AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1999
REGISTRATION NO. 333-06701
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. ___ [ ]
POST-EFFECTIVE AMENDMENT NO. 5 [X]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
POST-EFFECTIVE AMENDMENT NO. 5 [X]
(Check appropriate box or boxes)
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PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
PRUCO LIFE INSURANCE COMPANY
(Name of Depositor)
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(888) PRU-2888
(Address and telephone number of depositor's principal executive offices)
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THOMAS C. CASTANO
ASSISTANT SECRETARY
PRUCO LIFE INSURANCE COMPANY
213 WASHINGTON STREET
NEWARK, NEW JERSEY 07102-2992
(Name and address of agent for service)
Copies to:
CHRISTOPHER E. PALMER LEE D. AUGSBURGER
SHEA & GARDNER ASSISTANT GENERAL COUNSEL
1800 MASSACHUSETTS AVENUE, N.W. THE PRUDENTIAL INSURANCE COMPANY
WASHINGTON, D.C. 20036 OF AMERICA
(202) 828-2093 751 BROAD STREET
NEWARK, NEW JERSEY 07102
(973) 367-1388
It is proposed that this filing will become effective (Check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on _________ pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[X] on May 1, 1999 pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered:
Interests in Individual Variable Annuity Contracts
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<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495(A)EUNDER THE 1933 ACT)
N-4 ITEM NUMBER AND CAPTION LOCATION
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PART A
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1. Cover Page........................... Cover Page
2. Definitions.......................... Index of Special Terms
3. Synopsis or Highlights .............. Summary
4. Condensed Financial Information...... Accumulation Unit Values Chart
5. General Description of Registrant,
Depositor, and Portfolio........... Cover Page; (Pruco Life Insurance
Company, The Separate Account);
What Investment Options Can I
Choose?; Other Information
6. Deductions and Expenses.............. Summary; Summary of Contract
Expenses; What are the Expenses
Associated with the Discovery
Select Contract?; Other
Information (Sale of the Contract;
Distributor)
7. General Description of Variable
Annuity Contract..................... Cover Page; Summary; Index of
Special Terms; What is the
Discovery Select Variable
Annuity?; What Investment Options
Can I Choose?; Other Information
8. Annuity Period......................... Summary; What kind of Payments
will I Receive during the Income
Phase?
9. Death Benefit.......................... Summary; What is the Death
Benefit?
10. Purchases and Contract Value........... Summary; What is the Discovery
Select Variable Annuity?;
Calculating Contract Value
11. Redemptions............................ Summary; How Can I Access My
Money?; Short Term Cancellation
Right or "Free Look"
12. Taxes.................................. Summary; What are the Tax
Considerations Associated with the
Discovery Select Contract?
13. Legal Proceedings ..................... Litigation
14. Table of Contents of the Statement of
Additional Information............... Other Information
PART B
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15. Cover Page............................. Cover Page
16. Table of Contents...................... Table of Contents
17. General Information and History........ Cover Page; Company
18. Services............................... Performance Information
19. Purchase of Securities Being Offered... Part A: Summary; How Can I
Purchase A Discovery Select
Contract?
20. Underwriters Part A: Other Information; Part B: Distribution of Discovery
Select
21. Calculation of Performance Data........ Appendix A: Performance
Information
22. Annuity Payments....................... Part A: What Kind of Payments Will
I Receive During the Income Phase?
PART C
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23. Financial Statements................... Part B: Discovery Select Financial
Information; Pruco Life Financial
Information
Information required to be included in Part C is set forth under the appropriate
Item, so numbered in Part C to this Registration Statement.
<PAGE>
MAY 1, 1999
DISCOVERY
SELECT(SM)
VARIABLE ANNUITY
THIS PROSPECTUS DESCRIBES AN INDIVIDUAL VARIABLE ANNUITY CONTRACT OFFERED BY
PRUCO LIFE INSURANCE COMPANY (PRUCO LIFE). PRUCO LIFE IS A WHOLLY OWNED
SUBSIDIARY OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA.
Discovery Select offers a wide variety of investment choices, including 22
variable investment options that invest in mutual funds managed by these leading
investment firms:
PRUDENTIAL INVESTMENTS
AIM ADVISORS
AMERICAN CENTURY
FRANKLIN ADVISERS
JANUS CAPITAL
MFS
OPPENHEIMER CAPITAL
T. ROWE PRICE
WARBURG PINCUS
Please read this prospectus before purchasing a Discovery Select contract and
keep it for future reference. Current prospectuses for each of the underlying
mutual funds accompany this prospectus. These prospectuses contain important
information about the mutual funds. Please read these prospectuses and keep them
for reference.
To learn more about Discovery Select, you can request a copy of the Statement of
Additional Information (SAI) dated May 1, 1999. The SAI has been filed with the
Securities and Exchange Commission (SEC) and is legally a part of this
prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains the
Discovery Select SAI, material incorporated by reference, and other information
regarding registrants that file electronically with the SEC. The Table of
Contents of the SAI is on Page __ of this prospectus. For a free copy of the
SAI, call us at: (888) PRU-2888 or write to us at:
Pruco Life Insurance Company
213 Washington Street
Newark, New Jersey 07102-2992
Prudential Annuity Service Center
P.O. Box 14205
New Brunswick, New Jersey 08906-4205
THE SEC HAS NOT DETERMINED THAT THIS CONTRACT IS A GOOD INVESTMENT, NOR HAS THE
SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL
OFFENSE TO STATE OTHERWISE.
INVESTMENT IN A VARIABLE ANNUITY IS SUBJECT TO RISK, INCLUDING THE POSSIBLE LOSS
OF YOUR MONEY. AN INVESTMENT IN DISCOVERY SELECT IS NOT A BANK DEPOSIT AND IS
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
[LOGO] PRUDENTIAL
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
TABLE OF CONTENTS
-----------------
CAPTION PAGE
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INDEX OF SPECIAL TERMS .................................................... ii
SUMMARY ................................................................... 1
SUMMARY OF CONTRACT EXPENSES .............................................. 3
EXPENSE EXAMPLES .......................................................... 5
1. WHAT IS THE DISCOVERY SELECT VARIABLE ANNUITY? ......................... 7
Short Term Cancellation Right or "Free Look" ......................... 7
2. WHAT INVESTMENT OPTIONS CAN I CHOOSE? .................................. 8
Variable Investment Options .......................................... 8
Fixed Interest-Rate Options .......................................... 9
Transfers Among Options .............................................. 9
Dollar Cost Averaging ................................................ 10
Asset Allocation Program ............................................. 10
Auto-Rebalancing ..................................................... 10
Voting Rights ........................................................ 11
Substitution ......................................................... 11
3. WHAT KIND OF PAYMENTS WILL I RECEIVE DURING
THE INCOME PHASE? (ANNUITIZATION) ..................................... 11
Payment Provisions ................................................... 11
Option 1: Annuity Payments for a Fixed Period ........................ 11
Option 2: Life Annuity with 120 Payments
(10 Years) Certain ................................................. 11
Option 3: Interest Payment Option .................................... 12
Option 4: Other Annuity Options ...................................... 12
4. WHAT IS THE DEATH BENEFIT? ............................................. 12
Beneficiary .......................................................... 12
Calculation of the Death Benefit ..................................... 12
5. HOW CAN I PURCHASE A DISCOVERY SELECT CONTRACT? ........................ 13
Purchase Payments .................................................... 13
Allocation of Purchase Payments ...................................... 13
Calculating Contract Value ........................................... 13
CAPTION PAGE
- ------- ----
6. WHAT ARE THE EXPENSES ASSOCIATED WITH
THE DISCOVERY SELECT CONTRACT? ........................................ 13
Insurance Charges .................................................... 13
Annual Contract Fee .................................................. 14
Withdrawal Charge .................................................... 14
Critical Care Access ................................................. 15
Premium Taxes ........................................................ 15
Transfer Fee ......................................................... 15
Company Taxes ........................................................ 15
7. HOW CAN I ACCESS MY MONEY? ............................................. 15
Automated Withdrawals ................................................ 15
Suspension of Payments or Transfers .................................. 16
8. WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH
THE DISCOVERY SELECT CONTRACT? ........................................ 16
Taxes Payable by You ................................................. 16
Taxes on Withdrawals and Surrender ................................... 16
Taxes on Annuity Payments ............................................ 17
Penalty Taxes on Withdrawals and Annuity Payments .................... 17
Taxes Payable by Beneficiaries ....................................... 17
Withholding of Tax from Distributions ................................ 17
Annuity Qualification ................................................ 17
Diversification and Investor Control ................................. 17
Required Distributions Upon Your Death ............................... 18
Changes in the Contract .............................................. 18
Additional Information ............................................... 18
9. OTHER INFORMATION ...................................................... 18
Pruco Life Insurance Company ......................................... 18
The Separate Account ................................................. 19
Sale of the Contract; Distributor .................................... 19
Assignment ........................................................... 19
Financial Statements ................................................. 19
Year 2000 Compliance ................................................. 19
Statement of Additional Information .................................. 20
Accumulation Unit Values ............................................. 21
ADDITIONAL FINANCIAL INFORMATION
Further information about Pruco Life ................................. A-1
Pruco Life Financial Information ..................................... B-1
Market-value Adjustment Formula ...................................... C-1
i
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
INDEX OF SPECIAL TERMS
We have tried to make this prospectus as readable and understandable as
possible. By the nature of the contract, however, certain technical words or
terms are unavoidable. We have identified the following as some of these words
or terms.
- --------------------------------------------------------------------------------
ACCUMULATION PHASE. The period that begins with the contract date (see
below definition) and ends when you start receiving income payments or earlier
if the contract is terminated through a full withdrawal or payment of a death
benefit.
ACCUMULATION UNIT. A unit of measure used to calculate the value of your assets
allocated to the variable investment options during the accumulation phase.
ANNUITANT. The person(s) whose life determines how long the contract lasts and
the amount of income payments that will be paid. If there are co-annuitants,
"annuitant" means both persons unless otherwise stated.
ANNUITY DATE. The date when income payments are scheduled to begin.
BENEFICIARY. The person(s) or entity you have chosen to receive a death benefit.
CASH VALUE. This is the total value of your contract amount minus any withdrawal
charge(s) or market-value adjustment, if applicable.
CONTRACT DATE. The date we receive your initial purchase payment and all
necessary paperwork in good order. Contract anniversaries are measured from the
contract date.
CONTRACTOWNER, OWNER OR YOU. The person entitled to the ownership rights under
the contract.
CONTRACT VALUE. The total value of the amounts in a contract allocated to the
variable investment options and the interest rate options as of a particular
date.
DEATH BENEFIT If the Anuitant or contractowner dies , the designated person(s)
- -the beneficiary- will receive, at a minimum, the total amount invested or a
greater amount due to market appreciation. See "What is the Death Benefit? on
page___.
INCOME OPTIONS. Options under the contract that define the frequency and
duration of income payments. In your contract, these are referred to as payout
or annuity options.
INTEREST-RATE OPTION. An investment option that offers a fixed-rate of interest
for either a one year (fixed-rate option) or a seven-year period (market-value
adjustment option).
PURCHASE PAYMENTS. The amount of money you pay us to purchase the contract. You
can make additional purchase payments at any time during the accumulation phase.
PRUDENTIAL ANNUITY SERVICE CENTER. P.O. Box 14205, New Brunswick, New Jersey,
08906-4205. The phone number is 1-888-PRU-2888.
SEPARATE ACCOUNT. Purchase payments allocated to the variable investment options
are held by us in a separate account called the Pruco Life Flexible Premium
Variable Annuity Account. The Separate Account is set apart from all of the
general assets of Pruco Life.
TAX DEFERRAL. This is a way to increase your assets without currently being
taxed. You do not pay taxes on your contract earnings until you take money out
of your contract.
VARIABLE INVESTMENT OPTION. When you choose a variable investment option, we
purchase shares of the mutual fund which is used as an investment by that
option. We hold these shares in the Separate Account. The division of the
Separate Account of Pruco Life that invests in a particular mutual fund is
referred to in your contract as a subaccount.
ii
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
SUMMARY
FOR A MORE COMPLETE DISCUSSION OF THE FOLLOWING TOPICS, SEE THE CORRESPONDING
SECTION IN THE PROSPECTUS.
1. WHAT IS THE DISCOVERY SELECT VARIABLE ANNUITY?
This variable annuity contract, offered by Pruco Life, is a contract
between you, as the owner, and us. The contract allows you to invest on a
tax-deferred basis in one or more of 22 variable investment options. There are
also two fixed interest rate options which are available in most states. The
contract is intended for retirement savings or other long-term investment
purposes and provides for a death benefit and guaranteed income options.
The variable investment options are designed to offer the opportunity for a
better return than the fixed account. However, this is NOT guaranteed. It is
possible, due to market changes, that your investments may decrease in value.
The fixed interest-rate options offer an interest rate that is guaranteed.
While your money is in the fixed account, both the interest amount that your
money will earn and your principal amount is guaranteed by us.
You can invest your money in any or all of the variable investment options
and the interest-rate options. You are allowed 12 tax free transfers each
contract year among the variable investment options, without a charge. There are
certain restrictions on transfers involving the interest-rate options.
The contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the income phase. During the accumulation phase, earnings
grow on a tax-deferred basis and are taxed as income when you make a withdrawal.
The income phase starts when you choose to begin receiving regular payments from
your contract. The amount of money you are able to accumulate in your contract
during the accumulation phase will help determine the amount of payments you
will receive during the income phase. Other factors will affect the amount of
your payments such as, age, gender and payout option you selected.
FREE LOOK. If you change your mind about owning Discovery Select, YOU MAY
CANCEL YOUR CONTRACT WITHIN 10 DAYS AFTER RECEIVING IT (or whatever time period
is required in the state where the contract was issued).
