Portfolio Quasar Portfolio
AIM V.I. International Equity Fund Growth and Income Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. AMERICAN VARIABLE INSURANCE SERIES
VP Income & Growth Asset Allocation Fund Growth-Income Fund
International Fund
DAVIS VARIABLE ACCOUNT FUND, INC. DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
Davis Value Portfolio Dreyfus Socially Responsible Growth Fund
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST JOHN HANCOCK DECLARATION TRUST
Franklin Small Cap Fund Templeton International Equity Fund V.A. Bond Fund
INVESCO VARIABLE INVESTMENT FUNDS, INC. JANUS ASPEN SERIES
INVESCO VIF - Dynamics Fund Aggressive Growth Portfolio Growth and Income Portfolio
International Growth Portfolio
MFS VARIABLE INSURANCE TRUST WARBURG PINCUS TRUST
MFS Bond Series MFS Growth With Income Series Emerging Growth Portfolio
MFS Emerging Growth Series MFS Total Return Series
MFS Growth Series
</TABLE>
In this Prospectus, we provide information that you should know before you
invest. We have filed additional information about the Contracts with the
Securities and Exchange Commission ("SEC") in a Statement of Additional
Information ("SAI"), dated ___________, 2000. That SAI is legally a part of this
Prospectus. You can get a copy of the SAI free of charge by contacting us at the
address or telephone number shown on the cover page. The SEC maintains a Web
site (http://www.sec.gov) that contains the SAI, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC. The SEC's mailing address is 450 Fifth Street, N.W., Washington,
DC 20549, and its public reference number is (800) SEC-0330.
The accompanying prospectuses for the Funds and the related statements of
additional information describe the investment objectives and risks of investing
in the Funds. We may offer additional Funds and Subaccounts in the future. The
contents of the SAI with respect to the Contracts appears on page 25 of this
Prospectus.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ACCOMPANIED
BY A CURRENT PROSPECTUS FOR EACH OF THE FUNDS. YOU SHOULD READ THOSE
PROSPECTUSES CAREFULLY AND RETAIN THEM FOR FUTURE REFERENCE.
AS WITH ALL VARIABLE ANNUITY CONTRACTS, THE FACT THAT WE HAVE FILED A
REGISTRATION STATEMENT WITH THE SEC DOES NOT MEAN THAT THE SEC HAS DETERMINED
THAT THE CONTRACTS ARE A GOOD INVESTMENT. NOR HAS THE SEC DETERMINED THAT THIS
PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
30 Scranton Office Park
Scranton, PA 18507-1789
Telephone 1-800-458-6333
* DISCOVERY PREMIER IS A SERVICE MARK OF PRUDENTIAL
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE CONTRACTS UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE CONTRACTS AND IT IS NOT SOLICITING AN OFFER TO BUY THESE CONTRACTS
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS CONTENTS
PAGE
GLOSSARY 1
BRIEF DESCRIPTION OF THE CONTRACTS 2
FEE TABLES 3
GENERAL INFORMATION ABOUT PRUDENTIAL, PRUDENTIAL DISCOVERY PREMIER GROUP
VARIABLE CONTRACT ACCOUNT AND THE INVESTMENT OPTIONS AVAILABLE UNDER THE
CONTRACTS 8
Prudential 8
Prudential Discovery Premier Group Variable Contract Account 8
The Funds 8
THE CONTRACTS
The Accumulation Period 9
Allocation of Purchase Payments 13
Asset Allocation Program 14
Transfers 14
Dollar Cost Averaging 14
Auto-Rebalancing 15
Withdrawals 15
Systematic Withdrawal Plan 15
Texas Optional Retirement Plan 16
Death Benefit 17
Discontinuance of Contributions 18
Loan Provision 18
Modified Procedures 18
CHARGES, FEES AND DEDUCTIONS
Administrative Fee 19
Charge for Assuming Mortality and Expense Risks 19
Expenses Incurred by the Funds 19
Premium Taxes 19
FEDERAL TAX STATUS 19
ERISA CONSIDERATIONS 22
EFFECTING AN ANNUITY 22
Life Annuity with Payments Certain 22
Annuity Certain 22
Joint and Survivor Annuity with Payments Certain 23
Purchasing the Annuity 23
OTHER INFORMATION 23
Misstatement of Age or Sex 23
Sale of the Contract and Sales Commissions 23
Voting Rights 23
Substitution of Fund Shares 24
Performance Information 24
Reports to Participants 24
State Regulation 24
Legal Proceedings 25
Statement of Additional Information 25
Additional Information 25
<PAGE>
GLOSSARY
ACCOUNT--See the Prudential Discovery Premier Group Variable Contract Account
(the "Discovery Account") below.
ACCUMULATION PERIOD--The period, prior to the effecting of an annuity, during
which the amount credited to a Participant Account may vary with the investment
performance of any Subaccount of the Discovery Account.
ANNUITANT--The person or persons designated by the Participant upon whose life
or lives monthly annuity payments are based after an annuity is effected.
BENEFICIARY--A person designated by a Participant to receive benefits from funds
held under the Contract.
BUSINESS DAY--A day on which both the New York Stock Exchange and Prudential are
open for business.
CODE--The Internal Revenue Code of 1986, as amended.
CONTRACTHOLDER--The employer, association or trust to which Prudential has
issued a Contract.
CONTRACTS--The Group Variable Annuity Contracts that we describe in this
Prospectus and offer for use in connection with retirement arrangements that
qualify for federal tax benefits under Sections 401, 403(b), 408 or 457 of the
Code and with non-qualified annuity arrangements.
CONTRACT VALUE--The dollar amount held under a Contract.
EMPLOYER--The sponsor of the retirement plan or non-qualified annuity
arrangement.
FUNDS--The portfolios of The Prudential Series Fund, Inc., AIM Variable
Insurance Funds, Inc., Alliance Variable Products Series Fund, Inc., American
Variable Insurance Series, American Century Variable Portfolios, Inc., Davis
Variable Account Fund, Inc., Dreyfus Socially Responsible Growth Fund, Inc.,
Franklin Templeton Variable Insurance Products Trust, John Hancock Declaration
Trust, Invesco Variable Investment Funds, Inc., Janus Aspen Series, MFS Variable
Insurance Trust, and Warburg Pincus Trust available under the Contracts.
GENERAL ACCOUNT--The assets of Prudential other than those allocated to the
Discovery Account or any other separate account of Prudential.
GUARANTEED INTEREST ACCOUNT--An allocation option under the Contract funded by
Prudential's General Account, or under certain Contracts, a separate account. It
is not part of nor dependent upon the investment performance of the Discovery
Account. This Prospectus does not describe in detail the Guaranteed Interest
Account or any separate account funding a guaranteed interest rate option.
PARTICIPANT--A person who makes contributions, or for whom contributions have
been made, and to whom they remain credited under the Contract.
PARTICIPANT ACCOUNT--An account established for each Participant to record the
amount credited to the Participant under the Contract.
PARTICIPANT ACCOUNT VALUE--The dollar amount held in a Participant Account.
PRUDENTIAL--The Prudential Insurance Company of America. "We," "us," or "our"
means Prudential.
PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT--A separate account
of Prudential registered under the Investment Company Act of 1940 as a unit
investment trust, invested through its Subaccounts in shares of the
corresponding Funds.
SUBACCOUNT--A division of the Discovery Account, the assets of which are
invested in shares of the corresponding Fund.
UNIT AND UNIT VALUE--We credit a Participant with Units for each Subaccount in
which he invests. The value of these Units may change each Business Day to
reflect the investment results of, and deductions of charges from, the
Subaccounts, and the expenses of the Funds in which the assets of the
Subaccounts are invested. The number of Units credited to a Participant in any
Subaccount of the Discovery Account is determined by dividing the amount of the
contribution or transfer made on his behalf to that Subaccount by the applicable
Unit Value for the Business Day on which the contribution or transfer is
received at the address shown on the cover of this Prospectus or such other
address that Prudential has specified. We will reduce the number of Units
credited to a Participant under any Subaccount by the number of Units canceled
as a result of any transfer or withdrawal by a Participant from that Subaccount.
VALUATION PERIOD--The period of time from one determination of the value of the
amount invested in a Subaccount to the next. We make such determinations when
the net asset values of the Funds are calculated, which is generally as of 4:15
p.m. Eastern time on each day during which the New York Stock Exchange and
Prudential are open. Currently, the Prudential business unit that receives
transaction requests for the Contracts is open each day on which the New York
Stock Exchange is open.
VARIABLE INVESTMENT OPTIONS--The Subaccounts.
1
<PAGE>
BRIEF DESCRIPTION OF THE CONTRACTS
We offer the Contracts to retirement plans qualifying for federal tax benefits
under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code of 1986, as
amended (the "Code") and to nonqualified annuity arrangements. The Contracts are
group annuity contracts that we typically issue to employers. These employers
then make contributions under the Contract on behalf of their employees. A
person for whom contributions have been made and to whom they remain credited
under a Contract is a "Participant."
The value of a Participant's investment depends upon the performance of the
selected investment option[s]. Currently, there are 38 variable investment
options, each of which is called a Subaccount. Prudential limits the number of
subaccounts an employer may select in order to ensure that Prudential is the
owner of the assets in the subaccounts for tax purposes. We invest the assets of
each Subaccount in one of the Funds listed beginning on page 8. You may direct
contributions to one or a combination of variable investment options as well as
the Guaranteed Interest Account. We set up a separate Participant Account to
record your investment choices. You can withdraw amounts held under your
Participant Account, in whole or in part, prior to the annuity date. We also
provide for a death benefit under the Contract.
Through payroll deduction or similar agreements with the Contractholder, you may
make contributions under the Contract. In addition, you may make contributions
in ways other than payroll deduction under certain circumstances.
We assess charges under the Contracts for administering the Contracts and for
assuming mortality and expense risks under the Contracts. We deduct a mortality
and expense risk charge equal to an annual rate of 0.15% from the assets held in
the variable investment options. We also deduct an administrative charge equal
to an annual rate of 0.50% from the assets held in the variable investment
options. You can find further details about the administrative charge in the Fee
Tables, page 3, and under Administrative Fee, page 19.
A charge against each of the Funds' assets is also made by the investment
adviser for providing investment advisory and management services. You can find
further details about charges under the section entitled Charges, Fees and
Deductions, page 19.
Unless restricted by the retirement arrangement under which you are covered, or
by a section of the Code, you may withdraw, at any time, all or part of your
Participant Account. See "Withdrawals," page 15. We do not impose any charge
upon withdrawal. If you withdraw, you may be taxed under the Code, including,
under certain circumstances, a 10% penalty tax on premature withdrawals. See
"Federal Tax Status," page 19. In addition, you may transfer all or a part of
your Participant Account Value among the Subaccounts and the Guaranteed Interest
Account without the imposition of the withdrawal charge or tax liability.
You should send all written requests, notices, and transfer requests required by
the Contracts (other than withdrawal requests and death benefit claims), to
Prudential at the address shown on the cover of this Prospectus. You may effect
the telephone transactions that are permitted by your retirement plan by calling
us at 1-800-458-6333. You must send all written withdrawal requests or death
benefit claims to Prudential by one of the following three means: (1) By U.S.
mail to: Prudential, P.O. Box 5410, Scranton, Pennsylvania 18505-5410; (2)
Delivery service other than the U.S. mail (e.g., Federal Express, etc.) sent to
our office at the following address: Prudential, 30 Scranton Office Park,
Scranton, Pennsylvania 18507-1789; or (3) Fax to Prudential, Attention: Client
Payments at: (570) 340-4328. Under certain Contracts, the Contractholder or a
third party acting on their behalf provides record-keeping services that we
would otherwise perform. See "Modified Procedures," page 18.
We intend this brief description of the Contracts to provide a broad overview of
the more significant features of the Contracts. You can find more detailed
information about the Contracts in subsequent sections of this Prospectus and in
the Contracts themselves.
Transaction requests (including death benefit claims) received directly by
Prudential in good order on a given Business Day before the established
transaction cutoff time (4 PM Eastern Time, or such earlier time that the New
York Stock Exchange may close) will be effective for that Business Day. For
purposes of the preceding sentence, we define "good order" generally as an
instruction received by us that is sufficiently complete and clear that we do
not need to exercise any discretion to follow such instruction.
2
<PAGE>
FEE TABLE
PARTICIPANT TRANSACTION EXPENSES
Sales Charge Imposed on Contributions .....................................None
Sales Charge Imposed on Withdrawals or Surrenders .........................None
Annual Account Charge .....................................................None
DISCOVERY ACCOUNT ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE PARTICIPANT ACCOUNT VALUE)
ALL SUBACCOUNTS
---------------
Mortality and Expense Risk Charge 0.15%
Administrative Fee 0.35%
----
Total Separate Account Annual Expenses 0.50%
====
3
<PAGE>
ANNUAL EXPENSES OF THE FUNDS
(AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)
(BASED ON THE YEAR ENDED DECEMBER 31, 1998, UNLESS OTHERWISE NOTED)
<TABLE>
<CAPTION>
INVESTMENT TOTAL TOTAL
MANAGEMENT OTHER CONTRACTUAL ACTUAL
FEE EXPENSES EXPENSES EXPENSES*
<S> <C> <C> <C> <C>
THE PRUDENTIAL SERIES FUND, INC.
Conservative Balanced Portfolio 0.55% 0.02% 0.57% 0.57%
Diversified Bond Portfolio 0.40% 0.02% 0.42% 0.42%
Equity Income Portfolio 0.40% 0.02% 0.42% 0.42%
Equity Portfolio 0.45% 0.02% 0.47% 0.47%
Flexible Managed Portfolio 0.60% 0.01% 0.61% 0.61%
Global Portfolio 0.75% 0.11% 0.86% 0.86%
Government Income Portfolio 0.40% 0.03% 0.43% 0.43%
High Yield Bond Portfolio 0.55% 0.03% 0.58% 0.58%
Money Market Portfolio 0.40% 0.01% 0.41% 0.41%
Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63%
Small Capitalization Stock Portfolio 0.40% 0.07% 0.47% 0.47%
Stock Index Portfolio 0.35% 0.02% 0.37% 0.37%
20/20 Focus Portfolio (1) 0.75% 0.20% 0.95% 0.95%
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Government Securities Fund 0.50% 0.26% 0.76% 0.76%
AIM V.I. International Equity Fund 0.75% 0.16% 0.91% 0.91%
AIM V.I. Value Fund 0.61% 0.05% 0.66% 0.66%
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Premier Growth Portfolio 1.00% 0.09% 1.09% 1.06%
Growth and Income Portfolio 0.625% 0.105% 0.73% 0.73%
Quasar Portfolio 1.00% 0.30% 1.30% 0.95%
AMERICAN VARIABLE INSURANCE SERIES (2)
Asset Allocation Fund 0.44% ----- ----- 0.45%
Growth-Income Fund 0.35% ----- ----- 0.36%
International Fund 0.57% ----- ----- 0.66%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth 0.70% 0.00% 0.70% 0.70%
DAVIS VARIABLE ACCOUNT FUND, INC. (3)
Davis Value Portfolio 0.75% 0.30% 1.05% 1.05%
DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
Dreyfus Socially Responsible Growth Fund, Inc. 0.75% 0.05% 0.80% 0.80%
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund 0.75% 0.02% 0.77% 0.77%
Templeton International Equity Fund 0.80% 0.08% 0.88% 0.88%
JOHN HANCOCK DECLARATION TRUST
V.A. Bond Fund 0.50% 0.84% 1.34% 0.75%
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - Dynamics Fund 0.60% 14.41% 15.01% 1.45%
JANUS ASPEN SERIES (4)
Aggressive Growth Portfolio 0.72% 0.03% 0.75% 0.75%
Growth and Income Portfolio 0.75% 2.31% 3.06% 1.25%
Worldwide Growth Portfolio 0.67% 0.07% 0.74% 0.72%
MFS VARIABLE INSURANCE TRUST
MFS Bond Series 0.60% 0.63% 1.23% 1.02%
MFS Emerging Growth Series 0.75% 0.10% 0.85% 0.85%
MFS Growth Series 0.75% 0.10% 0.85% 0.85%
MFS Growth With Income Series 0.75% 0.13% 0.88% 0.88%
MFS Total Return Series 0.75% 0.16% 0.91% 0.91%
WARBURG PINCUS TRUST (5)
Emerging Growth Portfolio 0.95% 0.51% 1.46% 1.25%
</TABLE>
4
<PAGE>
* Reflects fee waivers and reimbursement of expenses, if any. The following
Expense Examples use "Total Actual Expenses."
The purpose of the foregoing tables is to assist Participants in understanding
the expenses that they bear, directly or indirectly, relating to the Prudential
Discovery Premier Group Variable Contract Account and the Funds. See the
sections on charges in this Prospectus and the accompanying prospectuses for the
Funds.
(1) The Prudential Series Fund, Inc. 20/20 Focus Portfolio. Based on estimated
operating expenses for the first fiscal year of operations, which ended
December 31, 1999.
(2) American Variable Insurance Series. Based on fiscal year ended November 30,
1998.
(3) Davis Variable Account Fund, Inc. Based on estimated operating expenses for
the first fiscal year of operations, which will end June 30, 2000.
(4) Janus Aspen Series. Fee reductions reduce investment management fee to the
level of the corresponding Janus retail fund. Janus has agreed to continue
the applicable waivers and fee reductions until at least the next annual
renewal of the advisory agreement. Other waivers, if applicable, are first
applied against the management fee and then against other expenses.
(5) Warburg Pincus Trust. Based on estimated expenses for the Portfolio's first
fiscal year of operations, which ended December 31, 1999.
5
<PAGE>
EXAMPLES OF FEES AND EXPENSES
The following examples illustrate the cumulative dollar amount of all the above
expenses that you would incur on each $1,000 of investment.
o The examples assume a consistent 5% annual return on invested assets.
o Because this Contract has no withdrawal charges, your expenses are not
impacted by whether or not you choose to make withdrawals.
THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES INCURRED IN ANY GIVEN YEAR MAY BE MORE OR LESS THAN
THOSE SHOWN IN THE EXAMPLES.
1 Year 3 Years
THE PRUDENTIAL SERIES FUND, INC.
