INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11
- - ------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11
- - ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or Rule
14a-6(i)(2).
/ / $500 per each party per Exchange Act Rule 14a-6(i)(3), or Rule
14a-6(i)(2).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11
30 Scranton Office Park
Moosic, Pennsylvania 18507
Notice of Meeting -- November 22, 1996
To Persons Having Voting Rights in Respect of
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11
------------------------------------
You are hereby notified that pursuant to the Rules and Regulations of The
Prudential Variable Contract Account-11 ("VCA-11"), a meeting of persons having
voting rights in respect of VCA-11 will be held at the offices of The Prudential
Insurance Company of America, 751 Broad Street, 4th Floor, Executive Conference
Room, Newark, New Jersey 07102 on November 22, 1996, at 9:30 A.M. (New York
time) for the following purposes:
1. To elect certain Members of The Prudential Variable Contract
Account-11 Committee (the "Committee"), each of whom shall serve for
an indefinite term;
2. To approve or disapprove certain changes to VCA-11's fundamental
investment restrictions;
3. To ratify or reject the selection of Price Waterhouse LLP as the
independent public accountant for VCA-11;
4. To approve or disapprove proposed amendments to the Rules and
Regulations of VCA-11 eliminating the need for certain meetings of
persons having voting rights; and
5. To consider and transact such other business as may properly come
before the meeting in accordance with the Rules and Regulations of
VCA-11.
In accordance with the Rules and Regulations of VCA-11, the number of votes
entitled to be cast was determined as of September 13, 1996. Only those persons
who had VCA-11 voting rights as of September 13, 1996 are entitled to notice of,
and to vote at, the meeting. If you plan to attend the meeting and would like
directions, you may obtain them by calling 1-800-458-6333.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
SPECIFY YOUR CHOICES AND SIGN, DATE AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE IN THE ENCLOSED SELF-ADDRESSED ENVELOPE WHICH REQUIRES
NO
<PAGE>
2
POSTAGE. IF YOU DO ATTEND THE MEETING, YOU MAY REVOKE
THE PROXY AND VOTE IN PERSON.
By order of the Committee
September 23, 1996 Thomas A. Early
Secretary to the Committee
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11
MEETING -- NOVEMBER 22, 1996
PROXY STATEMENT
The accompanying Proxy is solicited on behalf of the Committee of The
Prudential Variable Contract Account-11 ("VCA-11" or the "Account") and will be
voted at the meeting of persons having voting rights in respect of VCA-11 to be
held November 22, 1996 and at any adjournment thereof. Each Proxy may be revoked
at any time before its exercise by written revocation addressed to the Secretary
of The Prudential Variable Contract Account-11 Committee, c/o Prudential
Retirement Services, 30 Scranton Office Park, Moosic, PA 18507, and any person
having voting rights who attends the meeting may vote in person whether or not
he or she has previously executed a Proxy.
This solicitation is being made by use of the mails, but also may be made
by telephone, telegraph or personal interview, and the cost will be borne by The
Prudential Insurance Company of America ("Prudential"), whose principal business
address is 751 Broad Street, Newark, NJ 07102. As explained below, Prudential
makes a charge for providing administrative services to VCA-11, including this
solicitation. The approximate date on which this Statement and the accompanying
Proxy will first be sent to each person having VCA-11 voting rights is September
23, 1996.
There are [___] votes eligible to be cast by persons having VCA-11 voting
rights. Each person who had such rights on September 13, 1996, is entitled to
vote, and is entitled to the number of votes and fractions thereof equal to the
number of dollars and fractions thereof as of September 13, 1996, in his
individual accumulation account in VCA-11 or in the accumulation accounts under
a contract issued in connection with deferred compensation plans established
under Section 457 of the Internal Revenue Code of 1986, as amended. Prudential
is entitled to vote the number of votes and fractions thereof equal to $_______
of its own funds invested in VCA-11 as of September 13, 1996, which represents
__% of the Account. Prudential will cast its votes in the same proportions as
all other votes represented at the meeting in person or by proxy.
INVESTMENT MANAGEMENT AND ADMINISTRATION
Prudential is VCA-11's investment adviser. Prudential has entered into a
service agreement with its wholly-owned subsidiary, The Prudential Investment
Corporation ("PIC"), 751 Broad Street, Newark, NJ 07102, pursuant to which PIC
provides
1
<PAGE>
substantially all investment management services for VCA-11, subject to
Prudential's supervision. Prudential continues to have responsibility for all
investment advisory services under its investment management agreement with the
Account. Pursuant to the service agreement between Prudential and PIC,
Prudential reimburses PIC for its costs and expenses.
