-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WugYKRF8fkvGpv5vvae8mifqERUhZ+PnbzRp2YAppW6QyV3ib1CKsrnr/+hUj0YN nnyojxebLBhiHclybsDQPw== 0000950110-00-000403.txt : 20000427 0000950110-00-000403.hdr.sgml : 20000427 ACCESSION NUMBER: 0000950110-00-000403 CONFORMED SUBMISSION TYPE: N-4/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT CENTRAL INDEX KEY: 0001104304 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 221211670 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 333-95637 FILM NUMBER: 609649 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 811-09799 FILM NUMBER: 609650 BUSINESS ADDRESS: STREET 1: 3 GATEWAY CENTER STREET 2: 12TH FLOOR CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: 9738026997 MAIL ADDRESS: STREET 1: 3 GATEWAY CENTER STREET 2: 12TH FLOOR CITY: NEWARK STATE: NJ ZIP: 07102 N-4/A 1 FORM N-4/A As filed with the SEC on __________________, 2000. File No. 333-95637 File No. 811-09799 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. 1 [X] ___ Post-Effective Amendment No. ___ [ ] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X] PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT [Exact Name of Registrant] PRUDENTIAL INSURANCE COMPANY OF AMERICA [Name of Depositor] 3 Gateway Center, 4th Floor Newark, NJ 07102-4077 Depositor's Telephone Number: (973) 802-6997 C. Christopher Sprague, Esq. Assistant General Counsel The Prudential Insurance Company of America 3 Gateway Center, 4th Floor Newark, New Jersey 07102-4077 [Name and Address of Agent for Service of Process] Copies to: Christopher E. Palmer, Esq. Shea & Gardner 1800 Massachusetts Avenue, N.W. Washington, D.C. 20036 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of the registration statement. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. Title of Securities Being Registered: Interests in Group Variable Annuity Contracts. PROSPECTUS MAY 1, 2000 DISCOVERY PREMIER GROUP RETIREMENT ANNUITY This prospectus describes the Prudential DISCOVERY PREMIERSM Group Variable Annuity Contracts* (the "Contracts"). The Contracts are group variable annuity contracts sold by The Prudential Insurance Company of America to retirement plans qualifying for federal tax benefits under sections 401, 403(b), 408 or 457 of the Internal Revenue Code of 1986 as amended (the "Code") and to defined contribution annuity plans qualifying for federal tax benefits under Section 403(c) of the Code. In this Prospectus, The Prudential Insurance Company of America may be referred to as either "Prudential" or as "we" or "us". We may refer to a participant under a retirement plan as "you." As a plan participant, you can allocate contributions made on your behalf in a number of ways. You can allocate contributions to one or more of the 35 Subaccounts. Each Subaccount invests in one of the following portfolios of The Prudential Series Fund, Inc. (the "Prudential Series Fund") or other listed portfolios (collectively, the "Funds"):
THE PRUDENTIAL SERIES FUND, INC. Money Market Portfolio Flexible Managed Portfolio Equity Portfolio Diversified Bond Portfolio High Yield Bond Portfolio Prudential Jennison Portfolio Government Income Portfolio Stock Index Portfolio Global Portfolio Conservative Balanced Portfolio Equity Income Portfolio 20/20 Focus Portfolio Small Capitalization Stock Portfolio
AIM VARIABLE INSURANCE FUNDS, INC. ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. AIM V.I. Government Securities Fund AIM V.I. Value Fund Premier Growth Portfolio Quasar Portfolio AIM V.I. International Equity Fund Growth and Income Portfolio AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. DAVIS VARIABLE ACCOUNT FUND, INC. VP Income & Growth DAVIS VALUE PORTFOLIO DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. FRANKLIN TEMPLETON VARIABLE INSURANCE Dreyfus Socially Responsible Growth Fund PRODUCTS TRUST FRANKLIN SMALL CAP FUND TEMPLETON INTERNATIONAL SECURITIES FUND JOHN HANCOCK DECLARATION TRUST INVESCO VARIABLE INVESTMENT FUNDS, INC. V.A. Bond Fund INVESCO VIF - DYNAMICS FUND JANUS ASPEN SERIES MFS VARIABLE INSURANCE TRUST Aggressive Growth Portfolio Growth and Income Portfolio MFS Bond Series MFS Growth With Income Series Worldwide Growth Portfolio MFS Emerging Growth Series MFS Total Return Series MFS GROWTH SERIES WARBURG PINCUS TRUST EMERGING GROWTH PORTFOLIO
In this Prospectus, we provide information that you should know before you invest. We have filed additional information about the Contracts with the Securities and Exchange Commission ("SEC") in a Statement of Additional Information ("SAI"), dated May 1, 2000. That SAI is legally a part of this Prospectus. You can get a copy of the SAI free of charge by contacting us at the address or telephone number shown on the cover page. The SEC maintains a Web site (http://www.sec.gov) that contains the SAI, material incorporated by reference, and other information regarding registrants that file electronically with the SEC. The SEC's mailing address is 450 Fifth Street, N.W., Washington, DC 20549, and its public reference number is (800) SEC-0330. The accompanying prospectuses for the Funds and the related statements of additional information describe the investment objectives and risks of investing in the Funds. We may offer additional Funds and Subaccounts in the future. The contents of the SAI with respect to the Contracts appears on page __ of this Prospectus. PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR EACH OF THE FUNDS. YOU SHOULD READ THOSE PROSPECTUSES CAREFULLY AND RETAIN THEM FOR FUTURE REFERENCE. AS WITH ALL VARIABLE ANNUITY CONTRACTS, THE FACT THAT WE HAVE FILED A REGISTRATION STATEMENT WITH THE SEC DOES NOT MEAN THAT THE SEC HAS DETERMINED THAT THE CONTRACTS ARE A GOOD INVESTMENT. NOR HAS THE SEC DETERMINED THAT THIS PROSPECTUS IS COMPLETE OR ACCURATE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA 30 Scranton Office Park Scranton, PA 18507-1789 Telephone 1-800-458-6333 * DISCOVERY PREMIER IS A SERVICE MARK OF PRUDENTIAL 1 PROSPECTUS CONTENTS PAGE GLOSSARY 1 BRIEF DESCRIPTION OF THE CONTRACTS 2 FEE TABLE 3 GENERAL INFORMATION ABOUT PRUDENTIAL, PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT AND THE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACTS 8 Prudential 8 Prudential Discovery Premier Group Variable Contract Account 8 The Funds 8 THE CONTRACTS 9 The Accumulation Period 13 Allocation of Purchase Payments 14 Asset Allocation Program 14 Transfers 14 Dollar Cost Averaging 15 Auto-Rebalancing 15 Withdrawals 15 Systematic Withdrawal Plan 16 Texas Optional Retirement Plan 16 Death Benefit 17 Discontinuance of Contributions 18 Loan Provision 18 Modified Procedures 18 CHARGES, FEES AND DEDUCTIONS 19 Administrative Fee 19 Charge for Assuming Mortality and Expense Risks 19 Expenses Incurred by the Funds 19 Premium Taxes 19 FEDERAL TAX STATUS 19 ERISA CONSIDERATIONS 22 EFFECTING AN ANNUITY 22 Life Annuity with Payments Certain 22 Annuity Certain 22 Joint and Survivor Annuity with Payments Certain 23 Purchasing the Annuity 23 OTHER INFORMATION 23 Misstatement of Age or Sex 23 Sale of the Contract and Sales Commissions 23 Voting Rights 23 Substitution of Fund Shares 24 Performance Information 24 Reports to Participants 24 State Regulation 24 Legal Proceedings 25 Statement of Additional Information 25 Additional Information 25 i GLOSSARY ACCOUNT--See the Prudential Discovery Premier Group Variable Contract Account (the "Discovery Account") below. ACCUMULATION PERIOD--The period, prior to the effecting of an annuity, during which the amount credited to a Participant Account may vary with the investment performance of any Subaccount of the Discovery Account. ANNUITANT--The person or persons designated by the Participant upon whose life or lives monthly annuity payments are based after an annuity is effected. ANNUITY DATE --The date that the accumulation period ends and annuity payments begin. BENEFICIARY--A person designated by a Participant to receive benefits from funds held under the Contract. BUSINESS DAY--A day on which both the New York Stock Exchange and Prudential are open for business. CODE--The Internal Revenue Code of 1986, as amended. CONTRACTHOLDER--The employer, association or trust to which Prudential has issued a Contract. CONTRACTS--The Group Variable Annuity Contracts that we describe in this Prospectus and offer for use in connection with retirement arrangements that qualify for federal tax benefits under Sections 401, 403(b), 408 or 457 of the Code and with non-qualified annuity arrangements. CONTRACT VALUE--The dollar amount held under a Contract. EMPLOYER--The sponsor of the retirement plan or non-qualified annuity arrangement. FUNDS--The portfolios of The Prudential Series Fund, Inc., AIM Variable Insurance Funds, Inc., Alliance Variable Products Series Fund, Inc., American Century Variable Portfolios, Inc., Davis Variable Account Fund, Inc., Dreyfus Socially Responsible Growth Fund, Inc., Franklin Templeton Variable Insurance Products Trust, John Hancock Declaration Trust, Invesco Variable Investment Funds, Inc., Janus Aspen Series, MFS Variable Insurance Trust, and Warburg Pincus Trust available under the Contracts. GENERAL ACCOUNT--The assets of Prudential other than those allocated to the Discovery Account or any other separate account of Prudential. GUARANTEED INTEREST ACCOUNT--An allocation option under the Contract funded by Prudential's General Account, or under certain Contracts, a separate account. It is not part of nor dependent upon the investment performance of the Discovery Account. This Prospectus does not describe in detail the Guaranteed Interest Account or any separate account funding a guaranteed interest rate option. PARTICIPANT--A person who makes contributions, or for whom contributions have been made, and to whom they remain credited under the Contract. "You" means the Participant. PARTICIPANT ACCOUNT--An account established for each Participant to record the amount credited to the Participant under the Contract. PARTICIPANT ACCOUNT VALUE--The dollar amount held in a Participant Account. PRUDENTIAL--The Prudential Insurance Company of America. "We," "us," or "our" means Prudential. PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT--A separate account of Prudential registered under the Investment Company Act of 1940 as a unit investment trust, invested through its Subaccounts in shares of the corresponding Funds. SUBACCOUNT--A division of the Discovery Account, the assets of which are invested in shares of the corresponding Fund. UNIT AND UNIT VALUE--We credit a Participant with Units for each Subaccount in which he invests. The value of these Units may change each Business Day to reflect the investment results of, and deductions of charges from, the Subaccounts, and the expenses of the Funds in which the assets of the Subaccounts are invested. The number of Units credited to a Participant in any Subaccount of the Discovery Account is determined by dividing the amount of the contribution or transfer made on his behalf to that Subaccount by the applicable Unit Value for the Business Day on which the contribution or transfer is received at the address shown on the cover of this Prospectus or such other address that Prudential has specified. We will reduce the number of Units credited to a Participant under any Subaccount by the number of Units canceled as a result of any transfer or withdrawal by a Participant from that Subaccount. VALUATION PERIOD--The period of time from one determination of the value of the amount invested in a Subaccount to the next. We make such determinations generally as of 4:00 p.m. Eastern time on each day during which the New York Stock Exchange and Prudential are open. Currently, the Prudential business unit that receives transaction requests for the Contracts is open each day on which the New York Stock Exchange is open. VARIABLE INVESTMENT OPTIONS--The Subaccounts. 