Money Market Portfolio 9.24 28.86
Diversified Bond Portfolio 9.34 29.17
Government Income Portfolio 9.44 29.48
Conservative Balanced Portfolio 10.85 33.83
Flexible Managed Portfolio 11.25 35.06
High Yield Bond Portfolio 10.95 34.14
Stock Index Portfolio 8.84 27.61
Equity Income Portfolio 9.34 29.17
Equity Portfolio 9.84 30.73
Prudential Jennison Portfolio 11.45 35.68
Global Portfolio 13.75 42.75
20/20 Focus Portfolio 14.65 45.49
Small Capitalization Stock Portfolio 9.84 30.73
AIM VARIABLE INSURANCE FUNDS, INC
AIM V.I. Government Securities Fund 12.75 39.68
AIM V.I. International Equity Fund 14.25 44.27
AIM V.I. Value Fund 11.75 36.61
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC
Premier Growth Portfolio 15.74 48.84
Growth and Income Portfolio 12.45 38.76
Quasar Portfolio 14.65 45.49
AMERICAN VARIABLE INSURANCE SERIES
Asset Allocation Fund 9.64 30.11
Growth-Income Fund 8.74 27.30
International Fund 11.75 36.61
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC
VP Income and Growth 12.15 37.84
DAVIS VARIABLE ACCOUNT FUND, INC
Davis Value Portfolio 15.64 48.53
DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC
Dreyfus Socially Responsible Growth Fund 13.15 40.91
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
Franklin Small Cap Fund 12.85 39.99
Templeton International Equity Fund 13.95 43.36
JOHN HANCOCK BOND TRUST
V.A. Bond Fund 12.65 39.38
INVESCO VARIABLE INVESTMENT FUNDS, INC
INVESCO VIF - Dynamics Fund 19.60 60.58
JANUS ASPEN SERIES
Aggressive Growth Portfolio 12.65 39.38
International Growth Portfolio 17.62 54.58
Growth and Income Portfolio 12.35 38.45
MFS VARIABLE INSURANCE TRUST
MFS Bond Series 15.34 47.62
MFS Emerging Growth Series 13.65 42.44
MFS Growth Series 13.65 42.44
6
<PAGE>
MFS Growth With Income Series 13.95 43.36
MFS Total Return Series 14.25 44.27
WARBURG PINCUS TRUST
Emerging Growth Portfolio 17.62 54.58
Loans taken by a Participant from a Participant Account may be subject to
charges for establishing and maintaining the loan. The examples with respect to
the Contracts do not take into account any deduction for such charges.
7
<PAGE>
GENERAL INFORMATION ABOUT PRUDENTIAL,
PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT AND THE
INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACTS
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
The Prudential Insurance Company of America ("Prudential") is a mutual life
insurance company incorporated in 1873 under the laws of the State of New
Jersey. Our corporate office is located at 751 Broad Street, Newark, New Jersey.
We have been investing for pension funds since 1928.
Prudential is currently considering reorganizing itself into a publicly traded
stock company through a process known as "demutualization." On February 10,
1998, the Company's Board of Directors authorized management to take the
preliminary steps necessary to allow the Company to demutualize. On July 1,
1998, legislation was enacted in New Jersey that would permit this conversion to
occur and that specified the process for conversion. Demutualization is a
complex process involving development of a plan of reorganization, adoption of a
plan by the Company's Board of Directors, a public hearing, voting by qualified
policyholders and regulatory approval, all of which could take two or more years
to complete. Prudential's management and Board of Directors have not yet
determined to demutualize and it is possible that, after careful review,
Prudential could decide not to go public.
The plan of reorganization, which hasn't been approved, would provide the
criteria for determining eligibility and the methodology for allocating shares
or other consideration to those who would be eligible. Generally, the amount of
shares or other consideration eligible customers would receive would be based on
a number of factors, including the types, amounts and issue years of their
policies. As a general rule, owners of Prudential-issued insurance policies and
annuity contracts would be eligible, while mutual fund customers and customers
of the Company's subsidiaries would not be. It has not yet been determined
whether any exceptions to that general rule will be made with respect to
policyholders and contractowners of Prudential's subsidiaries. Eligible
policyholders would generally include employers, associations, other groups, and
trusts established by or for such entities, that own group policies issued by
Prudential, and generally would include Contractholders. The individuals covered
under a group plan, such as the Participants under a Contract, generally would
not be eligible to receive stock or other consideration from Prudential.
Prudential generally is responsible for the administrative and record-keeping
functions of the Prudential Discovery Premier Group Variable Contract Account
and pays the expenses associated with them. These functions include enrolling
Participants, receiving and allocating contributions, maintaining Participant
Accounts, preparing and distributing confirmations, statements, and reports. The
administrative and record-keeping expenses that we bear include salaries, rent,
postage, telephone, travel, legal, actuarial and accounting fees, office
equipment, stationery and maintenance of computer and other systems.
We are reimbursed for these administrative and record-keeping expenses by the
daily charge against the assets of each Subaccount for administrative expenses.
PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT
Prudential established the Prudential Discovery Premier Group Variable Contract
Account (the "Discovery Account") on November 9, 1999, under New Jersey law as a
separate investment account. The Discovery Account meets the definition of a
"separate account" under federal securities laws. Prudential is the legal owner
of the assets in the Discovery Account, and is obligated to provide all benefits
under the Contracts. Prudential will at all times maintain assets in the
Discovery Account with a total market value sufficient to support its
obligations under the Contracts. Prudential segregates the Discovery Account
assets from all of its other assets. Thus, those assets are not chargeable with
liabilities arising out of any other business Prudential conducts. The Discovery
Account's assets may include funds contributed by Prudential to commence
operation of the Discovery Account, and may include accumulations of the charges
Prudential makes against the Discovery Account. From time to time, Prudential
will transfer these additional assets to Prudential's general account. Before
making any such transfer, Prudential will consider any possible adverse impact
the transfer might have on the Discovery Account.
Prudential registered the Discovery Account with the U.S. Securities and
Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940
Act") as a unit investment trust, which is a type of investment company. This
registration does not mean that the SEC supervises the management or investment
policies or practices of the Discovery Account. For state law purposes, the
Discovery Account is treated as a part or division of Prudential. There are
currently 38 Subaccounts within the Discovery Account. These Subaccounts invest
in the corresponding Fund available under the Contracts. We may establish
additional Subaccounts in the future.
THE FUNDS
The following is a list of each Fund, its investment objective and its
investment adviser:
THE PRUDENTIAL SERIES FUND, INC.
MONEY MARKET PORTFOLIO. The investment objective is maximum current income
consistent with the stability of capital and the maintenance of liquidity. The
portfolio invests in short-term debt obligations that mature in 13 months or
less.
DIVERSIFIED BOND PORTFOLIO. The investment objective is a high level of income
over a longer term while providing reasonable safety of capital. The portfolio
invests primarily in higher grade debt obligations and high quality money market
instruments.
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GOVERNMENT INCOME PORTFOLIO. The investment objective is a high level of income
over the longer term consistent with the preservation of capital. The portfolio
invests primarily in U.S. Government securities, including intermediate and
long-term U.S. Treasury securities and debt obligations issued by agencies or
instrumentalities established by the U.S. Government.
CONSERVATIVE BALANCED PORTFOLIO. The investment objective is a total investment
return consistent with a conservatively managed diversified portfolio. The
portfolio invests in a mix of equity securities, debt obligations and money
market instruments.
FLEXIBLE MANAGED PORTFOLIO. The investment objective is a total investment
return consistent with an aggressively managed diversified portfolio. The
portfolio invests in a mix of equity securities, debt obligations and money
market instruments.
HIGH YIELD BOND PORTFOLIO. The investment objective is a high total return. The
portfolio invests primarily in high yield/high risk debt securities.
STOCK INDEX PORTFOLIO. The investment objective is investment results that
generally correspond to the performance of publicly-traded common stocks. The
portfolio attempts to duplicate the price and yield performance of the Standard
& Poor's 500 Composite Stock Price Index (the "S&P 500 Index").
EQUITY INCOME PORTFOLIO. The investment objective is both current income and
capital appreciation. The portfolio invests primarily in common stocks and
convertible securities that provide good prospects for returns above those of
the Standard & Poor's 500 Composite Stock Price Index or the NYSE Composite
Index.
EQUITY PORTFOLIO. The investment objective is capital appreciation. The
portfolio invests primarily in common stocks of major established corporations
as well as smaller companies that offer attractive prospects of appreciation.
PRUDENTIAL JENNISON PORTFOLIO. The investment objective is to achieve long-term
growth of capital. The portfolio invests primarily in equity securities of major
established corporations that offer above average growth prospects.
GLOBAL PORTFOLIO. The investment objective is long-term growth of capital. The
portfolio invests primarily in common stocks (and their equivalents) of foreign
and U.S. companies.
20/20 FOCUS PORTFOLIO. The investment objective is long-term growth of capital.
The portfolio will invest primarily in up to 40 equity securities of U.S.
companies.
SMALL CAPITALIZATION STOCK PORTFOLIO. The investment objective is long-term
growth of capital. The Portfolio attempts to duplicate the performance of the
Standard Poor's Small Capitalization Stock Index.
Prudential is the investment adviser for each of the portfolios of the
Prudential Series Fund. Prudential has a Service Agreement with its wholly-owned
subsidiary, The Prudential Investment Corporation ("PIC"), which provides that,
subject to Prudential's supervision, PIC will furnish investment advisory
services in connection with the management of the Prudential Series Fund. In
addition, Prudential has entered into a Subadvisory Agreement with its
wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under
which Jennison furnishes investment advisory services in connection with the
management of the Prudential Jennison Portfolio.
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. GOVERNMENT SECURITIES FUND. The investment objective is to achieve a
high level of current income consistent with reasonable concern for safety of
principal by investing in debt securities issued, guaranteed or otherwise backed
by the United States Government.
AIM V.I. INTERNATIONAL EQUITY FUND. The investment objective is to provide
long-term growth of capital by investing in a diversified portfolio of
international equity securities whose issuers are considered to have strong
earnings momentum.
AIM V.I. VALUE FUND. The investment objective is to achieve long-term growth of
capital by investing primarily in equity securities judged by the advisor to be
undervalued relative to the current or projected earnings of the companies
issuing the securities, or relative market values of assets owned by the
companies issuing the securities or relative to the equity market generally.
Income is a secondary objective.
The investment adviser for these Funds is AIM Advisors, Inc.
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
PREMIER GROWTH PORTFOLIO. The investment objective is growth of capital by
pursuing aggressive investment policies. The Fund invests primarily in equity
securities of U.S. companies. The Fund focuses on a relatively small number of
intensively researched companies.
GROWTH AND INCOME PORTFOLIO. The investment objective is reasonable current
income and reasonable opportunity for appreciation through investments primarily
in dividend-paying common stocks of good quality.
QUASAR PORTFOLIO. The investment objective is growth of capital by pursuing
aggressive investment policies. This Fund invests principally in a diversified
portfolio of equity securities.
The investment adviser for these Funds is Alliance Capital Management L.P.
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AMERICAN VARIABLE INSURANCE SERIES
ASSET ALLOCATION FUND. The Fund seeks to provide you with high total return
(including income and capital gains) consistent with preservation of capital
over the long-term by investing in a diversified portfolio of common stocks and
other equity securities, bonds and other intermediate and long-term debt
securities, and money market instruments (debt securities maturing in one year
or less).
GROWTH-INCOME FUND. The Fund seeks to make your investment grow and provide you
with income over time by investing primarily in common stocks or other
securities which offer the potential for appreciation and/or income.
INTERNATIONAL FUND. The Fund seeks to make your investment grow over time by
investing primarily in common stocks of companies located outside the United
States.
The investment adviser for these Funds is Capital Research and Management
Company.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP INCOME AND GROWTH. The Fund seeks dividend growth, current income and capital
appreciation by investing primarily in common stocks. The investment adviser for
this Fund is American Century Investment Management, Inc.
DAVIS VARIABLE ACCOUNT FUND, INC.
DAVIS VALUE PORTFOLIO. The Fund's investment objective is growth of capital. The
Fund invests primarily in common stock of U.S. companies with market
capitalization of at least $5 billion. The investment adviser for this Fund is
Davis Select Advisers, L.P.
DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND. The Fund's goal is to provide capital
growth, with current income as a secondary goal. To pursue these goals, the Fund
invests primarily in common stock of companies that, in the opinion of the
Fund's management, meet traditional investment standards and conduct their
business in manner that contributes to the enhancement of the quality of life in
America. The investment adviser for this Fund is The Dreyfus Corporation.
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST
FRANKLIN SMALL CAP FUND. The Fund's investment goal is long-term capital growth.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in the equity securities of U.S. small capitalization (small cap) growth
companies.
TEMPLETON INTERNATIONAL EQUITY FUND. The Fund's investment goal is long-term
capital growth. Under normal market conditions, the Fund will invest at least
65% of its total assets in the equity securities of companies located outside
the U.S., including emerging markets, and that are issued by companies that have
their principal activities outside the U.S.
The investment adviser for these Funds is Franklin Advisers, Inc.
JOHN HANCOCK DECLARATION TRUST
V.A. BOND FUND. The Fund seeks to generate a high level of current income
consistent with prudent investment risk. In pursuing this goal, the Fund
normally invests in a diversified portfolio of debt securities. The investment
advisor for this Fund is John Hancock Advisers, Inc.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - DYNAMICS FUND. The Fund attempts to make your investment grow over
the long term. The Fund invests in a variety of securities that the advisor
believes present opportunities for capital growth - primarily common stocks of
companies traded on U.S. securities exchanges, as well as over-the-counter. The
Fund also may invest in preferred stock (which generally pay higher dividends
than common stocks) and debt instruments that are convertible into common
stocks, as well as in securities of foreign companies. It is aggressively
managed. Because its strategy includes many short-term factors - including
current information about a company, investor interest, price movements of a
company's securities and general market and monetary conditions - securities in
its portfolio usually are bought and sold relatively frequently. The investment
adviser for this Fund is INVESCO Funds Group, Inc.
JANUS ASPEN SERIES
AGGRESSIVE GROWTH PORTFOLIO. The investment objective of the Fund is long-term
growth of capital. It is a diversified portfolio that seeks its objective
primarily by investing in common stocks selected for the growth potential, and
it normally invests at least 50% of its equity assets in medium-sized companies.
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GROWTH AND INCOME PORTFOLIO. The investment objective of this Fund is long-term
capital growth and current income. It is a diversified portfolio that normally
invests up to 75% of its assets in equity securities selected primarily for
growth potential and at least 25% of its assets in securities the portfolio
manager believes have income potential.
WORLDWIDE GROWTH PORTFOLIO. The investment objective of this Fund is long-term
growth of capital in a manner consistent with the preservation of capital. It is
a diversified portfolio that pursues its objective primarily through investments
in common stocks of foreign and domestic issuers.
The investment adviser for these Funds is Janus Capital Corporation.
MFS VARIABLE INSURANCE TRUST
MFS BOND SERIES. The investment objective is primarily to provide as high level
of current income as is believed to be consistent with prudent risk. Under
normal market conditions, the fund invests at least 65% of its assets in fixed
income securities.
MFS EMERGING GROWTH SERIES. The investment objective is long-term growth of
capital. Under normal market conditions, the Fund invests at least 65% of its
assets in common stocks and related securities of emerging growth companies.
MFS GROWTH SERIES. The investment objective is to provide long-term growth of
capital and future income rather than current income. Under normal market
conditions, the Fund invests at least 80% of its assets in common stock and
related securities.
MFS GROWTH WITH INCOME SERIES. The investment objective is to provide reasonable
current income and long-term growth of capital and income. Under normal market
conditions, the Fund invests at least 65% of its assets in common stocks and
related securities.
MFS TOTAL RETURN SERIES. The investment objective is above-average income
(compared to a portfolio invested entirely in equity securities) consistent with
the prudent employment of capital, and secondarily to provide a reasonable
opportunity for growth of capital and income.
The investment adviser for these Funds is Massachusetts Financial Services
Company.
WARBURG PINCUS TRUST
EMERGING GROWTH PORTFOLIO. The objective of this Fund is to seek maximum capital
appreciation by investing in equity securities of small-to-medium-sized domestic
companies with emerging or renewed growth potential. The investment adviser for
this Fund is Warburg Pincus Asset Management, Inc.
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The investment advisors to the various Funds charge a daily investment
management fee as compensation for their services, as set forth in the table
beginning on page 14 and as more fully described in the prospectus for each
Fund.
We recognize that in the future it may become disadvantageous for both variable
life insurance and variable annuity contract separate accounts to invest in the
same underlying mutual fund. Although neither Prudential nor the Funds currently
foresees any such disadvantage, the Funds' Boards of Directors intend to monitor
events in order to identify any material conflict between variable life
insurance and variable annuity contractholders and to determine what action, if
any, should be taken in response to a conflict. Material conflicts could result
from such things as: (1) changes in state insurance law; (2) changes in federal
income tax law; (3) changes in the investment management of any Fund; or (4)
differences between voting instructions given by variable life insurance and
variable annuity contractholders.
An affiliate of each of the Funds (other than the portfolios in the Prudential
Series Fund) may compensate Prudential based upon an annual percentage of the
average assets held in the Fund by Prudential under the Contracts. These
percentages vary by Fund, and reflect administrative and other services we
provide.
You can review a full description of the Funds in the accompanying prospectuses
for each Fund and in the related statements of additional information. You
should read those documents in conjunction with this Prospectus. There is no
assurance that the investment objectives will be met.
A Fund may have an investment objective and investment policies closely
resembling those of a mutual fund within the same complex that is sold directly
to individual investors. Despite such similarities, there can be no assurance
that the investment performance of any such Fund will resemble that of its
retail fund counterpart.
GUARANTEED INTEREST ACCOUNT
The Guaranteed Interest Account is a credited interest option available to fund
certain group annuity contracts issued by Prudential. Amounts that you allocate
to the Guaranteed Interest Account become part of the General Account of
Prudential. Prudential's General Account consists of all assets owned by
Prudential other than those in the Discovery Account and other separate accounts
of Prudential. Subject to applicable law, Prudential has sole discretion over
the investment of the assets of the General Account.
Because of exemptive and exclusionary provisions, Prudential has not registered
interests in the General Account (which include interests in the Guaranteed
Interest Account) under the Securities Act of 1933. Nor has Prudential
registered the General Account as an investment company under the Investment
Company Act of 1940. Accordingly, those Acts do not
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apply to the General Account or any interests therein, and Prudential has been
advised that the staff of the SEC has not reviewed the disclosures in the
Prospectus relating to the General Account. Disclosures that we make regarding
the General Account may, however, be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
Under certain Contracts, amounts that you allocate to the Guaranteed Interest
Account may be held within one or more guaranteed separate accounts. Prudential
has not registered interests in such separate account(s) under the Securities
Act of 1933 and has not registered the separate accounts as investment companies
under the Investment Company Act of 1940.
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THE CONTRACTS
We generally issue the Contracts to Employers whose employees may become
Participants. Under an IRA, a Participant's spouse may also become a
Participant. We may issue a Contract to an association that represents employers
of employees who become Participants, to an association or union that represents
members that become Participants, and to a trustee of a trust with participating
employers whose employees become Participants. Even though an Employer, an
association or a trustee is the Contractholder, the Contract normally provides
that Participants will have the rights and interests under them that are
described in this Prospectus. When a Contract is used to fund a deferred
compensation plan established by a tax-exempt entity under Section 457 of the
Code, all rights under the Contract are owned by the Employer to whom, or on
whose behalf, the Contract is issued. All amounts that we pay under the Contract
are payable to the Employer, and are its exclusive property. For a plan
established under Section 457 of the Code, the employee has no rights or
interests under the Contract, including any right or interest in any Subaccount
of the Discovery Account, except as provided in the Employer's plan. This may
also be true with respect to certain non-qualified annuity arrangements.
Notwithstanding the foregoing, the rules for Section 457 plans established by
state and local governments would be similar to those specified in this
paragraph.
Also, a particular plan, even if it is not a deferred compensation plan, may
limit a Participant's exercise of certain rights under a Contract. Participants
should check the provisions of their Employer's plan or any agreements with the
Employer to see if there are any such limitations and, if so, what they are.