2. WHAT INVESTMENT OPTIONS CAN I CHOOSE?
You can invest your money in any or all of the variable investment options
that use the mutual funds described in the fund prospectuses provided with this
prospectus:
THE PRUDENTIAL SERIES FUND
Money Market Portfolio
Diversified Bond Portfolio
High Yield Bond Portfolio
Stock Index Portfolio
Equity Income Portfolio
Equity Portfolio
Prudential Jennison Portfolio
Global Portfolio
Small Capitalization Stock Portfolio
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
American Century VP Value
JANUS ASPEN SERIES
Growth Portfolio
International Growth Portfolio
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series
Research Series
OCC ACCUMULATION TRUST
Managed Portfolio
Small Cap Portfolio
TEMPLETON VARIABLE PRODUCTS
SERIES FUND
Franklin Small Cap Investments Fund - Class 2
T.ROWE PRICE
Equity Series - Equity Income Portfolio
International Series - International Stock Portfolio
WARBURG PINCUS TRUST
Post-Venture Capital Portfolio
1
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
Depending upon market conditions, you may earn or lose money in any of
these options. The value of your contract will fluctuate depending upon the
investment performance of the mutual funds used by the variable investment
option(s). Performance information for the variable investment options is
provided in Appendix B and in the Statement of Additional Information (SAI).
Past performance is not a guarantee of future results.
You can also put your money into a fixed interest-rate option or the
market-value adjustment option.
3. WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE? (ANNUITIZATION)
If you want to receive regular income from your annuity, you can choose one
of several options, including guaranteed payments for the annuitant's lifetime.
Once you begin receiving regular payments, you cannot change your payment plan.
4. WHAT IS THE DEATH BENEFIT?
If the sole or last surviving annuitant dies before the income phase of the
contract begins, the person(s) or entity that you have chosen as your
beneficiary will receive a death benefit.
5. HOW CAN I PURCHASE A DISCOVERY SELECT ANNUITY CONTRACT?
You can purchase this contract, under most circumstances, with a $10,000
initial purchase payment. You can add $1,000 or more at any time during the
accumulation phase of the contract. Your financial professional can help you
fill out the proper forms.
6. WHAT ARE THE EXPENSES ASSOCIATED WITH THE DISCOVERY SELECT CONTRACT?
The contract has insurance features and investment features, and there are
costs related to each.
Each year we deduct a $30 contract maintenance charge if your contract
value is less than $50,000. For insurance and administrative costs, we also
deduct an annual charge of 1.40% of the average daily value of all assets
allocated to the variable investment options. This charge is not assessed
against amounts allocated to the interest-rate investment options.
There are a few states/jurisdictions that assess a premium tax when you
begin receiving regular income payments from your annuity. In those states, we
will assess the required premium tax charge which can range up to 5%.
There are also charges made by the mutual funds which are invested in by
the variable investment options. These annual charges currently range from 0.37%
to 1.40% of the average daily value of the mutual fund.
7. HOW CAN I ACCESS MY MONEY?
You may take money out at any time during the accumulation phase. Each
year, you withdraw up to 10% of your total purchase payments without charge.
Withdrawals in excess of 10% of your purchase payments may be subject to a
surrender charge. This charge decreases 1% each year. After the 7th year, there
is no charge for a withdrawal. You may however, be subject to income tax and a
tax penalty if you make an early withdrawal.
8. WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE DISCOVERY SELECT
CONTRACT?
Your earnings are not taxed until withdrawn. If you take money out during
the accumulation phase, purchase payments are withdrawn first and are taxed as
income. If you are younger than 59 1/2 when you take money out, you may be
charged a 10% federal tax penalty on the earnings in addition to ordinary
taxation. A portion of the payments you receive during the income phase is
considered partly a return of your original investment. As a result, that
portion of each payment is not taxable as income. . Generally, all amounts
withdrawn from IRA contracts are taxable and subject to the 10% penalty if
withdrawn prior to age 59 1/2.
9. OTHER INFORMATION
This contract is issued by Pruco Life, a subsidiary of The Prudential
Insurance Company of America, and sold by financial professionals.
2
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
SUMMARY OF CONTRACT EXPENSES
The purpose of this summary is to help you to understand the costs you will
pay for Discovery Select. This summary includes the expenses of the mutual funds
used by the variable investment options but does not include any premium taxes
that might be applicable in your state. More detailed information can be found
on page ___ under the section called, "What Are The Expenses Associated With The
Discovery Select Variable Annuity?" For more detailed expense information about
the mutual funds, please refer to the individual fund prospectuses which are
located at the back of this prospectus.
TRANSACTION EXPENSES
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WITHDRAWAL CHARGE: During contract year 1 ........ 7%
(SEE NOTE 1 BELOW) During contract year 2 ........ 6%
During contract year 3 ........ 5%
During contract year 4 ........ 4%
During contract year 5 ........ 3%
During contract year 6 ........ 2%
During contract year 7 ........ 1%
After that .................... 0%
TRANSFER FEE: First 12 transfers per year .. $ 0.00
Each transfer after 12 ....... $25.00
ANNUAL CONTRACT FEE
AND FULL WITHDRAWAL FEE: ............................. $30.00
ANNUAL ACCOUNT EXPENSES
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As a percentage of the average account value.
MORTALITY AND EXPENSE RISK: ........................ 1.25%
ADMINISTRATIVE FEE: ................................ 0.15%
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TOTAL: ....................................... 1.40%
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Note 1: As of the beginning of the contract year, you may withdraw up to 10%
of the total purchase payments plus any charge-free amount carried
over from the previous contract year without charge. There is no
withdrawal charge on any withdrawals made under the Critical Care
Access Option (see page __) or on any amount used to provide income
under the Life Annuity with 120 payments(10 years) Certain Option.
(see page ). Surrender charges are waived when a death benefit is
paid.
3
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
SUMMARY OF CONTRACT EXPENSES
ANNUAL MUTUAL FUND EXPENSES (after reimbursement)
================================================================================
As a percentage of each Fund's average daily net assets:
INVESTMENT OTHER TOTAL
MANAGEMENT FEE EXPENSES EXPENSES
- --------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
Money Market Portfolio ............ 0.40% 0.03% 0.43%
Diversified Bond Portfolio ........ 0.40% 0.03% 0.43%
High Yield Bond Portfolio ......... 0.55% 0.02% 0.57%
Stock Index Portfolio ............. 0.35% 0.02% 0.37%
Equity Income Portfolio ........... 0.40% 0.01% 0.41%
Equity Portfolio .................. 0.45% 0.01% 0.46%
Prudential Jennison Portfolio ..... 0.60% 0.04% 0.64%
Global Portfolio .................. 0.75% 0.10% 0.85%
Small Capitalization Stock Portfolio 0.40% 0.10% 0.50%
- --------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund ... 0.63% 0.06% 0.69%
AIM V.I. Value Fund ............... 0.62% 0.08% 0.70%
- --------------------------------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century VP Value ......... 1.00% 0.0% 1.00%
- --------------------------------------------------------------------------------
JANUS ASPEN SERIES (1)
Growth Portfolio .................. 0.65% 0.05% 0.70%
International Growth Portfolio .... 0.67% 0.29% 0.96%
- --------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series ............ 0.75% 0.12% 0.87%
Research Series ................... 0.75% 0.13% 0.88%
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST (2)
Managed Portfolio ................. 0.80% 0.07% 0.87%
Small Cap Portfolio ............... 0.80% 0.17% 0.97%
- --------------------------------------------------------------------------------
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap
Investments Fund - Class 2 ...... 0.40% 0.85% 1.25%
- --------------------------------------------------------------------------------
T.ROWE PRICE (3)
Equity Series - Equity Income
Portfolio ....................... 0.85% 0.00% 0.85%
International Series -
International Stock Portfolio ... 1.05% 0.00% 1.05%
- --------------------------------------------------------------------------------
WARBURG PINCUS TRUST (4)
Post-Venture Capital Portfolio .... 1.07% 0.33% 1.40%
================================================================================
(1) Janus Aspen Series: The information for each portfolio includes fee
waivers by Janus Capital Corporation. Fee waivers reduced the management fee of
the portfolios to the level of the corresponding Janus retail fund. Without
these waivers or reductions, the Management Fee, Other Expenses and Total
Operating Expenses for the portfolios would have been 0.74%,0.04% and 0.78% for
the Growth Portfolio and 0.79%, 0.29% and 1.08% for the International Growth
Portfolio. Janus Capital Corporation may change the waivers or reductions at any
time, with at least 90 days notice to the Trustees.
(2) OCC Accumulation Trust: Other Expenses shown include expense offsets
credited to the Portfolios that lowered overall custody expenses. Total Expenses
for the Small Cap and Managed Portfolios are limited so that their annualized
operating expenses (net of any expense offsets) do not exceed 1.00% of their
average daily net assets. Without these expense limitations and without giving
effect to any expense offsets, the Management Fees, Other Expenses and Total
Portfolio Annual Expenses for the fiscal year ended December 31, 1997 would have
been: 0.80%, 0.17% and 0.97%, for the Small Cap Portfolio and 0.80%, 0.07% and
0.87%, for the Managed Portfolio. Expense offsets for each Portfolio for the
fiscal year ended December 31, 1997 amounted to less than one basis point for
each Portfolio.
(3) T. Rowe Price Funds: Investment Management Fees include the ordinary
expenses of operating the Funds.
(4) Warburg Pincus Trust. The expense figures shown above are based on
actual expenses for fiscal year 1997, including fee waivers and/or expense
reimbursements by the Portfolio's investment advisor and co-administrator. If
the waivers and/or reimbursements were not included in the Investment Management
Fee it would equal 1.25%, Other Expenses would equal 0.33%, and Total Fund
Annual Expenses would have equaled 1.58%.
4
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
EXPENSE EXAMPLES
- --------------------------------------------------------------------------------
These examples will help you compare the fees and expenses of the different
variable investment options offered by Discovery Select. You can also use the
examples to compare the cost of Discovery Select with other variable annuity
contracts.
- --------------------------------------------------------------------------------
EXAMPLE 1- IF YOU WITHDRAW YOUR ASSETS
Example 1 assumes that you invest $10,000 in Discovery Select and that you
allocate all of your assets to one of the variable investment options and
withdraw all your assets at the end of the time period indicated. The example
also assumes that your investment has a 5% return each year and that the mutual
fund's operating expenses remain the same. Your actual costs may be higher or
lower, but based on these assumptions, your costs would be:
================================================================================
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
Money Market Portfolio ........... $ 820 $ 930 $ 1140 $ 2160
Diversified Bond Portfolio ....... $ 820 $ 930 $ 1140 $ 2160
High Yield Bond Portfolio ........ $ 830 $ 970 $ 1220 $ 2300
Stock Index Portfolio ............ $ 810 $ 910 $ 1110 $ 2090
Equity Income Portfolio .......... $ 810 $ 920 $ 1130 $ 2130
Equity Portfolio ................. $ 820 $ 940 $ 1160 $ 2190
Prudential Jennison Portfolio .... $ 840 $ 990 $ 1250 $ 2380
Global Portfolio ................. $ 860 $1060 $ 1360 $ 2590
Small Capitalization
Stock Portfolio ................ $ 820 $ 940 $ 1170 $ 2210
- --------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund .. $ 840 $ 1010 $ 1280 $ 2430
AIM V.I. Value Fund .............. $ 840 $ 1010 $ 1280 $ 2440
- --------------------------------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century VP Value ........ $ 870 $ 1090 $ 1420 $ 2720
- --------------------------------------------------------------------------------
JANUS ASPEN SERIES
Growth Portfolio ................. $ 840 $ 1010 $ 1280 $ 2440
International Growth Portfolio ... $ 870 $ 1090 $ 1410 $ 2700
- --------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series ........... $ 860 $ 1060 $ 1380 $ 2640
Research Series .................. $ 870 $ 1080 $ 1390 $ 2660
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Managed Portfolio ................ $ 860 $ 1060 $ 1370 $ 2610
Small Cap Portfolio .............. $ 870 $ 1090 $ 1420 $ 2710
- --------------------------------------------------------------------------------
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap
Investments Fund - Class 2 ..... $ 900 $ 1170 $ 1550 $ 2970
- --------------------------------------------------------------------------------
T.ROWE PRICE
Equity Series -
Equity Income Portfolio ........ $ 860 $ 1060 $ 1360 $ 2590
International Series -
International Stock Portfolio .. $ 880 $ 1120 $ 1460 $ 2790
- --------------------------------------------------------------------------------
WARBURG PINCUS TRUST
Post-Venture Capital Portfolio ... $ 910 $ 1220 $1630 $ 3130
================================================================================
Notes:
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The charges shown in the 10 year column are the same for Example 1 and Example
2. This is because after 10 years the withdrawal charges are no longer deducted
by us when you make a withdrawal or when you begin the income phase of your
contract.