1 BRIEF DESCRIPTION OF THE CONTRACTS We offer the Contracts to retirement plans qualifying for federal tax benefits under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code of 1986, as amended (the "Code") and to annuity arrangements qualifying for federal tax benefits under Section 403(c) of the Code. The Contracts are group annuity contracts that we typically issue to employers. These employers then make contributions under the Contract on behalf of their employees. A person for whom contributions have been made and to whom they remain credited under a Contract is a "Participant." The value of a Participant's investment depends upon the performance of the selected investment option[s]. Currently, there are 35 variable investment options, each of which is called a Subaccount. Prudential may limit the number of subaccounts an employer may select in order to ensure that Prudential is the owner of the assets in the Subaccounts for tax purposes. We invest the assets of each Subaccount in one of the Funds listed beginning on page __. You may direct contributions to one or a combination of variable investment options as well as the Guaranteed Interest Account. We set up a separate Participant Account to record your investment choices. You can withdraw amounts held under your Participant Account, in whole or in part, prior to the annuity date. We also provide for a death benefit under the Contract. Through payroll deduction or similar agreements with the Contractholder, you may make contributions under the Contract if permitted under your retirement arrangement. In addition, you may make contributions in ways other than payroll deduction under certain circumstances if permitted under your retirement arrangement. We assess charges under the Contracts for administering the Contracts and for assuming mortality and expense risks under the Contracts. We deduct a mortality and expense risk charge equal to an annual rate of 0.15% from the assets held in the variable investment options. We also deduct an administrative charge equal to a maximum annual rate of 0.75% from the assets held in the variable investment options. You can find further details about the administrative charge in the Fee Table, page __, and under Administrative Fee, page ___. A charge against each of the Funds' assets is also made by the investment adviser for providing investment advisory and management services. You can find further details about charges under the section entitled Charges, Fees and Deductions, page __. Unless restricted by the retirement arrangement under which you are covered, or by a section of the Code, you may withdraw, at any time, all or part of your Participant Account. See "Withdrawals," page __. We do not impose any charge upon withdrawal. If you withdraw, you may be taxed under the Code, including, under certain circumstances, a 10% penalty tax on premature withdrawals. See "Federal Tax Status," page __. In addition, you may transfer all or a part of your Participant Account Value among the Subaccounts and the Guaranteed Interest Account without the imposition of the withdrawal charge or tax liability. As explained below, notices, forms and requests for transactions related to the Contracts may be provided in traditional paper form or by electronic means, including telephone and Internet. Prudential reserves the right to vary the means available, including limiting them to electronic means, from Contract to Contract by Contract terms, related service agreements with the Contractholder, or notice to the Contractholder and Participants. You should send all written requests, notices, and transfer requests required or permitted by the Contracts (other than withdrawal requests and death benefit claims), to Prudential at the address shown on the cover of this Prospectus. You may effect permitted telephone transactions by calling us at 1-800-458-6333. All permitted Internet transactions may be made through www.prudential.com. You must send all written withdrawal requests or death benefit claims to Prudential by one of the following three means: (1) By U.S. mail to: Prudential, P.O. Box 5410, Scranton, Pennsylvania 18505-5410; (2) Delivery service other than the U.S. mail (e.g., Federal Express, etc.) sent to our office at the following address: Prudential, 30 Scranton Office Park, Scranton, Pennsylvania 18507-1789; or (3) Fax to Prudential, Attention: Client Payments at: (570) 340-4328. Under certain Contracts, the Contractholder or a third party acting on their behalf provides record-keeping services that we would otherwise perform. See "Modified Procedures," page __. Prudential may provide other permitted telephone numbers or Internet addresses through the Contractholder directly to Participants as authorized by the Contractholder. We intend this brief description of the Contracts to provide a broad overview of the more significant features of the Contracts. You can find more detailed information about the Contracts in subsequent sections of this Prospectus and in the Contracts themselves. Transaction requests (including death benefit claims) received directly by Prudential in good order on a given Business Day before the established transaction cutoff time (4 PM Eastern Time, or such earlier time that the New York Stock Exchange may close) will be effective for that Business Day. For purposes of the preceding sentence, we define "good order" generally as an instruction received by us that is sufficiently complete and clear that we do not need to exercise any discretion to follow such instruction. 2 FEE TABLE PARTICIPANT TRANSACTION EXPENSES Sales Charge Imposed on Contributions......................................None Sales Charge Imposed on Withdrawals or Surrenders..........................None Annual Account Charge......................................................None DISCOVERY ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE PARTICIPANT ACCOUNT VALUE) ALL SUBACCOUNTS Mortality and Expense Risk Charge 0.15% Maximum Administrative Fee 0.75% ----- Total Separate Account Annual Expenses 0.90% ===== 3 ANNUAL EXPENSES OF THE FUNDS (AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS) (BASED ON THE YEAR ENDED DECEMBER 31, 1999, UNLESS OTHERWISE NOTED)
TOTAL ACTUAL INVESTMENT TOTAL EXPENSES MANAGEMENT OTHER CONTRACTUAL (AFTER EXPENSE FEE EXPENSES EXPENSES REIMBURSEMENT)* THE PRUDENTIAL SERIES FUND, INC. Conservative Balanced Portfolio 0.55% 0.02% 0.57% 0.57% Diversified Bond Portfolio 0.40% 0.03% 0.43% 0.43% Equity Income Portfolio 0.40% 0.02% 0.42% 0.42% Equity Portfolio 0.45% 0.02% 0.47% 0.47% Flexible Managed Portfolio 0.60% 0.02% 0.62% 0.62% Global Portfolio 0.75% 0.09% 0.84% 0.84% Government Income Portfolio 0.40% 0.04% 0.44% 0.44% High Yield Bond Portfolio 0.55% 0.05% 0.60% 0.60% Money Market Portfolio 0.40% 0.02% 0.42% 0.42% Prudential Jennison Portfolio 0.60% 0.03% 0.63% 0.63% Small Capitalization Stock Portfolio 0.40% 0.05% 0.45% 0.45% Stock Index Portfolio 0.35% 0.04% 0.39% 0.39% 20/20 Focus Portfolio 0.75% 0.34% 1.09% 1.09% AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. Government Securities Fund 0.50% 0.40% 0.90% 0.90% AIM V.I. International Equity Fund 0.75% 0.22% 0.97% 0.97% AIM V.I. Value Fund 0.61% 0.15% 0.76% 0.76% ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. (1) Premier Growth Portfolio 1.00% 0.05% 1.05% 1.05% Growth and Income Portfolio 0.63% 0.08% 0.71% 0.71% Quasar Portfolio 1.00% 0.19% 1.19% 0.95% AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. VP Income & Growth 0.70% 0.00% 0.70% 0.70% DAVIS VARIABLE ACCOUNT FUND, INC. (2) Davis Value Portfolio 0.75% 1.54% 2.29% 1.00% DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. Dreyfus Socially Responsible Growth Fund 0.75% 0.04% 0.79% 0.79% FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST VIP Franklin Small Cap Fund-Class 1 (3) 0.55% 0.27% 0.82% 0.82% Templeton International Securities Fund-Class 1 (4) 0.69% 0.19% 0.88% 0.88% JOHN HANCOCK DECLARATION TRUST (5) V.A. Bond Fund 0.50% 0.51% 1.01% 0.75% INVESCO VARIABLE INVESTMENT FUNDS, INC. (6) INVESCO VIF - Dynamics Fund 0.75% 1.53% 2.28% 1.26% JANUS ASPEN SERIES (7) Aggressive Growth Portfolio 0.65% 0.02% 0.67% 0.67% Growth and Income Portfolio 0.65% 0.40% 1.05% 1.05% Worldwide Growth Portfolio 0.65% 0.05% 0.70% 0.70% MFS VARIABLE INSURANCE TRUST (8) MFS Bond Series 0.60% 0.46% 1.06% 0.76% MFS Emerging Growth Series 0.75% 0.09% 0.84% 0.84% MFS Growth Series 0.75% 0.71% 1.46% 0.91% MFS Growth With Income Series 0.75% 0.13% 0.88% 0.88% MFS Total Return Series 0.75% 0.15% 0.90% 0.90% WARBURG PINCUS TRUST (13) Emerging Growth Portfolio 0.90% 0.63% 1.53% 1.25%
* Reflects fee waivers and reimbursement of expenses, if any. The following Expense Examples use "Total Actual Expenses." 4 The purpose of the foregoing tables is to assist Participants in understanding the expenses that they bear, directly or indirectly, relating to the Prudential Discovery Premier Group Variable Contract Account and the Funds. See the sections on charges in this Prospectus and the accompanying prospectuses for the Funds. (1) Alliance Variable Products Series Fund. The expense limitation of 0.95% for the Quasar Portfolio may be discontinued at any time. During 1999, after applying the expense limitations, the investment management fee was 0.81% and other expenses were 0.14%. (2) Davis Variable Account Fund, Inc. Fees and expenses shown are for the period from 07/01/99, commencement of operations, through 12/31/99. The adviser has guaranteed that the total expenses will not exceed 1.00% through at least 5/1/2001. During 1999, the adviser waived the entire investment management fee of 0.75% and reimbursed the fund for other expenses of 0.54%. (3) VIP Franklin Small Cap Fund-Class 1. On 2/8/00, a merger and reorganization was approved that combined the assets of the fund with a similar fund of the Templeton Variable Products Series Fund, effective 5/1/00. On 2/8/00, fund shareholders approved new management fees, which apply to the combined fund effective 5/1/00. The table shows restated total expenses based on the new fees and assets of the fund as of 12/31/99, and not the assets of the combined fund. However, if the table reflected both the new fees and the combined assets, the fund's expenses after 5/1/00 would be estimated as: Management Fees 0.55%, Other Expenses 0.27%, Total Contractual Expenses 0.82% and Total Fund Actual Expenses 0.82%. (4) Templeton International Securities Fund-Class 1. On 2/8/00, shareholders approved a merger and reorganization that combined the fund with the Templeton International Equity Fund effective 5/1/00. The shareholders of that fund had approved new management fees, which apply to the combined fund effective 5/1/00. The table shows restated total expenses based on the new fees and assets of the fund as of 12/31/99, and not the assets of the combined fund. However, if the table reflected both the new fees and the combined assets, the fund's expenses after 5/1/00 would be estimated as: Management Fees 0.69%, Other Expenses 0.19%, Total Contractual Expenses 0.88% and Total Fund Actual Expenses 0.88%. (5) John Hancock Declaration Trust. The adviser has guaranteed that it will limit other expenses to 0.25% through at least 5/1/2001. (6) INVESCO. The expense limitation may be discontinued at any time following consultation with the Fund's board of directors. During 1999, after applying the expense limitation, the investment management fee was 0.75% and other expenses were 0.51%. (7) Janus Aspen Series. Expenses are based upon expenses for the fiscal year ended December 31, 1999, restated to reflect a reduction in the management fee for Aggressive Growth, Worldwide Growth, and Growth and Income Portfolios. (8) MFS Variable Insurance Trust. The expense limitations for the Bond Series and the Growth Series may be discounted at any time. During 1999, after applying the expense limitation for the Bond Series, the investment management fee was 0.60% and other expenses were 0.16%, and, for the Growth Series, the investment management was 0.75% and other expenses were 0.21%. (9) Warburg Pincus Trust. The expense limitation of 1.25% may be discontinued at any time. Fees and expenses in the chart are based on estimated expenses for the fiscal year ended December 31, 2000. After applying the 1.25% expense limitation to those numbers, the estimated investment management fee is 0.72% and estimated other expenses are 0.53%. 5 EXAMPLES OF FEES AND EXPENSES The following examples illustrate the cumulative dollar amount of all the above expenses that you would incur on each $1,000 of investment. * The examples assume a consistent 5% annual return on invested assets. * The examples assume that the current fee waivers and expense reimbursement arrangements for the Funds continue for the periods shown. * Because this Contract has no withdrawal charges, your expenses are not impacted by whether or not you choose to make withdrawals. THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE A REPRESENTATION OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES INCURRED IN ANY GIVEN YEAR MAY BE MORE OR LESS THAN THOSE SHOWN IN THE EXAMPLES.