THE ACCUMULATION PERIOD
Contributions; Crediting Units; Enrollment Forms; Deduction for Administrative
Expenses.
Ordinarily, an Employer will make contributions periodically to the Contract
pursuant to a payroll deduction or similar agreement between the Participant and
his Employer. In addition, you may make contributions in ways other than payroll
deduction under certain circumstances.
As a Participant, you designate what portion of the contributions made on your
behalf should be invested in the Subaccounts or the Guaranteed Interest Account.
The Participant may change this designation usually by notifying us at the
address shown on the cover page of this Prospectus or such other address as we
may direct. Under certain Contracts, an entity other than us keeps certain
records. Participants under those Contracts must contact the record-keeper. See
"Modified Procedures," page 18.
We credit the full amount (100%) of each contribution designated for investment
in any Subaccount to a Participant Account maintained for the Participant.
Except for the initial contribution, the number of Units that we credit to a
Participant in a Subaccount is determined by dividing the amount of the
contribution made on his behalf to that Subaccount by the Subaccount's Unit
Value determined as of the end of the Valuation Period during which the
contribution is received by us at the address shown on the cover page of this
Prospectus or such other address as we may direct.
We will invest the initial contribution made for a Participant in a Subaccount
no later than two Business Days after we receive it, if it is preceded or
accompanied by satisfactory enrollment information. If the Contractholder
submits an initial contribution on behalf of one or more new Participants that
is not preceded or accompanied by satisfactory enrollment information, then we
will allocate such contribution to the Prudential Series Fund Money Market
Subaccount upon receipt, and also will send a notice to the Contractholder or
its agent that requests allocation information for each such Participant. If we
do not receive the necessary enrollment information in response to its initial
notice, we will deliver up to three additional notices to the Contractholder or
its agent at monthly intervals that request such allocation information. After
105 days have passed from the time that Units of the Money Market Subaccount
were purchased on behalf of Participants who failed to provide the necessary
enrollment information, we will redeem the relevant Units and pay the proceeds
(including earnings) to the Contractholder. Any proceeds that we pay to the
Contractholder under this procedure may be considered a prohibited and taxable
reversion to the Contractholder under current provisions of the Code. Similarly,
proceeds that we return may cause the Contractholder to violate a requirement
under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended,
to hold all plan assets in trust. The Contractholder may avoid both problems if
it arranges to have the proceeds paid into a qualified trust or annuity
contract.
A change in the value of a Unit will not affect the number of Units of a
particular Subaccount credited to a Participant. However, the dollar value of a
Unit will vary from Business Day to Business Day depending upon the investment
experience of the Subaccount.
We determine the value of a Participant Account in a Subaccount on any
particular day by multiplying the total number of Units credited to the
Participant by the Subaccount's Unit Value on that day.
We set the Unit Value for each Subaccount at $10.00 on the date of commencement
of operations of that Subaccount. We determine the Unit Value for any subsequent
Business Day as of the end of that day by multiplying the Unit Change Factor for
that day by the Unit Value for the preceding Business Day.
We determine the Unit Change Factor for any Business Day by dividing the current
day net asset value for Fund shares by the net asset value for shares on the
previous Business Day. This factor is then reduced by a daily equivalent of the
mortality and expense risk fee and the administrative fee. We determine the
value of the assets of a Subaccount by multiplying the number of Fund shares
held by that Subaccount by the net asset value of each share, and adding the
value of dividends declared by the Fund but not yet paid.
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ALLOCATION OF PURCHASE PAYMENTS
A Participant determines how the initial contribution will be allocated among
the Subaccounts by specifying the desired allocation on the application or
enrollment form. A Participant may choose to allocate nothing to a particular
Subaccount. Unless a Participant tells us otherwise, we will allocate subsequent
contributions in the same proportions as the most recent contribution made by
that Participant. A Participant may change the way in which subsequent
contributions are allocated by providing us with proper written instruction at
the address on the cover page of this Prospectus (or such other address as we
may direct) or by telephoning us at the toll-free number we provide, once a
Participant has provided the appropriate identification to effect a telephone
transaction. See Transfers, below
ASSET ALLOCATION PROGRAM
We may make available an Asset Allocation Program to assist Participants in
determining how to allocate purchase payments. If a Participant chooses to
participate in the program, the Participant may do so by utilizing a form
available in the employee enrollment kit. The form will include a series of
illustrations depicting various asset allocation models based on age and risk
tolerance. We also make available a more comprehensive model based on an
internet web site for use by Participants. We offer the Asset Allocation Program
at no charge to the Participant. A Participant is under no obligation to
participate in the program or to invest according to the program
recommendations. A Participant may ignore, in whole or in part, the investment
allocations provided by the program.
We regard the Asset Allocation Program as an aid in making purchase payment
allocations. You should not view the Program as any guarantee of investment
return. You also should realize that there can be no assurance that any Fund
will attain its investment objectives. As a Participant, you should consider
reviewing your investor profile questionnaire annually, and each time your
investor profile changes.
TRANSFERS
A Participant may transfer out of an investment option into any combination of
other investment options available under the Contract. Generally, the transfer
request may be in dollars, such as a request to transfer $1,000 from one
investment option to another, or may be in terms of a percentage reallocation
among investment options. Under certain Contracts, we may require that transfer
requests be effected in terms of whole number percentages only, and not by
dollar amount. A Participant may make transfers by proper written notice to us
or by telephone, internet or telecopy, depending on the terms of the arrangement
applicable to the Participant.
If a Contractholder chooses telephone privileges, each Participant will
automatically be enrolled to use the Telephone Transfer System. A Participant
may decline telephone privileges on a form supplied by the Contractholder or us.
We have adopted procedures designed to ensure that requests by telephone are
genuine. We will not be held liable for following telephone instructions we
reasonably believe to be genuine. We cannot guarantee that a Participant will be
able to get through to complete a telephone transfer during peak periods such as
periods of drastic economic or market change.
Unless restricted by the retirement arrangement under which a Participant is
covered, when we receive a duly completed written transfer request form or
properly authorized telephone transfer request, we will transfer all or a
portion of the Participant Account in any of the Subaccounts to another
Subaccount or the Guaranteed Interest Account. We may restrict transfers from
the Guaranteed Interest Account. There is no minimum transfer amount. As of the
Business Day you make the transfer request, we will reduce the Subaccount(s)
from which the transfer is made by the number of Units obtained by dividing the
amount to be transferred by the Unit Value for the applicable Business Day. If
the transfer is made to another Subaccount as of the same day, the number of
Units we credit to the Participant in that Subaccount will be increased by means
of a similar calculation. We reserve the right to limit the frequency of these
transfers. All transfers are subject to the terms and conditions set forth in
this Prospectus and in the Contract(s) covering a Participant.
We did not design the Contracts for professional market timing organizations or
other organizations or individuals using programmed, large, or frequent
transfers. A pattern of exchanges that coincides with a "market timing" strategy
may be disruptive to the Discovery Account and the Funds, and we will discourage
such a practice. If such a pattern were to be found, we may be required to
modify the transfer procedures, including but not limited to, not accepting
transfer requests of an agent acting under a power of attorney on behalf of more
than one owner.
We may stipulate different procedures for Contracts under which another entity
provides record keeping services. Although there is presently no charge for
transfers, we reserve the right to impose such charges in the future.
Certain Contracts may prohibit transfers from the Guaranteed Interest Account
into non-equity investment options that are characterized in such Contract as
"competing" with Prudential's General Account options with regard to investment
characteristics. If a Contract precludes such transfers, the Contract will
further require that amounts transferred from the Guaranteed Interest Account
into non-competing investment options, such as a Subaccount investing in a stock
Fund, may not for 90 days thereafter be transferred into a "competing" option or
back to the Guaranteed Interest Account.
A Contract may include a provision that, upon discontinuance of contributions
for all Participants of an Employer covered under a Contract, the Contractholder
may request that we make transfer payments from any of the Subaccounts to a
designated alternate funding agency. If the Contract is used in connection with
certain tax-deferred annuities subject to Section 403(b) of the Code, or with
IRAs, we will promptly notify each affected Participant and each beneficiary of
a deceased Participant that such a request has been received. Within thirty days
of receipt of such notice, each recipient may elect in writing on a form
approved by us to have any of his or her Participant Account Value transferred
to the alternate funding agency. If he or she does not so elect, his or her
investment options will continue in force under the Contract. If he or she does
so elect, his or her account will be canceled as of a "transfer date" which is
the Business Day specified in the Contractholder's request or 90 days after we
receive the request, whichever is later. The product of Units in the
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Participant's Subaccounts immediately prior to cancellation and the appropriate
Unit Value on the transfer date, less the applicable withdrawal and annual
account charges, will be transferred to the designated alternate funding agency
in cash.
Subject to any conditions or limitations regarding transfers contained in the
tax-deferred annuity arrangement under which a Participant is covered, a
Participant can:
|X| continue to make transfers of all or part of his interest in his
Participant Account among the available investment options offered,
and
|X| transfer directly all or part of his interest in his Participant
Account to a Section 403(b) tax-deferred annuity contract of another
insurance company or to a mutual fund custodial account under Section
403(b)(7).
Contributions may be discontinued for all Participants under a Contract or for
all Participants of an Employer covered under the Contract used in connection
with a deferred compensation plan subject to Section 457 of the Code due to
certain circumstances, such as a change in any law or regulation, which would
have an adverse effect on us in fulfilling the terms of the Contract. If
contributions are so discontinued, we may initiate transfer payments from any
Subaccount to an alternate funding agency. The transfer would be made as
described in the paragraph above.
Transfers that you make among Subaccounts will take effect as of the end of the
Valuation Period in which we receive a proper transfer request.
From time to time, we may make an offer to holders of other variable annuities
that we or an affiliate issues to exchange their variable annuity contracts for
interests in a Contract issued by the Account. We will conduct any such exchange
offer in accordance with SEC rules and other applicable law. Current SEC rules
pertaining to exchange offers among affiliated variable annuity contracts
generally require, with certain exceptions, that no fee be imposed at the time
of the exchange. Under this rule, we could charge an administrative fee at the
time of the exchange, although we have no present intention of doing so.
DOLLAR COST AVERAGING
We may make available an administrative feature called Dollar Cost Averaging
("DCA"). This feature allows Participants to transfer amounts out of the
Guaranteed Interest Account or one of the Subaccounts and into one or more other
Subaccounts. Transfers may be in specific dollar amounts or percentages of the
amount in the DCA account at the time of the transfer. A Participant may ask
that transfers be made monthly, quarterly, semi-annually or annually. A
Participant can add to the DCA account at any time.
Each automatic transfer will take effect in monthly, quarterly, semi-annual or
annual intervals as designated by the Participant. If the New York Stock
Exchange and Prudential are not open on a transfer date, the transfer will take
effect as of the end of the Valuation Period which immediately follows that
date. Automatic transfers continue until the amount specified has been
transferred, or until the Participant notifies us and we process a change in
allocation or cancellation of the feature. We currently impose no charge for
this feature. We would impose such a charge only pursuant to an amendment to the
administrative services agreement. Such an amendment would have to be agreed to
in writing by both us and the Contractholder.
AUTO-REBALANCING
The Contracts may offer another investment technique. The Auto-Rebalancing
feature will allow Participants to automatically rebalance Subaccount assets at
specified intervals based on percentage allocations that they choose. For
example, suppose a Participant's initial investment allocation of Subaccounts is
split 40% and 60%, respectively. Then, due to investment results, that split
changes. A Participant may instruct that those assets be rebalanced to his or
her original or different allocation percentages. Auto-Rebalancing can be
performed on a one-time basis or periodically, as a Participant chooses. A
Participant may select that rebalancing occur in monthly, quarterly, semi-annual
or annual intervals. Rebalancing will take effect as of the end of the Valuation
Period for each applicable interval. It will continue at those intervals until
the Participant notifies us otherwise. If the New York Stock Exchange and
Prudential are not open on the rebalancing date, the transfer will take effect
as of the end of the Valuation Period which immediately follows that date. We
currently impose no charge for this feature. We would impose such a charge only
pursuant to an amendment to the administrative services agreement, which would
have to be agreed to in writing by both us and the Contractholder.
WITHDRAWALS
Under certain circumstances as described in the retirement arrangement under
which he is covered, a Participant may withdraw at any time all or part of his
Participant Account Value that is attributable to Employer contributions or
after-tax Participant contributions, if any.
The Code imposes restrictions on withdrawals from tax-deferred annuities subject
to Section 403(b) of the Code. Pursuant to Section 403(b)(11) of the Code,
amounts attributable to a Participant's salary reduction contributions
(including the earnings thereon) that are made under a tax deferred annuity
after December 31, 1988 can only be withdrawn (redeemed) when the Participant
attains age 59 1/2, separates from service with his employer, dies, or becomes
disabled (within the meaning of Section 72(m)(7) of the Code). However, the Code
permits the withdrawal at any time of amounts attributable to tax-deferred
annuity salary reduction contributions (excluding the earnings thereon) that are
made after December 31, 1988, in the case of a hardship. If the arrangement
under which a Participant is covered contains a financial hardship provision, a
Participant can make withdrawals in the event of the hardship.
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Furthermore, subject to any restrictions upon withdrawals contained in the
tax-deferred annuity arrangement under which a Participant is covered, a
Participant can withdraw at any time all or part of his Participant Account
Value under a predecessor Prudential tax-sheltered annuity contract, as of
December 31, 1988. Amounts earned after December 31, 1988 on the December 31,
1988 balance in a Participant Account attributable to salary reduction
contributions are, however, subject to the Section 403(b)(11) withdrawal
restrictions discussed above.
With respect to retirement arrangements other than tax-deferred annuities
subject to Section 403(b) of the Code, a Participant's right to withdraw at any
time all or part of his Participant Account Value may be restricted by the
retirement arrangement under which he is covered. For example, Code Section 457
plans typically permit withdrawals only upon attainment of age 70 1/2,
separation of service, or for unforeseeable emergencies.
You may specify from which investment options you would like the withdrawal
processed. You may specify the withdrawal amount as a dollar amount or as a
percentage of the Participant Account Value in the applicable Subaccount(s). If
you do not specify from where you would like the withdrawal processed, a partial
withdrawal will be withdrawn proportionally from all investment options.
We will generally pay the amount of any withdrawal within 7 days after receipt
of a properly completed withdrawal request. We will pay the amount of any
withdrawal requested, less any applicable tax withholding. We may delay payment
of any withdrawal allocable to the Subaccount(s) for a longer period if the
disposal or valuation of the Discovery 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.
SYSTEMATIC WITHDRAWAL PLAN
If permitted by the Code and the retirement arrangement under which a
Participant is covered, we may offer systematic withdrawals as an administrative
privilege. Under a systematic withdrawal arrangement, a Participant may arrange
for systematic withdrawals from the Subaccounts and the Guaranteed Interest
Account in which he or she invests. A Participant may arrange for systematic
withdrawals only if at the time he or she elects to have such an arrangement,
the balance in his or her Participant Account is at least $5,000. A Participant
who has not reached age 59 1/2, however, may not elect a systematic withdrawal
arrangement unless he or she has first separated from service with his Employer.
In addition, the $5,000 minimum balance does not apply to systematic withdrawals
made for the purpose of satisfying minimum distribution rules.
Federal income tax provisions applicable to the retirement arrangement under
which a Participant is covered may significantly affect the availability of
systematic withdrawals, how they may be made, and the consequences of making
them. Withdrawals by Participants are generally taxable. Participants who have
not reached age 59 1/2 may incur substantial tax penalties. WithdrawaLs made
after a Participant has attained age 70 1/2 and withdrawals by beneficiaries
must satisfy certain minimum distribution rules. See "Federal Tax Status," page
19.
You may arrange systematic withdrawals only pursuant to an election on a form we
have approved. Under certain types of retirement arrangements, an election to
arrange for systematic withdrawals by a married Participant must be consented to
in writing by the Participant's spouse, with signatures notarized or witnessed
by an authorized plan representative. The election must specify that the
systematic withdrawals will be made on a monthly, quarterly, semi-annual, or
annual basis.
We will effect all systematic withdrawals as of the day of the month specified
by the Contractholder, or, if such day is not a Business Day, then on the next
succeeding Business Day. Systematic withdrawals will continue until the
Participant has withdrawn all of the balance in his or her Participant Account
or has instructed Prudential in writing to terminate the systematic withdrawal
arrangement. The Participant may elect to make systematic withdrawals in equal
dollar amounts (in which case each withdrawal must be at least $250), unless it
is made to satisfy minimum distribution rules, or over a specified period of
time (at least three years). Where the Participant elects to make systematic
withdrawals over a specified period of time, the amount of each withdrawal
(which will vary, reflecting investment experience during the withdrawal period)
will be equal to the sum of the balances then in the Participant Account divided
by the number of systematic withdrawals remaining to be made during the
withdrawal period.
We will take systematic withdrawals first out of the Participant's investment,
if any, in the Guaranteed Interest Account until that money is exhausted.
Thereafter, we will take systematic withdrawals pro rata from the Subaccounts.
Certain Contracts may specify that systematic withdrawals be deducted in a
different manner.
A Participant may change the frequency, amount or duration of his or her
systematic withdrawals by submitting a form to us or our designee. We will
provide such a form to a Participant upon request. A Participant may make such a
change only once during each calendar year.
A Participant may at any time instruct us to terminate the Participant's
systematic withdrawal arrangement. No systematic withdrawals will be made for a
Participant after we have received this instruction. A Participant who chooses
to stop making systematic withdrawals may not again make them until the next
calendar year and may be subject to federal tax consequences as a result.
If a Participant arranges for systematic withdrawals, that will not affect any
of the Participant's other rights under the Contracts, including the right to
make withdrawals, and purchase a fixed dollar annuity.
TEXAS OPTIONAL RETIREMENT PROGRAM
Special rules apply with respect to Contracts covering persons participating in
the Texas Optional Retirement Program ("Texas Program").
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Under the terms of the Texas Program, Texas will contribute an amount somewhat
larger than a Participant's contribution. Texas' contributions will be credited
to the Participant Account. Until the Participant begins his or her second year
of participation in the Texas Program, Prudential will have the right to
withdraw the value of the Units purchased for this account with Texas'
contributions. If the Participant does not commence his or her second year of
Texas Program participation, the value of those Units representing Texas'
contributions will be withdrawn and returned to the State.
A Participant has withdrawal benefits for Contracts issued under the Texas
Program only in the event of the Participant's death, retirement or termination
of employment. Participants will not, therefore, be entitled to exercise the
right of withdrawal in order to receive in cash the Participant Account Value
credited to them under the Contract unless one of the foregoing conditions has
been satisfied. A Participant may, however, transfer the value of the
Participant's interest under the Contract to another Prudential contract or
contracts of other carriers approved under the Texas Program during the period
of the Participant's Texas Program participation.
DEATH BENEFIT
When we receive due proof of a Participant's death and a claim and payment
election submitted on a form approved by us, we will pay to the designated
beneficiary a death benefit made up of the balance in the Participant Account.
The appropriate address to which a death benefit claim generally should be sent
is set out on the cover page of this Prospectus. For certain Contracts, a death
benefit claim should be sent to a designated record keeper rather than us.
We will pay the death benefit, according to the Participant's instructions, in:
|X| one sum as if it were a single withdrawal,
|X| systematic withdrawals,
|X| an annuity, or
|X| a combination of the three.