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DISCOVERY SELECT VARIABLE ANNUITY
EXAMPLE 2 - IF YOU DO NOT WITHDRAW YOUR ASSETS
Example 2 assumes that you invest $10,000 in Discovery Select and allocate all
of your assets to one of the variable investment options and DO NOT WITHDRAW any
of your assets at the end of the time period indicated. The example also assumes
that your investment has a 5% return each year and that the mutual fund's
operating expenses remain the same. Your actual costs may be higher or lower,
but based on these assumptions, your costs would be:
================================================================================
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
THE PRUDENTIAL SERIES FUND
Money Market Portfolio ........... $ 190 $ 580 $ 990 $ 2160
Diversified Bond Portfolio ....... $ 190 $ 580 $ 990 $ 2160
High Yield Bond Portfolio ........ $ 200 $ 620 $ 1070 $ 2300
Stock Index Portfolio ............ $ 180 $ 560 $ 960 $ 2090
Equity Income Portfolio .......... $ 180 $ 570 $ 980 $ 2130
Equity Portfolio ................. $ 190 $ 590 $ 1010 $ 2190
Prudential Jennison Portfolio .... $ 210 $ 640 $ 1100 $ 2380
Global Portfolio ................. $ 230 $ 710 $ 1210 $ 2590
Small Capitalization Stock
Portfolio ...................... $ 190 $ 590 $ 1020 $ 2210
- --------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. Growth and Income Fund .. $ 210 $ 660 $ 1130 $ 2430
AIM V.I. Value Fund .............. $ 210 $ 660 $ 1130 $ 2440
- --------------------------------------------------------------------------------
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century VP Value ........ $ 240 $ 740 $ 1270 $ 2720
- --------------------------------------------------------------------------------
JANUS ASPEN SERIES
Growth Portfolio ................. $ 210 $ 660 $ 1130 $ 2440
International Growth Portfolio ... $ 240 $ 740 $ 1260 $ 2700
- --------------------------------------------------------------------------------
MFS VARIABLE INSURANCE TRUST
Emerging Growth Series ........... $ 230 $ 720 $ 1230 $ 2640
Research Series .................. $ 240 $ 730 $ 1240 $ 2660
- --------------------------------------------------------------------------------
OCC ACCUMULATION TRUST
Managed Portfolio ................ $ 230 $ 710 $ 1220 $ 2610
Small Cap Portfolio .............. $ 240 $ 740 $ 1270 $ 2710
- --------------------------------------------------------------------------------
TEMPLETON VARIABLE PRODUCTS SERIES FUND
Franklin Small Cap Investments
Fund - Class 2 ................. $ 270 $ 820 $ 1400 $ 2970
- --------------------------------------------------------------------------------
T.ROWE PRICE
Equity Series -
Equity Income Portfolio ........ $ 230 $ 710 $ 1210 $ 2590
International Series -
International Stock Portfolio .. $ 250 $ 770 $ 1310 $ 2790
- --------------------------------------------------------------------------------
WARBURG PINCUS TRUST
Post-Venture Capital Portfolio ... $ 280 $ 870 $ 1480 $ 3130
These examples do not show past or future expenses. Actual expenses for a
particular year may be more or less than those shown in the examples.
================================================================================
Notes: (cont.) If your contract value is less than $50,000, on your contract
anniversary (and upon a surrender), We deduct a $30 fee. The examples use an
average number as the amount of the annual contract fee. This amount was
calculated by taking the total annual contract fees collected in the calendar
year of 1998 and then dividing that number by the total assets allocated to the
investment options using the mutual funds shown in the examples. Your actual
fees will vary based on the amount of your contract and your specific
allocation(s). A table of accumulation unit values of interests in each variable
investment option, appears on Page___. Premium taxes are not reflected. in these
examples. Premium taxes may apply depending on the state where you live.
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DISCOVERY SELECT VARIABLE ANNUITY
1. WHAT IS THE DISCOVERY SELECT VARIABLE ANNUITY?
The Discovery Select Variable Annuity is a contract between you, the owner, and
us, the insurance company, Pruco Life Insurance Company (Pruco Life, We or Us).
Under our contract or agreement, in exchange for your payment to us, we promise
to pay you a guaranteed income stream that can begin any time after the first
contract anniversary. (Maryland residents must wait until the end of the seventh
contract year.). Your annuity is in the accumulation phase until you decide to
begin receiving annuity payments. The date you begin receiving annuity payments
is the annuity date. On the annuity date, your contract switches to the income
phase.
This annuity contract benefits from tax deferral. Tax deferral means that you
are not taxed on earnings or appreciation on the assets in your contract until
you withdraw money from your contract.
Discovery Select is a variable annuity contract. This means that during the
accumulation phase, you can allocate your assets among 22 variable investment
options as well as 2 guaranteed interest-rate options. (If you live in Maryland,
Oregon or Washington, both interest-rate options may not be available to you. If
you select a variable investment option, the amount of money you are able to
accumulate in your contract during the accumulation phase depends upon the
investment performance of the mutual fund which are invested in by that variable
investment option. Because the mutual funds' portfolios fluctuate in value
depending upon market conditions, your assets can either increase or decrease in
value. This is important, since the amount of the annuity payments you receive
during the income phase depends upon the value of your contract at the time you
begin receiving payments.
As mentioned above, Discovery Select also contains two guaranteed interest-rate
options: a fixed-rate option and a market-value adjustment option. The
fixed-rate option offers an interest rate that is guaranteed by us for one year
and will always be at least 3.0% per year. The market-value adjustment option
guarantees a stated interest rate, generally higher than the fixed-rate option,
however, in order to get the full benefit of the stated interest rate, assets in
this option must be held for a seven-year period. (This option is not available
to residents of Maryland, Oregon or Washington.)
As the owner of the contract, you have all of the decision-making rights under
the contract. You will also be the annuitant unless you designate someone else.
The annuitant is the person who receives the annuity payments when the income
phase begins. The annuitant is also the person whose life is used to determine
how much and how long these payments will continue. On and after the annuity
date, the annuitant is the owner and may not be changed. The beneficiary becomes
the owner when a death benefit is payable.
The beneficiary is the person(s) or entity designated to receive any death
benefit if the annuitant(s) dies during the accumulation phase. You may change
the beneficiary anytime prior to the annuity date by making a written request to
us. Your request becomes effective when we approve it.
SHORT TERM CANCELLATION RIGHT OR "FREE LOOK"
If you change your mind about owning Discovery Select, you may cancel your
contract within 10 days after receiving it (or whatever period is required in
the state where the contract was issued). You can request a refund by returning
the contract either to the financial professional who sold it to you, or to the
Prudential Annuity Service Center at the address shown on the first page of this
prospectus. You will receive, depending on applicable law:
o Your full purchase payment; or
o The amount your contract is worth as of the day we receive your request.
This amount may be more or less than your original payment.
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2. WHAT INVESTMENT OPTIONS CAN I CHOOSE?
The contract gives you the choice of allocating your purchase payments to any
one or more of 22 variable investment options, as well as two guaranteed
interest-rate options. The 22 variable investment options use mutual funds
managed by leading investment advisors. Each of these mutual funds has a
separate prospectus that is provided with this prospectus. YOU SHOULD READ THE
MUTUAL FUND PROSPECTUS BEFORE YOU DECIDE TO ALLOCATE YOUR ASSETS TO THE VARIABLE
INVESTMENT OPTION USING THAT FUND.
VARIABLE INVESTMENT OPTIONS
Listed below are the mutual funds available to the variable investment options.
Each variable investment option has a different investment objective.
THE PRUDENTIAL SERIES FUND, INC.
o Money Market Portfolio
o Diversified Bond Portfolio
o High Yield Bond Portfolio
o Stock Index Portfolio
o Small Capitalization Stock Portfolio
o Equity Income Portfolio
o Equity Portfolio
o Prudential Jennison Portfolio (domestic equity)
o Global Portfolio
The Prudential Series Fund, Inc. is managed by Prudential through another
company it owns called The Prudential Investment Corporation. The Prudential
Investment Corporation manages each of the portfolios of the Prudential Series
fund except the Prudential Jennison Portfolio. For this portfolio, Prudential
Investment Corporation oversees another company owned by Prudential called
Jennison Associates Capital Corp. which provides the day to day investment
advisory services.
AIM VARIABLE INSURANCE FUNDS, INC.
o AIM V.I. Growth and Income Fund
o AIM V.I. Value Fund
AIM Advisors, Inc. serves as investment adviser to both of these funds.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
o American Century VP Value
American Century Investment Management, Inc. is the investment adviser for
American Century VP Value.
JANUS ASPEN SERIES
o Growth Portfolio
o International Growth Portfolio
Janus Capital Corporation serves as investment adviser to the Growth Portfolio
and the International Growth Portfolio.
MFS VARIABLE INSURANCE TRUST
o Emerging Growth Series
o Research Series (long-term growth and future income)
Massachusetts Financial Services Company, a Delaware corporation, is the
investment adviser to the Emerging Growth Series and the Research Series.
OCC ACCUMULATION TRUST
o Managed Portfolio (equity)
o Small Cap Portfolio
OpCap Advisors is the investment adviser to the Managed Portfolio and the Small
Cap Portfolio.
T. ROWE PRICE
o T. Rowe Price Equity Series, Inc., Equity Income Portfolio
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o T. Rowe Price International Series, Inc., International Stock Portfolio
T. Rowe Price Associates, Inc. is the investment manager for the Equity Income
Portfolio and Rowe Price-Fleming International, Inc. is the investment manager
for the International Stock Portfolio.
TEMPLETON VARIABLE PRODUCTS SERIES FUND
o Franklin Small Cap Investments Fund--Class 2
Franklin Advisers, Inc. is the investment manager for this portfolio of the
Templeton Variable Products Series Fund.
WARBURG PINCUS TRUST
o Post-Venture Capital Portfolio
Warburg Pincus Counselors, Inc. serves as investment adviser and Abbott Capital
Management, L.P. serves as sub-investment adviser for that portion of the
Post-Venture Capital Portfolio allocated to private limited partnerships or
other investment funds.
FIXED INTEREST-RATE OPTIONS
We offer two interest-rate options: a fixed-rate option and a market-value
adjustment option (not available in Maryland, Oregon or Washington). We set a
one year guaranteed annual interest rate that is always available for the
one-year fixed-rate option. For the market-value adjustment option, We set a
seven-year guaranteed interest rate.
When you select one of these options, your payment will earn interest at the
established rate for the applicable interest rate period. A new interest rate
period is established every time you allocate or transfer money into a fixed
interest-rate option. You may have money allocated in more than one interest
rate period at the same time. This could result in your money earning interest
at different rates and each interest rate period maturing at a different time.
If you transfer or withdraw assets or annuitize from the market-value adjustment
option before an interest rate period is over, the assets will be subject to a
market value adjustment.
The market-value adjustment may increase or decrease the amount being withdrawn
or transferred and may be substantial. The adjustment, whether up or down will
never be greater than 40%. The amount of the market-value adjustment is based on
the difference between the:
1. Guaranteed interest rate for the amount you are withdrawing or
transferring; and
2. Interest rate that is in effect on the date of the withdrawal or
transfer.
The amount of time left in the interest rate period is also a factor. You will
find a detailed description of how the market-value adjustment is calculated on
Page C-1 of this prospectus. (If your contract was issued in Pennsylvania,
please see page C-4 of this prospectus.)
TRANSFERS AMONG OPTIONS
You can transfer money among the variable investment options and the fixed
interest-rate options. Your transfer request may be made by telephone or in
writing to the Prudential Annuity Service Center. [Only two transfers per month
may be made by telephone. After that, all transfer requests must be in writing
with an original signature.] We have procedures in place to confirm that
instructions received by telephone are genuine. We will not be liable for
following telephone instructions that we reasonably believe to be genuine. Your
transfer request will take effect at the end of the business day on which it was
received.
YOU CAN MAKE TRANSFERS OUT OF A FIXED INTEREST-RATE OPTION ONLY DURING THE
30-DAY PERIOD FOLLOWING THE END OF AN INTEREST RATE PERIOD.
If you transfer money from a market-value adjustment option after the 30-day
period has ended, the money may be subject to a market-value adjustment.
During the contract accumulation phase, you can make 12 transfers each contract
year, among the investment options, without charge. If you make
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more than 12 transfers in one contract year, you will be charged $25 for each
additional transfer. (Dollar Cost Averaging and Auto-Rebalancing transfers do
not count toward the 12 free transfers per year.)
DOLLAR COST AVERAGING
The Dollar Cost Averaging (DCA) feature allows you to systematically transfer
either a fixed dollar amount or a percentage out of any variable investment
option or fixed interest-rate option and into any variable investment option(s).
You can transfer money to more than one variable investment option. The
investment option used for the transfers is designated as the DCA account. You
can have these automatic transfers made from the DCA account monthly, quarterly,
semiannually or annually. By allocating amounts on a regular schedule instead of
allocating the total amount at one particular time, you may be less susceptible
to the impact of market fluctuations.
Your initial transfer must be at least 3.0% of your DCA account. After that,
transfers will continue automatically until the entire amount in your DCA
account has been transferred or until you tell us to discontinue the transfers.
If your DCA account balance drops below $250, the entire remaining balance of
the account will be transferred on the next transfer date, You can allocate
subsequent purchase payments to re-open the DCA account at any time.
Your transfers will be made on the last calendar day of each transfer period you
have selected, provided that the New York Stock Exchange is open on that date.
If the New York Stock Exchange is not open on a particular transfer date, the
transfer will take effect on the next business day.
Any transfers you make because of Dollar Cost Averaging are not counted toward
the 12 free transfers you are allowed per year. This feature is available only
during the contract accumulation phase.
ASSET ALLOCATION PROGRAM
We recognize the value of having advice when deciding on the allocation of your
money. If you choose to participate in the Asset Allocation Program, your
financial professional will give you a questionnaire to complete that will help
determine a program that is appropriate for you. Your asset allocation will be
prepared based on your answers to the questionnaire. You will not be charged for
this service and you are not obligated to participate or to invest according to
program recommendations.
AUTO-REBALANCING
Once your money has been allocated among the variable investment options, the
actual performance of mutual funds may cause your allocation to shift. For
example, an investment option that initially holds only a small percentage of
your assets could perform much better than another investment option. Over time,
this option could increase to a larger percentage of your assets than you
desire. You can direct us to automatically rebalance your assets to return to
your original allocation or to change allocations by selecting the
Auto-Rebalancing feature. The fixed interest-rate options and the DCA account
cannot participate in this feature.
Your rebalancing will be done monthly, quarterly, semiannually or annually based
on your choice. The rebalancing will be done on the last calendar day of the
period you have chosen, provided that the New York Stock Exchange is open on
that date. If the New York Stock Exchange is not open on that date, the
rebalancing will take effect on the next business day.
Any transfers you make because of Auto-Rebalancing are not counted toward the 12
free transfers you are allowed per year. This feature is available only during
the contract accumulation phase.
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VOTING RIGHTS
We are the legal owner of the shares in the mutual funds representing the
variable investment options. However, We vote the shares of the mutual funds
according to voting instructions it receives from contractowners. We will mail
you a proxy which is a form you need to complete and return to us to tell us how
you wish to vote. When we receive those instructions, we will vote all of the
shares we own on your behalf, in proportion to those instructions. This will
also include any shares that we own on our own behalf. We may change the way
your voting instructions are calculated if it is required by federal regulation.