1 Year 3 Years THE PRUDENTIAL SERIES FUND, INC. Conservative Balanced Portfolio $ 14.85 $ 46.10 Diversified Bond Portfolio 13.45 41.83 Equity Income Portfolio 13.35 41.52 Equity Portfolio 13.85 43.05 Flexible Managed Portfolio 15.34 47.62 Global Portfolio 17.52 54.28 Government Income Portfolio 13.55 42.13 High Yield Bond Portfolio 15.14 47.02 Money Market Portfolio 13.35 41.52 Prudential Jennison Portfolio 15.44 47.93 Small Capitalization Stock Portfolio 13.65 42.44 Stock Index Portfolio 13.05 40.60 20/20 Focus Portfolio 19.99 61.77 AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. Government Securities Fund 18.12 56.08 AIM V.I. International Equity Fund 18.81 58.18 AIM V.I. Value Fund 16.73 51.86 ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. Premier Growth Portfolio 19.60 60.58 Growth and Income Portfolio 16.24 50.35 Quasar Portfolio 18.61 57.58 AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. VP Income and Growth 16.14 50.05 DAVIS VARIABLE ACCOUNT FUND, INC. Davis Value Portfolio 19.11 59.08 DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. Dreyfus Socially Responsible Growth Fund 17.03 52.77 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST VIP Franklin Small Cap Fund - Class 1 17.33 53.67 Templeton International Equity Fund 17.92 55.48 JOHN HANCOCK DECLARATION TRUST Bond Fund 16.63 51.56 INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Dynamics Fund 21.67 66.82 JANUS ASPEN SERIES Aggressive Growth Portfolio 15.84 49.14 Growth and Income Portfolio 19.60 60.58 Worldwide Growth Portfolio 16.14 50.05 MFS VARIABLE INSURANCE TRUST MFS Bond Series 16.73 51.86 MFS Emerging Growth Series 17.52 54.28 MFS Growth Series 18.22 56.38 MFS Growth With Income Series 17.92 55.48 MFS Total Return Series 18.22 56.38 WARBURG PINCUS TRUST Emerging Growth Portfolio 21.57 66.52
If permitted under your retirement arrangement, loans taken by a Participant from a Participant Account may be subject to charges for establishing and maintaining the loan. The examples with respect to the Contracts do not take into account any deduction for such charges. 6 GENERAL INFORMATION ABOUT PRUDENTIAL, PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT AND THE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACTS THE PRUDENTIAL INSURANCE COMPANY OF AMERICA The Prudential Insurance Company of America ("Prudential") is a mutual life insurance company incorporated in 1875 under the laws of the State of New Jersey. Our corporate office is located at 751 Broad Street, Newark, New Jersey. We have been investing for pension funds since 1928. Prudential is currently considering reorganizing itself into a publicly traded stock company through a process known as "demutualization." On February 10, 1998, the company's Board of Directors authorized management to take the preliminary steps necessary to allow the company to demutualize. On July 1, 1998, legislation was enacted in New Jersey that would permit this conversion to occur and that specified the process for conversion. Demutualization is a complex process involving development of a plan of reorganization, adoption of a plan by the company's Board of Directors, a public hearing, voting by qualified policyholders and regulatory approval. Prudential is working toward completing this process in 2001 and currently expects adoption by the Board of Directors to take place in the latter part of 2000. However, there is no certainty that the demutualization will be completed in this timeframe or that the necessary approvals will be obtained. Also it is possible that after careful review, Prudential could decide not to demutualize or could decide to delay its plans. The plan of reorganization, which has not been fully developed and approved, would provide the criteria for determining eligibility and the methodology for allocating shares or other consideration to those who would be eligible. Generally, the amount of shares or other consideration eligible customers would receive would be based on a number of factors, including the types, amounts and issue years of their policies. As a general rule, owners of Prudential-issued insurance policies and annuity contracts would be eligible, provided that their policies were in force on the date Prudential's Board of Directors adopted a plan of reorganization, while mutual fund customers and customers of the company's subsidiaries would not be. It has not yet been determined whether any exceptions to that general rule will be made with respect to policyholders and contractholders of Prudential's subsidiaries. Eligible policyholders would generally include employers, associations, other groups, and trusts established by or for such entities, that own group policies issued by Prudential, and generally would include Contractholders. The individuals covered under a group plan, such as the Participants under a Contract, generally would not be eligible to receive stock or other consideration from Prudential. It has not yet been determined whether any exceptions to that general rule will be made with respect to policyholders and contractholders of Prudential's subsidiaries. This does not constitute a proposal, offer, solicitation or recommendation regarding any plan of reorganization that may be proposed or a recommendation regarding the ownership of any stock that could be issued in connection with any such demutualization. Prudential generally is responsible for the administrative and record-keeping functions of the Prudential Discovery Premier Group Variable Contract Account and pays the expenses associated with them. These functions include enrolling Participants, receiving and allocating contributions, maintaining Participant Accounts, preparing and distributing confirmations, statements, and reports. The administrative and record-keeping expenses that we bear include salaries, rent, postage, telephone, travel, legal, actuarial and accounting fees, office equipment, stationery and maintenance of computer and other systems. We are reimbursed for these administrative and record-keeping expenses by the daily charge against the assets of each Subaccount for administrative expenses. PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT Prudential established the Prudential Discovery Premier Group Variable Contract Account (the "Discovery Account") on November 9, 1999, under New Jersey law as a separate investment account. The Discovery Account meets the definition of a "separate account" under federal securities laws. Prudential is the legal owner of the assets in the Discovery Account, and is obligated to provide all benefits under the Contracts. Prudential will at all times maintain assets in the Discovery Account with a total market value sufficient to support its obligations under the Contracts. Prudential segregates the Discovery Account assets from all of its other assets. Thus, those assets are not chargeable with liabilities arising out of any other business Prudential conducts. The Discovery Account's assets may include funds contributed by Prudential to commence operation of the Discovery Account, and may include accumulations of the charges Prudential makes against the Discovery Account. From time to time, Prudential will transfer these additional assets to Prudential's general account. Before making any such transfer, Prudential will consider any possible adverse impact the transfer might have on the Discovery Account. Prudential registered the Discovery Account with the U.S. Securities and Exchange Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a unit investment trust, which is a type of investment company. This registration does not mean that the SEC supervises the management or investment policies or practices of the Discovery Account. For state law purposes, the Discovery Account is treated as a part or division of Prudential. There are currently 35 Subaccounts within the Discovery Account. These Subaccounts invest in the corresponding Fund available under the Contracts. We may establish additional Subaccounts in the future. 7 THE FUNDS The following is a list of each Fund, its investment objective and its investment adviser: THE PRUDENTIAL SERIES FUND, INC. MONEY MARKET PORTFOLIO. The investment objective is maximum current income consistent with the stability of capital and the maintenance of liquidity. The portfolio invests in short-term debt obligations that mature in 13 months or less. DIVERSIFIED BOND PORTFOLIO. The investment objective is a high level of income over a longer term while providing reasonable safety of capital. The portfolio invests primarily in higher grade debt obligations and high quality money market instruments. GOVERNMENT INCOME PORTFOLIO. The investment objective is a high level of income over the longer term consistent with the preservation of capital. The portfolio invests primarily in U.S. Government securities, including intermediate and long-term U.S. Treasury securities and debt obligations issued by agencies or instrumentalities established by the U.S. Government. CONSERVATIVE BALANCED PORTFOLIO. The investment objective is a total investment return consistent with a conservatively managed diversified portfolio. The portfolio invests in a mix of equity securities, debt obligations and money market instruments. FLEXIBLE MANAGED PORTFOLIO. The investment objective is a total investment return consistent with an aggressively managed diversified portfolio. The portfolio invests in a mix of equity securities, debt obligations and money market instruments. HIGH YIELD BOND PORTFOLIO. The investment objective is a high total return. The portfolio invests primarily in high yield/high risk debt securities. STOCK INDEX PORTFOLIO. The investment objective is investment results that generally correspond to the performance of publicly-traded common stocks. The portfolio attempts to duplicate the price and yield performance of the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index"). EQUITY INCOME PORTFOLIO. The investment objective is both current income and capital appreciation. The portfolio invests primarily in common stocks and convertible securities that provide good prospects for returns above those of the Standard & Poor's 500 Composite Stock Price Index or the NYSE Composite Index. EQUITY PORTFOLIO. The investment objective is capital appreciation. The portfolio invests primarily in common stocks of major established corporations as well as smaller companies that offer attractive prospects of appreciation. PRUDENTIAL JENNISON PORTFOLIO. The investment objective is to achieve long-term growth of capital. The portfolio invests primarily in equity securities of major established corporations that offer above average growth prospects. GLOBAL PORTFOLIO. The investment objective is long-term growth of capital. The portfolio invests primarily in common stocks (and their equivalents) of foreign and U.S. companies. 