Any such payment will be subject to the minimum distribution rules of Code
Section 401(a)(9) as described below under "Federal Tax Status." If the
Participant has not so directed, the beneficiary may, within any time limit
prescribed by or for the retirement arrangement that covered the Participant,
elect:
|X| to receive a one sum cash payment;
|X| to have a fixed dollar annuity purchased under the Contract on a
specified date, using the same annuity purchase rate basis that would
have applied if the Participant Account were being used to purchase an
annuity for the Participant;
|X| to receive regular payments in accordance with the systematic
withdrawal plan; or
|X| a combination of all or any two of the three options above.
Under certain types of retirement arrangements, the Retirement Equity Act of
1984 requires that in the case of a married Participant, a death benefit will be
payable to the Participant's spouse in the form of a "qualified pre-retirement
survivor annuity." A "qualified pre-retirement survivor annuity" is an annuity
for the lifetime of the Participant's spouse in an amount which can be purchased
with no less than 50% of the balance in the Participant Account as of the
Participant's date of death. Under the Retirement Equity Act, the spouse of a
Participant in a retirement arrangement which is subject to these rules may
consent to waive the pre-retirement survivor annuity benefit. Such consent must
acknowledge the effect of waiving the coverage, contain the signatures of the
Participant and spouse, and must be notarized or witnessed by an authorized plan
representative. Unless the spouse of a Participant in a Plan which is subject to
these requirements properly consents to the waiver of the benefit, we will pay
50% of the balance in the Participant Account to such spouse even if the
designated beneficiary is someone other than the spouse. Under these
circumstances, we would pay the remaining 50% to the Participant's designated
beneficiary.
Unless the retirement arrangement that covered the Participant provides
otherwise, a beneficiary who elects to have a fixed-dollar annuity may choose
from among the available forms of annuity. See "Effecting an Annuity," page ___.
The beneficiary may elect to purchase an annuity immediately or at a future
date. If an election includes systematic withdrawals, the beneficiary will have
the right to terminate such withdrawals and receive the remaining balance in the
Participant Account in cash (or effect an annuity with it), or to change the
frequency, size or duration of such withdrawals, subject to the minimum
distribution rules. See "Federal Tax Status" section of this Prospectus. If the
beneficiary fails to make any election within any time limit prescribed by or
for the retirement arrangement that covered the Participant, within seven days
after the expiration of that time limit, we will make a one sum cash payment to
the beneficiary. A specific Contract may provide that an annuity is payable to
the beneficiary if the beneficiary fails to make an election.
Until we pay a death benefit that results in reducing to zero the balance in the
Participant Account, we will maintain the Participant Account Value in the
Subaccounts and the Guaranteed Interest Account that make up the Participant
Account for the beneficiary in the same manner as they had been for the
Participant, except:
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|X| the beneficiary may make no contributions; and
|X| the beneficiary may not take a loan.
DISCONTINUANCE OF CONTRIBUTIONS
By notifying us, the Contractholder generally may discontinue contributions on
behalf of all Participants under a Contract or for all Participants of an
Employer covered under a Contract. Contributions under the Contract will also be
discontinued for all Participants covered by a retirement arrangement that is
terminated.
On 90 days' advance notice to the Contractholder, we may elect not to accept any
new Participant, or not to accept further contributions for existing
Participants.
The fact that contributions on a Participant's behalf are discontinued does not
otherwise affect the Participant's rights under the Contracts. However, if
contributions under a Program are not made for a Participant for a specified
period of time (24 months in certain states, 36 months in others) and the total
value of his Participant Account is at or below a specified amount ($1,000 in
certain states, $2,000 in others), we may, if permitted by the Code, elect to
cancel that Participant Account unless prohibited by the retirement arrangement,
and pay the Participant the value as of the date of cancellation.
LOAN PROVISION
The loans described in this section are generally available to Participants in
401(a) plans and 403(b) programs. The interest rate and other terms and
conditions of the loan may vary from Contract to Contract.
For plans that are subject to ERISA, it is the responsibility of the Contract
trustee or fiduciary to ensure that the interest rate or other terms and
conditions of the loan comply with all Contract qualification requirements
including the ERISA regulations.
The loans described in this section, which involve the variable investment
options, work as follows. The minimum loan amount is as specified in the
Contract, or if not specified, as we determine. The maximum loan amount is the
lesser of:
|X| $50,000, reduced by the highest outstanding balance of loans during
the one year period immediately preceding the date of the loan, or
|X| 50% of the value of the Participant's vested interest under a
Contract.
Generally, in the loan application, the Contractholder (or in certain cases, the
Participant) designates the Subaccount(s) from which the loan amount is
deducted. To repay the loan, the Participant makes periodic payments of interest
plus a portion of the principal. Prudential invests those payments in the
Subaccounts chosen by the Participant. The Participant may specify the
Subaccounts from which he may borrow and into which repayments may be invested.
If the Participant does not specify the Subaccounts from which the loan amount
is deducted, we will deduct the loan amount pro rata from the Participant
Account Value in the Subaccounts.
The maximum loan amount referred to above is imposed by federal tax law. That
limit, however, applies to all loans from any qualified plan of the Employer.
Since we cannot monitor a Participant's loan activity relating to other plans
offered to Participants, it is the Participant's responsibility to do so.
Provided that a Participant adheres to these limitations, the loan will not be
treated as a taxable distribution. If, however, the Participant defaults on the
loan by, for example, failing to make required payments, the defaulted loan
amount (as described in loan disclosure information provided to a borrowing
Participant) will be treated as a taxable distribution. In that event, we will
send the appropriate tax information to the Participant and the Internal Revenue
Service.
We charge a loan application fee of up to $75, which is deducted from the
Participant Account at the time the loan is initiated. We will not accept a
personal check as payment of the loan application fee. We also impose an annual
charge of up to $60 as a loan maintenance fee for record-keeping and other
administrative services provided in connection with the loan. This charge is
guaranteed not to increase during the term of any loan. This annualized loan
maintenance charge will be pro rated based on the number of full months that the
loan is outstanding, and we generally deduct it quarterly. Under certain
Contracts, we will deduct the loan maintenance fee annually. We will deduct the
loan maintenance charge first against the Participant Account Value under the
Guaranteed Interest Account (if available). If the Participant is not invested
in the Guaranteed Interest Account, of if the Participant does not have enough
money in that option to pay the charge, we will then deduct the charge from any
one or more of the Subaccounts in which the Participant is invested.
MODIFIED PROCEDURES
Under certain Contracts, the Contractholder or a third party acting on their
behalf provides record keeping services that would otherwise be performed by us.
Such Contracts may require procedures somewhat different than those set forth in
this Prospectus. For example, such Contracts may require that contribution
allocation requests, withdrawal requests, and/or transfer requests be directed
to the Contract's record-keeper rather than us. The record-keeper is the
Contractholder's agent, not our agent. Accordingly, transactions will be
processed and priced as of the end of the Valuation Period in which we receive
appropriate instructions and/or funds from the record-keeper. The Contract will
set forth any such different procedures.
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CHARGES, FEES AND DEDUCTIONS
ADMINISTRATIVE FEE
We impose an administrative fee to compensate for the expenses incurred in
administering the Contracts. This includes such things as issuing the Contract,
establishing and maintaining records, and providing reports to Contractholders
and Participants. We deduct this fee daily from the assets in each of the
Subaccounts at an effective annual rate of 0.35%.
CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS
We make a deduction daily from the assets of each of the Subaccounts as
compensation for assuming the risk that our estimates of longevity and of the
expenses we expect to incur over the lengthy periods that the Contract may be in
effect will turn out to be incorrect. We assess the charge daily at an annual
rate of 0.15% of the assets held in the Subaccounts.
EXPENSES INCURRED BY THE FUNDS
Participants indirectly bear the charges and expenses of the Funds. You can
review details about investment management fees and other Fund expenses in the
fee table and in the accompanying prospectuses for the Funds and the related
statements of additional information.
PREMIUM TAXES
Certain states and other jurisdictions impose on us premium taxes or similar
assessments, either at the time contributions are made or when the Participant's
Account Value is surrendered or applied to purchase an annuity. We reserve the
right to deduct an amount from contributions or the Participant's Account to
cover such taxes or assessments, if any, when applicable. Not all states impose
premium taxes on annuities. However, the rates in those that do currently range
from 0.5% to 5%.
FEDERAL TAX STATUS
The following discussion is general in nature and describes only federal income
tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. It is not intended as tax advice.
Participants and Contractholders should consult a qualified tax adviser for
complete information and advice.
ANNUITY QUALIFICATION
This discussion assumes the Contracts will be treated as annuity contracts for
federal income tax purposes. In order to qualify for the tax rules applicable to
annuity contracts, the assets underlying the Contracts must be diversified
according to certain rules. For further detail on diversification requirements,
see Dividends, Distributions and Taxes in the attached prospectus for the
Prudential Series Fund. Tax rules also require that Prudential must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. Treasury Department regulations do not
provide guidance concerning the extent to which Participants may direct
investments in the particular investment options without causing Participants,
instead of Prudential, to be considered the owner of the underlying assets. The
ownership rights under the Contract are similar to, but different in certain
aspects from, those addressed by the Internal Revenue Service in rulings holding
that the insurance company was the owner of the assets. For example,
Participants have the choice of more funds and the ability to reallocate amounts
among available Subaccounts more frequently than in the Ruling. While we believe
that Prudential will be treated as the owner of the assets of the Discovery
Account, it is possible that the Participants may be considered to own the
assets. Because of these uncertainties, Prudential reserves the right to make
any changes it deems necessary to assure that the Contracts qualify as annuity
contracts for tax purposes. Any such changes will apply uniformly to affected
Participants and will be made with such notice to affected Participants as is
feasible under the circumstances.
TAX-QUALIFIED RETIREMENT ARRANGEMENTS USING THE CONTRACTS
The Contracts may be used with qualified pension and profit sharing plans, plans
established by self-employed persons ("Keogh plans"), simplified employee
pension plans ("SEPs"), individual retirement plan accounts ("IRAs"), Roth IRAs,
and tax-deferred annuities ("TDAs"). The provisions of the tax law that apply to
these retirement arrangements that may be funded by the Contracts are complex,
and Participants are advised to consult a qualified tax adviser.
The Contracts may also be used with certain deferred compensation plans of a
state or local government or a tax-exempt organization (called "Section 457
Plans" after the Internal Revenue Code section that governs their structure).
The tax rules for such plans involve, among other things, limitations on
contributions and minimum distribution requirements. Tax-exempt organizations or
governmental employers considering the use of the Contracts to fund or otherwise
provide deferred compensation to their employees should consult with a qualified
tax adviser concerning these specific requirements. Please refer to the
discussion of Entity Owners on page 21, which may be applicable in certain
circumstances.
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CONTRIBUTIONS
In general, assuming that the requirements and limitations of tax law applicable
to the particular type of plan are adhered to by Participants and Employers,
contributions made under a retirement arrangement funded by a Contract are
deductible (or not includible in income) up to certain amounts each year.
Contributions to a Roth IRA are subject to certain limits, and are not
deductible for federal income tax purposes.
EARNINGS
Under the retirement programs with which the Contracts may be used, federal
income tax currently is not imposed upon the investment income and realized
gains earned by the Subaccounts in which the contributions have been invested
until a distribution or withdrawal is received.
DISTRIBUTIONS OR WITHDRAWALS
When a distribution or withdrawal is received, either as a lump sum, an annuity,
or as regular payments in accordance with a systematic withdrawal arrangement,
all or a portion of the distribution or withdrawal is normally taxable as
ordinary income. In some cases, the tax on lump sum distributions may be limited
by a special income-averaging rule. The effect of federal income taxation
depends largely upon the type of retirement plan and a generalized description,
beyond that given here, is not particularly useful. Careful review of tax law
applicable to the particular type of plan is necessary.
Furthermore, premature distributions or withdrawals may be restricted or subject
to a penalty tax. Participants contemplating a withdrawal should consult a
qualified tax adviser.
Under a Roth IRA, distributions are generally not taxable for federal income tax
purposes if they are made after attainment of age 59-1/2 or for certain other
reasons and if the individual had a Roth IRA in effect for at least five years.
MINIMUM DISTRIBUTION RULES
In general, distributions from qualified retirement arrangements and Section 457
Plans must begin by the "Required Beginning Date" which is April 1 of the
calendar year following the later of (1) the year in which the Participant
attains age 70-1/2 or (2) the Participant retires. The following exceptions
apply:
o For a TDA, only benefits accruing after December 31, 1986 must begin
distribution by the Required Beginning Date.
o Roth IRAs are not subject to these pre-death minimum distribution
rules.
Distributions that are made after the Required Beginning Date must generally be
made in the form of an annuity for the life of the Participant or the lives of
the Participant and his designated beneficiary, or over a period that is not
longer than the life expectancy of the Participant or the life expectancies of
the Participant and his designated beneficiary.
Distributions to beneficiaries are also subject to minimum distribution rules.
If a Participant dies before his entire interest in his Participant Account has
been distributed, his remaining interest must be distributed at least as rapidly
as under the method of distribution being used as of the Participant's date of
death. If the Participant dies before distributions have begun (or are treated
as having begun) the entire interest in his Participant Account must be
distributed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death. Alternatively, if there is a designated beneficiary,
the designated beneficiary may elect to receive payments beginning no later than
December 31 of the calendar year immediately following the year in which the
Participant dies and continuing for the beneficiary's life or a period not
exceeding the beneficiary's life expectancy (except that with respect to
distributions from a Section 457 Plan, such period cannot exceed 15 years).
Special rules apply where the deceased Participant's spouse is his designated
beneficiary.
In addition to the above rules, with respect to a Section 457 Plan, any
distribution that is payable over a period of more than one year can only be
made in substantially non-increasing amounts no less frequently than annually.
An excise tax applies to Participants or beneficiaries who fail to take the
minimum distribution in any calendar year.
TAXES PAYABLE BY PARTICIPANT
We believe the Contracts are annuity contracts for tax purposes. Accordingly, as
a general rule, Participants should not pay any tax until money is received
under the Contracts. Generally, annuity contracts issued by the same company
(and affiliates) to a Participant during the same calendar year must be treated
as one annuity contract for purposes of determining the amount subject to tax
under the rules described below.
TAXES ON WITHDRAWALS AND SURRENDER
If a Participant makes a withdrawal from the Contract or surrenders it before
annuity payments begin, the amount received will be taxed as ordinary income,
rather than as return of purchase payments, until all gain has been withdrawn.
If a Participant assigns all or part of the Contract as collateral for a loan,
the part assigned will be treated as a withdrawal. Also, if a Participant elects
the interest payment option, this will be treated, for tax purposes, as a
surrender of the Contract.
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If a Participant transfers the Contract for less than full consideration, such
as by gift, tax will be triggered on the gain in the Contract. This rule does
not apply to transfers to a spouse or incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment a Participant receives will be treated as a
partial return of purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment received by a fraction, the
numerator of which is the purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the Contract.
After the full amount of the purchase payments have been recovered tax-free, the
full amount of the annuity payments will be taxable. If annuity payments stop
due to the death of the annuitant before the full amount of the purchase
payments have been recovered, a tax deduction is allowed for the unrecovered
amount.
PENALTY TAXES ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount received under the Contract may be subject to a 10 percent
penalty tax. Amounts are not subject to this penalty tax if:
o the amount is paid on or after age 59-1/2 or the death of the
Participant;
o the amount received is attributable to the Participant becoming
disabled;
o the amount paid or received is in the form of level annuity payments
not less frequently than annually under a lifetime annuity; or
o the amount received is paid under an immediate annuity contract (in
which annuity payments begin within one year of purchase).
If the lifetime annuity payment stream is modified (other than as a result of
death or disability) before age 59-1/2 (or before the end of the five year
period beginning with the first payment and ending after age 59-1/2), the tax
for the year of modification will be increased by the penalty tax that would
have been imposed without the exception, plus interest for the deferral.
TAXES PAYABLE BY BENEFICIARIES
Generally, the same tax rules apply to amounts received by a beneficiary as
those set forth above with respect to a Participant. The election of an annuity
payment option instead of a lump sum death benefit may defer taxes. Certain
minimum distribution requirements apply upon the death of a Participant, as
discussed further below.
REQUIRED DISTRIBUTIONS UPON DEATH OF PARTICIPANT
Certain distributions must be made under the Contract upon the death of a
Participant. The required distributions depend on whether the Participant dies
on or before the start of annuity payments under the Contract or after annuity
payments are started under the Contract.
If the Participant dies on or after the annuity date, the remaining portion of
the interest in the Contract must be distributed at least as rapidly as under
the method of distribution being used as of the date of death.
If the Participant dies before the annuity date, the entire interest in the
Contract must be distributed within 5 years after the date of death. However, if
an annuity payment option is selected by the designated beneficiary and if
annuity payments begin within 1 year of the death of the Participant, the value
of the Contract may be distributed over the beneficiary's life or a period not
exceeding the beneficiary's life expectancy. The designated beneficiary is the
person to whom ownership of the Contract passes by reason of death, and must be
a natural person.
If any portion of the Contract is payable to (or for the benefit of) a
Participant's surviving spouse, such portion of the Contract may be continued
with the spouse as the owner.
ENTITY OWNERS
When a Contract is held by a non-natural person (for example, a corporation),
the Contract generally will not be taxed as an annuity and increases in the
value of the Contract will be subject to tax. Exceptions include contracts held
by an entity as an agent for a natural person, contracts held under a qualified
pension or profit sharing plan, a TDA or individual retirement plan (see
discussion above) or contracts that provide for immediate annuities.
WITHHOLDING
Taxable amounts distributed from annuity contracts in nonqualified annuity
arrangements are subject to tax withholding. Participants may generally elect
not to have tax withheld from payments. The rate of withholding on annuity
payments will be determined on the basis of the withholding certificate filed
with us. Absent these elections, we will withhold the tax amounts required by
the applicable tax regulations. Participants may be subject to penalties under
the estimated tax
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payment rules if withholding and estimated tax payments are not sufficient.
Participants who fail to provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
In addition, certain distributions from qualified plans, which are not directly
rolled over or transferred to another eligible qualified plan, are subject to a
mandatory 20% withholding for federal income tax. The 20% withholding
requirement does not apply to: (1) distributions for the life or life expectancy
of the Participant, or joint and last survivor expectancy of the Participant and
a designated beneficiary; or (2) distributions for a specified period of 10
years or more; or (3) distributions required as minimum distributions. Amounts
that are received under a Contract used in connection with a Section 457 Plan
are treated as wages for federal income tax purposes and are, thus, subject to
general withholding requirements.
TAXES ON PRUDENTIAL
Although the Account is registered as an investment company, it is not a
separate taxpayer for purposes of the Code. The earnings of the Subaccounts
invested in the Funds are taxed as part of the operations of Prudential. No
charge is being made currently against those Subaccounts for company federal
income taxes. Prudential will review the question of a charge to the Subaccounts
invested in the Funds for company federal income taxes periodically. Such a
charge may be made in future years for any federal income taxes that would be
attributable to the Contracts.