Prudential Retirement Services, Inc. ("PRSI"), 30 Scranton Office Park,
Moosic, PA 18507, a wholly-owned indirect subsidiary of Prudential, is the
principal underwriter of the Account.
Prudential is also responsible for the administrative and recordkeeping
functions of VCA-11 and pays the expenses associated with them. Prudential has
entered into a service agreement with its indirect wholly-owned subsidiary, The
Prudential Asset Management Company, Inc. ("PAMCO"), 30 Scranton Office Park,
Moosic, PA 18507, which provides that PAMCO may furnish certain administrative
and recordkeeping services in connection with Prudential's obligations to
investment companies such as VCA-11 and provides that Prudential will reimburse
PAMCO for its costs and expenses. Prudential is reimbursed for these
administrative and recordkeeping expenses by the annual account charge and the
daily charge against the assets of the Account for administrative expenses.
UPON REQUEST, VCA-11 WILL FURNISH, WITHOUT CHARGE, A COPY OF VCA-11'S MOST
RECENT ANNUAL REPORT AND THE MOST RECENT SEMIANNUAL REPORT SUCCEEDING THE
ANNUAL REPORT, IF ANY, TO ANY PERSON WITH VCA-11 VOTING RIGHTS. IF YOU WISH TO
OBTAIN COPIES OF THESE REPORTS, MAIL A REQUEST TO PRUDENTIAL, C/O PRUDENTIAL
RETIREMENT SERVICES, 30 SCRANTON OFFICE PARK, MOOSIC, PENNSYLVANIA 18507, OR
CALL 1-800-458-6333.
MEETING PROPOSALS
Generally, a proposal intended to be presented at a meeting of persons with
VCA-11 voting rights must be received by the Account a reasonable time before
the solicitation of proxies is made, usually no less than 120 days before the
mailing. Since the Account no longer holds annual meetings, all proposals
received from persons with VCA-11 voting rights shall be retained by the
Account, to be eligible for distribution with the proxy materials for the next
called meeting of such persons.
2
<PAGE>
1. ELECTION OF MENDEL A. MELZER, JONATHAN M. GREENE, AND SAUL K. FENSTER TO
THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-11 COMMITTEE
VCA-11 is managed by The Prudential Variable Contract Account-11 Committee
(the "VCA-11 Committee" or the "Committee"). The Members of the Committee are
elected by the persons having voting rights in respect of the VCA-11 Account.
Once approved by those persons having VCA-11 voting rights, each Member of the
Committee serves for an indefinite term. The Committee met three times in 1995.
The Committee has nominated Mendel A. Melzer, Jonathan M. Greene, and Saul
K. Fenster to serve as Members of the Committee. Mark Fetting, currently
Chairman and a Member of the Committee, and James Scott, currently a Member of
the Committee, will resign if the nominees are elected. Mary C. Gencher has
resigned as a Member of the Committee effective September 30, 1996. If elected
as Members, it is expected that the Committee will elect Mr. Melzer as Chairman
and appoint Mr. Greene as President. The table below sets forth information
about the Members of the Committee who will continue to serve, the nominees to
the Committee, and the officers of VCA-11, who like Committee Members serve for
an indefinite term.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR LAST 5
NAME AGE POSITION YEARS
---- --- -------- --------------------------------------
<S> <C> <C> <C>
Mendel A. Nominee for Since 1995, Chief Financial Officer of
Melzer*/ Member of the Prudential's Money Management Group;
Committee 1993 to 1995, Senior Vice President and
Chief Financial Officer of Prudential
Preferred Financial Services; prior to
1993, Managing Director, PIC.
Jonathan M. Nominee for Since 3/96, President of Investment
Greene*/ Member of the Management of Prudential's Money
Committee Management Group; prior to 3/96, Vice
President and Portfolio Manager, T. Rowe
Price Associates, Inc. (investments).
Saul K. Nominee for President, New Jersey Institute of
Fenster Member of the Technology (education).