20/20 FOCUS PORTFOLIO. The investment objective is long-term growth of capital. The portfolio will invest primarily in up to 40 equity securities of U.S. companies. SMALL CAPITALIZATION STOCK PORTFOLIO. The investment objective is long-term growth of capital. The portfolio attempts to duplicate the performance of the Standard Poor's Small Capitalization Stock Index. Prudential is the investment adviser for each of the portfolios of the Prudential Series Fund. Prudential has a Service Agreement with its wholly-owned subsidiary, The Prudential Investment Corporation ("PIC"), which provides that, subject to Prudential's supervision, PIC will furnish investment advisory services in connection with the management of the Prudential Series Fund. In addition, Prudential has entered into Subadvisory Agreements with its wholly-owned subsidiary Jennison Associates Capital Corp. ("Jennison"), under which Jennison furnishes investment advisory services in connection with the management of the Prudential Jennison Portfolio and the 20/20 Focus Portfolio. AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. GOVERNMENT SECURITIES FUND. The investment objective is to achieve a high level of current income consistent with reasonable concern for safety of principal by investing in debt securities issued, guaranteed or otherwise backed by the United States Government. AIM V.I. INTERNATIONAL EQUITY FUND. The investment objective is to provide long-term growth of capital by investing in a diversified portfolio of international equity securities whose issuers are considered to have strong earnings momentum. AIM V.I. VALUE FUND. The investment objective is to achieve long-term growth of capital by investing primarily in equity securities judged by the adviser to be undervalued relative to the adviser's appraisal of the current or projected earnings of the companies issuing the securities, or relative market values of assets owned by the companies issuing the securities or relative to the equity market generally. Income is a secondary objective. The investment adviser for these Funds is AIM Advisors, Inc. 8 ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. PREMIER GROWTH PORTFOLIO. The investment objective is growth of capital rather than current income. In pursuing its investment objective, the Fund will employ aggressive investment policies. The Fund invests primarily in equity securities of U.S. companies. GROWTH AND INCOME PORTFOLIO. The investment objective is reasonable current income and reasonable opportunity for appreciation through investments primarily in dividend-paying common stocks of good quality. QUASAR PORTFOLIO. The investment objective is growth of capital by pursuing aggressive investment policies. This Fund invests principally in a diversified portfolio of equity securities. The investment adviser for these Funds is Alliance Capital Management L.P. AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. VP INCOME AND GROWTH. The Fund seeks dividend growth, current income and capital appreciation by investing primarily in common stocks. The investment adviser for this Fund is American Century Investment Management, Inc. DAVIS VARIABLE ACCOUNT FUND, INC. DAVIS VALUE PORTFOLIO. The Fund's investment objective is growth of capital. The Fund invests primarily in common stock of U.S. companies with market capitalization of at least $5 billion. The investment adviser for this Fund is Davis Select Advisers, L.P. DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND. The Fund's primary goal is to provide capital growth with current income as a secondary goal. The Fund invests primarily in common stock of companies that, in the opinion of the Fund's management, not only meet traditional investment standards but which also show evidence that they conduct their business in manner that contributes to the enhancement of the quality of life in America. The investment adviser for this Fund is The Dreyfus Corporation. FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST (VIP) FRANKLIN SMALL CAP FUND. The Fund's investment goal is long-term capital growth. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of U.S. small capitalization (small cap) growth companies. The investment adviser for the Franklin Small Cap Fund is Franklin Advisers, Inc. TEMPLETON INTERNATIONAL SECURITIES FUND. The Fund's investment goal is long-term capital growth. Under normal market conditions, the Fund will invest at least 65% of its total assets in the equity securities of companies located outside the U.S., including emerging markets. The investment adviser for the Templeton International Securities Fund is Templeton Investment Counsel, Inc. JOHN HANCOCK DECLARATION TRUST V.A. BOND FUND. The Fund seeks to generate a high level of current income consistent with prudent investment risk. In pursuing this goal, the Fund normally invests in a diversified portfolio of debt securities. The investment adviser for this Fund is John Hancock Advisers, Inc. INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - DYNAMICS FUND. The Fund attempts to make your investment grow over the long term. The Fund invests in a variety of securities that the advisor believes present opportunities for capital growth - primarily common stocks of companies traded on U.S. securities exchanges, as well as over-the-counter. The Fund also may invest in preferred stock (which generally pays higher dividends than common stocks) and debt instruments that are convertible into common stocks, as well as in securities of foreign companies. It is aggressively managed. Because its strategy includes many short-term factors - including current information about a company, investor interest, price movements of a company's securities and general market and monetary conditions - securities in its portfolio usually are bought and sold relatively frequently. The investment adviser for this Fund is INVESCO Funds Group, Inc. 9 JANUS ASPEN SERIES AGGRESSIVE GROWTH PORTFOLIO. The investment objective of the Fund is long-term growth of capital. It is a diversified portfolio that seeks its objective primarily by investing in common stocks selected for growth potential, and it normally invests at least 50% of its equity assets in medium-sized companies. GROWTH AND INCOME PORTFOLIO. The investment objective of this Fund is long-term capital growth and current income. It is a diversified portfolio that normally invests up to 75% of its assets in equity securities selected primarily for growth potential and at least 25% of its assets in securities the portfolio manager believes have income potential. WORLDWIDE GROWTH PORTFOLIO. The investment objective of this Fund is long-term growth of capital in a manner consistent with the preservation of capital. It is a diversified portfolio that pursues its objective primarily through investments in common stocks of foreign and domestic issuers. The investment adviser for these Funds is Janus Capital Corporation. MFS VARIABLE INSURANCE TRUST MFS BOND SERIES. The investment objective is primarily to provide as high level of current income as is believed to be consistent with prudent risk. Its secondary objective is to protect shareholders capital. Under normal market conditions, the fund invests at least 65% of its assets in fixed income securities. MFS EMERGING GROWTH SERIES. The investment objective is long-term growth of capital. Under normal market conditions, the Fund invests at least 65% of its assets in common stocks and related securities of emerging growth companies. MFS GROWTH SERIES. The investment objective is to provide long-term growth of capital and future income rather than current income. Under normal market conditions, the Fund invests at least 80% of its assets in common stock and related securities. MFS GROWTH WITH INCOME SERIES. The investment objective is to provide reasonable current income and long-term growth of capital and income. Under normal market conditions, the Fund invests at least 65% of its assets in common stocks and related securities. MFS TOTAL RETURN SERIES. The investment objective is above-average income (compared to a portfolio invested entirely in equity securities) consistent with the prudent employment of capital, and secondarily to provide a reasonable opportunity for growth of capital and income. The investment adviser for these Funds is MFS Investment Management. WARBURG PINCUS TRUST EMERGING GROWTH PORTFOLIO. The objective of this Fund is to seek maximum capital appreciation by investing in equity securities of small or medium-sized domestic companies with emerging or renewed growth potential. The investment adviser for this Fund is Credit Suisse Asset Management, LLC. - ----------------------------------------- The investment advisers to the various Funds charge a daily investment management fee as compensation for their services, as set forth in the table beginning on page __ and as more fully described in the prospectus for each Fund. We recognize that in the future it may become disadvantageous for both variable life insurance and variable annuity contract separate accounts to invest in the same underlying mutual fund. Although neither Prudential nor the Funds currently foresees any such disadvantage, the Funds' Boards of Directors intend to monitor events in order to identify any material conflict between variable life insurance and variable annuity contractholders and to determine what action, if any, should be taken in response to a conflict. Material conflicts could result from such things as: (1) changes in state insurance law; (2) changes in federal income tax law; (3) changes in the investment management of any Fund; or (4) differences between voting instructions given by variable life insurance and variable annuity contractholders. An affiliate of each of the Funds (other than the portfolios in the Prudential Series Fund) may compensate Prudential based upon an annual percentage of the average assets held in the Fund by Prudential under the Contracts. These percentages vary by Fund, and reflect administrative and other services we provide. You can review a full description of the Funds in the accompanying prospectuses for each Fund and in the related statements of additional information. You should read those documents in conjunction with this Prospectus. There is no assurance that the investment objectives will be met. A Fund may have an investment objective and investment policies closely resembling those of a mutual fund within the same complex that is sold directly to individual investors. Despite such similarities, there can be no assurance that the investment performance of any such Fund will resemble that of its retail fund counterpart. Not all Funds described in this prospectus are available to Participants. Of the Funds described in this prospectus, your Employer may choose up to 28 Funds that will be available to you. Once your Employer has made that choice, it cannot substitute other Funds for any Funds that it has already selected. However, if your employer chooses fewer than 28 Funds initially, we will permit it to select additional Funds, so long as the total number of Funds available to Participants does not exceed 28. Prudential reserves the right to change the number of Funds that an Employer may make available to Participants to comport with future amendments of the Code and future rulings or interpretations issued by the Internal Revenue Service. 