SUBSTITUTION
We may substitute one or more of the mutual funds used by the variable
investment options. We may also cease to allow investments in existing funds. We
would do this only if events such as investment policy changes or tax law
changes make the mutual fund unsuitable. We would not do this without the
approval of the Securities and Exchange Commission and necessary state insurance
department approvals. You will be given specific notice in advance of any
substitution we intend to make.
3. WHAT KIND OF PAYMENTS WILL I RECEIVE DURING THE INCOME PHASE?
(ANNUITIZATION)
PAYMENT PROVISIONS
The annuitant can begin receiving annuity payments any time after the first
contract anniversary. (Maryland residents must wait until after the seventh
anniversary.) Annuity payments must begin no later than the contract anniversary
that coincides with or follows the annuitant's 90th birthday (unless we agree to
another date).
You may choose among the income plans described below at any time before the
annuity date. These plans are called annuity options. During the income phase,
all of the annuity options under this contract are fixed annuity options. This
means that your participation in the variable investment options ends on the
annuity date. If you have not selected an annuity option by the annuity date,
the Interest Payment Option (Option 3, described below) will automatically be
selected unless prohibited by applicable law. ONCE THE ANNUITY PAYMENTS BEGIN,
YOU CANNOT CHANGE THE ANNUITY OPTION.
OPTION 1. ANNUITY PAYMENTS FOR A FIXED PERIOD
Under this option, we will make equal payments for a period you choose, up to 25
years. The annuity payments may be made monthly, quarterly, semiannually, or
annually for as long as the annuitant is alive. If the annuitant dies during the
income phase, a lump sum payment will be made to the beneficiary. The amount of
the lump sum payment is determined by calculating the present value of the
unpaid future payments. This is done by using the interest rate used to compute
the actual payments. The interest rate used will always be at least 3.50% a
year.. For payment periods of 10 years or more, we will waive any withdrawal
charge that otherwise would have been applied.
OPTION 2. LIFE ANNUITY WITH 120 PAYMENTS (10 YEARS) CERTAIN
Under this option, we will make annuity payments to the annuitant monthly,
quarterly, semiannually, or annually as long as the annuitant is alive. If the
annuitant dies before we have made 10 years worth of payments, we will pay the
beneficiary the present value of the remaining annuity payments in one lump sum
unless the annuitant has specifically instructed that the remaining monthly
annuity payments continue to be paid to the beneficiary. The present value of
the remaining annuity payments is calculate by using the interest rate used to
compute the amount of the original 120 payments. The interest rate used will
always be at least 3.50% a year. No withdrawal charge is applicable under this
option.
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OPTION 3. INTEREST PAYMENT OPTION
Under this option, you can choose to have us hold all or a portion of your
contract assets in order to accumulate interest. You can receive interest
payments on a monthly, quarterly, semiannual, or annual basis or you can allow
the interest to accrue on your contract assets. If you have not selected an
annuity option by the annuity date, this is the option we will automatically
select for you, unless prohibited by applicable law. Under this option, we will
pay you interest at an effective rate of at least 3.0% a year.
This option is not available if your contract is held in an Individual
Retirement Account.
OPTION 4. OTHER ANNUITY OPTIONS
We currently offer a variety of other annuity options not described above. At
the time you choose to receive your annuity payments, we may make available to
you any of the fixed annuity options that are offered at your annuity date. You
should be aware that depending on your contract date and the annuity option you
choose, you may have to pay withdrawal charges.
4. WHAT IS THE DEATH BENEFIT?
If the annuitant (or the last surviving annuitant, if there are co-annuitants)
dies during the accumulation phase, we will, upon receiving appropriate proof of
death, pay a death benefit to the beneficiary designated by the contractowner.
The death benefit feature protects the value of the contract for the
beneficiary.
BENEFICIARY
The beneficiary is the person(s) or entity you name to receive any death
benefit. The beneficiary is named at the time the contract is issued, unless you
change it at a later date. Unless an irrevocable beneficiary has been named, you
can change the beneficiary at any time before the annuitant or last surviving
annuitant dies.
CALCULATION OF THE DEATH BENEFIT
If the annuitant dies prior to age 80, the beneficiary will receive the greater
of the following:
o Current value of the total assets in the contract; or
o The highest value of the contract on any contract anniversary date. This is
called the step-up value. Between anniversary dates, the step-up value is
only increased by additional amounts invested and reduced proportionally by
withdrawals; or
o The total of all purchase payments compounded daily at an effective annual
rate of 5.0%, subject to a 200% cap. This is called the roll-up value and
is also reduced proportionally by withdrawals. (This calculation is not
available to contracts that were issued in New York.)
Upon reaching age 80, the step-up value and roll-up value are locked-in and can
only be increased by additional purchase payments, but will continue to be
reduced proportionally by the withdrawals. For this purpose, an annuitant is
deemed to reach age 80 on the contract anniversary on or following the
annuitant's actual 80th birthday.
Here is an example of a proportional reduction:
If an owner withdrew 50% of a contract valued at $100,000 and if the step-up
value was $80,000, the new step-up value following the withdrawal, would be
$40,000 or 50% of what it had been prior to the withdrawal.
If the contractowner and annuitant are not the same, the death benefit is
payable only in the event of the death of a sole annuitant or last surviving
annuitant, not the death of the contractowner.
Certain terms of this death benefit are limited in Oregon. This death benefit
was enhanced in January, 1998, to provide for an annual step-up value
calculation. Certain contractowners must
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have elected an endorsement in order for this enhanced death benefit to apply.
See the Statement of Additional Information (SAI) for details.
5. HOW CAN I PURCHASE A DISCOVERY SELECT CONTRACT?
PURCHASE PAYMENTS
A purchase payment is the amount of money you give us to purchase the contract.
The minimum purchase payment is $10,000. You can make additional purchase
payments of at least $1,000 or more at any time during the accumulation phase.
You must get our prior approval for any purchase payments over $2 million.
ALLOCATION OF PURCHASE PAYMENTS
When you purchase a contract, we will allocate your purchase payment among the
variable investment options and the fixed interest-rate options based on the
percentages you choose. The percentage of your allocation to a specific
investment option can range in whole percentages from 0% to 100%. If you make
additional purchase payments, they will be allocated in the same way as your
most recent purchase payment, unless you tell us otherwise. We will credit these
purchase payments to your contract as of the end of the business day on which
the payment is received. Our business day closes when the New York Stock
Exchange does, usually at [4:15 p.m]. Eastern time.
CALCULATING CONTRACT VALUE
The value of the variable portion of your contract will go up or down depending
on the investment performance of the variable investment option(s) you choose.
To determine the value of your contract, we use a unit of measure called an
accumulation unit. An accumulation unit works like a share of a mutual fund.
Every day we determine the value of an accumulation unit for each of the
variable investment options. We do this by:
1. Adding up the total amount of money allocated to a specific investment
option;
2. Subtracting from that amount insurance charges and any other charges
such as taxes; and
3. Dividing this amount by the number of outstanding accumulation units.
When you make a purchase payment, we credit your contract with accumulation
units. The number of accumulation units credited to your contract is determined
by dividing the amount of the purchase payment allocated to an investment option
by the unit price of the accumulation unit for that investment option. We
calculate the unit price for each investment option after the New York Stock
Exchange closes each day and then credit your contract. The value of the
accumulation units can increase, decrease, or remain the same from day to day.
The Accumulation Unit Values chart provided in Appendix A to this prospectus
gives you more detailed information about the accumulation units of the variable
investment options.
We cannot guarantee that the value of your contract will increase or that it
will not fall below the amount of your total purchase payments. However, we do
guarantee a minimum interest rate of 3.0% a year on that portion of the contract
allocated to the fixed interest-rate options.
6. WHAT ARE THE EXPENSES ASSOCIATED WITH THE DISCOVERY SELECT CONTRACT?
There are charges and other expenses associated with the contract that reduce
the return on your investment. These charges and expenses are described below.
INSURANCE CHARGES
Each day, We makes a deduction for its insurance charges. The insurance charges
have two parts:
1. Mortality and expense risk charge
2. Administrative expense charge
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1. Mortality and Expense Risk Charge
The mortality risk charge is for assuming the risk that the annuitant(s) will
live longer than expected based on our life expectancy tables. When this
happens, we pay a greater number of annuity payments. The expense risk charge is
for assuming that the current charges will be insufficient in the future to
cover the cost of administering the contract.
The mortality and expense risk charge is equal, on an annual basis, to 1.25% of
the daily value of the contract invested in the variable investment options,
after expenses have been deducted. This charge is not assessed against amounts
allocated to the interest-rate options.
If the charges under the contract are not sufficient, then we will bear the
loss. We do, however, expect to profit from this charge. The mortality and
expense risk charge cannot be increased. Any profits made from this charge may
be used by us to pay for the costs of distributing the contracts.
2. Administrative Expense Charge
This charge is for the expenses associated with the administration of the
contract. The administration of the contract would include preparing and issuing
the contract, establishment and maintenance of contract records, confirmations,
annual reports, personnel costs, legal and accounting fees, filing fees, and
systems costs.
This charge is equal, on an annual basis, to 0.15% of the daily value of the
contract invested in the variable investment option, after expenses have been
deducted.
ANNUAL CONTRACT FEE
During the accumulation phase, if your contract assets are less than $50,000, We
will deduct $30 per contract year (this fee may differ in certain states). This
annual contract fee is used for administrative expenses cannot be increased. The
$30 charge will be deducted proportionately from each of the contract's variable
investment options. This charge will also be deducted when you surrender your
contract if your contract assets are less than $50,000.
WITHDRAWAL CHARGE
During the accumulation phase you can make withdrawals from your contract. When
you make a withdrawal, money will be taken first from your purchase payments.
When your purchase payments have been used up, then we will take the money from
your earnings. You will not have to pay any withdrawal charge when you withdraw
your earnings.
The withdrawal charge is for the payment of the expenses involved in selling and
distributing the contracts, including sales commissions, printing of
prospectuses, sales administration, preparation of sales literature and other
promotional activities.
You can withdraw up to 10% of your total purchase payments each contract year
without paying a withdrawal charge. This amount is referred to as the
"charge-free amount". If any of the charge-free amount from the previous year is
not used, it will be carried over to the next contract year. During the first
seven contract years, if your withdrawal of purchase payments is more than the
charge-free amount, a withdrawal charge will be applied. This charge is based on
your contract date.
The following table shows the percentage of withdrawal charges that would apply:
During contract year 1 ............. 7%
During contract year 2 ............. 6%
During contract year 3 ............. 5%
During contract year 4 ............. 4%
During contract year 5 ............. 3%
During contract year 6 ............. 2%
During contract year 7 ............. 1%
After that ........................ 0%
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DISCOVERY SELECT VARIABLE ANNUITY
CRITICAL CARE ACCESS
We will allow you to withdraw money from the contract and waive any withdrawal
and annual contract fee, if the annuitant or the last surviving co-annuitant (if
applicable) becomes confined to an eligible nursing home or hospital for a
period of at least three consecutive months. You would need to provide us with
proof of the confinement. If a physician has certified that the annuitant or
last surviving co-annuitant is terminally ill (has six months or less to live)
there will be no charge imposed for withdrawals. Critical Care Access is not
available in all states. This option is not available to the contractowner if he
or she is not the annuitant.
PREMIUM TAXES
Some states and/or municipalities charge premium taxes or similar taxes. We are
responsible for the payment of these taxes and will make a deduction from the
value of the contract to pay for them. Some of these taxes are due when the
contract is issued, others are due when annuity payments begin. It is our
current practice not to deduct these taxes until annuity payments begin. In the
few states that impose a tax, the current rates range up to 5.0%.
TRANSFER FEE
You can make 12 free transfers every year. We measure a year from the date we
issue your contract (contract date). If you make more than 12 transfers in a
year (excluding Dollar Cost Averaging and Auto-Rebalancing), we will deduct a
transfer fee of $25 for each additional transfer. The transfer fee will be
deducted proportionately from all the affected investment options. The transfer
fee is deducted before the MVA is calculated.
COMPANY TAXES
We will pay the taxes on the earnings of the Separate Account. We are not
currently charging the Separate Account for taxes. We will periodically review
the issue of charging the Separate Account for these taxes.
7. HOW CAN I ACCESS MY MONEY?
You can access your money by:
o Making a withdrawal (either partial or complete); or
o Electing to receive annuity payments during the income phase.
YOU CAN MAKE WITHDRAWALS ONLY DURING THE ACCUMULATION PHASE.
When you make a complete withdrawal, you will receive the value of your contract
on the day you made the withdrawal, less any applicable charges.
Unless you tell us otherwise, any partial withdrawal will be made
proportionately from all of the affected investment options and interest-rate
options you have selected. You will have to receive our consent to make a
partial withdrawal if the amount is less than $500.
We will generally pay the withdrawal amount, less any required tax withholding,
within seven days after we receive a properly completed withdrawal request. We
will deduct applicable charges, including a market-value adjustment, if any,
from the assets in your contract.
INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL
YOU MAKE. For a more complete explanation, see Section 8 of this prospectus and
the tax discussion in the Statement of Additional Information.
AUTOMATED WITHDRAWALS
We offer an Automated Withdrawal feature. This feature enables you to receive
periodic withdrawals in monthly, quarterly, semiannual or annual intervals. We
will process your withdrawals at the end of the business day at the intervals
you specify. We will continue at these intervals until you tell us otherwise.
15
<PAGE>
You can make withdrawals from any designated investment option or proportionally
from all investment options. Market-value adjustments may apply. Withdrawal
charges may be deducted if the withdrawals in any contract year are more than
the charge-free amount. The minimum automated withdrawal amount you can make is
$250.
INCOME TAXES AND A 10% PENALTY TAX ON EARNINGS MAY APPLY TO AUTOMATED
WITHDRAWALS.