Committee
W. Scott Member of the Since 4/95, Principal, Scott McDonald &
McDonald, Jr. Committee Associates; prior to 4/95, Executive Vice
since 9/85 President, Fairleigh Dickinson University.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION FOR LAST 5
NAME AGE POSITION YEARS
---- --- -------- --------------------------------------
<S> <C> <C> <C>
Joseph Member of the Vice President, Interclass (international
Weber Committee corporate learning).
since 9/85
Thomas A. Secretary to Since 4/94, Vice President and General
Early the Counsel, Prudential Retirement Services;
Committee prior to 1994, Associate General Counsel,
since 2/95 Frank Russell Company.
Rosanne J. Assistant Assistant General Counsel of Prudential.
Baruh Secretary to
the
Committee
since 6/88
C. Christopher Assistant Since 12/94, Assistant General Counsel,
Sprague Secretary to Prudential; prior to 12/94, Staff Attorney and
the Senior Counsel, U.S. Securities and
Committee Exchange Commission.
since 2/95
Michael G. Assistant Since 11/93, Director and Assistant
Williamson Secretary to Comptroller, Prudential Retirement
the Services; prior to 11/93, Manager,
Committee Prudential Retirement Services.
since 11/93
</TABLE>
- - ---------------
* Messrs. Greene and Melzer, nominees to be Members of the Committee, are
interested persons of Prudential and VCA-11, as that term is defined in the
Investment Company Act of 1940, because they are officers of Prudential,
the investment adviser of VCA-11. Certain actions of the Committee,
including the annual continuance of the Agreement for Investment Management
Services between VCA-11 and Prudential, must be approved by a majority of
the Members of the Committee who are not interested persons of Prudential,
its affiliates or VCA-11. Messrs. Fenster, McDonald and Weber are not
interested persons of Prudential, its affiliates or VCA-11. However, Mr.
Fenster is President of the New Jersey Institute of Technology. Prudential
has issued a group annuity to the Institute and provides group life and
group health insurance to its employees.
4
<PAGE>
None of the Members of or nominees to the Committee have any beneficial
interest in the Account. Mr. Melzer also serves as a director on the Board of
Cashway Furniture, Inc. of Minneapolis, Minnesota.
The Committee has no nominating or compensation committees. The Committee
does have an audit subcommittee, which is composed solely of the outside
Members, and which meets with the independent public accountants, management,
and internal auditors periodically to evaluate each party's execution of their
respective responsibilities. During 1995, the audit subcommittee -- consisting
of Ms. Gencher and Messrs. Fenster and Weber -- met once.
Prudential, under an agreement with VCA-11, pays all compensation to the
Members of the Committee. Members of the Committee who are affiliated with
Prudential receive no additional compensation for services they perform for or
on behalf of VCA-11. In addition, the officers of VCA-11 are all officers or
employees of Prudential and receive no additional compensation for services they
perform for or on behalf of VCA-11. Compensation for the current outside Members
of the Committee appears on the table below.
5
<PAGE>
<TABLE>
<CAPTION>
Total 1995
Compensation
Pension or related to
Retirement VCA-11 and
Aggregate Benefits Other
1995 Accrued as Estimated Prudential-
Compensation Part of Total Annual Related
Related to VCA-11 Benefits Upon Investment
Name VCA-11(1) Expenses Retirement Companies
- - ---------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Mary C.
Gencher $2,800 None None $ 5,600(2)
W. Scott
McDonald,
Jr. $2,800 None None $22,000(3)
Joseph
Weber $2,800 None None $24,800(4)
</TABLE>
The nominees to the VCA-11 Committee will be elected if approved by more
than 50% of the votes of persons having VCA-11
- - --------
(1) Fees are paid by Prudential, not VCA-11.
(2) During 1995, Ms. Gencher served on the Board or Committee of two
Prudential-related investment companies. All of her 1995 compensation was
paid by Prudential.
(3) During 1995, Mr. McDonald served on the Board or Committee of four
Prudential-related investment companies. Of his 1995 compensation, $5,600
was paid by Prudential, and $16,400 was paid by Prudential-related
investment companies.
(4) During 1995, Mr. Weber served on the Board or Committee of five
Prudential-related investment companies. Of his 1995 compensation, $8,400
was paid by Prudential, and $16,400 was paid by Prudential-related
investment companies.
6
<PAGE>
voting rights who are present or represented by proxy at the November 22, 1996
meeting.