10 GUARANTEED INTEREST ACCOUNT The Guaranteed Interest Account is a credited interest option available to fund certain group annuity contracts issued by Prudential. Amounts that you allocate to the Guaranteed Interest Account become part of the General Account of Prudential. Prudential's General Account consists of all assets owned by Prudential other than those in the Discovery Account and other separate accounts of Prudential. Subject to applicable law, Prudential has sole discretion over the investment of the assets of the General Account. Because of exemptive and exclusionary provisions, Prudential has not registered interests in the General Account (which include interests in the Guaranteed Interest Account) under the Securities Act of 1933. Nor has Prudential registered the General Account as an investment company under the Investment Company Act of 1940. Accordingly, those Acts do not apply to the General Account or any interests therein, and Prudential has been advised that the staff of the SEC has not reviewed the disclosures in the Prospectus relating to the General Account. Disclosures that we make regarding the General Account may, however, be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. Under certain Contracts, amounts that you allocate to the Guaranteed Interest Account may be held within one or more guaranteed separate accounts. Prudential has not registered interests in such separate account(s) under the Securities Act of 1933 and has not registered the separate accounts as investment companies under the Investment Company Act of 1940. 11 THE CONTRACTS We generally issue the Contracts to Employers whose employees may become Participants. Under an IRA, a Participant's spouse may also become a Participant. We may issue a Contract to an association that represents employers of employees who become Participants, to an association or union that represents members that become Participants, and to a trustee of a trust with participating employers whose employees become Participants. Even though an Employer, an association or a trustee is the Contractholder, the Contract normally provides that Participants will have the rights and interests under them that are described in this Prospectus. When a Contract is used to fund a deferred compensation plan established by a tax-exempt entity under Section 457 of the Code, all rights under the Contract are owned by the Employer to whom, or on whose behalf, the Contract is issued. All amounts that we pay under the Contract are payable to the Employer, and are its exclusive property. For a plan established under Section 457 of the Code, the employee has no rights or interests under the Contract, including any right or interest in any Subaccount of the Discovery Account, except as provided in the Employer's plan. This may also be true with respect to certain non-qualified annuity arrangements. Notwithstanding the foregoing, the rules for Section 457 plans established by state and local governments would be similar to those specified in this paragraph. Also, a particular plan, even if it is not a deferred compensation plan, may limit a Participant's exercise of certain rights under a Contract. Participants should check the provisions of their Employer's plan or any agreements with the Employer to see if there are any such limitations and, if so, what they are. THE ACCUMULATION PERIOD Contributions; Crediting Units; Enrollment Forms; Deduction for Administrative Expenses. If permitted under your retirement arrangement, an Employer will make contributions periodically to the Contract pursuant to a payroll deduction or similar agreement between the Participant and his Employer. In addition, you may make contributions in ways other than payroll deduction under certain circumstances. As a Participant, you designate what portion of the contributions made on your behalf should be invested in the Subaccounts or the Guaranteed Interest Account. The Participant may change this designation usually by notifying us as described under "Requests, Consents and Notices," page ___. Under certain Contracts, an entity other than us keeps certain records. Participants under those Contracts must contact the record-keeper. See "Modified Procedures," page __. We credit the full amount (100%) of each contribution designated for investment in any Subaccount to a Participant Account maintained for the Participant. Except for the initial contribution, the number of Units that we credit to a Participant in a Subaccount is determined by dividing the amount of the contribution made on his behalf to that Subaccount by the Subaccount's Unit Value determined as of the end of the Valuation Period during which the contribution is received by us at the address shown on the cover page of this Prospectus or such other address as we may direct. We will invest the initial contribution made for a Participant in a Subaccount no later than two Business Days after we receive it, if it is preceded or accompanied by satisfactory enrollment information. If the Contractholder submits an initial contribution on behalf of one or more new Participants that is not preceded or accompanied by satisfactory enrollment information, then we will allocate such contribution to the Prudential Series Fund Money Market Subaccount upon receipt, and also will send a notice to the Contractholder or its agent that requests allocation information for each such Participant. If we do not receive the necessary enrollment information in response to its initial notice, we will deliver up to three additional notices to the Contractholder or its agent at monthly intervals that request such allocation information. After 105 days have passed from the time that Units of the Money Market Subaccount were purchased on behalf of Participants who failed to provide the necessary enrollment information, we will redeem the relevant Units and pay the proceeds (including earnings) to the Contractholder. Any proceeds that we pay to the Contractholder under this procedure may be considered a prohibited and taxable reversion to the Contractholder under current provisions of the Code. Similarly, proceeds that we return may cause the Contractholder to violate a requirement under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, to hold all plan assets in trust. The Contractholder may avoid both problems if it arranges to have the proceeds paid into a qualified trust or annuity contract. A change in the value of a Unit will not affect the number of Units of a particular Subaccount credited to a Participant. However, the dollar value of a Unit will vary from Business Day to Business Day depending upon the investment experience of the Subaccount. We determine the value of a Participant Account in a Subaccount on any particular day by multiplying the total number of Units credited to the Participant by the Subaccount's Unit Value on that day. We set the Unit Value for each Subaccount at $10.00 on the date of commencement of operations of that Subaccount. We determine the Unit Value for any subsequent Business Day as of the end of that day by multiplying the Unit Change Factor for that day by the Unit Value for the preceding Business Day. We determine the Unit Change Factor for any Business Day by dividing the current day net asset value for Fund shares by the net asset value for shares on the previous Business Day. This factor is then reduced by a daily equivalent of the mortality and expense risk fee and the administrative fee. We determine the value of the assets of a Subaccount by multiplying the number of Fund shares held by that Subaccount by the net asset value of each share, and adding the value of dividends declared by the Fund but not yet paid. 12 ALLOCATION OF PURCHASE PAYMENTS A Participant determines how the initial contribution will be allocated among the Subaccounts by specifying the desired allocation on the application or enrollment form. A Participant may choose to allocate nothing to a particular Subaccount. Unless a Participant tells us otherwise, we will allocate subsequent contributions in the same proportions as the most recent contribution made by that Participant. A Participant may change the way in which subsequent contributions are allocated by providing us with proper instruction as described under "Requests, Consents and Notices," page __. ASSET ALLOCATION PROGRAM We may make available an Asset Allocation Program to assist Participants in determining how to allocate purchase payments. If a Participant chooses to participate in the program, the Participant may do so by utilizing a form available in the employee enrollment kit. The form will include a series of illustrations depicting various asset allocation models based on age and risk tolerance. We also make available a more comprehensive model based on an internet web site for use by Participants. We offer the Asset Allocation Program at no charge to the Participant. A Participant is under no obligation to participate in the program or to invest according to the program recommendations. A Participant may ignore, in whole or in part, the investment allocations provided by the program. We regard the Asset Allocation Program as an aid in making purchase payment allocations. You should not view the Program as any guarantee of investment return. You also should realize that there can be no assurance that any Fund will attain its investment objectives. As a Participant, you should consider reviewing your investor profile questionnaire annually, and each time your investor profile changes. TRANSFERS A Participant may transfer out of an investment option into any combination of other investment options available under the Contract. Generally, the transfer request may be in dollars, such as a request to transfer $1,000 from one investment option to another, or may be in terms of a percentage reallocation among investment options. Under certain Contracts, we may require that transfer requests be effected in terms of whole number percentages only, and not by dollar amount. A Participant may make transfers by proper notice to us as described under "Requests, Consents and Notices," page __. If a Contractholder chooses telephone privileges, each Participant will automatically be enrolled to use the Telephone Transfer System. A Participant may decline telephone privileges on a form supplied by the Contractholder or us. We have adopted procedures designed to ensure that requests by telephone are genuine. We will not be held liable for following telephone instructions we reasonably believe to be genuine. We cannot guarantee that a Participant will be able to get through to complete a telephone transfer during peak periods such as periods of drastic economic or market change. Unless restricted by the retirement arrangement under which a Participant is covered, when we receive a duly completed written transfer request form or properly authorized telephone transfer request, we will transfer all or a portion of the Participant Account in any of the Subaccounts to another Subaccount or the Guaranteed Interest Account. We may restrict transfers from the Guaranteed Interest Account. There is no minimum transfer amount. As of the Business Day you make the transfer request, we will reduce the Subaccount(s) from which the transfer is made by the number of Units obtained by dividing the amount to be transferred by the Unit Value for the applicable Business Day. If the transfer is made to another Subaccount as of the same day, the number of Units we credit to the Participant in that Subaccount will be increased by means of a similar calculation. We reserve the right to limit the frequency of these transfers. All transfers are subject to the terms and conditions set forth in this Prospectus and in the Contract(s) covering a Participant. We did not design the Contracts for professional market timing organizations or other organizations or individuals using programmed, large, or frequent transfers. A pattern of exchanges that