SUSPENSION OF PAYMENTS OR TRANSFERS
We may be required to suspend or postpone payments made in connection with
withdrawals or transfers for any period when:
The New York Stock Exchange is closed (other than customary weekend and holiday
closings); Trading on the New York Stock Exchange is restricted;
An emergency exists during which sales of shares of the mutual funds are not
reasonable or We cannot reasonably value the accumulation units; or
The Securities and Exchange Commission, by order, so permits suspension or
postponement of payments for the protection of owners.
We expect to pay the amount of any withdrawal or transfer made from the
interest-rate options promptly upon request.
8. WHAT ARE THE TAX CONSIDERATIONS ASSOCIATED WITH THE DISCOVERY SELECT
CONTRACT?
We have prepared the following discussion regarding annuity contracts owned by
individuals. It does not cover annuity contracts held under tax-favored
retirement plans or contracts held by other than individuals. The 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. A qualified tax adviser should be consulted for
complete information and advice.
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Taxes Payable by You
Generally, annuity contracts issued by the same company (and affiliates) to you
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 you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn.
If you assign all or part of your contract as collateral for a loan, the part
assigned will be treated as a withdrawal. Also, if you elect the interest
payment option, you will be treated, for tax purposes, as surrendering your
contract.
If you transfer your contract for less than full consideration, such as by gift,
you will trigger tax on the gain in the contract. This rule does not apply if
you transfer the contract to your spouse or incident to divorce.
16
<PAGE>
Taxes on Annuity Payments
A portion of each annuity payment you receive will be treated as a partial
return of your 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 you receive by a fraction, the
numerator of which is your 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 your 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 your purchase
payments have been recovered, a tax deduction is allowed for the unrecovered
amount.
Penalty Taxes on Withdrawals and Annuity Payments
Any taxable amount you receive under your 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 you reach age 59 1/2 or die;
o the amount received is attributable to your 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; and
o the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase)
o If you modify the lifetime annuity payment stream (other than as a result
of death or disability) before you reach age 59 1/2 (or before the end of
the five year period beginning with the first payment and ending after you
reach age 59 1/2), your 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 your beneficiary as
those set forth above with respect to you. The election of an annuity payment
option instead of a lump sum death benefit may defer taxes. Certain minimum
distribution requirements apply upon your death, as discussed further below.
Withholding of Tax from Distributions
Taxable amounts distributed from your annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. These elections must be made on the appropriate Pruco Life forms.
ANNUITY QUALIFICATION
Diversification and Investor Control
In order to qualify for the tax rules applicable to annuity contracts described
above, the contract must be an annuity contract for tax purposes. This means
that the assets underlying the annuity contract must be diversified, according
to certain rules. It also means that Pruco Life, and not you as the
contract-owner, must have sufficient control over the underlying assets to be
treated as the owner of the underlying assets for tax purposes. We believe these
rules, which are further discussed in the Statement of Additional Information,
will be met.
17
<PAGE>
Required Distributions Upon Your Death
Upon your death (or the death of a joint owner, if earlier), certain
distributions must be made under the contract. The required distributions depend
on whether you die on or before you start taking annuity payments under the
contract or after you start taking annuity payments under the contract.
If you die 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 you die 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 your designated beneficiary and if annuity
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your 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) your
surviving spouse, such portion of the contract may be continued with your spouse
as the owner.
Changes in the Contract
We reserve the right to make any changes we deem necessary to assure that the
contract qualifies as an annuity contract for tax purposes. Any such changes
will apply to all contractowners and you will be given notice to the extent
feasible under the circumstances.
Additional Information
You should refer to the Statement of Additional Information if:
o The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
o Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
o You are a nonresident alien.
o You transfer your contract to, or designate, a beneficiary who is either 37
1/2 years younger than you or a grandchild.
o You wish additional information on withholding taxes.
9. OTHER INFORMATION
PRUCO LIFE INSURANCE COMPANY
Pruco Life Insurance Company is a stock life insurance company organized in 1971
under the laws of the State of Arizona. Pruco Life is licensed to sell life
insurance and annuities in the District of Columbia, Guam and in all states
except New York and therefore is subject to the insurance laws and regulations
of all the jurisdictions where it is licensed to do business. Pruco Life is a
wholly-owned subsidiary of The Prudential Life Insurance Company of America
(Prudential), a mutual insurance company founded in 1875 under the laws of the
State of New Jersey.
Prudential is considering converting from a mutual insurance company to a stock
insurance company. This process is called demutualization. Legislation allowing
Prudential to demutualize has been enacted by the state of New Jersey, however,
no plan of demutualization has been adopted by the Board of Directors or
approved by policyholders and appropriate state insurance regulators. Once it
has been adopted, this process could take two or more years to complete and
there will be a
18
<PAGE>
continuing evaluation by the Board of Directors and senior management of the
company of the potential impact of the process on contractowners.
THE SEPARATE ACCOUNT
We have established a separate account, the Pruco Life Flexible Premium Variable
Annuity Account (Separate Account), to hold the assets that are associated with
the contracts. The Separate Account was established under Arizona law on June
16, 1995, and is registered with the U.S. Securities and Exchange Commission
under the Investment Company Act of 1940, as a unit investment trust, which is a
type of investment company. The assets of the Separate Account are held in the
name of Pruco Life and legally belong to us. These assets are kept separate from
all of our other assets and may not be charged with liabilities arising out of
any other business we may conduct. More detailed information about Pruco Life,
including its audited financial statements, are provided in Part III of this
prospectus beginning on page ___.
SALE OF THE CONTRACT; DISTRIBUTOR
Prudential Investment Management Services LLC ("PIMS"), 751 Broad Street,
Newark, New Jersey 07102-3777, acts as the distributor of the contracts. PIMS is
a wholly-owned subsidiary of Prudential and is a limited liability corporation
organized under Delaware law in 1996. It is a registered broker-dealer under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. Commissions for the sales of contracts are paid to
Prudential financial professionals and to other independent broker-dealers who
sell the contracts. Registered representatives of independent broker-dealers may
be paid on a different basis than those affiliated with PIMS. The maximum
commission that will be paid to the broker-dealer to cover both the individual
representative's commission and other distribution expenses will not be more
than 6.0% of the purchase payment.
ASSIGNMENT
You can assign the contract at any time during your lifetime. We will not be
bound by the assignment until we receive written notice. We will not be liable
for any payment or other action we take in accordance with the contract if that
action occurs before we receive notice of the assignment. An assignment, like
any other change in ownership, may trigger a taxable event.
If the contract is issued under a qualified plan, there may be limitations on
your ability to assign the contract. For further information please speak to
your financial professional.
FINANCIAL STATEMENTS
The financial statements of the Separate Account associated with Discovery
Select are included in the Statement of Additional Information.
YEAR 2000 COMPLIANCE
Many computer systems are programmed to recognize only the last two digits in a
date. As a result, any computer system that has date-sensitive programming may
recognize a date using "00" as the year 1900 rather than the year 2000. If this
anomaly is not corrected, the year "00" could cause systems to perform date
comparisons and calculations incorrectly which could in turn affect the accuracy
and compromise the integrity of business records.
To address this potential problem, Prudential established a Company-wide Program
Office (CPO) to develop and coordinate an operating framework for the Year 2000
compliance activities. Prudential's CPO structured the Year 2000 program into
three major components: Business Applications; Infrastructure; and Business
Partners. The CPO also established quality assurance procedures including a
certification process. This process will monitor and evaluate enterprise-wide
progress of each component of Prudential's program for conversion and upgrading
of systems for Year 2000 compliance.
19
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
While Prudential and its subsidiaries believe that they are well positioned to
mitigate its Year 2000 issue, this issue, by its nature contains inherent
uncertainties, including the uncertainty of Year 2000 readiness of third
parties. Consequently, Prudential is unable to determine at this time whether
the consequences of Year 2000 failures will have a material adverse effect on
Prudential's or Pruco Life's operations, liquidity or financial condition. In
the worst case, it is possible that any technology failure, including an
internal or external Year 2000 failure, could have a material impact on
Prudential's or Pruco Life's operations, liquidity, or financial position.
Prudential is enhancing existing business contingency plans to mitigate Year
2000 risk. Current contingency plans include planned responses to the failure of
specific business applications or infrastructure components. These responses are
being reviewed and expected to be finalized by June 1999 to ensure that they are
workable under the special conditions of a Year 2000 failure. The plans are also
being updated to reduce the level of uncertainty about the Year 2000 problem
including readiness of Prudential's Business Partners.
STATEMENT OF ADDITIONAL INFORMATION
The contents of the Statement of Additional Information include:
Company
Experts
Litigation
Legal Opinions
Principal Underwriter
Determination of Subaccount Unit Values
Performance Information
Comparative Performance Information
Further Information about the Death Benefit
Federal Tax Status
Financial Information
20
<PAGE>
<TABLE>
<CAPTION>
APPENDIX A
DISCOVERY SELECT VARIABLE ANNUITY
ACCUMULATION UNIT VALUES
THE DISCOVERY SELECT VARIABLE ANNUITY SUBACCOUNTS OF THE
FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
PRUDENTIAL PRUDENTIAL PRUDENTIAL
MONEY MARKET DIVERSIFIED BOND HIGH YIELD BOND
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
1/1/97 10/7/96* 1/1/97 10/7/96* 1/1/97 10/7/96*
TO TO TO TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Accumulation unit value at $1.04505 $1.03576 $1.06033 $1.03731 $1.12263 $1.11250
beginning of period
- ------------------------------------------------------------------------------------------------------------------------------------
2. Accumulation unit value at $1.08688 $1.04505 $1.13525 $1.06033 $1.25972 $1.12263
end of period
- ------------------------------------------------------------------------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 80,833,415.276 16,621,393.391 83,725,722.943 6,007,103.917 84,952,656.068 8,231,177.952
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
OCC ACCUMULATION
TRUST MANAGED
PORTFOLIO
- ----------------------------------------------------------------------
1/1/97 10/7/96*
TO TO
12/31/97 12/31/96
- ----------------------------------------------------------------------
<S> <C> <C>
1. Accumulation unit value at $1.05185 $0.99909
beginning of period
- ----------------------------------------------------------------------
2. Accumulation unit value at $1.26868 $1.05185
end of period
- ----------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 144,784,302.260 8,643,613.602
- ----------------------------------------------------------------------
<CAPTION>
PRUDENTIAL PRUDENTIAL AIM V.I.
STOCK INDEX EQUITY INCOME GROWTH & INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
1/1/97 10/7/96* 1/1/97 10/7/96* 1/1/97 10/7/96*
TO TO TO TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Accumulation unit value at $1.13652 $1.07837 $1.23339 $1.13494 $1.03757 $1.00065
beginning of period
- ------------------------------------------------------------------------------------------------------------------------------------
2. Accumulation unit value at
end of period $1.48876 $1.13652 $1.66167 $1.23339 $1.28644 $1.03757
- ------------------------------------------------------------------------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 115,667,745.942 7,481,300.307 99,533,256.833 2,784,920.648 32,365,951.864 3,408,549.878
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
T. ROWE PRICE
EQUITY INCOME
PORTFOLIO
- ---------------------------------------------------------------------
1/1/97 10/7/96*
TO TO
12/31/97 12/31/96
- ---------------------------------------------------------------------
<S> <C> <C>
1. Accumulation unit value at $1.04885 $0.99996
beginning of period
- ---------------------------------------------------------------------
2. Accumulation unit value at
end of period $1.33212 $1.04885
- ---------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 65,481,114.119 6,578,342.434
- ---------------------------------------------------------------------
<CAPTION>
PRUDENTIAL PRUDENTIAL AIM V.I.
EQUITY JENNISON VALUE
PORTFOLIO PORTFOLIO FUND
- ------------------------------------------------------------------------------------------------------------------------------------
1/1/97 10/7/96* 1/1/97 10/7/96* 1/1/97 10/7/96*
TO TO TO TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Accumulation unit value at $1.20807 $1.13479 $1.13943 $1.12169 $1.04935 $1.00223
beginning of period
- ------------------------------------------------------------------------------------------------------------------------------------
2. Accumulation unit value at
end of period $1.48518 $1.20807 $1.48006 $1.13943 $1.27997 $1.04935
- ------------------------------------------------------------------------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 134,944,416.513 8,287,180.736 72,354,119.265 4,882,616.029 37,009,784.835 4,033,863.906
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
JANUS ASPEN SERIES
GROWTH
PORTFOLIO
- ------------------------------------------------------------------
1/1/97 10/7/96*
TO TO
12/31/97 12/31/96
- ------------------------------------------------------------------
<S> <C> <C>
1. Accumulation unit value at $1.00830 $1.00191
beginning of period
- ------------------------------------------------------------------
2. Accumulation unit value at
end of period $1.22056 $1.00830
- ------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 40,236,134.863 5,459,308.662
- ------------------------------------------------------------------
* COMMENCEMENT OF BUSINESS
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
APPENDIX A (CONTINUED)
DISCOVERY SELECT VARIABLE ANNUITY
- ------------------------------------------------------------------------------------------------------------------------------------
MFS MFS OCC ACCUMULATION TRUST
RESEARCH SERIES EMERGING GROWTH SMALL CAP.