2. APPROVAL OF CHANGES TO THE ACCOUNT'S FUNDAMENTAL INVESTMENT RESTRICTIONS
On August 14, 1996, at the request of the Account's investment adviser, the
Committee, including all Committee Members who are not interested persons of
Prudential, its affiliates, or the Account, considered and determined to propose
revisions to the Account's fundamental investment restrictions. The investment
adviser recommended adoption of the proposed revisions for several reasons.
First, the proposed changes would make the wording of the investment
restrictions generally consistent with proposed changes to the investment
restrictions for VCA-10, one of the other investment companies available under
the Medley Program. There would be some differences to account for the fact that
VCA-11 is a money market fund. These proposed changes would make the
restrictions of VCA-10 and VCA-11 generally consistent with other funds managed
by the investment adviser. This standardization is designed to increase
efficiency and facilitate compliance efforts, thereby reducing the upward
pressure on administrative costs. Second, the proposed changes would change
certain restrictions from fundamental to non-fundamental, where permitted by the
Investment Company Act of 1940 (the "1940 Act"). This provides the flexibility
for the Committee to change the restriction without holding a meeting of persons
having voting rights with respect to the Account. Without these changes the
Committee may be faced with the choice of increasing the upward pressure on
costs by holding a meeting or forgoing the desired change in the investment
restriction.
As a money market fund, VCA-11 is subject to the requirements of a rule of
the Securities and Exchange Commission ("SEC") that strictly limits the types of
securities in which VCA-11 may invest. In general, VCA-11 is permitted only to
invest in certain U.S. dollar-denominated securities that VCA-11 determines to
present minimal credit risk, and VCA-11 is required to maintain its
dollar-weighted average portfolio maturity at 90 days or less. More information
about these requirements is included in the prospectus dated May 1, 1996 at page
15 and the Appendix thereto.
Because this SEC rule already significantly limits the types of securities
in which VCA-11 may invest, the Committee and the investment adviser do not
expect that the revisions to the restrictions will have any impact on the
Account's current investment practices. [TRUE?] As noted above, the revisions
are being made for the sake of consistency and future flexibility. Based on
these considerations, the Committee believes that
7
<PAGE>
approval of the proposed changes are in the best interests of Contractholders
and participants.
The various proposed changes are set forth below.
(i) CONCENTRATION IN PARTICULAR INDUSTRIES. The Committee recommends that
the two following fundamental investment restrictions be stricken:
"Seventy-five percent of the assets held in [the] Account are subject
to the limitation that no purchase of a security, other than a
security of the U.S. Government or its agencies and instrumentalities,
will be made for [the] Account if as a result of such purchase more
than 5% of the total value of the Account's assets will be invested in
the securities of one issuer."
"[VCA-11 will not:] Purchase any securities (other than obligations of
the U.S. Government, its agencies and instrumentalities) if as a
result 25% or more of the value of the Account's total assets
(determined at the time of investment) would be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation
with respect to money market instruments of domestic banks, U.S.
branches of foreign banks that are subject to the same regulations as
U.S. banks, and foreign branches of domestic banks (provided that the
domestic bank is unconditionally liable in the event of the failure of
the foreign branch to make payment on its instruments for any
reason)."
In their place, the Committee recommends the substitution of the following
fundamental investment restriction:
"VCA-11 will not purchase any security (other than obligations of the
U.S. Government, its agencies or instrumentalities) if as a result:
(i) with respect to 75% of VCA-11's total assets, more than 5% of
VCA-11's total assets (determined at the time of investment) would
then be invested in securities of a single issuer, or (ii) 25% or more
of VCA-11's total assets (determined at the time of the investment)
would be invested in a single industry. Notwithstanding this
restriction, there is no limitation with respect to money market
instruments of domestic banks, U.S. branches of foreign banks that are
subject to the same regulations as U.S. banks, and foreign branches of
domestic banks (provided that the domestic bank is unconditionally
liable in the event of the failure of the foreign branch to make
payment on its instruments for any reason)."
8
<PAGE>
This proposed change merely restates the existing restrictions in
simplified form. The current restriction states that all investments in bank
money market instruments will not be grouped together and considered an
investment in the banking industry subject to the 25% limitation. This provision
is included in the proposed restriction as well. The Committee does not
anticipate that this proposed change will have any impact on the Account's
investment practices.
(ii) INVESTMENTS IN REAL ESTATE-RELATED SECURITIES AND FINANCIAL FUTURES.