coincides with a "market timing" strategy may be disruptive to the Discovery Account and the Funds, and we will discourage such a practice. If such a pattern were to be found, we may be required to modify the transfer procedures, including but not limited to, not accepting transfer requests of an agent acting under a power of attorney on behalf of more than one owner. We may stipulate different procedures for Contracts under which another entity provides record keeping services. Although there is presently no charge for transfers, we reserve the right to impose such charges in the future. Certain Contracts may prohibit transfers from the Guaranteed Interest Account into non-equity investment options that are characterized in such Contract as "competing" with Prudential's General Account options with regard to investment characteristics. If a Contract precludes such transfers, the Contract will further require that amounts transferred from the Guaranteed Interest Account into non-competing investment options, such as a Subaccount investing in a stock Fund, may not for 90 days thereafter be transferred into a "competing" option or back to the Guaranteed Interest Account. A Contract may include a provision that, upon discontinuance of contributions for all Participants of an Employer covered under a Contract, the Contractholder may request that we make transfer payments from any of the Subaccounts to a designated alternate funding agency. If the Contract is used in connection with certain tax-deferred annuities subject to Section 403(b) of the Code, or with IRAs, we will promptly notify each affected Participant and each beneficiary of a deceased Participant that such a request has been received. Within thirty days of receipt of such notice, each recipient may elect in writing on a form approved by us to have any of his or her Participant Account Value transferred to the alternate funding agency. If he or she does not so elect, his or her investment options will continue in force under the Contract. If he or she does so elect, his or her account will be canceled as of a "transfer date" which is the Business Day specified in the Contractholder's request or 90 days after we receive the request, whichever is later. The product of Units in the Participant's Subaccounts immediately prior to cancellation and the appropriate Unit Value on the transfer date will be transferred to the designated alternate funding agency in cash. 13 Subject to any conditions or limitations regarding transfers contained in the tax-deferred annuity arrangement under which a Participant is covered, a Participant can: * continue to make transfers of all or part of his interest in his Participant Account among the available investment options offered, and * transfer directly all or part of his interest in his Participant Account to a Section 403(b) tax-deferred annuity contract of another insurance company or to a mutual fund custodial account under Section 403(b)(7). Contributions may be discontinued for all Participants under a Contract or for all Participants of an Employer covered under the Contract used in connection with a deferred compensation plan subject to Section 457 of the Code due to certain circumstances, such as a change in any law or regulation, which would have an adverse effect on us in fulfilling the terms of the Contract. If contributions are so discontinued, we may initiate transfer payments from any Subaccount to an alternate funding agency. The transfer would be made as described in the paragraph above. Transfers that you make among Subaccounts will take effect as of the end of the Valuation Period in which we receive a proper transfer request. From time to time, we may make an offer to holders of other variable annuities that we or an affiliate issues to exchange their variable annuity contracts for interests in a Contract issued by the Account. We will conduct any such exchange offer in accordance with SEC rules and other applicable law. Current SEC rules pertaining to exchange offers among affiliated variable annuity contracts generally require, with certain exceptions, that no fee be imposed at the time of the exchange. Under this rule, we could charge an administrative fee at the time of the exchange, although we have no present intention of doing so. DOLLAR COST AVERAGING We may make available an administrative feature called Dollar Cost Averaging ("DCA"). This feature allows Participants to transfer amounts out of the Guaranteed Interest Account or one of the Subaccounts and into one or more other Subaccounts. Transfers may be in specific dollar amounts or percentages of the amount in the DCA account at the time of the transfer. A Participant may ask that transfers be made monthly, quarterly, semi-annually or annually. A Participant can add to the DCA account at any time. Each automatic transfer will take effect in monthly, quarterly, semi-annual or annual intervals as designated by the Participant. If the New York Stock Exchange and Prudential are not open on a transfer date, the transfer will take effect as of the end of the Valuation Period which immediately follows that date. Automatic transfers continue until the amount specified has been transferred, or until the Participant notifies us and we process a change in allocation or cancellation of the feature. We currently impose no charge for this feature. We would impose such a charge only pursuant to an amendment to an administrative services agreement. Such an amendment would have to be agreed to in writing (or its electronic equivalent) by both us and the Contractholder. AUTO-REBALANCING The Contracts may offer another investment technique. The Auto-Rebalancing feature will allow Participants to automatically rebalance Subaccount assets at specified intervals based on percentage allocations that they choose. For example, suppose a Participant's initial investment allocation of Subaccounts is split 40% and 60%, respectively. Then, due to investment results, that split changes. A Participant may instruct that those assets be rebalanced to his or her original or different allocation percentages. Auto-Rebalancing can be performed on a one-time basis or periodically, as a Participant chooses. A Participant may select that rebalancing occur in monthly, quarterly, semi-annual or annual intervals. Rebalancing will take effect as of the end of the Valuation Period for each applicable interval. It will continue at those intervals until the Participant notifies us otherwise. If the New York Stock Exchange and Prudential are not open on the rebalancing date, the transfer will take effect as of the end of the Valuation Period which immediately follows that date. We currently impose no charge for this feature. We would impose such a charge only pursuant to an amendment to an administrative services agreement, which would have to be agreed to in writing (or its electronic equivalent) by both us and the Contractholder. WITHDRAWALS Under certain circumstances as described in the retirement arrangement under which he is covered, a Participant may withdraw at any time all or part of his Participant Account Value that is attributable to Employer contributions or after-tax Participant contributions, if any. The Code imposes restrictions on withdrawals from tax-deferred annuities subject to Section 403(b) of the Code. Pursuant to Section 403(b)(11) of the Code, amounts attributable to a Participant's salary reduction contributions (including the earnings thereon) that are made under a tax deferred annuity after December 31, 1988 can only be withdrawn (redeemed) when the Participant attains age 59 1/2, separates from service with his employer, dies, or becomes disabled (within the meaning of Section 72(m)(7) of the Code). However, the Code permits the withdrawal at any time of amounts attributable to tax-deferred annuity salary reduction contributions (excluding the earnings thereon) that are made after December 31, 1988, in the case of a hardship. If the arrangement under which a Participant is covered contains a financial hardship provision, a Participant can make withdrawals in the event of the hardship. 14 Furthermore, subject to any restrictions upon withdrawals contained in the tax-deferred annuity arrangement under which a Participant is covered, a Participant can withdraw at any time all or part of his Participant Account Value under a predecessor Prudential tax-sheltered annuity contract, as of December 31, 1988. Amounts earned after December 31, 1988 on the December 31, 1988 balance in a Participant Account attributable to salary reduction contributions are, however, subject to the Section 403(b)(11) withdrawal restrictions discussed above. With respect to retirement arrangements other than tax-deferred annuities subject to Section 403(b) of the Code, a Participant's right to withdraw at any time all or part of his Participant Account Value may be restricted by the retirement arrangement under which he is covered. For example, Code Section 457 plans typically permit withdrawals only upon attainment of age 70 1/2, separation of service, or for unforeseeable emergencies. You may specify from which investment options you would like the withdrawal processed. You may specify the withdrawal amount as a dollar amount or as a percentage of the Participant Account Value in the applicable Subaccount(s). If you do not specify from where you would like the withdrawal processed, a partial withdrawal will be withdrawn proportionally from all investment options. We will generally pay the amount of any withdrawal within 7 days after receipt of a properly completed withdrawal request. We will pay the amount of any withdrawal requested, less any applicable tax withholding. We may delay payment of any withdrawal allocable to the Subaccount(s) for a longer period if the disposal or valuation of the Discovery Account's assets is not reasonably practicable because the New York Stock Exchange is closed for other than a regular holiday or weekend, trading is restricted by the SEC, or the SEC declares that an emergency exists. SYSTEMATIC WITHDRAWAL PLAN If permitted by the Code and the retirement arrangement under which a Participant is covered, we may offer systematic withdrawals as an administrative privilege. Under a systematic withdrawal arrangement, a Participant may arrange for systematic withdrawals from the Subaccounts and the Guaranteed Interest Account in which he or she invests. A Participant may arrange for systematic withdrawals only if at the time he or she elects to have such an arrangement, the balance in his or her Participant Account is at least $5,000. A Participant who has not reached age 59 1/2, however, may not elect a systematic withdrawal arrangement unless he or she has first separated from service with his Employer. In addition, the $5,000 minimum balance does not apply to systematic withdrawals made for the purpose of satisfying minimum distribution rules. Federal income tax provisions applicable to the retirement arrangement under which a Participant is covered may significantly affect the availability of systematic withdrawals, how they may be made, and the consequences of making them. Withdrawals by Participants are generally taxable. Participants who have not reached age 59 1/2 may incur substantial tax penalties. WithdrawaLs made after a Participant has attained age 70 1/2 and withdrawals by beneficiaries must satisfy certain minimum distribution rules. See "Federal Tax Status," page __. You may arrange systematic withdrawals only pursuant to an election in a form we have approved. Under certain types of retirement arrangements, an election to arrange for systematic withdrawals by a married Participant must be consented to in writing by the Participant's spouse, with signatures notarized or witnessed by an authorized plan representative, or equivalent electronic