SERIES PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
1/1/97 10/7/96* 1/1/97 10/7/96* 1/1/97 10/7/96*
TO TO TO TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Accumulation unit value at $1.02610 $1.00228 $0.95812 $1.00860 $1.05106 $0.99623
beginning of period
- ------------------------------------------------------------------------------------------------------------------------------------
2. Accumulation unit value at
end of period $1.21695 $1.02610 $1.15186 $0.95812 $1.26710 $1.05106
- ------------------------------------------------------------------------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 31,409,622.799 2,727,173.841 44,342,699.749 5,755,823.499 36,276,986.681 2,345,892.859
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------
WARBURG PINCUS
POST-VENTURE CAPITAL
PORTFOLIO
- -----------------------------------------------------------------
1/1/97 10/7/96*
TO TO
12/31/97 12/31/96
- -----------------------------------------------------------------
<S> <C> <C>
1. Accumulation unit value at $0.95745 $1.00587
beginning of period
- -----------------------------------------------------------------
2. Accumulation unit value at
end of period $1.07018 $0.95745
- -----------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 11,039,843.408 1,786,114.670
- -----------------------------------------------------------------
<CAPTION>
PRUDENTIAL JANUS ASPEN SERIES T. ROWE PRICE
GLOBAL INTERNATIONAL GROWTH INTERNATIONAL STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
1/1/97 10/7/96* 1/1/97 10/7/96* 1/1/97 10/7/96*
TO TO TO TO TO TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97 12/31/96
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Accumulation unit value at $1.19505 $1.14330 $1.05349 $1.00130 $1.03988 $1.00159
beginning of period
- ------------------------------------------------------------------------------------------------------------------------------------
2. Accumulation unit value at
end of period $1.26079 $1.19505 $1.23121 $1.05349 $1.05690 $1.03988
- ------------------------------------------------------------------------------------------------------------------------------------
3. Number of accumulation units
outstanding at end of period 18,580,228.224 1,375,155.605 63,737,491.551 5,902,196.099 22,039,049.211 2,951,073.568
- ------------------------------------------------------------------------------------------------------------------------------------
* COMMENCEMENT OF BUSINESS
</TABLE>
22
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
SELECTED FINANCIAL DATA-PRUCO LIFE INSURANCE COMPANY
[TO BE PROVIDED BY AMENDMENT]
DISCOVERY SELECT VARIABLE ANNUITY
MANAGEMENT DISCUSSION AND ANALYSIS
[TO BE PROVIDED BY AMENDMENT]
DIRECTORS AND OFFICER LISTING
[TO BE PROVIDED BY AMENDMENT]
A-1
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
CONSOLIDATED FINANCIAL STATEMENTS OF
PRUCO LIFE INSURANCE COMPANY AND SUBSIDIARIES
[TO BE PROVIDED BY AMENDMENT]
B-1
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
MARKET-VALUE ADJUSTMENT FORMULA
WITH RESPECT TO RESIDENTS OF STATES, OTHER THAN PENNSYLVANIA, IN WHICH
DISCOVERY SELECT IS BEING OFFERED. WITH RESPECT TO RESIDENTS OF PENNSYLVANIA,
SEE PAGE C-4.
MARKET-VALUE ADJUSTMENT FORMULA
The Market-Value Adjustment, which is applied to withdrawals and transfers made
at any time other than the 30-day period following the end of an interest rate
period, involves three amounts:
1. The number of whole months remaining in the existing interest rate
period.
2. The guaranteed interest rate.
3. The interest rate that Pruco Life declares for a duration of one year
longer than the number of whole years remaining on the existing cell
being withdrawn from.
Stated as a formula, the Market Value Factor is equal to:
(M/12) x (R-C), not to exceed +0.40 or be less than -0.40;
Where,
M = the number of whole months (not to be less than one) remaining in the
interest rate period.
R = the Contract's guaranteed interest rate expressed as a decimal. Thus 6.2% is
converted to 0.062.
C = the interest rate, expressed as a decimal, that Pruco Life declares for a
duration equal to the number of whole years remaining in the present
interest rate period, plus 1 year as of the date the request for a
withdrawal or transfer is received.
The Market-Value Adjustment is then equal to the Market Value Factor
multiplied by the amount subject to a Market-Value Adjustment.
The steps below explain how a Market-Value Adjustment is calculated.
Step 1: Divide the number of whole months left in the existing interest
rate period (not to be less than one) by 12.
Step 2: Divide the interest rate Pruco Life declares on the date the
request for withdrawal or transfer is received for a duration of years
equal to the whole number of years determined in Step 1, plus 1 additional
year. Subtract this interest rate from the guaranteed interest rate. The
result could be negative.
Step 3: Multiply the results of Step 1 and Step 2. Again, the result could
be negative. If the result is less than -0.4, use the value -0.4. If the
result is in between -0.4 and 0.4, use the actual value. If the result is
C-1
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
more than 0.4, use the value 0.4.
Step 4: Multiply the result of Step 3 (which is the Market Value Factor) by
the value of the amount subject to a Market-Value Adjustment. The result is
the Market-Value Adjustment.
Step 5: The result of Step 4 is added to the interest cell. If the
Market-Value Adjustment is positive, the interest cell will go up in value.
If the Market-Value Adjustment is negative, the interest cell will go down
in value.
Depending upon when the withdrawal request is made, a withdrawal charge may
apply.
The following example will illustrate the application of a Market-Value
Adjustment and the determination of the withdrawal charge. Suppose a Contract
owner made two invested purchase payments, the first in the amount of $10,000 on
December 1, 1995, all of which was allocated to the Equity Subaccount, and the
second in the amount of $5,000 on October 1, 1997, all of which was allocated to
the MVA Option with a guaranteed interest rate of 8% (0.08) for 7 years. A
request for withdrawal of $8,500 is made on February 1, 2000 (the Contract owner
does not provide any withdrawal instructions). On that date the amount in the
Equity Subaccount is equal to $12,000 and the amount in the interest cell with a
maturity date of September 30, 2004 is $5,985.23, so that the Contract Fund on
that date is equal to $17,985.23.
On February 1, 2000, the interest rates declared by Pruco Life for the
duration of 5 years (4 whole years remaining until September 30, 2004, plus 1
year) is 11%.
The following computations would be made:
1. Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
2. Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
------------------------------------
DATE PAYMENT FREE
------------------------------------
12/1/95 $10,000 $1,000
12/1/96 $2,000
10/1/97 $5,000 $2,500
12/1/97 $4,000
12/1/98 $5,500
12/1/99 $7,000
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the
fourth Contract year) for a total of $7,000.
3. Since the withdrawal request is in the fifth Contract year, a 3% withdrawal
charge rate applies to any portion of the withdrawal which is not
charge-free.
$8,500.00 requested withdrawal amount
$7,000.00 charge-free
C-2
<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
$1,500.00 additional amount needed to complete withdrawal
The Contract provides that the Contract Fund will be reduced by an amount which,
when reduced by the withdrawal charge, will equal the amount requested.
Therefore, in order to produce the amount needed to complete the withdrawal
request ($1,500), we must "gross-up" that amount, before applying the withdrawal
charge rate. This is done by dividing by 1 minus the withdrawal charge rate.
$1,500.00 / (1-.03) =
$1,500.00 / 0.97 = $1,546.39 grossed-up amount
Please note that a 3% withdrawal charge on this grossed-up amount reduces it to
$1,500, the balance needed to complete the request.
$1,546.39 grossed-up amount
x.03 withdrawal charge rate
$46.39 withdrawal charge
4. The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interest rate that would be offered
for an interest cell with a duration of the remaining whole years plus 1),
which is -0.03, multiplied by 4.58333 (55 months remaining until
September 30, 2004, divided by 12) or -0.13750. Thus, there will be a
negative Market-Value Adjustment of 14% of the amount in the interest cell
that is subject to the adjustment.
-0.13750 x $5,985.23 = -822.97 negative MVA
$5,985.23 unadjusted value
$5,162.26 adjusted value
$12,000.00 Equity value
$17,162.26 adjusted Contract Fund
5. The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over
all accounts making up the Contract Fund following the Market-Value
Adjustments, if any, associated with the MVA option.
Equity ($12,000/$17,162.26) x $8,546.39 = $5,975.71
7-Yr MVA ($5,162.26/$17,162.26) x $8,546.39 = $2,570.68
$8,546.39
6. The adjusted value of the interest cell, $5,162.26, reduced by the
withdrawal of $2,570.68 leaves $2,591.58. This amount must be "unadjusted"
by dividing it by 0.86250 (1 plus the Market-Value Adjustment of -0.13750)
to determine the amount remaining in the interest cell to which the
guaranteed interest rate of 8% will continue to be credited until
September 30, 2004 or a subsequent withdrawal. That amount is $3,004.73.
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DISCOVERY SELECT VARIABLE ANNUITY
WITH RESPECT TO RESIDENTS OF PENNSYLVANIA ONLY.
MARKET-VALUE ADJUSTMENT FORMULA
The Market-Value Adjustment, which is applied to withdrawals and transfers made
at any time other than the 30-day period following the end of an interest rate
period, involves three amounts:
1. The number of whole months remaining in the existing interest rate
period.
2. The guaranteed interest rate.
3. The interpolated value of the interest rates that Pruco Life declares
for the number of whole years remaining and the duration 1 year longer
than the number of whole years remaining in the existing interest rate
period.
Stated as a formula, the Market Value Factor is equal to: (M/12) x (R-C),
not to exceed +0.40 or be less than -0.40; Where,
M = the number of whole months (not to be less than one) remaining in the
interest rate period.
R = the Contract's guaranteed interest rate expressed as a decimal. Thus 6.2%
is converted to 0.062.
C = the interpolated value of the interest rates, expressed as a decimal, that
Pruco Life declares for the number of whole years remaining and the
duration 1 year longer than the number of whole years remaining as of the
date the request for a withdrawal or transfer is received or m/365 x (n+1)
year rate + (365-m)/365 x n year rate, where "n" equals years and "m"
equals days remaining in year "n" of the existing interest rate period.
The Market-Value Adjustment is then equal to the Market Value Factor
multiplied by the amount subject to a Market-Value Adjustment.
The steps below explain how a Market-Value Adjustment is calculated.
Step 1: Divide the number of whole months left in the existing interest
rate period (not to be less than one) by 12.
Step 2: Interpolate the interest rates Pruco Life declares on the date the
request for withdrawal or transfer is received for the duration of years
equal to the whole number of years determined in Step 1, plus the whole
number of years plus 1 additional year.
Step 3: Subtract this interpolated interest rate from the guaranteed
interest rate. The result could be negative.
Step 4: Multiply the results of Step 1 and Step 2. Again, the result could
be negative. If the result is less than -0.4, use the value -0.4. If the
result is in between -0.4 and 0.4, use the actual value. If the result is
more than 0.4, use the value 0.4.
Step 5: Multiply the result of Step 3 (which is the Market Value Factor)
by the value of the amount subject to a Market-Value Adjustment. The
result is the Market-Value Adjustment.
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<PAGE>
DISCOVERY SELECT VARIABLE ANNUITY
Step 6: The result of Step 4 is added to the interest cell. If the
Market-Value Adjustment is positive, the interest cell will go up in
value. If the Market-Value Adjustment is negative, the interest cell will
go down in value.
Depending upon when the withdrawal request is made, a withdrawal charge
may apply.
The following example will illustrate the application of a Market-Value
Adjustment and the determination of the withdrawal charge. Suppose a Contract
owner made two invested purchase payments, the first in the amount of $10,000 on
December 1, 1995, all of which was allocated to the Equity Subaccount, and the
second in the amount of $5,000 on October 1, 1997, all of which was allocated to
the MVA Option with a guaranteed interest rate of 8% (0.08) for 7 years. A
request for withdrawal of $8,500 is made on February 1, 2000 (the Contract owner
does not provide any withdrawal instructions). On that date the amount in the
Equity Subaccount is equal to $12,000 and the amount in the interest cell with a
maturity date of September 30, 2004 is $5,985.23, so that the Contract Fund on
that date is equal to $17,985.23.
On February 1, 2000, the interest rates declared by Pruco Life for the
durations 4 and 5 years (4 whole years remaining until September 30, 2004, plus
1 year) are 10.8% and 11.4%, respectively.
The following computations would be made:
1. Calculate the Contract Fund value as of the effective date of the
transaction. This would be $17,985.23.
2. Calculate the charge-free amount (the amount of the withdrawal that is not
subject to a withdrawal charge).
------------------------------------
DATE PAYMENT FREE
------------------------------------
12/1/95 $10,000 $1,000
12/1/96 $2,000
10/1/97 $5,000 $2,500
12/1/97 $4,000
12/1/98 $5,500
12/1/99 $7,000
The charge-free amount in the fifth Contract year is 10% of $15,000 (total
purchase payments) plus $5,500 (the charge-free amount available in the
fourth Contract year) for a total of $7,000.
3. Since the withdrawal request is in the fifth Contract year, a 3%
withdrawal charge rate applies to any portion of the withdrawal which is
not charge-free.
$8,500.00 requested withdrawal amount
-$7,000.00 charge-free
$1,500.00 additional amount needed to complete withdrawal
The Contract provides that the Contract Fund will be reduced by an amount
which, when reduced by the withdrawal charge, will equal the amount
requested. Therefore, in order to produce the amount needed to complete
the withdrawal request ($1,500), we must "gross-up" that amount, before
applying the
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DISCOVERY SELECT VARIABLE ANNUITY
withdrawal charge rate. This is done by dividing by 1 minus the withdrawal
charge rate.
$1,500.00 / (1-.03) =
$1,500.00 / 0.97 = $1,546.39 grossed-up amount
Please note that a 3% withdrawal charge on this grossed-up amount reduces it to
$1,500, the balance needed to complete the request.
$1,546.39 grossed-up amount
x.03 withdrawal charge rate
$46.39 withdrawal charge
4. The Market Value Factor is determined as described in steps 1 through 5,
above. In this case, it is equal to 0.08 (8% is the guaranteed rate in the
existing cell) minus 0.11 (11% is the interpolated value for the interest
rates that would be offered for interest cells with durations of whole
years remaining and whole year plus 1 remaining in the existing interest
rate period), which is -0.03, multiplied by 4.58333 (55 months remaining
until September 30, 2004, divided by 12) or -0.13750. Thus, there will be
a negative Market-Value Adjustment of approximately 14% of the amount in
the interest cell that is subject to the adjustment.
-0.13750 x $5,985.23 = -822.97 negative MVA
$5,985.23 unadjusted value
$5,162.26 adjusted value
$12,000.00 Equity value
$17,162.26 adjusted Contract Fund
5. The total amount to be withdrawn, $8,546.39, (sum of the surrender charge,
$46.39, and the requested withdrawal amount of $8,500) is apportioned over
all accounts making up the Contract Fund following the Market-Value
Adjustments, if any, associated with the MVA option.