The Committee recommends that the following fundamental investment restriction
be stricken:
"[VCA-11 will not:] Buy or sell real estate, mortgages,
commodities or commodity contracts . . . ."
In its place, the Committee recommends the substitution of the two following
fundamental investment restrictions:
"No purchase of or investment in real estate will be made
for the account of VCA-11."
"No commodities or commodity contracts will be purchased or
sold for the account of VCA-11."
This proposed change merely restates the existing restrictions. The
Committee does not anticipate that these proposed changes will have any impact
on the Account's investment practices.
(iii) LOANS. The Committee recommends that the following fundamental
investment restriction be stricken:
"[VCA-11 will not:] Make cash loans except that . . . VCA-11
may purchase debt obligations in accordance with its
investment objective and policies and may engage in
repurchase agreements."
In its place, the Committee recommends the substitution of the following
fundamental investment restriction:
"VCA-11 will not lend money, except that it may purchase debt
obligations in accordance with its investment objective and policies
and may engage in repurchase agreements."
This proposed change merely restates the existing restrictions. The
Committee does not anticipate that these proposed changes will have any impact
on the Account's investment practices.
9
<PAGE>
(iv) BORROWING AND MARGINS. The Committee recommends that the two following
fundamental investment restrictions be stricken:
"[VCA-11 will not:] Purchase securities on margin, issue senior
securities or otherwise borrow money, except that [the] Account, in
accordance with its investment objective and policies, may purchase and
sell securities on a when-issued and delayed delivery basis. [The]
Account may obtain such short-term credit as it needs for the clearance
of securities transactions, and may also borrow from a bank as a
temporary measure, in amounts not exceeding 5% of the value of its
portfolio, to accommodate abnormally heavy redemption requests, if they
should occur, but not for leveraging or investment purposes. Investment
securities will not be purchased while borrowings are outstanding.
Interest paid on borrowings will not be available for investment by the
Accounts."
"[VCA-11 will not:] Mortgage, pledge or hypothecate any assets except
that either Account may pledge assets in an amount up to 10% of the
value of its portfolio, but only to secure borrowings for extraordinary
or emergency purposes as described in paragraph 5 above."
In their place, the Committee recommends the substitution of the two following
fundamental investment restrictions:
"VCA-11 will not issue senior securities, borrow money or pledge its
assets, except that VCA-11 may borrow from banks up to 33-1/3 percent
of the value of its total assets (calculated when the loan is made)
for temporary, extraordinary or emergency purposes or for the
clearance of transactions. VCA-11 may pledge up to 33-1/3 percent of
the value of its total assets to secure such borrowing. For purposes
of this restriction, the purchase or sale of securities on a
when-issued or delayed delivery basis is not deemed to be a pledge of
assets or the issuance of a senior security."
"VCA-11 will not purchase securities on margin (but VCA-11 may obtain
such short-term credits as may be necessary for the clearance of
transactions)."
The current restrictions are stricter than required by the 1940 Act, which
would permit the Account to borrow from a bank, provided that immediately after
the borrowing there is an asset coverage of at least 300% for all borrowings of
the investment company. The proposed change authorizes the Account to borrow to
the limit imposed by the 1940 Act. Because VCA-11 is a money
10
<PAGE>
market fund, the investment adviser does not expect to utilize this additional
borrowing power.
(v) INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Committee recommends
that the following fundamental investment restriction be stricken:
"[VCA-11 will not:] Buy or sell the securities of other
investment companies."
In its place, the Committee has adopted the following non-fundamental investment
restriction:
"Except as part of a merger, consolidation, acquisition or
reorganization, VCA-11 will not invest in the securities of other
investment companies in excess of the limits stipulated by the
Investment Company Act of 1940 as amended, and the rules and
regulations thereunder."
The proposed deletion, along with the Committee's adoption of the indicated
non-fundamental restriction, increases the Account's ability to invest in other
investment companies to correspond with the limits imposed by the 1940 Act.
Although the investment adviser does not intend at this time to invest in other
investment companies, this change will provide it the flexibility it would need
to do so in the future if circumstances warrant and regulations permit.
By making the new restriction non-fundamental, the Committee increases the
Account's flexibility to change the restriction if circumstances warrant. Such
changes may be desirable, for example, to take advantage of new financial
instruments or to respond to regulatory changes. The Committee does not,
however, currently plan to change this investment restriction.