ERISA CONSIDERATIONS
Employer involvement and other factors will determine whether a Contract is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). If applicable, ERISA and the Code prevent a fiduciary and other
"parties in interest" with respect to a plan (and, for these purposes, an IRA
would also constitute a "plan") from receiving any benefit from any party
dealing with the plan, as a result of the sale of the Contract. Administrative
exemptions under ERISA generally permit the sale of insurance/annuity products
to plans, provided that certain information is disclosed to the person
purchasing the Contract. This information has to do primarily with the fees,
charges, discounts and other costs related to the Contract, as well as any
commissions paid to any agent selling the Contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found under "Charges, Fees and Deductions" starting on page
19.
Information about sales representatives and commissions may be found under
"Other Information" and "Sale of the Contract and Sales Commissions" on page
23.
In addition, other relevant information required by the exemptions is contained
in the Contract and accompanying documentation. Please consult your tax advisor
if you have any additional questions.
EFFECTING AN ANNUITY
Subject to the restrictions on withdrawals from tax-deferred annuities subject
to Section 403(b) of the Code, and subject to the provisions of the retirement
arrangement that covers him or her, a Participant may elect at any time to have
all or a part of his or her interest in the Participant Account used to purchase
a fixed dollar annuity under the Contracts. The Contracts do not provide for
annuities that vary with the investment results of any Subaccount. Withdrawals
from the Participant Account that are used to purchase a fixed dollar annuity
under the Contracts become part of Prudential's general account, which supports
insurance and annuity obligations.
In electing to have an annuity purchased, the Participant may select from the
forms of annuity described below, unless the retirement arrangement covering the
Participant provides otherwise. The annuity is purchased on the first day of the
month following receipt by us of proper written notice on a form we have
approved that the Participant has elected to have an annuity purchased, or on
the first day of any subsequent month that the Participant designates. We
generally will make the first monthly annuity payment within one month of the
date on which the annuity is purchased.
Under certain types of retirement arrangements, the Retirement Equity Act of
1984 requires that in the case of a married Participant, certain elections of
payouts which are not qualified joint and survivor annuities must include the
consent and signatures of the Participant and his spouse and must be notarized
or witnessed by an authorized plan representative. A "qualified joint and
survivor annuity" is an annuity for the Participant's lifetime with at least 50%
of the amount payable to the Participant continued after the Participant's death
to his or her spouse, if then living.
Once annuity payments begin, the annuitant cannot surrender his or her annuity
benefit and receive a one sum payment.
We make the following forms of annuity available to Participants.
LIFE ANNUITY WITH PAYMENTS CERTAIN
This is an immediate annuity payable monthly during the lifetime of the
annuitant. We guarantee that if, at the death of the annuitant, payments have
been made for less than the period certain (which may be 60, 120, 180, or 240
months, as selected by the annuitant), they will be continued during the
remainder of the selected period to his or her beneficiary.
ANNUITY CERTAIN
This is an immediate annuity payable monthly for a period certain which may be
60, 120, 180, or 240 months, as selected by the annuitant. If the annuitant dies
during the period certain, we will continue payments in the same amount the
annuitant was receiving to his or her beneficiary. We make no further payments
after the end of the period certain.
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<PAGE>
JOINT AND SURVIVOR ANNUITY WITH PAYMENTS CERTAIN
This is an immediate annuity payable monthly during the lifetime of the
annuitant with payments continued after his or her death to the contingent
annuitant, if surviving, for the latter's lifetime. Until the selected number of
payments certain have been paid, payments made to the contingent annuitant after
the annuitant's death are the same as those the annuitant was receiving.
Thereafter, the payments continued to the contingent annuitant will be a
percentage of the monthly amount paid to the annuitant such as 33%, 50%, 66%, or
100% as selected by the annuitant. The amounts of each payment made to the
annuitant will be lower as the percentage he or she selects to be paid to the
contingent annuitant is higher. If both the annuitant and the contingent
annuitant die during the period certain (which may be 60, 120, 180, or 240
months, as selected by the annuitant), we will continue payments during the
remainder of the period certain to the properly designated beneficiary.
We may make other forms of annuity available under the Contracts. The retirement
arrangement under which the Participant is covered may restrict the forms of
annuity that a Participant may elect.
If the dollar amount of the first monthly annuity payment is less than the
minimum amount specified in the Contract, or if the beneficiary is other than a
natural person receiving payments in his or her own right, we may elect to pay
the commuted value of the unpaid payments certain in one sum.
PURCHASING THE ANNUITY
We apply the value of your Participant Account, less any applicable taxes, to
the appropriate annuity purchase rate determined in accordance with the schedule
in the Contract at the time the annuity is purchased. However, we may determine
monthly payments from schedules of annuity purchase rates providing for larger
payments than the rates shown in the Contract.
We guarantee the schedule of annuity purchase rates in a Contract for ten years
from the date the Contract is issued. If at any time after a Contract has been
in effect for ten years, we modify the schedule of annuity purchase rates, the
modification is also guaranteed for ten years. A change in the schedule of
annuity purchase rates used for an annuity certain with 180 payments or less, as
described above, will apply only to amounts added to a Participant Account after
the date of change. A change in any other schedule will apply to all amounts in
a Participant Account.
OTHER INFORMATION
MISSTATEMENT OF AGE OR SEX
If an annuitant's stated age or sex (except where unisex rates apply) or both
are incorrect, we will change each benefit and the amount of each annuity
payment to that which the total contributions would have bought for the correct
age and sex. Also, we will adjust for the amount of any overpayments we have
already made.
SALE OF THE CONTRACT AND SALES COMMISSIONS
Prudential Investment Management Services LLC ("PIMS"), a wholly-owned direct
subsidiary of Prudential, acts as the principal underwriter of the Contract.
PIMS was organized in 1996 under Delaware 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. PIMS' principal business
address is 751 Broad Street, Newark, NJ 07102. The Contract is sold by
registered representatives of PIMS who are also authorized by state insurance
departments to do so. The maximum commission that we will pay to the
broker-dealer to cover both the individual representative's commission and other
distribution expenses will not exceed 3.0% of the purchase payment.
VOTING RIGHTS
As stated above, all of the assets held in the Subaccounts of the Discovery
Account are invested in shares of the corresponding Funds. We are the legal
owner of those shares. As such, we have the right to vote on any matter voted on
at any shareholders meetings of the Funds. However, as required by law, we vote
the shares of the Funds at any regular and special shareholders meetings the
Funds are required to hold in accordance with voting instructions received from
Participants. The Funds may not hold annual shareholders meetings when not
required to do so under the laws of the state of their incorporation or the
Investment Company Act of 1940. Fund shares for which no timely instructions
from Participants are received, and any shares owned directly or indirectly by
us, are voted in the same proportion as shares in the respective portfolios for
which instructions are received. Should the applicable federal securities laws
or regulations, or their current interpretation, change so as to permit us to
vote shares of the Funds in our own right, we may elect to do so.
Generally, Participants may give voting instructions on matters that would be
changes in fundamental policies and any matter requiring a vote of the
shareholders of the Funds. With respect to approval of the investment advisory
agreement or any change in a portfolio's fundamental investment policy,
Participants participating in such portfolios will vote separately on the
matter, as required by applicable securities laws.
The number of Fund shares for which a Participant may give instructions is
determined by dividing the portion of the value of the Participant Account
derived from participation in a Subaccount, by the value of one share in the
corresponding portfolio of the applicable Fund. The number of votes for which
you may give us instructions is determined as of the record date chosen by the
Board of the applicable Fund. We furnish you with proper forms and proxies to
enable you to give these
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instructions. We reserve the right to modify the manner in which the weight to
be given to voting instructions is calculated where such a change is necessary
to comply with current federal regulations or interpretations of those
regulations.
We may, if required by state insurance regulations, disregard voting
instructions if such instructions would require shares to be voted so as to
cause a change in the sub-classification or investment objectives of one or more
of the Funds' portfolios, or to approve or disapprove an investment advisory
contract for a Fund. In addition, we may disregard voting instructions that
would require changes in the investment policy or investment adviser of one or
more of the Funds' portfolios, provided that we reasonably disapprove such
changes in accordance with applicable federal regulations. If we do disregard
voting instructions, we will advise you of that action and our reasons for such
action in the next annual or semi-annual report.
SUBSTITUTION OF FUND SHARES
Although we believe it to be unlikely, it is possible that in the judgment of
its management, one or more of the Funds may become unsuitable for investment by
Contractholders and Participants. This may occur because of investment policy
changes, tax law changes, the unavailability of shares for investment or at our
discretion. In that event, we may seek to substitute the shares of another
portfolio or of an entirely different mutual fund. Before this can be done, we
would have to obtain the approval of the SEC, and possibly one or more state
insurance departments. We would notify Contractholders and Participants of any
such substitution.
PERFORMANCE INFORMATION
We may depict performance information for the Subaccounts in advertising and
reports to current and prospective Contractholders and Participants. Performance
information is based on the historical investment experience of the Funds,
adjusted to take charges under the Contract into account, and does not indicate
or represent future performance.
Total returns are based on the overall dollar or percentage change in value of a
hypothetical investment over a stipulated period, and assume a surrender of the
Contract at the end of the period. Total return quotations reflect changes in
unit values and the deduction of applicable charges including any applicable
withdrawal charges.
A cumulative total return reflects performance over a stated period of time. An
average annual total return reflects the hypothetical annually compounded return
that would have produced the same cumulative total return if the performance had
been constant over the entire period.
The Money Market Subaccount may advertise its current and effective yield.
Current yield reflects the income generated by an investment in the Subaccount
over a specified seven-day period. Effective yield is calculated in a similar
manner, except that income earned is assumed to be reinvested.
Reports or advertising may include comparative performance information,
including, but not limited to:
o comparisons to market indices,
o comparisons to other investments,
o performance rankings,
o personalized illustrations of historical performance, and
o data presented by analysts or included in publications.
See Performance Information in the Statement of Additional Information for
recent performance information.
REPORTS TO PARTICIPANTS
We will send Participants, at least annually, reports showing as of a specified
date the number of units credited to them in the Subaccounts of the Discovery
Account. We also will send each Participant annual and semi-annual reports for
the applicable Funds.
STATE REGULATION
Prudential is subject to regulation by the Department of Banking and Insurance
of the State of New Jersey as well as by the insurance departments of all the
other states and jurisdictions in which it does business. Prudential must file
an annual statement in a form promulgated by the National Association of
Insurance Commissioners. This annual statement is reviewed and analyzed by the
New Jersey Department, which makes an independent computation of Prudential's
legal reserve liabilities and statutory apportionments under its outstanding
contracts. New Jersey law requires a quinquennial examination of Prudential to
be made. Examination involves an extensive audit including, but not limited to,
an inventory check of assets, sampling techniques to check the performance by
Prudential of its contracts and an examination of the manner in which divisible
surplus has been apportioned and distributed to policyholders and
Contractholders. This regulation does not involve any supervision or control
over the investment policies of the Subaccounts or over the selection of
investments for them, except for verification of the compliance of Prudential's
investment portfolio with New Jersey law.
The laws of New Jersey also contain special provisions which relate to the
issuance and regulation of contracts on a variable basis. These laws set forth a
number of mandatory provisions which must be included in contracts on a variable
basis and prohibit such contracts from containing other specified provisions.
The Department may initially disapprove or subsequently
24
<PAGE>
withdraw approval of any contract if it contains provisions which are "unjust,
unfair, inequitable, ambiguous, misleading, likely to result in
misrepresentation or contrary to law." New Jersey also can withhold or withdraw
approval if sales are solicited by communications which involve misleading or
inadequate descriptions of the provisions of the contract.
In addition to the annual statement referred to above, Prudential is required to
file with New Jersey and other states a separate statement with respect to the
operations of all its variable contracts accounts, in a form promulgated by the
National Association of Insurance Commissioners.
LEGAL PROCEEDINGS
We are subject to legal and regulatory actions in the ordinary course of our
business, including class actions. Our pending legal and regulatory actions
include proceedings specific to us and proceedings generally applicable to
business practices in the industry in which we operate. In our insurance
operations, we are subject to class actions and individual suits involving a
variety of issues, including sales practices, claims payment and denial of
benefit matters and payment of service fees.
In certain of our pending legal and regulatory actions, large and/or
indeterminate amounts are sought, including punitive or exemplary damages.
Included in the statement of additional information is a summary of the pending
proceedings against us that we currently believe are significant. Those
proceedings involve alleged deceptive life insurance sales practices. These
sales practices alleged to have occurred are contrary to our policy. While
Prudential believes it has adequately reserved in all material respects based on
information currently available, the ultimate amount of the total cost of
remedying policyholder claims and related costs is dependent on complex and
varying factors, including the relief options to be chosen by claimants, the
dollar value of those options, and the number and type of claims that may
successfully be appealed. As with any litigation, the pending proceedings are
subject to many uncertainties, and, given the complexity and scope of these
proceedings, their outcome cannot be predicted with precision.
STATEMENT OF ADDITIONAL INFORMATION
Page
----
The contents of the Statement of Additional Information include:
Definitions 2
Other Contract Provisions 2
Administration 2
Performance Information 2
Directors of Prudential 7
Principal Officers of Prudential 9
Sale of Contracts 11
Litigation 11
Legal Matters 14
Experts 14
Financial Statements of Prudential A-1
ADDITIONAL INFORMATION
Prudential has filed a registration statement with the SEC under the Securities
Act of 1933, relating to the offering described in this Prospectus. This
Prospectus does not include all of the information set forth in the registration
statement. Certain portions have been omitted pursuant to the rules and
regulations of the SEC. You may obtain the omitted information, however, from
the SEC's principal office in Washington, D.C., upon payment of a prescribed
fee.
You may obtain further information, including the Statement of Additional
Information, from us without charge. The addresses and telephone numbers are set
forth on the cover page of this Prospectus.
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<PAGE>
SUBJECT TO COMPLETION - JANUARY 28, 2000
STATEMENT OF ADDITIONAL INFORMATION ___________, 2000
DISCOVERY PREMIER
--------------------
GROUP RETIREMENT ANNUITY
DISCOVERY PREMIER
GROUP VARIABLE ANNUITY CONTRACTS
ISSUED THROUGH
PRUDENTIAL DISCOVERY PREMIER GROUP
VARIABLE CONTRACT ACCOUNT
The Prudential Insurance Company of America ("Prudential") offers the DISCOVERY
PREMIERSM Group Variable Annuity Contracts for use in connection with retirement
arrangements that qualify for federal tax benefits under Sections 401, 403(b),
408 or 457 of the Internal Revenue Code of 1986 (the "Code") and with
non-qualified annuity arrangements on a continuous basis. Contributions to the
Contract made on behalf of a Participant may be invested in one or more of the
38 Subaccounts of Prudential Discovery Premier Group Variable Contract Account
as well as the Guaranteed Interest Account. Each Subaccount is invested in a
corresponding Portfolio of The Prudential Series Fund, Inc., AIM Variable
Insurance Funds, Inc., Alliance Variable Products Series Fund, American Variable
Insurance Series, American Century Variable Portfolios, Inc., Davis Variable
Account Fund, Inc., Dreyfus Socially Responsible Growth Fund, Inc., Franklin
Templeton Variable Insurance Products Trust, John Hancock Declaration Trust,
Invesco Variable Investment Funds, Inc., Janus Aspen Series, MFS Variable
Insurance Trust, and Warburg Pincus Trust.
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus, dated ___________, 2000. Certain portions of
that ___________, 2000 prospectus are incorporated by reference into this
Statement of Additional Information.
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE CONTRACTS UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT
OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE CONTRACTS AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE CONTRACTS IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
<PAGE>
TABLE OF CONTENTS
PAGE
DEFINITIONS ............................................................ 2
OTHER CONTRACT PROVISIONS .............................................. 2
ASSIGNMENT ............................................................ 2
PARTICIPATION IN DIVISIBLE SURPLUS .................................... 2
ADMINISTRATION ......................................................... 2
PERFORMANCE INFORMATION ................................................ 2
AVERAGE ANNUAL TOTAL RETURN ........................................... 2
NON-STANDARD TOTAL RETURN ............................................. 3
PERFORMANCE INFORMATION ............................................... 3
DIRECTORS OF PRUDENTIAL ................................................ 7
OFFICERS OF PRUDENTIAL ................................................. 9
SALE OF THE CONTRACTS .................................................. 11
LITIGATION ............................................................. 11
LEGAL MATTERS .......................................................... 14
EXPERTS ................................................................ 14
FINANCIAL STATEMENTS OF PRUDENTIAL ..................................... A-1
Prudential
30 Scranton Office Park
Scranton, PA 18507-1789
Telephone 1-800-458-6333
<PAGE>
DEFINITIONS
CONTRACTS--The group variable annuity contracts described in the Prospectus and
offered for use in connection with retirement arrangements that qualify for
federal tax benefits under Sections 401, 403(b), 408 or 457 of the Internal
Revenue Code and with non-qualified annuity arrangements.
FUNDS--The Portfolios of the Prudential Series Fund, Inc., AIM Variable
Insurance Funds, Inc., Alliance Variable Products Series Fund, American Variable
Insurance Series, American Century Variable Portfolios, Inc., Davis Variable
Account Fund, Inc., Dreyfus Socially Responsible Growth Fund, Inc., Franklin
Templeton Variable Insurance Products Trust, John Hancock Declaration Trust,
Invesco Variable Investment Funds, Inc., Janus Aspen Series, MFS Variable
Insurance Trust, and Warburg Pincus Trust.
PARTICIPANT--A person who makes contributions, or for whom contributions have
been made, and to whom they remain credited under the Contract.
PARTICIPANT ACCOUNT--An account established for each Participant to record the
amount credited to the Participant under the Contract.
PARTICIPANT ACCOUNT VALUE--The dollar amount held in a Participant Account.
PRUDENTIAL--The Prudential Insurance Company of America. "We," "us," or "our"
means Prudential.
PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT--A separate account
of Prudential registered under the Investment Company Act of 1940 as a unit
investment trust (the "Discovery Account"), invested through its Subaccounts in
shares of the corresponding Funds.
SUBACCOUNT--A division of the Discovery Account, the assets of which are
invested in shares of the corresponding Funds.
We set out other defined terms in the Prospectus.
OTHER CONTRACT PROVISIONS
ASSIGNMENT
Unless contrary to applicable law, the right to any payment under the Contract
is neither assignable nor subject to the claim of any creditor.
PARTICIPATION IN DIVISIBLE SURPLUS
A mutual life insurance company differs from a stock life insurance company in
that it has no stockholders who are the owners of the enterprise. Accordingly, a
Contractholder of Prudential participates in the divisible surplus of
Prudential, according to the annual determination of Prudential's Board of
Directors as to the portion, if any, of the divisible surplus which has accrued
on the Contracts. No assurance can be given as to the amount of divisible
surplus, if any, that will be available for distribution under these Contracts
in the future. As discussed in the Prospectus, Prudential is considering
reorganizing itself into a stock company.
ADMINISTRATION
The assets of each Subaccount of the Discovery Account are invested in a
corresponding Fund. The prospectus and the statement of additional information
of each Fund describe the investment management and administration of that Fund.