Equity ($12,000/$17,162.26) x $8,546.39 = $5,975.71
7-Yr MVA ($5,162.26/$17,162.26) x $8,546.39 = $2,570.68
$8,546.39
6. The adjusted value of the interest cell, $5,162.26, reduced by the
withdrawal of $2,570.68 leaves $2,591.58. This amount must be "unadjusted"
by dividing it by 0.86250 (1 plus the Market-Value Adjustment of -0.13750)
to determine the amount remaining in the interest cell to which the
guaranteed interest rate of 8% will continue to be credited until
September 30, 2004 or a subsequent withdrawal. That amount is $3,004.73.
C-6
<PAGE>
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
751 BROAD STREET
NEWARK, NEW JERSEY 07102-3777
TELEPHONE: (888) PRU-2888
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[MAY 1], 1999
PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY ACCOUNT
VARIABLE ANNUITY CONTRACTS
The DISCOVERY SELECT(SM) Annuity Contract* (the "contract") is an individual
variable annuity contract issued by the Pruco Life Insurance Company ("Pruco
Life"), a stock life insurance company that is a wholly-owned subsidiary of The
Prudential Insurance Company of America ("Prudential") and is funded through the
Pruco Life Flexible Premium Variable Annuity Account (the "Account"). The
contract is purchased by making an initial purchase payment of $10,000 or more;
subsequent payments must be $1,000 or more.
This statement of additional information is not a prospectus and should be read
in conjunction with the Discovery Select prospectus, dated [May 1], 1999. To
obtain a copy of the prospectus, without charge, you can write to the Prudential
Annuity Service Center, P.O. Box 14205, New Brunswick, New Jersey 08906-4205, or
by telephoning (888) PRU-2888.
TABLE OF CONTENTS
PAGE
----
COMPANY................................................................... 2
EXPERTS................................................................... 2
LITIGATION................................................................ 2
LEGAL OPINIONS............................................................ 2
PRINCIPAL UNDERWRITER..................................................... 2
DETERMINATION OF SUBACCOUNT UNIT VALUES................................... 2
PERFORMANCE INFORMATION................................................... 3
COMPARATIVE PERFORMANCE INFORMATION....................................... 5
FURTHER INFORMATION ABOUT THE DEATH BENEFIT .............................. 5
FEDERAL TAX STATUS........................................................ 7
FINANCIAL INFORMATION..................................................... A1
PRUCO LIFE INSURANCE COMPANY PRUDENTIAL ANNUITY SERVICE CENTER
213 WASHINGTON STREET P.O. BOX 14205
NEWARK, NEW JERSEY 07102-2992 NEW BRUNSWICK, NEW JERSEY 08906-4205
TELEPHONE: (888) PRU-2888
*DISCOVERY SELECT is a service mark of Prudential.
Catalog No. [40MZ259J]
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COMPANY
Pruco Life Insurance Company ("Pruco Life") is a stock life insurance company
organized in 1971 under the laws of the State of Arizona. Pruco Life is licensed
to sell life insurance and annuities in the District of Columbia, Guam and all
states except New York.
Pruco Life is a wholly-owned subsidiary of The Prudential Insurance Company of
America ("Prudential"), a mutual life insurance company founded in 1875 under
the laws of the State of New Jersey.
Prudential is considering converting from a mutual insurance company to a stock
insurance company. This process is called demutualization. Legislation allowing
Prudential to demutualize has been enacted by the state of New Jersey, However,
no plan of demutualization has been adopted by the Board of Directors or
approved by policyholders. Approval by state insurance regulators must also be
granted. Once the plan of demutualization has been adopted, the process could
take two or more years to complete. There will be a continuing evaluation by the
Board of Directors and senior management of the company to monitor the potential
impact of this process on contractowners.
EXPERTS
The consolidated financial statements of Pruco Life for the years ended December
31, 199_ and December 31, 199_ have been audited by PricewaterhouseCoopers LLP,
independent accountants ("PwC"). The report certifying this audit is included in
this prospectus. Pruco Life has relied upon this report based on PwC's authority
as experts in accounting and auditing. PwC's principal business address is 1777
Avenue of the Americas, New York, New York, 10036.
LITIGATION
Several actions have been brought against Pruco Life alleging that Pruco Life
and its agents engaged in improper life insurance sales practices. Prudential
has agreed to indemnify Pruco Life for losses, if any resulting from such
litigation. No other significant litigation is being brought against Pruco Life
that would have a material effect on its financial position.
LEGAL OPINIONS
Shea & Gardner of Washington, D.C., has provided advice on certain matters
relating to the federal securities laws in connection with the contracts.
PRINCIPAL UNDERWRITER
Prudential Investment Management Services LLC ("PIMS"),a subsidiary of
Prudential offers the contracts on a continuous basis through Corporate Office
and regional home office employees in those states in which contracts may be
lawfully sold. It may also offer the contract through licensed insurance brokers
and agents, or through appropriately registered direct or indirect
subsidiariy(ies) of Prudential, provided clearances to do so are obtained in any
jurisdiction where such clearances may be necessary. During 1998, 1997 and 1996,
the aggregate dollar amount of underwriting commissions paid to and the amounts
retained by PIMS were $ ___, ___, and ___ respectively. during 1998, 1997 and
1996 PIMS paid $ ___, $4,710 and $0 respectively to cover individual
representatives' commissions and other distribution expenses.
Prudential may pay trail commissions to registered representatives who maintain
an ongoing relationship with a contractholder. Typically, a trail commission is
a 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.
DETERMINATION OF SUBACCOUNT UNIT VALUES
The value for each Subaccount Unit is computed as of the end of each "valuation
period" as defined in the prospectus (also referred to in this section as
"business day"). On any given business day the value of a Unit in each
subaccount will be determined by multiplying the value of a Unit of that
subaccount for the preceding business day by the net investment factor for that
subaccount for the current business day. The net investment factor for any
2
<PAGE>
business day is determined by dividing the value of the assets of the subaccount
for that day by the value of the assets of the subaccount for the preceding
business day (ignoring, for this purpose, changes resulting from new purchase
payments and withdrawals), and subtracting from the result the daily equivalent
of the 1.4% annual charge for administrative expenses and mortality and expense
risks. (See WHAT ARE THE EXPENSES ASSOCIATED WITH THE DISCOVERY SELECT CONTRACT
and CALCULATING CONTRACT VALUE in the prospectus.) The value of the assets of a
subaccount is determined by multiplying the number of shares of The Prudential
Series Fund, Inc. (the "Series Fund") or other Fund held by that subaccount by
the net asset value of each share and adding the value of dividends declared by
the Series Fund or other Fund but not yet paid.
PERFORMANCE INFORMATION
The tables that follow provide performance information for each subaccount
through December 31, 1998. The performance information is based on historical
experience and does not indicate or represent future performance.
AVERAGE ANNUAL TOTAL RETURN
The DISCOVERY SELECT Annuity is a relatively new contract. The returns shown
below were calculated using historical investment returns of the Funds. All
fees, expenses and charges associated with the DISCOVERY SELECT Annuity and the
Funds have been reflected in these returns, as if the Contract had existed from
the inception date of each Funds' portfolios.
Table 1 below shows the average annual rates of total return on hypothetical
investments of $1,000 for periods ended December 31, 1997 in each subaccount
other than the Money Market Subaccount. These figures assume withdrawal of the
investments at the end of the period other than to effect an annuity under the
Contract. This table assumes deferred sales charges.
TABLE 1
AVERAGE ANNUAL TOTAL RETURN
[PERFORMANCE INFORMATION TO BE PROVIDED BY AMENDMENT]
Note 1: This table assumes deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.
The average annual rates of total return shown above are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance with
the following formula: P(1+T)(n)=ERV. In the formula, P is a hypothetical
investment of $1,000; T is the average annual total return; "n" is the number of
years; and ERV is the withdrawal value at the end of the periods shown. These
figures assume deduction of the maximum withdrawal charge that may be applicable
to a particular period.
NON-STANDARD TOTAL RETURN
Table 2 below shows the average annual rates of return as in Table 1, but
assumes that the investments are not withdrawn at the end of the period or that
the Contract owner annuitizes at the end of the period. This table assumes no
deferred sales charges.
3
<PAGE>
TABLE 2
AVERAGE ANNUAL TOTAL RETURN ASSUMING NO WITHDRAWAL
[PERFORMANCE INFORMATION TO BE PROVIDED BY AMENDMENT]
Note 1: This table assumes no deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.
Table 3 shows the cumulative total return for the portfolios, assuming no
withdrawal. This table assumes no deferred sales charges.
TABLE 3
CUMULATIVE TOTAL RETURN ASSUMING NO WITHDRAWAL
[PERFORMANCE INFORMATION TO BE PROVIDED BY AMENDMENT]
Note 1: This table assumes no deferred sales charges.
Note 2: Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds--the Old
Trust and the present Quest for Value Accumulation Trust (the "Present
Trust")--at which time the Present Trust Commenced Operations.
Note 3: All tables assume a $30.00 annual charge for contracts under $50,000.
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 SELECT 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, 1998 were [ ]% and [ ]%, 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 1.25% charge for mortality and
expense risks and the 0.15% charge for administration. It does not reflect the
withdrawal charge.
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 yields 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.
4
<PAGE>
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 Annuity 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.
FURTHER INFORMATION ABOUT THE DEATH BENEFIT
Early in 1998, Pruco Life began to offer an enhanced Death Benefit under the
Contract. For Contracts issued after the new Death Benefit became available in a
particular state, the new Death Benefit is contained in an Endorsement that is
issued with the Contract. Existing Contract Owners are also being given the
option to elect the new Death Benefit or retain the Death Benefit currently
available under their Contracts. For existing Contract Owners electing the new
Death Benefit, the Endorsement describing the new Death Benefit will be issued
after the Contract and should be attached to and kept with the Contract. As used
here, the term "Endorsement Date" describes both the date on which the Contract
is issued with the Endorsement for Contracts purchased after the new Death
Benefit is available and the date on which the Endorsement is issued for
existing Contract Owners so electing. The new Death Benefit provisions are
described below.
If the sole or last surviving Annuitant dies prior to the annuity date, Pruco
Life will, upon receipt of all of the information necessary to make the payment
(including due proof of death and election of a payment option), pay a Death
Benefit to the beneficiary designated by the Contract Owner.
IF THE SOLE OR OLDER ANNUITANT IS UNDER AGE 80 when the Death Benefit
Endorsement is issued, the Death Benefit on or prior to the Contract Anniversary
coinciding with or next following his or her 80th birthday will equal the
greater of, the Contract Fund value or the Guaranteed Minimum Death Benefit, as
of the date of due proof of death. The Guaranteed Minimum Death Benefit is
calculated daily and is equal to the greater of: (1) the 5% annual increase
("Roll-Up"); or (2) the highest annual Contract Fund value ("Step-Up"), both of
which are described below.
Roll-Up
The Roll-Up is equal to the total invested purchase payments (initial and
additional) and is increased daily to the date of death at an effective annual
interest rate of 5%, until the cap maximum is reached. The cap is equal to the
sum of two times each invested purchase payment. The Roll-Up and the cap are
proportionally reduced by the effect of withdrawals. Once the cap is reached,
the Roll-Up can only be increased by the amount of additional invested purchase
payments and will be proportionally reduced by the effect of withdrawals. For
purposes of determining the Death Benefit, "proportionally reduced by the effect
of withdrawals" means that withdrawals (including any applicable charges) will
reduce other values in the same proportion as they reduce the Contract Fund
value.
Step-Up
Prior to the first Contract Anniversary, the Step-Up is the initial invested
purchase payment increased by additional invested purchase payments and
proportionally reduced by the effect of withdrawals. The Step-Up for each
subsequent Contract Anniversary will be reset to the greater of the Contract
Fund value as of that Contract Anniversary and the prior Step-Up. Between
Contract Anniversaries, the Step-Up will be increased by invested purchase
payments and proportionally reduced by effect of withdrawals.
After the Contract Anniversary coinciding with or following the Annuitant's 80th
birthday, the Death Benefit will equal the greater of the Contract Fund value as
of the date of due proof of death or the Guaranteed Minimum Death Benefit as of
the Contract Anniversary coinciding with or next following his or her 80th
birthday, increased by additional invested purchase payments and proportionally
reduced by the effect of withdrawals since such Contract Anniversary.
5
<PAGE>
IF THE SOLE OR OLDER ANNUITANT IS AGE 80 OR OVER on the Endorsement Date, the
Death Benefit will equal the greater of the Contract Fund value as of the date
of due proof of death or the total invested purchase payments (initial and
additional) proportionally reduced by the effect of withdrawals.
Upon issuance of the Endorsement, you may not change an Annuitant or
Co-Annuitant. You may add or remove an Annuitant or Co-Annuitant only with our
prior approval.
If the Contract was issued prior to the Endorsement Date, the following rules
apply: (1) the initial value of the Roll-Up and the Step-Up is the total
invested purchase payments (initial and additional), less total withdrawals
(including any applicable charges) as of the issuance of the Endorsement;
(2) the initial value of the cap will be two times the initial value of the
Roll-Up; and (3) the words, "Prior to the first Contract Anniversary", as used
in the description of the Step-Up, means prior to the first Contract Anniversary
following the issuance of the Endorsement.
Contracts issued prior to the Endorsement Date WHOSE OWNERS DO NOT ELECT TO
ATTACH THE ENDORSEMENT TO THEIR CONTRACTS and Contracts issued in states in
which the Endorsement is not available will continue to have the Death Benefit
calculated as originally offered, as follows: The Death Benefit will equal the
greatest of: (1) the Contract Fund as of the date of due proof of death; or
(2) the sum of all invested purchase payments made less total withdrawals made
(including withdrawal charges); or (3) the greatest of the Contract Fund values
calculated on every third Contract Anniversary reduced by all subsequent
withdrawals and withdrawal charges.
The Death Benefit is payable on the death of the sole or last surviving
Annuitant, not the Contract Owner.
The beneficiary may receive this amount in a lump sum or under a payout option.