(vi) SHORT SALES. The Committee recommends that the following fundamental
investment restriction be stricken:
"[VCA-11 will not:] Make short sales of securities or
maintain a short position."
In its place, the Committee has adopted the following non-fundamental investment
restriction:
"VCA-11 will not make short sales of securities or maintain
a short position."
This proposed change does not change the substance of the restriction.
Rather, it only makes the restriction non-fundamental. By doing so, the
Committee increases the Account's flexibility to change the restriction if
circumstances warrant.
11
<PAGE>
At some future date, for example, the SEC may find it appropriate to authorize
short sales in some situations for money market funds. The Committee does not,
however, currently plan to change this investment restriction.
(vii) UNDERWRITING OF SECURITIES. The Committee recommends that the
following fundamental investment restriction be stricken:
"[VCA-11 will not:] Underwrite the securities of other
issuers . . . ."
In its place, the Committee recommends the substitution of the following
fundamental investment restriction:
"VCA-11 will not underwrite the securities of other issuers, except
where VCA-11 may be deemed to be an underwriter for purposes of certain
federal securities laws in connection with the disposition of portfolio
securities and with loans that VCA-11 is permitted to make."
This proposed change restates the existing restriction to make the language
more consistent with that used in similar restrictions of other accounts and
funds managed by Prudential. The proposed change also clarifies that the Account
may dispose of any security in which the Account is otherwise permitted to
invest or make any loan the Account is otherwise permitted to make without
regard to any limitation regarding whether the Account may technically be deemed
an "underwriter" in such context. The Committee does not anticipate that this
proposed change will have any impact on the Account's investment practices.
(viii) LOANS OF PORTFOLIO SECURITIES. The Committee recommends that the
following fundamental investment restriction be stricken:
"[VCA-11 will not:] Lend portfolio securities unless the loans are
fully collateralized and subject to such other safeguards as the
Account's Committee determines are advisable and appropriate."
The restriction proposed to be deleted merely summarizes SEC standards with
regard to portfolio lending with which the Account already must comply. If the
SEC were to revise these standards at some later date, the Account would have
the flexibility to take advantage of that change if it were advantageous to do
so. The Committee does not anticipate that this proposed change will have any
current impact on the Account's investment practices.
12
<PAGE>
(ix) CONTROL OR MANAGEMENT OF OTHER COMPANIES. The Committee recommends
that the following fundamental restriction be stricken:
"[VCA-11 will not:] Acquire securities for the purpose of
exercising control or management of any company."
In its place, the Committee recommends the substitution of the following
fundamental investment restriction:
"No securities of any company will be acquired for VCA-11
for the purpose of exercising control or management
thereof."
This proposed change merely restates the current restriction in order to
make the language more consistent with that used in similar restrictions of
other accounts and funds managed by Prudential. The Committee does not
anticipate that this proposed change will have any impact on the Account's
investment practices.
(x) INVESTMENT IN EQUITY SECURITIES. The Committee recommends that the
following fundamental restriction be stricken:
"VCA-11 will not: Purchase common stock, preferred stock,
warrants or other equity securities, or oil and gas
interests."
Under current SEC rules, a money market fund such as VCA-11 may not invest
in these securities. In addition, the Account's fundamental objective is to seek
as high a level of current income as is consistent with preservation of capital
and liquidity. Accordingly, the restriction is proposed to be deleted as
duplicative.
This proposal will be adopted effective with the next registration
statement amendment filed with respect to the Account if approved by a majority
vote of persons having VCA-11 voting rights. As defined in the 1940 Act, a
majority vote of persons having VCA-11 voting rights means the lesser of (a) 67%
or more of the votes of such persons present or represented by proxy at a
meeting if more than 50% of all votes entitled to be cast are held by persons
present in person or represented by proxy at such meeting, or (b) more than 50%
of all votes entitled to be cast.
THE COMMITTEE RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 2.
13
<PAGE>
3. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT PUBLIC
ACCOUNTANT
For 1995 and prior years Deloitte & Touche LLP served as independent public
accountant for Prudential and for VCA-11. For 1996, Prudential determined to
retain Price Waterhouse LLP ("PW") as the independent public accountant for
Prudential. The Committee found it to be in the best interests of
Contractholders and participants to select PW as the independent public
accountant for 1996 for VCA-11 as well, and did so in August 1996.