We are generally responsible for the administrative and recordkeeping functions
of the Discovery Account and pay the expenses associated with them. These
functions include enrolling Participants, receiving and allocating
contributions, maintaining Participant Accounts, preparing and distributing
confirmations, statements, and reports. The administrative and recordkeeping
expenses borne by us include salaries, rent, postage, telephone, travel, legal,
actuarial and accounting fees, office equipment, stationery and maintenance of
computer and other systems.
We are reimbursed for these administrative and recordkeeping expenses by the
daily charge against the assets of each Subaccount for administrative expenses.
That daily charge is equal to an effective annual rate of 0.50% of the net
assets in each Subaccount.
PERFORMANCE INFORMATION
AVERAGE ANNUAL TOTAL RETURN
The Discovery Account may advertise average annual total return information
calculated according to a formula prescribed by the U.S. Securities and Exchange
Commission ("SEC"). Average annual total return shows the average annual
percentage increase, or decrease, in the value of a hypothetical contribution
allocated to a Subaccount from the beginning to the end of each specified period
of time. The SEC standardized version of this performance information is based
on an assumed contribution of $1,000 allocated to a Subaccount at the beginning
of each period and full
2
<PAGE>
withdrawal of the value of that amount at the end of each specified period.
(There are no withdrawal charges under the Contract.) This method of calculating
performance further assumes that (i) a $1,000 contribution was allocated to a
Subaccount and (ii) no transfers or additional payments were made. Premium taxes
are not included in the term "charges" for purposes of this calculation. Average
annual total return is calculated by finding the average annual compounded rates
of return of a hypothetical contribution that would compare the Unit Value on
the first day of the specified period to the ending redeemable value at the end
of the period according to the following formula:
P(1 + T)n= ERV
Where T equals average annual total return, where ERV (the ending redeemable
value) is the value at the end of the applicable period of a hypothetical
contribution of $1,000 made at the beginning of the applicable period, where P
equals a hypothetical contribution of $1,000, and where n equals the number of
years.
NON-STANDARD TOTAL RETURN
In addition to the standardized average annual total return information
described above, we may present total return information computed on bases
different from that standardized method.
The Discovery Account may also present aggregate total return figures for
various periods, reflecting the cumulative change in value of an investment in
the Discovery Account for the specified period.
PERFORMANCE INFORMATION
The tables below provide performance information for each Subaccount for
specified periods ending December 31, 1999. No standardized total return table
is included because the Subaccounts are only commencing operations on or after
the date of this Statement of Additional Information. For the periods prior to
the date the Subaccounts commenced operations, non-standard performance
information for the Contracts will be calculated based on the performance of the
Funds and the assumption that the Subaccounts were in existence for the same
periods as those indicated for the Funds, with the level of Contract charges
that were in effect at the inception of the Subaccounts (this is referred to as
"hypothetical performance data"). This information does not indicate or
represent future performance.
3
<PAGE>
Table 1 below shows average annual total return assuming a hypothetical
investment of $1,000 at the beginning of the period via the Subaccount investing
in the applicable Fund and ending on 12/31/99. The tables use the same
assumptions as SEC standardized performance. That means that the rates of return
shown below reflect the mortality and expense risk fee and the
administrativefee.
TABLE 1
SUBACCOUNT "HYPOTHETICAL"
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
From Date
One Year Three Years Five Years Ten Years Established
Ended Ended Ended Ended Through Inception
Fund Portfolio 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99 Date
<S> <C> <C> <C> <C> <C> <C>
THE PRUDENTIAL SERIES FUND, INC.
Conservative Balanced Portfolio 5.15% 9.16% 10.79% 8.74% 9.06% May-83
Diversified Bond Portfolio -2.22% 3.39% 6.23% 6.12% 7.04% May-83
Equity Income Portfolio 10.92% 12.07% 15.18% 12.20% 12.86% Feb-88
Equity Portfolio 10.86% 13.37% 17.13% 13.35% 13.28% May-83
Flexible Managed Portfolio 6.20% 10.14% 12.87% 10.12% 10.15% May-83
Global Portfolio 46.30% 23.23% 20.33% 11.57% 12.52% Sep-88
Government Income Portfolio -4.16% 3.44% 5.60% 5.46% 6.10% May-89
High Yield Bond Portfolio 3.08% 3.60% 7.19% 8.21% 6.41% Feb-87
Money Market Portfolio 3.44% 3.38% 3.61% 3.54% 4.69% May-83
Prudential Jennison Portfolio 40.29% 34.65% N/A N/A 29.54% May-95
Small Capitalization Stock Portfolio 12.18% 11.36% N/A N/A 15.58% Apr-95
Stock Index Portfolio 18.85% 25.84% 26.63% 16.20% 17.37% Oct-87
20/20 Focus Portfolio N/A N/A N/A N/A 18.45% May-99
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Government Securities Fund -1.82% 4.26% 5.83% N/A 4.17% May-93
AIM V.I. International Equity Fund 54.54% 23.68% 21.43% N/A 18.32% May-93
AIM V.I. Value Fund 29.40% 28.11% 26.73% N/A 22.57% May-93
ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
Premier Growth Portfolio 31.82% 37.37% 35.53% N/A 25.81% Jun-92
Growth and Income Portfolio 10.87% 19.64% 23.41% N/A 14.98% Jan-91
Quasar Portfolio 16.58% 9.37% N/A N/A 10.13% Aug-96
AMERICAN VARIABLE INSURANCE SERIES
Asset Allocation Fund 4.93% 11.13% 14.58% 9.85% 9.63% Aug-89
Growth-Income Fund 9.15% 15.99% 18.78% 12.27% 13.47% Feb-84
International Fund 73.03% 29.96% 22.75% N/A 14.36% May-90
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income & Growth 17.52% N/A N/A N/A 24.19% Oct-97
DAVIS VARIABLE ACCOUNT FUND, INC.
Davis Value Portfolio
DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
Dreyfus Socially Responsible Growth Fund, Inc. 30.30% 28.80% 28.16% N/A 23.61% Oct-93
FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS
TRUST
Franklin Small Cap Fund 74.43% N/A N/A N/A 32.70% May-98
Templeton International Equity Fund 23.11% 14.99% 16.71% N/A 14.86% May-92
JOHN HANCOCK DECLARATION TRUST
V.A. Bond Fund -1.02% 5.47% N/A N/A 6.22% Aug-96
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - Dynamics Fund 55.10% N/A N/A N/A 91.52% Aug-97
JANUS ASPEN SERIES
Aggressive Growth Portfolio
Growth & Income Portfolio
Worldwide Growth Portfolio
MFS VARIABLE INSURANCE TRUST
MFS Bond Series -2.06% 4.51% N/A N/A 4.32% Oct-95
MFS Emerging Growth Series 76.21% 41.94% N/A N/A 35.94% Jul-95
MFS Growth Series N/A N/A N/A N/A 39.51% May-99
MFS Growth With Income Series 6.19% 18.70% N/A N/A 20.62% Oct-95
MFS Total Return Series 2.58% 11.49% N/A N/A 14.92% Jan-95
WARBURG PINCUS TRUST
Emerging Growth Portfolio N/A N/A N/A N/A 31.45%
</TABLE>
4
<PAGE>
MONEY MARKET SUBACCOUNT YIELD
The "yield" and "effective yield" figures for the Money Market Subaccount shown
below were calculated using historical investment returns of the Money Market
Portfolio of the Prudential Series Fund. All fees, expenses and charges
associated with the DISCOVERY PREMIER Group Annuity and the Series Fund have
been reflected.
The "yield" and "effective yield" of the Money Market Subaccount for the seven
days ended December 31, 1999 were 4.05 % and 4.14%, respectively.
The yield is computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the Money Market Subaccount at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the difference by the value of the subaccount at
the beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7), with the resulting figure carried
to the nearest ten-thousandth of 1%.
The deduction referred to above consists of the 0.15% charge for mortality and
expense risks and the 0.35% charge for administration.
The effective yield is obtained by taking the base period return, adding 1,
raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the
result, according to the following formula: Effective Yield = (base period
return + 1) 365/7 -1.
The yield on amounts held in the Money Market Subaccount will fluctuate on a
daily basis. Therefore, the stated yields for any given period are not an
indication of future yields.
COMPARATIVE PERFORMANCE INFORMATION
Reports or advertising may include comparative performance information,
including, but not limited to: (1) comparisons to market indices such as the Dow
Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line
Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the
Lehman Brothers bond indices; (2) comparisons to other investments, such as
certificates of deposit; (3) performance rankings assigned by services such as
Morningstar, Inc. and Variable Research and Data Services (VARDS), and Lipper
Analytical Services, Inc.; (4) data presented by analysts such as Dow Jones,
A.M. Best, The Bank Rate Monitor National Index; and (5) data in publications
such as The Wall Street Journal, Times, Forbes, Barrons, Fortune, Money
Magazine, and Financial World.
5
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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
DIRECTORS
FRANKLIN E. AGNEW--Director since 1994 (current term expires April, 2000).
Member, Committee on Finance & Dividends; Member, Corporate Governance
Committee. Business consultant since 1986. Senior Vice President, H.J. Heinz
from 1971 to 1986. Mr. Agnew is also a director of Bausch & Lomb, Inc. and Erie
Plastics Corporation. Age 64. Address: 600 Grant Street, Suite 660, Pittsburgh,
PA 15219.
FREDERICK K. BECKER--Director since 1994 (current term expires April, 2005).
Member, Auditing Committee; Member, Corporate Governance Committee. President,
Wilentz Goldman and Spitzer, P.A. (law firm) since 1989, with firm since 1960.
Age 63. Address: 90 Woodbridge Center Drive, Woodbridge, NJ 07095.
GILBERT F. CASELLAS--Director since 1998 (current term expires April, 2003).
Member, Compensation Committee. President, The Swarthmore Group, Inc. since
1999. Partner, McConnell Valdes, LLP in 1998. Chairman, U.S. Equal Employment
Opportunity Commission from 1994 to 1998. Age 46. Address: 1646 West Chester
Pike, Suite 3, West Chester, PA 19382.
JAMES G. CULLEN--Director since 1994 (current term expires April, 2001). Member,
Compensation Committee; Member, Committee on Business Ethics. President & Chief
Operating Officer, Bell Atlantic Corporation, since 1998. President & Chief
Executive Officer, Telecom Group, Bell Atlantic Corporation, from 1997 to 1998.
Vice Chairman, Bell Atlantic Corporation from 1995 to 1997. President, Bell
Atlantic Corporation from 1993 to 1995. Mr. Cullen is also a director of Bell
Atlantic Corporation and Johnson & Johnson. Age 56. Address: 1310 North Court
House Road, 11th Floor, Alexandria, VA 22201.
CAROLYNE K. DAVIS--Director since 1989 (current term expires April, 2001).
Member, Committee on Business Ethics; Member, Compensation Committee.
Independent Health Care Advisor since 1997. National and International Health
Care Advisor, Ernst & Young, LLP from 1985 to 1997. Dr. Davis is also a director
of Beckman Coulter Instruments, Inc., Merck & Co., Inc., Minimed Incorporated,
and Beverley Enterprises. Age 67. Address: 751 Broad Street, 23rd Floor, Newark,
NJ 07102.
ROGER A. ENRICO--Director since 1994 (current term expires April, 2002). Member,
Committees on Nominations & Corporate Governance; Member, Compensation
Committee. Chairman and Chief Executive Officer, PepsiCo, Inc. since 1996. Mr.
Enrico originally joined PepsiCo, Inc. in 1971. Mr. Enrico is also a director of
A.H. Belo Corporation and Dayton Hudson Corporation. Age 54. Address: 700
Anderson Hill Road, Purchase, NY 10577.
ALLAN D. GILMOUR--Director since 1995 (current term expires April, 2003).
Member, Investment Committee; Member, Committee on Finance & Dividends. Retired
since 1995. Vice Chairman, Ford Motor Company, from 1993 to 1995. Mr. Gilmour
originally joined Ford in 1960. Mr. Gilmour is also a director of Whirlpool
Corporation, MeidiaOne Group, Inc., AP Automotive Systems, Inc., The Dow
Chemical Company and DTE Energy Company. Age 64. Address: 751 Broad Street, 23rd
Floor, Newark, NJ 07102.
WILLIAM H. GRAY, III--Director since 1991 (current term expires April, 2000).
Chairman, Committees on Nominations & Corporate Governance. Member, Executive
Committee; Member, Committee on Business Ethics. President and Chief Executive
Officer, The College Fund/UNCF since 1991. Mr. Gray served in Congress from 1979
to 1991. Mr. Gray is also a director of Chase Manhattan Corporation, Municipal
Bond Investors Assurance Corporation, Rockwell International Corporation,
Union-Pacific Corporation, Warner-Lambert Company, CBS Corporation, and
Electronic Data Systems. Age 57. Address: 8260 Willow Oaks Corp. Drive, Fairfax,
VA 22031-4511.
JON F. HANSON--Director since 1991 (current term expires April, 2003). Member,
Investment Committee; Member, Committee on Business Ethics. Chairman, Hampshire
Management Company since 1976. Mr. Hanson is also a director of James E. Hanson
Management Company, Neumann Distributors, Inc., Fleet Trust and Investment
Services Company, N.A., United Water Resources, Orange & Rockland Utilities,
Inc., and Consolidated Delivery and Logistics. Age 62. Address: 235 Moore
Street, Suite 200, Hackensack, NJ 07601.
GLEN H. HINER, JR.--Director since 1997 (current term expires April, 2001).
Member, Compensation Committee. Chairman and Chief Executive Officer, Owens
Corning since 1991. Senior Vice President and Group Executive, Plastics Group,
General Electric Company from 1983 to 1991. Mr. Hiner is also a director of Dana
Corporation and Owens Corning. Age 64. Address: One Owens Corning Parkway,
Toledo, OH 43659.
CONSTANCE J. HORNER--Director since 1994 (current term expires April, 2002).
Member, Auditing Committee; Member, Committees on Nominations & Corporate
Governance. Guest Scholar, The Brookings Institution since 1993. Ms. Horner is
also a director of Foster Wheeler
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Corporation, Ingersoll-Rand Company, and Pfizer, Inc. Age 56. Address: 1775
Massachusetts Ave., N.W. Washington, D.C. 20036-2188.
GAYNOR N. KELLEY--Director since 1997 (current term expires April, 2001).
Member, Auditing Committee. Retired since 1996. Chairman and Chief Executive
Officer, The Perkin Elmer Corporation from 1990 to 1996. Mr. Kelley is also a
director of Hercules Incorporated, and Alliant Techsystems. Age 67. Address: 751
Broad Street, 23rd Floor, Newark, NJ 07102-3777.
BURTON G. MALKIEL--Director since 1978 (current term expires April, 2002).
Chairman, Investment Committee; Member, Executive Committee; Member, Committee
on Finance & Dividends. Professor of Economics, Princeton University, since
1988. Dr. Malkiel is also a director of Banco Bilbao Vizcaya, Baker Fentress &
Company, The Jeffrey Company, The Southern New England Telecommunications
Company, and Vanguard Group, Inc. Age 66. Address: Princeton University, 110
Fisher Hall, Prospect Avenue, Princeton, NJ 08544-1021.
ARTHUR F. RYAN--Chairman of the Board, President and Chief Executive Officer of
Prudential since 1994. President and Chief Operating Officer, Chase Manhattan
Bank from 1990 to 1994, with Chase since 1972. Age 56. Address: 751 Broad
Street, Newark, NJ 07102.
IDA F.S. SCHMERTZ--Director since 1997 (current term expires April, 2004).
Member, Audit Committee. Principal, Investment Strategies International since
1994. Age 64. Address: 751 Broad Street, 23rd Floor, Newark, NJ 07102.
CHARLES R. SITTER--Director since 1995 (current term expires April, 2003).
Member, Committee on Finance & Dividend; Member, Investment Committee. Retired
since 1996. President, Exxon Corporation from 1993 to 1996. Mr. Sitter began his
career with Exxon in 1957. Age 68. Address: 5959 Las Colinas Boulevard, Irving,
TX 75039-2298.
DONALD L. STAHELI--Director since 1995 (current term expires April, 2003).
Member, Compensation Committee; Member, Auditing Committee. Retired since 1996.
Chairman and Chief Executive Officer, Continental Grain Company from 1994 to
1997. President and Chief Executive Officer, Continental Grain Company from 1988
to 1994. Mr. Staheli is also director of Bankers Trust Company, Conti-Financial
Corporation and Continental Grain Company. Age 67 Address: 39 Locust Street,
Suite 204, New Canaan, CT 06840.
RICHARD M. THOMSON--Director since 1976 (current term expires April, 2000).
Chairman, Executive Committee; Chairman, Compensation Committee. Retired since
1998. Chairman of the Board, The Toronto-Dominion Bank from 1997 to 1998.
Chairman and Chief Executive Officer from 1978 to 1997. Mr. Thomson is also a
director of CGC, Inc., INCO, Limited, S.C. Johnson & Son, Inc., The Thomson
Corporation, Canadian Occidental Petroleum, Ltd., The Toronto-Dominion Bank and
Ontario Hydro. Age 64. Address: P.O. Box 1, Toronto-Dominion Centre, Toronto,
Ontario, M5K 1A2, Canada.
JAMES A. UNRUH--Director since 1996 (current term expires April, 2000). Member,
Committees on Nominations & Corporate Governance; Member, Investment Committee.
Retired since 1997. Chairman and Chief Executive Officer, Unisys Corporation,
from 1990 to 1997. Mr. Unruh is also a director of Ameritech Corporation and
Moss Micro. Age 57. Address: 751 Broad Street, Newark, NJ 07102-3777.
P. ROY VAGELOS, M.D.--Director since 1989 (current term expires April, 2001).
Chairman, Auditing Committee; Member, Executive Committee; Member, Committees on
Nominations & Corporate Governance. Chairman, Regeneron Pharmaceuticals since
1995. Chairman, Advanced Medicines, Inc. since 1997. Chairman, Chief Executive
Officer and President, Merck & Co., Inc. from 1986 to 1995, Dr. Vagelos
originally joined Merck in 1975 Dr. Vagelos is also a director of The Estee
Lauder Companies, Inc. and PepsiCo., Inc. Age 69. Address: One Crossroads Drive,
Building A, 3rd Floor, Bedminster, NJ 07921.
STANLEY C. VAN NESS--Director since 1990 (current term expires April, 2002).
Chairman, Committee on Business Ethics; Member, Executive Committee; Member,
Auditing Committee. Partner, Herbert, Van Ness, Cayci & Goodell (law firm) since
1998. Counselor at Law, Picco Herbert Kennedy (law firm) from 1990 to 1998. Mr.
Van Ness is also a director of Jersey Central Power & Light Company. Age 64.
Address: 22 Chambers Street, Princeton, NJ 08542.
PAUL A. VOLCKER--Director since 1988 (current term expires April, 2000).
Chairman, Committee on Finance & Dividends; Member, Executive Committee; Member,
Committee on Nominations & Corporate Governance. Consultant since 1997.
Chairman, Wolfensohn & Co., Inc. 1988 to 1996 Chairman, James D. Wolfensohn,
Inc. 1988 to 1996. Chief Executive Officer, James D. Wolfensohn, Inc. from 1995
to 1996. Mr. Volcker is also a director of Nestle, S.A., and Bankers Trust New
York Corporation as well as a Director of the Board of Overseers of TIAA-CREF.