Unless the beneficiary has been irrevocably designated, you may change the
beneficiary at any time. If the Annuitant dies after he or she has begun to
receive annuity payments, the Death Benefit, if any, will be determined by the
type(s) of payout provisions then in effect.
If the annuitant was the sole owner of the Contract, the Annuitant's spouse was
the sole beneficiary, and the spouse had an unrestricted right to receive the
death benefit in a lump sum, then the spouse has the right to continue the
Contract as Annuitant and owner.
FEDERAL TAX STATUS
OTHER TAX RULES.
DIVERSIFICATION.
The Internal Revenue Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements. For further
detail on diversification requirements, see Dividends, Distributions, and Taxes
in the accompanying prospectus for the Prudential Series Fund. Pruco Life
believes the underlying variable investment options for the Contract meet these
diversification requirements.
INVESTOR CONTROL.
Treasury Department regulations do not provide guidance concerning the extent to
which you may direct your investment in the particular investment options
without causing you, instead of Pruco Life, to be considered the owner of the
underlying assets. Because of this uncertainty, Pruco Life reserves the right to
make such changes as it deems necessary to assure that the contract qualifies as
an annuity for tax purposes. Any such changes will apply uniformly to affected
contractowners and will be made with such notice to affected contractowners as
is feasible under the circumstances.
ENTITY OWNERS.
Where a contract is held by a non-natural person (e.g., a corporation), other
than as an agent or nominee for a natural person (or in other limited
circumstances), the contract will not be taxed as an annuity and increases in
the value of the contract will be subject to tax.
PURCHASE PAYMENTS MADE BEFORE AUGUST 14, 1982.
If your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982, favorable tax rules may apply to certain
withdrawals from the contract. Generally, withdrawals are treated as a recovery
of your investment in the contract first until purchase payments made before
August 14, 1982 are
6
<PAGE>
withdrawn. Moreover, any income allocable to purchase payments made before
August 14, 1982, is not subject to the 10 % penalty tax.
WITHHOLDING OF TAX FROM DISTRIBUTIONS.
Taxable amounts distributed from annuity contracts are subject to tax
withholding. You may generally elect not to have tax withheld from your
payments. The rate of withholding on annuity payments will be determined on the
basis of the withholding certificate you file with Pruco Life. These elections
must be made on the appropriate Pruco Life forms. Absent these elections, Pruco
Life will withhold the tax amounts required by the applicable tax regulations.
You may be subject to penalties under the estimated tax payment rules if your
withholding and estimated tax payments are not sufficient.
NONRESIDENT ALIENS.
Special tax withholding rules apply to nonresident aliens.
FINANCIAL STATEMENTS
[THE FINANCIAL STATEMENTS OF THE PRUCO LIFE FLEXIBLE PREMIUM VARIABLE ANNUITY
ACCOUNT TO BE PROVIDED BY AMENDMENT]
7
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FINANCIAL
INFORMATION
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS [TO BE PROVIDED BY AMENDMENT]
(1) Financial Statements of the Pruco Life Flexible Premium Variable Annuity
Account (Registrant) consisting of the Statements of Net Assets as of
December 31, 1998; the Statements of Operations for the period ended
December 31, 1998; the Statements of Changes in Net Assets for the periods
ended December 31, 1998 and December 31, 1997; and the Notes relating
thereto will appear in the prospectus (Part A of the Registration
Statement) [To Be Filed By Amendment].
(2) Consolidated Statements of Pruco Life Insurance (Depositor) and
subsidiaries consisting of the Consolidated Statements of Financial
Position as of December 31, 1998 and 1997; and the related Consolidated
Statements of Operations of Stockholder's Equity and Cash Flows for the
years ended December 31, 1998, 1997 and 1996; and the Notes to the
Consolidated Financial Statements will appear in the prospectus (Part A of
the Registration Statement) [To Be Filed By Amendment].
(b) EXHIBITS
(1) Resolution of the Board of Directors of Pruco Life Insurance Company
establishing the Pruco Life Flexible Premium Variable Annuity Account.
(Note 2)
(2) Agreements for custody of securities and similar investments--Not
Applicable.
(3) (a) Distribution Agreement between Prudential Investment Management
Services, Inc. "PIMS" (Underwriter) and Pruco Life Insurance Company
(Depositor)[To Be Filed By Amendment]
(b) Form of Selected Broker Agreement used by PIMS [To Be Filed By
Amendment]
(4) The Prudential DISCOVERY SELECT Contract. (Note 3)
(5) (a) Application form for the Contract. (Note 4)
(6) (a) Articles of Incorporation of Pruco Life Insurance Company, as amended
October 19, 1993. (Note 5)
(b) By-laws of Pruco Life Insurance Company, as amended May 6, 1997. (Note 9)
(7) Contract of reinsurance in connection with variable annuity contract--Not
Applicable.
(8) Other material contracts performed in whole or in part after the date the
registration statement is filed: (a) Form of Fund Participation Agreement.
(Note 3)
(9) Opinion of Counsel as to legality of the securities being registered. [TO
BE FILED BY AMENDMENT]
(10) Written consent of _______________, independent
accountants. [TO BE FILED BY AMENDMENT]
(11) All financial statements
omitted from Item 23, Financial Statements-- Not Applicable.
(12) Agreements in consideration for providing initial capital between or among
Registrant, Depositor, Underwriter, or initial Contract owners--Not
Applicable.
(13) Schedule of Performance Computations. [TO BE FILED BY AMENDMENT]
(14) Powers of Attorney.
(a) William M. Bethke, Ira J. Kleinman, Mendel A. Melzer, Esther H. Milnes
and I. Edward Price (Note 7)
(b) James M. Schlomann (Note 5)
(c) Kiyofumi Sakaguchi (Note 8)
(d) James J. Avery Jr (Note 10)
C-1
<PAGE>
(Note 1)
(Note 2) Incorporated by reference to Form N-4, Registration No. 33-61125,
filed July 19, 1995 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 3) Incorporated by reference to Form N-4, Registration No. 333-06701,
filed June 24, 1996 on behalf of the Pruco Life Flexible Premium
Variable Annuity Account.
(Note 4) Incorporated by reference to Pre-Effective Amendment No. 1 to Form
N-4, Registration No. 333-06701, filed September 12, 1996 on behalf of
the Pruco Life Flexible Premium Variable Annuity Account.
(Note 5) Incorporated by reference to Form S-6, Registration No. 333-07451,
filed July 2, 1996 on behalf of the Pruco Life Variable Appreciable
Account.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 4 to Form
S-1, Registration No. 33-86780, filed April 9, 1998 on behalf of the
Pruco Life Variable Contract Real Property Account.
(Note 7) Incorporated by reference to Form 10-K, Registration No. 33-08698,
filed March 31, 1997 on behalf of the Pruco Life Variable Contract
Real Property Account.
(Note 8) Incorporated by reference to Post-Effective Amendment No. 8 to Form
S-6, Registration No. 33-49994, filed April 28, 1997, on behalf of the
Pruco Life PRUvider Variable Appreciable Account.
(Note 9) Incorporated by reference to Form 10-Q, Registration No. 33-37587,
filed August 15, 1997 on behalf of the Pruco Life Insurance Company.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 2 to Form
S-6, Registration No. 333-07451, filed June 25, 1997 on behalf of the
Pruco Life Variable Appreciable Account.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
See Part A: Directors and Officers.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Pruco Life Insurance Company ("Pruco Life"), a corporation organized under the
laws of Arizona, is a direct, wholly-owned subsidiary of The Prudential
Insurance Company of America, ("Prudential"), a mutual life insurance company
organized under the laws of New Jersey. The subsidiaries of Prudential and short
descriptions of each are set forth on the following pages.
Pruco Life may be deemed to control its two wholly-owned subsidiaries, Pruco
Life Insurance Company of New Jersey ("Pruco Life of New Jersey") and The
Prudential Insurance Company of Arizona ("PLICA"). Pruco Life may also be deemed
to control the following separate accounts which are registered as unit
investment trusts under the Investment Company Act of 1940: the Pruco Life
Variable Appreciable Account, the Pruco Life Variable Insurance Account, the
Pruco Life Single Premium Variable Life Account, the Pruco Life Variable
Universal Account, the Pruco Life PRUvider Variable Appreciable Account, the
Pruco Life Single Premium Variable Annuity Account, the Pruco Life Flexible
Premium Variable Annuity Account (Registrant) (separate accounts of Pruco Life),
the Pruco Life of New Jersey Variable Appreciable Account, the Pruco Life of New
Jersey Variable Insurance Account, the Pruco Life of New Jersey Single Premium
Variable Life Account, and the Pruco Life of New Jersey Single Premium Variable
Annuity Account (separate accounts of Pruco Life of New Jersey).
The above-referenced separate accounts, along with Prudential and certain of
Prudential's separate accounts, hold all the shares of The Prudential Series
Fund, Inc., a Maryland corporation. In addition, The Prudential holds all the
shares of Prudential's Gibraltar Fund, a Maryland Corporation, in three of its
separate accounts. The Prudential Series Fund, Inc. and Prudential's Gibraltar
Fund are registered as open-end diversified, management investment companies
under the Investment Company Act of 1940. Additionally, the aforementioned
separate accounts of Prudential are registered as unit investment trusts under
the Investment Company Act of 1940.
C-2
<PAGE>
In addition, Pruco Life 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, all of which are registered as open-end, diversified, management
investment companies under the Investment Company Act of 1940 and with the
Prudential Variable Contract Account-24, a registered unit investment trust.
The subsidiaries of Prudential and short descriptions of each are listed under
Item 25 of Post-Effective Amendment No. 32 to the Form N-1A Registration
Statement for The Prudential Series Fund, Inc., Registration No. 2-80896, filed
February 28, 1997, the text of which is hereby incorporated.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of November 30, 1998, there were ____________ Contractowners of qualified
Contracts and ____________ owners of nonqualified Contracts offered by the
Registrant.
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.
Arizona, being the state of organization of Pruco Life Insurance Company
("Pruco"), permits entities organized under its jurisdiction to indemnify
directors and officers with certain limitations. The relevant provisions of
Arizona law permitting indemnification can be found in Section 10-850 et. seq.
of the Arizona Statutes Annotated. The text of Pruco's By-law, Article VIII,
which relates to indemnification of officers and directors, is incorporated by
reference to Exhibit 3(ii) to its form 10-Q filed August 15, 1997.
Insofar as indemnification for liabilities 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Prudential Investment Management Services LLC (PIMS)
PIMS is distributor for 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
C-3
<PAGE>
Fund, Inc., Prudential 20/20 Focus Fund, Prudential Utility Fund, Inc.,
Prudential World Fund, Inc. and The Target Portfolio Trust.
(b) Information concerning the officers and directors of PIMS is set forth
below.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME (1) WITH UNDERWRITER WITH REGISTRANT
- ------- --------------------- ----------------------
<S> <C> <C>
E. Michael Caulfield President None
Mark R. Fetting Executive Vice President None
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Jonathan M. Greene Executive Vice President None
Jean D. Hamilton Executive Vice President None
Ronald P. Joelson Executive Vice President None
Brian M. Storms Executive Vice President None
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
John R. Strangfeld Executive Vice President None
Mario A. Mosse Senior Vice President and
Chief OperatiNonefficer
Scott S. Wallner Vice President, Secretary
and Chief LegNonefficer
Michael G. Williamson Vice President, Comptroller
and Chief FNonecial Officer
C. Edward Chaplin Treasurer None
</TABLE>
- -------------------------------------
(1) The address of each person named is Prudential Plaza, 751 Broad Street,
Newark, New Jersey 07102 unless otherwise noted.
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section 31
(a) of the 1940 Act and the rules promulgated thereunder are maintained by the
Registrant through The Prudential Insurance Company of America, 751 Broad
Street, Newark, New Jersey 07102-3777.
ITEM 31. MANAGEMENT SERVICES
Summary of any contract not discussed in Part A or Part B of the registration
statement under which management-related services are provided to the
Registrant--Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to file a post-effective amendment to this Registrant
Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16
months old for so long as payments under the variable annuity contracts may
be accepted.
C-4
<PAGE>
(b) Registrant undertakes to include either (1) as part of any application 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
postcard 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) Registrant undertakes 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) Restrictions on withdrawal under Section 403(b) Contracts are imposed in
reliance upon, and in compliance with, a no-action letter issued by the
Chief of the Office of Insurance Products and Legal Compliance of the U.S.
Securities and Exchange Commission to the American Council of Life
Insurance on November 28, 1988.
(e) Pruco Life 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
Pruco Life.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal hereunto affixed and
attested, all in the City of Newark and the State of New Jersey, on this 12th
day of February, 1999.
THE PRUCO LIFE FLEXIBLE PREMIUM
VARIABLE ANNUITY ACCOUNT
(Registrant)
BY: PRUCO LIFE INSURANCE COMPANY
(Depositor)
Attest: /s/ CLIFFORD E. KIRSCH /s/ ESTHER H. MILNES
- ------------------------------------ ---------------------------------
CLIFFORD E. KIRSCH ESTHER H. MILNES
CHIEF LEGAL OFFICER PRESIDENT
C-6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 5 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
SIGNATURE AND TITLE
-----------------
*
- --------------------------------------------
ESTHER MILNES February 12, 1999
PRESIDENT AND DIRECTOR -----------------
*
- --------------------------------------------
JAMES J. AVERY JR
CHAIRMAN OF THE BOARD AND DIRECTOR
* *By: /s/ CLIFFORD E. KIRSCH
- -------------------------------------------- ------------------------------
JAMES M. SCHLOMANN CLIFFORD E. KIRSCH
VICE PRESIDENT AND COMPTROLLER (ATTORNEY-IN-FACT)*
*
- --------------------------------------------
WILLIAM M. BETHKE
DIRECTOR
*
- --------------------------------------------
IRA J. KLEINMAN
DIRECTOR
*
- --------------------------------------------
MENDEL A. MELZER
DIRECTOR
*
- --------------------------------------------
I. EDWARD PRICE
DIRECTOR
*
- --------------------------------------------
KIYOFUMI SAKAGUCHI
DIRECTOR
C-7