procedure permitted by ERISA and related federal regulations. The election must specify that the systematic withdrawals will be made on a monthly, quarterly, semi-annual, or annual basis. We will effect all systematic withdrawals as of the day of the month specified by the Contractholder, or, if such day is not a Business Day, then on the next succeeding Business Day. Systematic withdrawals will continue until the Participant has withdrawn all of the balance in his or her Participant Account or has instructed Prudential in writing to terminate the systematic withdrawal arrangement. The Participant may elect to make systematic withdrawals in equal dollar amounts (in which case each withdrawal must be at least $250), unless it is made to satisfy minimum distribution rules, or over a specified period of time (at least three years). Where the Participant elects to make systematic withdrawals over a specified period of time, the amount of each withdrawal (which will vary, reflecting investment experience during the withdrawal period) will be equal to the sum of the balances then in the Participant Account divided by the number of systematic withdrawals remaining to be made during the withdrawal period. We will take systematic withdrawals first out of the Participant's investment, if any, in the Guaranteed Interest Account until that money is exhausted. Thereafter, we will take systematic withdrawals pro rata from the Subaccounts. Certain Contracts may specify that systematic withdrawals be deducted in a different manner. A Participant may change the frequency, amount or duration of his or her systematic withdrawals by submitting a form to us or our designee. We will provide such a form to a Participant upon request. A Participant may make such a change only once during each calendar year. A Participant may at any time instruct us to terminate the Participant's systematic withdrawal arrangement. No systematic withdrawals will be made for a Participant after we have received this instruction. A Participant who chooses to stop making systematic withdrawals may not again make them until the next calendar year and may be subject to federal tax consequences as a result. If a Participant arranges for systematic withdrawals, that will not affect any of the Participant's other rights under the Contracts, including the right to make withdrawals, and purchase a fixed dollar annuity. 15 TEXAS OPTIONAL RETIREMENT PROGRAM Special rules apply with respect to Contracts covering persons participating in the Texas Optional Retirement Program ("Texas Program"). Under the terms of the Texas Program, Texas will contribute an amount somewhat larger than a Participant's contribution. Texas' contributions will be credited to the Participant Account. Until the Participant begins his or her second year of participation in the Texas Program, Prudential will have the right to withdraw the value of the Units purchased for this account with Texas' contributions. If the Participant does not commence his or her second year of Texas Program participation, the value of those Units representing Texas' contributions will be withdrawn and returned to the State. A Participant has withdrawal benefits for Contracts issued under the Texas Program only in the event of the Participant's death, retirement or termination of employment. Participants will not, therefore, be entitled to exercise the right of withdrawal in order to receive in cash the Participant Account Value credited to them under the Contract unless one of the foregoing conditions has been satisfied. A Participant may, however, transfer the value of the Participant's interest under the Contract to another Prudential contract or contracts of other carriers approved under the Texas Program during the period of the Participant's Texas Program participation. DEATH BENEFIT When we receive due proof of a Participant's death and a claim and payment election submitted on a form approved by us, we will pay to the designated beneficiary a death benefit made up of the balance in the Participant Account. The appropriate address to which a death benefit claim generally should be sent is set out on the cover page of this Prospectus. For certain Contracts, a death benefit claim should be sent to a designated record keeper rather than us. We will pay the death benefit, according to the Participant's instructions, in: * one sum as if it were a single withdrawal, * systematic withdrawals, * an annuity, or * a combination of the three. Any such payment will be subject to the minimum distribution rules of Code Section 401(a)(9) as described below under "Federal Tax Status." If the Participant has not so directed, the beneficiary may, within any time limit prescribed by or for the retirement arrangement that covered the Participant, elect: * to receive a one sum cash payment; * to have a fixed dollar annuity purchased under the Contract on a specified date, using the same annuity purchase ratE basis that would have applied if the Participant Account were being used to purchase an annuity for the Participant; * to receive regular payments in accordance with the systematic withdrawal plan; or * a combination of all or any two of the three options above. Under certain types of retirement arrangements, the Retirement Equity Act of 1984 requires that in the case of a married Participant, a death benefit will be payable to the Participant's spouse in the form of a "qualified pre-retirement survivor annuity." A "qualified pre-retirement survivor annuity" is an annuity for the lifetime of the Participant's spouse in an amount which can be purchased with no less than 50% of the balance in the Participant Account as of the Participant's date of death. Under the Retirement Equity Act, the spouse of a Participant in a retirement arrangement which is subject to these rules may consent to waive the pre-retirement survivor annuity benefit. Such consent must acknowledge the effect of waiving the coverage, contain the signatures of the Participant and spouse, and must be notarized or witnessed by an authorized plan representative. Unless the spouse of a Participant in a Plan which is subject to these requirements properly consents to the waiver of the benefit, we will pay 50% of the balance in the Participant Account to such spouse even if the designated beneficiary is someone other than the spouse. Under these circumstances, we would pay the remaining 50% to the Participant's designated beneficiary. Unless the retirement arrangement that covered the Participant provides otherwise, a beneficiary who elects to have a fixed-dollar annuity may choose from among the available forms of annuity. See "Effecting an Annuity," page ___. The beneficiary may elect to purchase an annuity immediately or at a future date. If an election includes systematic withdrawals, the beneficiary will have the right to terminate such withdrawals and receive the remaining balance in the Participant Account in cash (or effect an annuity with it), or to change the frequency, size or duration of such withdrawals, subject to the minimum distribution rules. See "Federal Tax Status" section of this Prospectus. If the beneficiary fails to make any election within any time limit prescribed by or for the retirement arrangement that covered the Participant, within seven days after the expiration of that time limit, we will make a one sum cash payment to the beneficiary. A specific Contract may provide that an annuity is payable to the beneficiary if the beneficiary fails to make an election. 16 Until we pay a death benefit that results in reducing to zero the balance in the Participant Account, we will maintain the Participant Account Value in the Subaccounts and the Guaranteed Interest Account that make up the Participant Account for the beneficiary in the same manner as they had been for the Participant, except: * the beneficiary may make no contributions; and * the beneficiary may not take a loan. DISCONTINUANCE OF CONTRIBUTIONS By notifying us, the Contractholder generally may discontinue contributions on behalf of all Participants under a Contract or for all Participants of an Employer covered under a Contract. Contributions under the Contract will also be discontinued for all Participants covered by a retirement arrangement that is terminated. On 90 days' advance notice to the Contractholder, we may elect not to accept any new Participant, or not to accept further contributions for existing Participants. The fact that contributions on a Participant's behalf are discontinued does not otherwise affect the Participant's rights under the Contracts. However, if contributions under a Program are not made for a Participant for a specified period of time (24 months in certain states, 36 months in others) and the total value of his Participant Account is at or below a specified amount ($1,000 in certain states, $2,000 in others), we may, if permitted by the Code, elect to cancel that Participant Account unless prohibited by the retirement arrangement, and pay the Participant the value as of the date of cancellation. LOAN PROVISION The loans described in this section are generally available to Participants in 401(a) plans and 403(b) programs. Loans are not generally available under non-qualified arrangements. The interest rate and other terms and conditions of the loan may vary from Contract to Contract. For plans that are subject to ERISA, it is the responsibility of the Contract trustee or fiduciary to ensure that the interest rate or other terms and conditions of the loan comply with all Contract qualification requirements including the ERISA regulations. The loans described in this section, which involve the variable investment options, work as follows. The minimum loan amount is as specified in the Contract, or if not specified, as we determine. The maximum loan amount is the lesser of: * $50,000, reduced by the highest outstanding balance of loans during the one year period immediately preceding the date of the loan, or * 50% of the value of the Participant's vested interest under a Contract. Generally, in the loan application, the Contractholder (or in certain cases, the Participant) designates the Subaccount(s) from which the loan amount is deducted. To repay the loan, the Participant makes periodic payments of interest plus a portion of the principal. Prudential invests those payments in the Subaccounts chosen by the Participant. The Participant may specify the Subaccounts from which he may borrow and into which repayments may be invested. If the Participant does not specify the Subaccounts from which the loan amount is deducted, we will deduct the loan amount pro rata from the Participant Account Value in the Subaccounts. The maximum loan amount referred to above is imposed by federal tax law. That limit, however, applies to all loans from any qualified plan of the Employer. Since we cannot monitor a Participant's loan activity relating to other plans offered to Participants, it is the Participant's responsibility to do so. Provided that a Participant adheres to these limitations, the loan will not be treated as a taxable distribution. If, however, the Participant defaults on the loan by, for example, failing to make required payments, the defaulted loan amount (as described in loan disclosure information provided to a borrowing Participant) will be treated as a taxable distribution. In that event, we will send the appropriate tax information to the Participant and the Internal Revenue Service. We charge a loan application fee of up to $75, which is deducted from the Participant Account at the time the loan is initiated. We will not accept a personal check as payment of the loan application fee. We also impose an annual charge of up to $60 as a loan maintenance fee for record-keeping and other administrative services provided in connection with the loan. This charge is guaranteed not to increase during the term of any loan. This annualized loan maintenance charge will be pro rated based on the number of full months that the loan is outstanding, and we generally deduct it quarterly. Under certain Contracts, we will deduct the loan maintenance fee annually. We will deduct the loan maintenance charge first against the Participant Account Value under the Guaranteed Interest Account (if available). If the Participant is not invested in the Guaranteed Interest Account, of if the Participant does not have enough money in that option to pay the charge, we will then deduct the charge from any one or more of the Subaccounts in which the Participant is invested. 