Age 71, Address: 610 Fifth Avenue, Suite 420, New York, NY 10020.
JOSEPH H. WILLIAMS--Director since 1994 (current term expires April, 2002).
Member, Committee on Finance & Dividends; Member, Investment Committee.
Director, The Williams Companies since 1979. Chairman & Chief Executive Officer,
The Williams Companies from 1979 to 1993. Mr. Williams is also a director of The
Orvis Company, MTC Investors, LLC., and AEA Investors, Inc. Age 65. Address: One
Williams Center, Tulsa, OK 74102.
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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
PRINCIPAL OFFICERS
ARTHUR F. RYAN--Chairman of the Board, President and Chief Executive Officer
since 1994; prior to 1994, President and Chief Operating Officer, Chase
Manhattan Corporation. Age 56.
E. MICHAEL CAULFIELD--Executive Vice President, Financial Management since 1998;
Chief Executive Officer, Prudential Investments from 1995 to 1998; Chief
Executive Officer, Money Management Group in 1995; prior to 1995, President,
Prudential Preferred Financial Services. Age 52.
MICHELE S. DARLING--Executive Vice President Human Resources since 1997; prior
to 1997, Executive Vice President, Canadian Imperial Bank of Commerce. Age 45.
ROBERT C. GOLDEN--Executive Vice President Operations and Systems since 1997;
prior to 1997, Executive Vice President, Prudential Securities. Age 53.
MARK B. GRIER--Executive Vice President, Corporate Governance since 1998;
Executive Vice President, Financial Management from 1997 to 1998; Chief
Financial Officer from 1995 to 1997; prior to 1995, Executive Vice President,
Chase Manhattan Corporation. Age 46.
JEAN D. HAMILTON--Executive Vice President, Prudential Institutional since 1998;
President, Diversified Group since 1995 to 1998; prior to 1995, President,
Prudential Capital Group. Age 52.
RODGER A. LAWSON--Executive Vice President, International Investments & Global
Marketing Communications since 1998; Executive Vice President, Marketing and
Planning from 1996 to 1998; President and CEO, Van Eck Global, from 1994 to
1996; prior to 1994, President and CEO, Global Private Banking, Bankers Trust
Company. Age 52.
KIYOFUMI SAKAGUCHI--Executive Vice President, International Insurance since
1998; President, International Insurance Group from 1995 to 1998; prior to 1995,
Chairman and CEO, The Prudential Life Insurance Co., Ltd., Japan. Age 56.
JOHN V. SCICUTELLA--Executive Vice President, Individual Financial Services
since 1998; Chief Executive Officer, Individual Insurance Group from 1997 to
1998; Executive Vice President Operations and Systems from 1995 to 1997; prior
to 1995, Executive Vice President, Chase Manhattan Corporation. Age 49.
JOHN R. STRANGFELD--Executive Vice President, Global Asset Management since
1998; Chief Executive Officer, Private Asset Management Group (PAMG) from 1996
to 1998; President, PAMG, from 1994 to 1996; prior to 1994, Senior Managing
Director. Age 45.
JAMES J. AVERY, JR.--Senior Vice President & Chief Actuary, Individual Insurance
Group since 1997; President Prudential Select from 1996 to 1997; prior to 1995,
Executive Vice President and Chief Operating Officer, Prudential Select. Age 47.
MARTIN A. BERKOWITZ--Senior Vice President, Financial Management since 1998;
Senior Vice President and Comptroller from 1995 to 1998; prior to 1995, Senior
Vice President and CFO, Prudential Investment Corporation. Age 50.
WILLIAM M. BETHKE--Senior Vice President and Chief Investment Officer since
1997; prior to 1997, President, Capital Management Group. Age 51.
ANNE E. BOSSI--Senior Vice President, Institutional since 1998; President, Group
Life & Disability 1997 to 1998; President, Group Life Insurance 1995 to 1997;
prior to 1995, President, Northeastern Group Operations. Age 47.
RICHARD J. CARBONE--Senior Vice President and Chief Financial Officer since
1997. Controller, Salomon Brothers, New York, NY, from 1995 to 1997; prior to
1995, Controller, Bankers Trust. Age 51.
THOMAS J. CARROLL--Senior Vice President and Chief Auditor since 1999. Managing
Director, Bankers Trust Company from 1996 to 1998; prior to 1996, Global Chief
Auditor and Managing Director, Credit Suisse First Boston. Age 57.
THOMAS W. CRAWFORD--Senior Vice President, Individual Financial Services, since
1998; President and Chief Executive Officer, Prudential Property & Casualty
Company from 1996 to 1998; Vice President, Prudential Property & Casualty
Company in 1996; prior to 1996, President & CEO, Southern Heritage Insurance
Company. Age 55.
WILLIAM D. FRIEL--Senior Vice President and Chief Information Officer since
1996; prior to 1996, Chief Executive Officer, Prudential Service Company. Age
60.
MICHAEL J. HINES--Senior Vice President, Marketing and Communications since
1999; 1996 to 1998 Vice President, Marketing and Communications. Age 47.
RONALD P. JOELSON--Senior Vice President, Financial Management, since 1999.
Senior Vice President, Guaranteed Products, from 1996 to 1999. Vice President,
Guaranteed Investments, Guaranteed Products during 1996; prior to 1996, Managing
Director, Retirement Services. Age 40.
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IRA J. KLEINMAN--Senior Vice President, International Insurance Group, since
1997; prior to 1997, Chief Marketing & Product Development Officer. Age 51.
KATHLEEN KRALL--Senior Vice President, Individual Financial Services since 1999;
Vice President, Individual Financial Services from 1996 to 1999; Vice President,
Operations and Systems from 1995 to 1996; prior to 1995 Vice President, Chase
Manhattan Bank. Age 41.
JOYCE R. LEIBOWITZ--Senior Vice President, Management Internal Controls since
1999; Vice President, Management Internal Controls from 1995 to 1999; prior to
1995 Integrated Control Officer. Age 51.
JOHN M. LIFTIN--Senior Vice President and General Counsel since 1998;
Self-employed from 1997 to 1998; prior to 1997 Senior Vice President and General
Counsel, Kidder & Peabody Group, Inc. Age 55.
THOMAS E. MINERVA - Senior Vice President, Individual Financial Services, since
2000; prior to 2000, Corporate Vice President, Individual Financial Services.
Age 51.
PRISCILLA A. MYERS--Senior Vice President, Demutualization since 1998; Senior
Vice President and Auditor from 1995 to 1998; prior to 1995, Vice President and
Auditor. Age 48.
I. EDWARD PRICE--Senior Vice President since 1996; Senior Vice President and
Actuary from 1995 to 1996; prior to 1995, Chief Executive Officer, Prudential
International Insurance. Age 56.
SUSAN J. BLOUNT--Vice President and Secretary since 1995; prior to 1995,
Assistant General Counsel. Age 41.
C. EDWARD CHAPLIN--Vice President and Treasurer since 1995; prior to 1995,
Managing Director and Assistant Treasurer. Age 41.
ANTHONY S. PISZEL--Vice President and Controller since 1998; Vice President,
Enterprise Financial Management from 1997 to 1998; prior to 1997, Chief
Financial Officer, Individual Insurance Group. Age 44.
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SALE OF THE CONTRACTS
Prudential Investment Management Services LLC ("PIMS"), a subsidiary of
Prudential, offers the Contracts on a continuous basis through Corporate Office,
regional home office and group sales office employees in those states in which
the Contracts may be lawfully sold. It may also offer the Contracts through
licensed insurance brokers and agents, or through appropriately registered
direct or indirect subsidiary(ies) of Prudential, provided clearances to do so
are obtained in any jurisdiction where such clearances may be necessary.
We may pay trail commissions to registered representatives who maintain an
ongoing relationship with a Contractholder. Typically, a trail commission is
compensation that is paid periodically to a representative, the amount of which
is linked to the value of the Contract and the amount of time that the Contract
has been in effect.
LITIGATION
WE ARE SUBJECT TO LEGAL AND REGULATORY ACTIONS IN THE ORDINARY COURSE OF OUR
BUSINESS, INCLUDING CLASS ACTIONS. OUR PENDING LEGAL AND REGULATORY ACTIONS
INCLUDE PROCEEDINGS SPECIFIC TO US AND PROCEEDINGS GENERALLY APPLICABLE TO
BUSINESS PRACTICES IN THE INDUSTRY IN WHICH WE OPERATE. IN OUR INSURANCE
OPERATIONS, WE ARE SUBJECT TO CLASS ACTIONS AND INDIVIDUAL SUITS INVOLVING A
VARIETY OF ISSUES, INCLUDING SALES PRACTICES, CLAIMS PAYMENT AND DENIAL OF
BENEFIT MATTERS AND PAYMENT OF SERVICE FEES.
In certain of our pending legal and regulatory actions, large and/or
indeterminate amounts are sought, including punitive or exemplary damages. The
following is a summary of pending proceedings against us that we currently
believe are significant.
We have been subject to substantial regulatory investigations and civil
litigation involving alleged deceptive life insurance sales practices engaged in
by us and our insurance agents in violation of state and federal laws. The sales
practices alleged to have occurred are contrary to our policy.
In April 1995, a Multi-State Life Insurance Task Force (the "Task Force"),
comprised of insurance regulators from 29 states and the District of Columbia,
was formed to conduct a review of sales and marketing practices throughout the
life insurance industry. Prudential was the initial focus of the Task Force
examination. In July 1996, the Task Force released its report on its activities
(the "Task Force Report"). The Task Force Report found that some sales of life
insurance policies, including life insurance policies issued by Pruco Life, had
been improper (principally relating to improper financed insurance sales,
improper representations in sales involving abbreviated payment plans and
insurance improperly sold primarily as an investment rather than as life
insurance) and that efforts to prevent such practices were not sufficiently
effective. Pruco Life was not named in the Task Force Report, but the report
covered the sales of Pruco Life policies. Based on these findings, the Task
Force recommended, and Prudential agreed to, various changes in our sales and
other business practices controls (including as to the training, supervision and
discipline of agents and field management) and a series of fines allocated to
all 50 states and the District of Columbia. In addition, the Task Force and
Prudential agreed upon a remediation program pursuant to which relief would be
offered to policyholders who were misled when they purchased individual
permanent life insurance policies in the United States from 1982 through 1995.
By March 1997, Prudential had entered into consent orders with insurance
regulatory authorities in all 50 states and the District of Columbia in which
such authorities adopted the Task Force Report and agreed to accept this
remediation program as enhanced by the Class Action Settlement discussed below
(the "Remediation Program") and the payment of approximately $65 million in
fines, penalties and related payments to resolve with these authorities the
sales practices issues identified by the Task Force's examination (each such
agreement a "State Settlement").
Commencing in February 1995, a number individual and alleged class civil actions
were filed against Prudential and Pruco Life alleging improprieties in
connection with the sale, servicing and operation of permanent individual life
insurance policies. These actions were consolidated and transferred by the
Judicial Panel on Multi-District Litigation to the United States District Court
for the District of New Jersey (the "District Court"). In September 1996, the
plaintiffs in the alleged class actions in the consolidated proceeding joined in
the filing of an amended consolidated class action against us (the "Class
Action") and the pending individual actions (the "Individual Actions") were
stayed. The principal allegations of the Class Action were that individual
permanent life insurance was improperly sold through alleged misrepresentations
concerning the use of an existing policy's value or dividend stream to purchase
or maintain another policy (i.e., financed insurance sales), alleged
misrepresentations relating to the number of out-of-pocket cash premiums
required to be paid for a policy or the realization of specified benefits (i.e.,
"vanishing premium" or abbreviated payment plans) and alleged misrepresentations
of the insurance product sold as an investment rather than a life insurance
policy.
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In October 1996, we entered into a Stipulation of Settlement (the "Class Action
Settlement") in the Class Action covering all persons who own or owned at
termination of the policy, an individual permanent life insurance policy issued
in the United States by Prudential, Pruco Life and Pruco Life of New Jersey
during the period January 1, 1982 through December 31, 1995 (each a "Covered
Policy") other than those opting out of the Class Settlement, those who had
previously settled with us who were represented by counsel, the owners of
certain corporate-owned life insurance or trust-owned life insurance policies
and a limited number of other specified policyholders (the "Class Members"). The
Class Action Settlement proposed to settle the Class Action by adopting the
Remediation Program described in the Task Force Report and previously accepted
in the initial State Settlements plus specified enhancements and changes,
including some additional remedies. In addition, it was agreed in the Class
Action Settlement that the total pre-tax cost of remedies for the claims filed
through the ADR process of the Remediation Program described below would result
in a minimum average cost per remedy of $2,364 for the first 330,000 claims
remedied. It was also agreed that the ADR participants would be provided with
additional compensation to be determined by a formula that would range in
aggregate amount from $50 million to $300 million depending on the total number
of claims remedied, which would be distributed as determined by the District
Court at the end of the ADR claim evaluation process described below. It was
agreed in the Class Action Settlement that the aggregate amount of pre-tax cost
for remedies granted through the ADR process and the additional compensation to
be distributed at the end of the ADR process would in no event be less than $410
million. The Class Action Settlement releases Prudential and us from all claims
that have been asserted by Class Members and bars Class Members from asserting
any other claims with respect to the sales, servicing or administration of the
Covered Policies.
In October 1996, a notice of the Class Action and proposed Class Action
Settlement was provided to the owners of the approximately 10.7 million Covered
Policies, giving each owner the opportunity to opt out of the Class Action in
order to pursue alternative remedies. Owners of approximately 21,800 Covered
Policies elected to be excluded from the Class Action Settlement (the "Opt-Out
Policyholders"). In January 1997, the District Court sanctioned and fined
Prudential $1 million for failure to properly implement procedures for its
employees to retain documents in violation of the District Court's order that
required the parties to preserve all documents relevant to the resolution of the
Class Action and the Remediation Program. The District Court ordered Prudential
to implement a document retention policy and directed that an independent expert
be engaged to investigate the extent of document destruction and its impact on
the Remediation Program, so that claim evaluations would take into account any
failure to retain materials relevant to the claim. In March 1997, the District
Court issued an order certifying the class for settlement purposes only and
approving the amended Class Action Settlement as fair to Class Members. In July
1998, this order was affirmed on appeal by the U.S. Court of Appeals for the
Third circuit, although the issue of class counsel's fees was sent back to the
District court for review. In January 1999, the U.S. Supreme Court denied a writ
of certiorari filed by certain Class Members objecting to the Class Settlement.
The approval of the settlement is now final and unappealable, although the
District Court has retained jurisdiction over the administration, execution,
enforcement and interpretation of the settlement.
The Remediation Program offered two alternative forms of relief: participation
in the Alternative Dispute Resolution ("ADR") process or Basic Claim Relief. The
ADR process was designed to permit policyholders who believe they were misled
regarding the sale of their policies to submit claims for relief through a
no-cost dispute resolution process with certain specified safeguards to protect
policyholders. The ADR process has provided individual review of each claim with
remedies tailored to the type of claim and the available evidence concerning the
claim, including any evidence of document destruction by us. Remedies under the
ADR process have included, among other things: return of policy values
improperly used; cancellation of an unwanted policy and refund of some or all
premiums paid including interest; agreement that the policyholder need not make
future payments for some or all premiums due; or issuance of a substitute
product. The ADR process does not guarantee that there will be a determination
in the policyholder's favor providing for any relief or remedy. Basic Claim
Relief has provided a choice of specified remedies without a claim or showing
that any improper sales practices occurred. The Basic Claim Relief options have
included preferred rate premium loans and annuities, mutual fund shares or life
insurance policies with certain benefits or values that we will enhance.
Pursuant to the Class Action Settlement and the State Settlements, beginning in
February 1997, Remediation Program packages were mailed to Class Members (i.e.,
the owners of the 10.7 million Covered Policies, other than Opt-Out
Policyholders) informing them of their options under the Remediation Program.
The owners of approximately 1.16 million Covered Policies indicated an intent to
file an ADR claim and were provided an ADR claim form for completion and
submission. The ADR process generally has required that individual claim forms
and files be reviewed by Prudential and by one or more independent claim
evaluators. Approximately 649,000 claim forms were completed and returned by
policyholders and virtually all decision letters had been mailed to claimants as
of February 28, 1999. In many instances, claimants have the right to "appeal"
the decision to an independent reviewer. We believe that the bulk of such
appeals will be resolved in 1999. The owners of approximately 503,000 policies
indicated an interest in a Basic Claim Relief Remedy.
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In a related matter, the NASD examined our individual life insurance
broker-dealer's (Pruco Securities Corporation) sales practices with respect to
SEC-registered variable life insurance products sold in the United States from
1983 through 1995, as well as the public. In July 1999, Pruco Securities
Corporation entered into a settlement agreement with the NASD that included
findings by the NASD of improper sales practices affecting the sale of some of
our variable life products similar to those cited by the Task Force and
inadequate supervision. This settlement agreement censured Pruco Securities,
required the retention of an independent consultant to review Pruco Securities'
policies and procedures relevant to the NASD's findings, and levied a $20
million fine. This settlement did not change the Remediation Program or add to
our obligations to claimants in the Remediation Program or other policyholders.
On September 2, 1999, the Insurance Department of the State of New York formally
adopted a Report of Examination based on the Department's review, for the years
1996 and 1997, of Prudential's individual life insurance sales practices
controls and various company recordkeeping, reporting and filing requirements.
Significantly, the examination report did not identify problems with sales
practices controls or the steps taken to implement the recommendations contained
in the Task Force Report described above. However, the examiners did cite
violations relating to some of Prudential's advertisements and advertising
files, the use of unfiled policy forms in what is now a discontinued line of
business, various problems related to the back-office maintenance of new
business and complaint files, and the inability to produce all requested
documents and data in a timely manner. The Department also concluded that
Prudential failed to adequately facilitate its examination. These matters were
resolved by entry of a Stipulation in which Prudential agreed to pay a fine of
$1.5 million and agreed that the Auditing Committee of its Board of Directors
would provide semi-annual reports for a three year period to the New York
Department describing the status of steps taken to remedy the issues cited in
the Report of Examination.
We remain subject to oversight and review by insurance regulators and other
regulatory authorities with respect to our sales practices and the conduct of
the Remediation Program. The releases granted by the state insurance regulatory
authorities pursuant to the State Settlements do not become final until the
Remediation Program has been completed without any material changes to which
those regulators have not agreed. The Class Action Settlement does not cover:
policies other than individual permanent life insurance policies issued in the
United States; any type of policy issued prior to 1982 or after 1995; the
Opt-Out Policyholders, some of whom are proceeding with their own individual or
putative class actions; and individual actions not barred by the Class Action
Settlement. Prudential agreed to indemnify Pruco Life for losses, if any,
resulting from claims arising from sales practice violations that occurred
between 1982 and 1995. We believe that no other litigation is being brought
against Pruco Life that would have a material effect on its financial position.