The Committee's selection of PW instead of Deloitte & Touche did not result
due to any dispute between Prudential and Deloitte & Touche or between the
Committee and Deloitte & Touche. Deloitte & Touche's reports for the last two
years did not contain any adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.
No disagreement of a type that an auditor would refer to in its report occurred
between Deloitte & Touche and the VCA-11 Committee or Prudential.
As noted earlier, the VCA-11 Committee has an audit subcommittee, which
consists solely of the Members of the Committee who are not interested persons
of Prudential or VCA-11. Members of the subcommittee periodically will meet at
their discretion with representatives of PW to discuss the affairs of VCA-11. At
the audit subcommitee's discretion, no interested person of Prudential or VCA-11
will be present at such meetings.
It is anticipated that one or more representatives of PW will attend the
November 22, 1996 meeting that is the subject of this proxy statement, that they
will have an opportunity to make a statement if they desire to do so, and that
they will also be available to respond to appropriate questions. It is not
anticipated that representatives of Deloitte & Touche will attend the meeting.
This proposal will be adopted if approved by more than 50% of the votes of
persons having VCA-11 voting rights who are present or represented by proxy at
the November 22, 1996 meeting.
THE COMMITTEE RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 3.
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4. PROPOSED AMENDMENTS TO THE RULES AND REGULATIONS OF VCA-11 ELIMINATING THE
NEED FOR CERTAIN MEETINGS OF PERSONS HAVING VOTING RIGHTS
The Rules and Regulations of VCA-11 presently require that the Committee
call a meeting of persons having voting rights with respect to the Account if
the Committee changes the Account's independent public accountant. In addition,
the Rules and Regulations of VCA-11 are silent on the issue of whether the
Committee itself may amend the Rules and Regulations or whether a vote of
persons having voting rights with respect to the Account is required.
On August 14, 1996, the Members of the Committee, including all Members who
are not interested persons of Prudential, its affiliates or VCA-11, considered
and determined to propose that the Rules and Regulations of VCA-11 be amended:
(1) to eliminate the requirement of a meeting of persons with voting rights when
the Committee selects a different independent public accountant; and (2) to
provide that the Committee may amend the Rules and Regulations in any respect
without a vote of persons having voting rights. It was determined that
applicable law does not require meetings of persons having voting rights in
these circumstances, and that reducing the need for such meetings will result in
economic savings which will ease the upward pressure on administrative costs.
For these reasons, the Committee has determined that these amendments are in the
best interests of Contractholders and participants. The Committee thus
recommends approval of these amendments. Each amendment is discussed in more
detail below.
Ratification of Independent Public Accountant. At the September 1988
meeting of persons having VCA-11 voting rights, amendments to the Rules and
Regulations were adopted eliminating the need for annual meetings. The proposal
adopted at that meeting eliminated the requirement that the Committee annually
seek ratification or rejection of the same independent public accounting firm.
Instead, the revised Rules and Regulations included a requirement that the
Committee call a meeting of persons having voting rights with respect to the
Account for the purpose of submitting the selection of an independent public
accountant for ratification or rejection only if the Committee selects an
accountant other than the accountant whose selection was most recently ratified
by persons having voting rights. This requirement was included because it was
understood at that time to be required to ensure compliance with the 1940 Act.
Since that time, however, it has become clear that the 1940 Act does not require
that a meeting be called if the Committee selects a different accountant.
Rather, the 1940 Act currently requires only that the Committee submit for
ratification or rejection the selection of the accountant if an annual meeting
is being held
15
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for other reasons. The Committee determined that it was appropriate to amend the
Rules and Regulations to be consistent with the current interpretation of the
1940 Act.
Authority to Amend the Rules and Regulations. The Rules and Regulations are
silent on who has the authority to amend them. In the past, however, the
Committee has generally submitted proposed amendments to persons having voting
rights with respect to VCA-11. That approach did not generally result in any
additional costs when, as was the case prior to 1989, meetings with persons with
voting rights were held annually. New Jersey law, however, does not require a
vote of persons having voting rights to amend the Rules and Regulations of the
Account. In addition, the Rules and Regulations are analogous to a corporation's
by-laws, which generally can be amended by the board of directors without
shareholder vote. Accordingly, the Committee determined it was appropriate to
clarify that it has the authority to amend the Rules and Regulations in any
respect without a vote of persons having voting rights with respect to the
Account.
Wording of the Proposed Amendments. Set forth below are the proposed
amendments to the Rules and Regulations of VCA-11:
1. Amend Article II, Section 2 to delete the following provision:
"(b) The Committee shall call a meeting of the persons having voting
rights in respect of VCA-11 for the purpose of submitting the selection
of an independent accountant for ratification or rejection if the
Committee selects an accountant other than the accountant whose
selection was most recently ratified by persons having voting rights in
respect of VCA-11.
2. Amend Article III, Section 2(d) to read as follows:
"The Committee shall have the following powers:
"(d) to select an independent public accountant for VCA-11;
3. Amend Article III, Section 2 to add the following new subsection and to
redesignate subsections (e) and (f) as (f) and (g), respectively:
"The Committee shall have the following powers:
"(e) to amend these Rules and Regulations without the approval of persons
having voting rights in respect of VCA-11;
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This proposal will be adopted if approved by more than 50% of the votes of
persons having VCA-11 voting rights who are present or represented by proxy at
the November 22, 1996 meeting.
THE COMMITTEE RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL NO. 4.
5. OTHER BUSINESS
The Committee currently does not know of any other business that will be
considered at the meeting aside from that described in this Proxy Statement.
Should any matters other than those referred to above properly come before the
meeting, the holders of the Proxies will act with respect thereto in accordance
with their best judgment.
By order of the Committee
September 23, 1996 THOMAS A. EARLY
Secretary to the Committee
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THE PRUDENTIAL VARIABLE CONTRACT ACCOUNT-2
THIS PROXY SOLICITED ON BEHALF OF THE VCA-2 COMMITTEE
Meeting of Persons Having Voting Rights
NOVEMBER 22, 1996
John Doe IMPORTANT
123 Main Street Please read carefully, specify your choices,
New York, N.Y. 10001-1234 sign, date and mail this proxy as soon as
possible.
To all persons having voting rights in Prudential Variable Contract Account-2
("VCA-2"):
Members of the VCA-2 Committee solicit your voting instructions and
recommend votes FOR items 1 through 5. The VCA-2 Committee will vote the
appropriate number of shares pursuant to the instructions given.
IF NO CHOICE IS MADE AS TO ANY ITEM, THE VCA-2 COMMITTEE WILL VOTE
"FOR". WITH RESPECT TO ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
MEETING, THE MEMBERS OF THE VCA-2 COMMITTEE WILL VOTE IN ACCORDANCE WITH
THEIR BEST JUDGMENT.
The VCA-2 Committee -- for the purpose of voting on the items in the agenda
set forth in the Notice of Meeting To Persons Having Voting Rights in Respect of
the Prudential Variable Contract Account-2, at such special meeting to be held
on November 22, 1996, at 9:30 A.M. (New York time) at the offices of The
Prudential Insurance Company of America, 751 Broad Street, 4th Floor, Executive
Conference Room, Newark, New Jersey 07102 -- is hereby instructed to vote the
VCA-2 shares for the following purposes:
_______________________________________________________________________________
FOR AGAINST ABSTAIN
(1) To elect certain Members of The
Prudential Variable Contract Account-2
Committee (the "Committee"), each of
whom shall serve for an indefinite
term.
Mendel A. Melzer _____ _____ _____
Jonathan M. Greene _____ _____ _____
Saul K. Fenster _____ _____ _____
<PAGE>
(2) To approve or disapprove certain changes _____ _____ _____
to VCA-2's fundamental investment
objective and policies.
(3) To ratify or reject the selection of _____ _____ _____
Price Waterhouse LLP as the independent
public accountant for VCA-11
(4) To approve or disapprove proposed _____ _____ _____
amendments to the Rules and Regulations
of VCA-2 eliminating the need for
certain meetings of persons having
voting rights.
IF NO CONTRARY SPECIFICATIONS ARE MADE, THIS PROXY WILL BE VOTED "FOR" ITEMS 1
THROUGH 4. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE IN
PERSON.
____________________________________________________________________________
PLEASE MARK ALL
CHOICES LIKE THIS X
---
__________________________
ACCOUNT NUMBER
SIGNATURE ______________________________________ DATE _______________ 1996
SIGNATURE ______________________________________ DATE _______________ 1996
(Please sign exactly as your name appears above)