In 1996, Prudential established a reserve to cover the cost of remedying
policyholder claims of $410 million, as agreed to in the Class Action
Settlement. Prudential had no better information available at that time upon
which to make a reasonable estimate of losses. Prudential also incurred charges
or reserves to cover administrative costs related to the ADR process, regulatory
fines, penalties and related payments, litigation costs and settlements, and
other fees and expenses associated with the resolution of sales practices issues
("Additional Sales Practices Costs") aggregating $715 million. In 1997, based on
additional information derived from claim sampling techniques, the terms of the
settlement and the number of claim forms received, management increased the
estimated liability for the cost of remedying policyholder claims in the ADR
process by $1.64 billion before taxes to approximately $2.05 billion before
taxes, of which $1.80 billion was funded in a settlement trust. Prudential also
incurred charges or additional reserves to cover Additional Sales Practices
Costs aggregating $390 million. Prudential expressly noted that additional cost
items were anticipated that could not be fully evaluated at that time. In 1998,
based on estimates derived from an analysis of claims actually remedied
(including interest) and a sample of claims still to be remedied (both estimates
included the additional liability associated with the results of the
investigation by the independent expert regarding the impact of document
destruction on the ADR program) and an estimate of additional liabilities
associated with a claimant's right to "appeal" the decision, the estimated
liability was increased for the cost of ADR remedies by $510 million before
taxes to a total of $2.56 billion before taxes, all of which has been funded in
the settlement trust. Prudential also incurred charges or established additional
reserves to cover Additional Sales Practices Costs aggregating $640 million.
WHILE PRUDENTIAL BELIEVES IT HAS ADEQUATELY RESERVED IN ALL MATERIAL RESPECTS
BASED ON INFORMATION CURRENTLY AVAILABLE, THE ULTIMATE AMOUNT OF THE TOTAL COST
OF REMEDYING POLICYHOLDER CLAIMS AND RELATED COSTS IN DEPENDENT ON COMPLEX AND
VARYING FACTORS, INCLUDING THE RELIEF OPTIONS TO BE CHOSEN BY CLAIMANTS, THE
DOLLAR VALUE OF THOSE OPTIONS, AND THE NUMBER AND TYPE OF CLAIMS THAT MAY
SUCCESSFULLY BE APPEALED. AS WITH ANY LITIGATION, THE LITIGATION BY OPT-OUT
POLICYHOLDERS AND THE INDIVIDUAL ACTIONS ARE SUBJECT TO MANY UNCERTAINTIES, AND,
GIVEN THE COMPLEXITY AND SCOPE OF THESE SUITS, THEIR OUTCOME CANNOT BE PREDICTED
WITH PRECISION.
12
<PAGE>
LEGAL MATTERS
All matters relating to New Jersey law pertaining to the Contracts, including
the validity of the Contracts and Prudential's authority to issue the Contracts,
have been passed upon by C. Christopher Sprague, Assistant General Counsel of
Prudential. Shea and Gardner of Washington, D.C. has provided advice on certain
matters relating to the federal securities laws.
EXPERTS
The financial statements of Prudential as of December 31, 1998 and 1997 and for
each of the three years in the period ended December 31, 1998 included in the
statement of additional information have been so included in reliance on the
reports of___________________________, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
______________________'s principal business address
is____________________________________________________________________.
13
<PAGE>
FINANCIAL STATEMENTS
The consolidated financial statements for Prudential included herein should be
distinguished from the financial statements of the Discovery Account, and should
be considered only as bearing upon the ability of Prudential to meet its
obligations under the Contracts. Prudential financial statements are included in
the Statement of Additional Information for Prudential's Medley Program.
[Prudential financial statements to be added to this SAI by pre-effective
amendment.]
14
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements are included in Part B:
[To be added by pre-effective amendment.]
(b) Exhibits
1. Resolution adopted by the Board of Directors of The Prudential
Insurance Company of America on November 9, 1999 establishing
the Prudential Discovery Premier Group Variable Contract
Account (the "Discovery Account"). (Note 2)
2. Not applicable.
3(a). Distribution Agreement. (Note 2)
3(b). Broker-dealer sales agreement. (Note 2)
4. Form of Group Annuity Contract offered by The Prudential
Insurance Company of America. (Note 2)
5(a). Not applicable.
5(b). Form or Participant enrollment form (including acknowledgment
of restrictions on redemption imposed by I.R.C. Section
403(b)). (Note 2)
6(a). Charter of The Prudential Insurance Company of America, as
amended November 14, 1995. (Note 3)
6(b). By-Laws of The Prudential Insurance Company of America, as
amended May 12, 1998. (Note 4)
7. Not applicable.
8. Participation Agreements. (Note 2)
9. Consent and opinion of C. Christopher Sprague, Assistant
General Counsel, The Prudential Insurance Company of America,
as to the legality of the securities being registered. (Note
2)
10(a). Consent of ______________, Independent Accountants. (Note 2)
10(b). Consent of Shea & Gardner. (Note 2)
10(c). Powers of Attorney. (Note 1)
11. Not applicable.
12. Not applicable.
13. Schedule for Computation of Performance Calculations. (Note 2)
- ----------
(Note 1) Filed herewith.
(Note 2) To be filed by pre-effective amendment.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 9 to
Form S-1, Registration No. 33-20083, filed April 9, 1998 on
behalf of The Prudential Variable Contract Real Property
Account.
(Note 4) Incorporated by reference to Form S-6, Registration No.
333-64957, filed September 30, 1998 on behalf of The
Prudential Variable Appreciable Account.
15
<PAGE>
Item 25. Directors and Officers of the Depositor
Information about the Directors and Executive Officers of Prudential,
Registrant's depositor, appears under the heading of "Directors and Officers of
Prudential" in the Statement of Additional information (Part B of this
Registration Statement).
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Registrant is a separate account of The Prudential Insurance Company of America,
a mutual life insurance company organized under the laws of the State of New
Jersey. The subsidiaries of Prudential and short descriptions of each are listed
under Item 25 to Post-Effective Amendment No. 36 to the Form N-1A registration
Statement for the Prudential Series Fund, Inc., Registration No. 2-80896, filed
May 1, 1999, the text of which is hereby incorporated.
In addition to the subsidiaries shown on the Organization Chart, Prudential
holds all of the voting securities of Prudential's Gibraltar Fund, Inc., a
Maryland corporation, in three of its separate accounts. Prudential also holds
directly and in three of its separate accounts, shares of The Prudential Series
Fund, Inc., a Maryland corporation. The balance of the shares of The Prudential
Series Fund, Inc. are hold in separate accounts of Pruco Life Insurance Company
and Pruco Life Insurance Company of New Jersey, wholly-owned subsidiaries of
Prudential. All of the separate accounts referred to above are unit investment
trusts registered under the Investment Company Act of 1940. Prudential's
Gibraltar Fund, Inc. and The Prudential Series Fund, Inc. are registered as
open-end, diversified management investment companies under the Investment
Company Act of 1940. The shares of these investment companies are voted in
accordance with the instructions of persons having interests in the unit
investment trusts, and Prudential, Pruco Life Insurance Company and Pruco Life
Insurance Company of New Jersey vote the shares they hold directly in the same
manner that they vote the shares that they hold in their separate accounts.
Registrant may also be deemed to be under common control with The Prudential
Variable Contract Account-2, The Prudential Variable Contract Account-10, and
The Prudential Variable Contract Account-11, separate accounts of Prudential
registered as open-end, diversified management investment companies under the
Investment Company Act of 1940.
Prudential is a mutual insurance company. Its financial statements have been
prepared in conformity with generally accepted accounting principles, which
include statutory accounting practices prescribed or permitted by state
regulatory authorities for insurance companies.
Item 27. Number of Contractholders
Not applicable.
Item 28. Indemnification
The Registrant, in conjunction with certain affiliates, maintains insurance on
behalf of any person who is or was a trustee, director, officer, employee, or
agent of the Registrant, or who is or was serving at the request of the
Registrant as a trustee, director, officer, employee or agent of such other
affiliated trust or corporation, against any liability asserted against and
incurred by him or her arising out of his or her position with such trust or
corporation.
New Jersey, being the state of organization of The Prudential Insurance Company
of America ("Prudential"), permits entities organized under its jurisdiction to
indemnify directors and officers with certain limitations. The relevant
provisions of New Jersey law permitting indemnification can be found in Section
14A:3-5 of the New Jersey Statutes Annotated. The text of Prudential's By-law
27, which relates to indemnification of officers and directors, is incorporated
by reference to Exhibit (8) (ii) of Post-Effective Amendment No. 12 to Form N-4,
Registration No. 33-25434, filed April 30, 1997, on behalf of the Prudential
Variable Contract Account.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer of controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriter
(a) Prudential Investment Management Services LLC ("PIMS"), a direct
wholly owned subsidiary of Prudential, acts as the principal
underwriter for the registrant and also for The Prudential
<PAGE>
Variable Contract Account-2, The Prudential Variable Contract
Account-10, and The Prudential Variable Contract Account-11, which
are registered as open-end management investment companies under the
Investment Company Act of 1940. It also acts as principal
underwriter for The Prudential Variable Contract Account-24, The
Prudential Variable Contract GI-2, and The Prudential Discovery
Premier Group Variable Contract Account, which are registered as
unit investment trusts under the Investment Company Act of 1940.
PIMS is also distributor for the following companies, which are
registered as open-end management investment companies under the
Investment Company Act of 1940: Cash Accumulation Trust, Command
Money Fund, Command Government Fund, Command Tax-Free Fund, the
Global Total Return Fund, Inc., Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity
Fund), Prudential Balanced Fund, Prudential California Municipal
Fund, Prudential Distressed Securities Fund, Inc., Prudential
Diversified Bond Fund, Inc., Prudential Emerging Growth Fund, Inc.,
Prudential Equity Fund, Inc., Prudential Equity Income Fund,
Prudential Europe Growth Fund, Inc., Prudential Global Genesis Fund,
Inc., Prudential Global Limited Maturity Fund, Inc., Prudential
Government Income Fund, Inc., Prudential Government Securities
Trust, Prudential High Yield Fund, Inc., Prudential High Yield Total
Return Fund, Inc., Prudential Index Series Fund, Prudential
Institutional Liquidity Portfolio, Inc., Prudential Intermediate
Global Income Fund, Inc., Prudential International Bond Fund, Inc.,
The Prudential Investment Portfolios, Inc., Prudential Mid-Cap Value
Fund, Prudential MoneyMart Assets, Inc., Prudential Mortgage Income
Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential National Municipals Fund, Inc., Prudential
Natural Resources Fund, Inc., Prudential Pacific Growth Fund, Inc.,
Prudential Real Estate Securities Fund, Prudential Small-Cap Quantum
Fund, Inc. Prudential Small Company Value Fund, Inc., Prudential
Special Money Market Fund, Inc., Prudential Structured Maturity
Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential 20/20
Focus Fund, Prudential Utility Fund, Inc., Prudential World Fund,
Inc. and The Target Portfolio Trust.
(b)(1) The following table sets forth information regarding certain
officers of PIMS. As a limited liability company, PIMS has no
directors. None of these persons has a position or office with the
Registrant. The principal business address for the following persons
is 751 Broad Street, Newark, NJ 07102.
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
Robert F. Gunia President
C. Edward Chaplin Treasurer
Kevin B. Frawley Senior Vice President
and Chief Compliance
Officer
Jean D. Hamilton Executive Vice President
John R. Strangfeld Executive Vice President
William V. Healey Senior Vice President,
Secretary and Chief Legal
Officer
Margaret M. Deverell Senior Vice President, Comptroller
and Chief Financial Officer
(c) NAME OF NET UNDERWRITING
PRINCIPAL DISCOUNTS AND COMPENSATION
UNDERWRITER COMMISSIONS ON REDEMPTION
------------------ ----------------- -------------
Prudential Investment
Management Services, LLC $0 $0
Item 30. Location of Accounts and Records
All accounts, books and documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the rules thereunder are maintained by
the Registrant through Prudential at the following addresses:
<PAGE>
The Prudential Insurance Company of America
and The Prudential Investment Corporation
751 Broad Street
Newark, New Jersey 07102-3777
The Prudential Insurance Company of America
and The Prudential Investment Corporation
Gateway Buildings Two, Three and Four
100 Mulberry Street
Newark, New Jersey 07102
The Prudential Insurance Company of America and
The Prudential Investment Corporation
56 North Livingston Avenue
Roseland, New Jersey 07088
The Prudential Insurance Company of America
c/o Prudential Investments
30 Scranton Office Park
Scranton, Pennsylvania 18507-1789
The Prudential Insurance Company of America
c/o The Prudential Asset Management Company, Inc.
71 Hanover Road
Florham Park, New Jersey 07932
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Item 31. Management Services
None.
Item 32. Undertakings
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as necessary to ensure that the audited financial
statements in this registration statement are never more than 16
months old for so long as payments under the variable annuity
contracts may be accepted, unless otherwise permitted.
(b) to include either (1) as part of any enrollment form to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement
of Additional Information.
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form promptly
upon written or oral request.
(d) Prudential Insurance Company of America hereby represents that the
fees and charges deducted under the Contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Prudential
Insurance Company of America.
403(b) ANNUITIES
The Registrant intends to rely on the no-action response dated November 28,
1988, from Ms. Angela C. Goelzer of the Commission staff to the American Council
of Life Insurance concerning the redeemability of Section 403(b) annuity
contracts and the Registrant has complied with the provisions of paragraphs
(1)-(4) thereof.
TEXAS ORP
The Registrant intends to offer Contracts to Participants in the Texas Optional
Retirement Program. In connection with that offering, Rule 6c-7 of the
Investment Company Act of 1940 is being relied upon and paragraphs (a)-(d) of
that Rule will be complied with.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant and
the Depositor have duly caused this Registration Statement to be signed on their
behalf, in the City of Newark, and the State of New Jersey on this 28th day of
January, 2000.
The Prudential Discovery Premier Group Variable
Contract Account
------------------------------------------------
(Registrant)
BY: The Prudential Insurance Company of America
-------------------------------------------------
(Depositor)
By: /s/ C. Christopher Sprague
- -------------------------------------
C. Christopher Sprague
Assistant General Counsel
- -------------------------------------
(Signature and Title)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
below on this 28th day of January, 2000.
SIGNATURE AND TITLE
/s/ * /s/ * .
----------------------------------- ------------------------------------
Arthur F. Ryan Franklin E. Agnew
Chairman of the Board, Director
President and Chief Executive
Officer
/s/ * /s/ * .
----------------------------------- ------------------------------------
Anthony S. Piszel Roger A. Enrico
Vice President and Controller Director
(Chief Accounting Officer)
/s/ * /s/ * .
----------------------------------- ------------------------------------
Richard J. Carbone Allan D. Gilmour
Senior Vice President and Director
Principal Financial Officer
/s/ * /s/ * .
----------------------------------- ------------------------------------
Frederic K. Becker Jon F. Hanson
Director Director
/s/ * /s/ * .
----------------------------------- ------------------------------------
Gilbert F. Casellas Glen H. Hiner
Director Director
/s/ * /s/ * .
----------------------------------- ------------------------------------
James G. Cullen P. Roy Vagelos, M.D.
Director Director
/s/ * /s/ * .
----------------------------------- ------------------------------------
Gaynor N. Kelley Stanley C. Van Ness
Director Director
/s/ *
-----------------------------------
Burton G. Malkiel
Director
* By: C. Christopher Sprague .
--------------------------------
C. Christopher Sprague
(Attorney-In-Fact)
POWER OF ATTORNEY
Know all men by these presents:
That I, ANTHONY PIZEL, of NEWARK, NEW JERSEY, am the Senior Vice President
and Comptroller of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 28TH day of
January, 2000.
/s/ Anthony Pizel
-----------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, RICHARD J. CARBONE, of NEWARK, NEW JERSEY, am the Senior Vice
President and Chief Financial Officer of The Prudential Insurance Company of
America, do hereby make, constitute and appoint as my true and lawful attorney
in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E.
KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER
SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name,
place and stead, to sign, where applicable: annual reports on Form 10-K,
registration statements on the appropriate forms prescribed by the Securities
and Exchange Commission, and any other periodic documents and reports required
under the Investment Company Act of 1940, the Securities Act of 1933 and all
amendments thereto executed on behalf of The Prudential Insurance Company of
America and filed with the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 28th day of January, 2000.
/s/ Richard J. Carbone
----------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, FRANKLIN E. AGNEW, of PITTSBURGH, PENNSYLVANIA, a member of the
Board of Directors of The Prudential Insurance Company of America, do hereby
make, constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Franklin E. Agnew
---------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Frederic K. Becker, Short Hills, New Jersey, a member of the Board
of Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Frederic K. Becker
----------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Gilbert F. Casellas, Chevy Chase, Maryland, a member of the Board
of Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 27th day of January, 2000.
/s/ Gilbert F. Casellas
-----------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, James G. Cullen, Alexandria, Virginia, a member of the Board of
Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 25th day of January, 2000.
/s/ James G. Cullen
-------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Allan D. Gilmour, of Dearborn, Michigan, a member of the Board of
Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Allan D. Gilmour
--------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Roger A. Enrico, of Greenwich, Connecticut, a member of the Board
of Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 25th day of January, 2000.
/s/ Roger A. Enrico
-------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Jon F. Hanson, of Far Hills, New Jersey, a member of the Board of
Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Jon F. Hanson
-----------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Glen H. Hiner, of Toledo, Ohio, a member of the Board of Directors
of The Prudential Insurance Company of America, do hereby make, constitute and
appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L.
BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E.
SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or
any of them severally, for me and in my name, place and stead, to sign, where
applicable: annual reports on Form 10-K, registration statements on the
appropriate forms prescribed by the Securities and Exchange Commission, and any
other periodic documents and reports required under the Investment Company Act
of 1940, the Securities Act of 1933 and all amendments thereto executed on
behalf of The Prudential Insurance Company of America and filed with the
Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Glen H. Hiner
-----------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Gaynor N. Kelley, of Chicago, Illinois, a member of the Board of
Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Gaynor N. Kelley
--------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Burton G. Malkiel, of Princeton, New Jersey, a member of the Board
of Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 27th day of January, 2000.
/s/ Burton G. Malkiel
---------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Arthur F. Ryan, of Mendham, New Jersey, a member of the Board of
Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Arthur F. Ryan
------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, P. Roy Vagelos, of Far Hills, New Jersey, a member of the Board of
Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ P. Roy Vagelos
------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
<PAGE>
POWER OF ATTORNEY
Know all men by these presents:
That I, Stanley C. Van Ness, of Brielle, New Jersey, a member of the Board
of Directors of The Prudential Insurance Company of America, do hereby make,
constitute and appoint as my true and lawful attorney in fact, LEE D.
AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J.
LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR
D. WOODS III or any of them severally, for me and in my name, place and stead,
to sign, where applicable: annual reports on Form 10-K, registration statements
on the appropriate forms prescribed by the Securities and Exchange Commission,
and any other periodic documents and reports required under the Investment
Company Act of 1940, the Securities Act of 1933 and all amendments thereto
executed on behalf of The Prudential Insurance Company of America and filed with
the Securities and Exchange Commission for the following:
The Prudential Discovery Premier Group Variable Contract Account and group
annuity contracts, to the extent they represent participating interests in
said Account.
IN WITNESS WHEREOF, I have hereunto set my hands this 26th day of January, 2000.
/s/ Stanley C. Van Ness
-----------------------
State of __________)
) SS
County of _________)
On this ____ day of __________ 2000, before me personally appeared, to me
known to me to be the person mentioned and described in and who executed the
foregoing instrument and duly acknowledged to me that (s)he executed the same.
My commission expires:
Notary Public