17 MODIFIED PROCEDURES Under certain Contracts, the Contractholder or a third party acting on their behalf provides record keeping services that would otherwise be performed by us. Such Contracts may require procedures somewhat different than those set forth in this Prospectus. For example, such Contracts may require that contribution allocation requests, withdrawal requests, and/or transfer requests be directed to the Contract's record-keeper rather than us. The record-keeper is the Contractholder's agent, not our agent. Accordingly, transactions will be processed and priced as of the end of the Valuation Period in which we receive appropriate instructions and/or funds from the record-keeper. The Contract will set forth any such different procedures. CHARGES, FEES AND DEDUCTIONS ADMINISTRATIVE FEE We impose an administrative fee to compensate for the expenses incurred in administering the Contracts. This includes such things as issuing the Contract, establishing and maintaining records, and providing reports to Contractholders and Participants. We deduct this fee daily from the assets in each of the Subaccounts at a maximum effective annual rate of 0.75%. We may reduce this administrative fee under Contracts as to which, due to economies of scale or other factors, our administrative costs are reduced. CHARGE FOR ASSUMING MORTALITY AND EXPENSE RISKS We make a deduction daily from the assets of each of the Subaccounts as compensation for assuming the risk that our estimates of longevity and of the expenses we expect to incur over the lengthy periods that the Contract may be in effect will turn out to be incorrect. We assess the charge daily at an annual rate of 0.15% of the assets held in the Subaccounts. EXPENSES INCURRED BY THE FUNDS Participants indirectly bear the charges and expenses of the Funds. You can review details about investment management fees and other Fund expenses in the fee table and in the accompanying prospectuses for the Funds and the related statements of additional information. PREMIUM TAXES Certain states and other jurisdictions impose on us premium taxes or similar assessments, either at the time contributions are made or when the Participant's Account Value is surrendered or applied to purchase an annuity. We reserve the right to deduct an amount from contributions or the Participant's Account to cover such taxes or assessments, if any, when applicable. Not all states impose premium taxes on annuities. However, the rates in those that do currently range from 0.5% to 5%. REQUESTS, CONSENTS AND NOTICES The way you provide all or some requests, consents, or notices under a Contract (or related agreement or procedure) may include telephone access to an automated system, telephone access to a staffed call center, or Internet access through www.prudential.com, as well as traditional paper. Prudential reserves the right to vary the means available from Contract to Contract, including limiting them to electronic means, by Contract terms, related service agreements with the Contractholder, or notice to the Contractholder and Participants. If electronic means are authorized, you will automatically be able to use them. Prudential also will be able to use electronic means to provide notices to you, provided your Contract or other agreement with the Contractholder does not specifically limit these means. Electronic means will only be used, however, when Prudential reasonably believes that you have effective access to the electronic means and that they are allowed by applicable law. Also, you will be able to receive a paper copy of any notice upon request. For your protection and to prevent unauthorized exchanges, telephone calls and other electronic communications will be recorded and stored, and you will be asked to provide your personal identification number or other identifying information before any request will be processed. Neither Prudential nor our agents will be liable for any loss, liability, or cost which results form acting upon instructions reasonably believed to be authorized by you. During times of extraordinary economic or market changes, electronic and other instructions may be difficult to implement. Some states, retirement programs, or Contractholders may not allow these privileges, or allow them only in modified form. FEDERAL TAX STATUS The following discussion is general in nature and describes only federal income tax law (not state or other tax laws). It is based on current law and interpretations, which may change. It is not intended as tax advice. Participants and Contractholders should consult a qualified tax adviser for complete information and advice. 18 ANNUITY QUALIFICATION This discussion assumes the Contracts will be treated as annuity contracts for federal income tax purposes. In order to qualify for the tax rules applicable to annuity contracts, the assets underlying the Contracts must be diversified according to certain rules. For further detail on diversification requirements, see Dividends, Distributions and Taxes in the attached prospectus for the Prudential Series Fund. Tax rules also require that Prudential must have sufficient control over the underlying assets to be treated as the owner of the underlying assets for tax purposes. Treasury Department regulations do not provide guidance concerning the extent to which Participants may direct investments in the particular investment options without causing Participants, instead of Prudential, to be considered the owner of the underlying assets. The ownership rights under the Contract are similar to, but different in certain aspects from, those addressed by the Internal Revenue Service in rulings holding that the insurance company was the owner of the assets. For example, Participants have the choice of more funds and the ability to reallocate amounts among available Subaccounts more frequently than in the Ruling. While we believe that Prudential will be treated as the owner of the assets of the Discovery Account, it is possible that the Participants may be considered to own the assets. Because of these uncertainties, Prudential reserves the right to make any changes it deems necessary to assure that the Contracts qualify as annuity contracts for tax purposes. Any such changes will apply uniformly to affected Participants and will be made with such notice to affected Participants as is feasible under the circumstances. TAX-QUALIFIED RETIREMENT ARRANGEMENTS USING THE CONTRACTS The Contracts may be used with qualified pension and profit sharing plans, plans established by self-employed persons ("Keogh plans"), simplified employee pension plans ("SEPs"), individual retirement plan accounts ("IRAs"), Roth IRAs, and tax-deferred annuities ("TDAs"). The Contracts may also be used with defined contribution annuity plans qualifying for federal tax benefits under Section 403(c) of the Code ("Section 403(c) annuities"). The provisions of the tax law that apply to these retirement arrangements that may be funded by the Contracts are complex, and Participants are advised to consult a qualified tax adviser. The Contracts may also be used with certain deferred compensation plans of a state or local government or a tax-exempt organization (called "Section 457 Plans" after the Internal Revenue Code section that governs their structure). The tax rules for such plans involve, among other things, limitations on contributions and minimum distribution requirements. Tax-exempt organizations or governmental employers considering the use of the Contracts to fund or otherwise provide deferred compensation to their employees should consult with a qualified tax adviser concerning these specific requirements. Please refer to the discussion of Entity Owners on page __, which may be applicable in certain circumstances. CONTRIBUTIONS In general, assuming that the requirements and limitations of tax law applicable to the particular type of plan are adhered to by Participants and Employers, contributions made under a qualified retirement arrangement funded by a Contract are deductible (or not includible in income) up to certain amounts each year. Contributions to a Roth IRA are subject to certain limits, and are not deductible for federal income tax purposes. Contributions to Section 403(c) annuities are not deductible. EARNINGS Under the retirement programs with which the Contracts may be used, federal income tax currently is not imposed upon the investment income and realized gains earned by the Subaccounts in which the contributions have been invested until a distribution or withdrawal is received. DISTRIBUTIONS OR WITHDRAWALS When a distribution or withdrawal is received, either as a lump sum, an annuity, or as regular payments in accordance with a systematic withdrawal arrangement, all or a portion of the distribution or withdrawal is normally taxable as ordinary income. In some cases, the tax on lump sum distributions may be limited by a special income-averaging rule. The effect of federal income taxation depends largely upon the type of retirement plan and a generalized description, beyond that given here, is not particularly useful. Careful review of tax law applicable to the particular type of plan is necessary. Furthermore, premature distributions or withdrawals may be restricted or subject to a penalty tax. Participants contemplating a withdrawal should consult a qualified tax adviser. Under a Roth IRA, distributions are generally not taxable for federal income tax purposes if they are made after attainment of age 59-1/2 or for certain other reasons and if the individual had a Roth IRA in effect for at least five years. MINIMUM DISTRIBUTION RULES In general, distributions from qualified retirement arrangements and Section 457 Plans must begin by the "Required Beginning Date" which is April 1 of the calendar year following the later of (1) the year in which the Participant attains age 70-1/2 or (2) the Participant retires. The following exceptions apply: * For a TDA, only benefits accruing after December 31, 1986 must begin distribution by the Required Beginning Date. * For IRAs, (2) above does not apply. * Roth IRAs are not subject to these pre-death minimum distribution rules. 19 Distributions that are made after the Required Beginning Date must generally be made in the form of an annuity for the life of the Participant or the lives of the Participant and his designated beneficiary, or over a period that is not longer than the life expectancy of the Participant or the life expectancies of the Participant and his designated beneficiary. Distributions to beneficiaries are also subject to minimum distribution rules. If a Participant dies before his entire interest in his Participant Account has been distributed, his remaining interest must be distributed at least as rapidly as under the method of distribution being used as of the Participant's date of death. If the Participant dies before distributions have begun (or are treated as having begun) the entire interest in his Participant Account must be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. Alternatively, if there is a designated beneficiary, the designated beneficiary may elect to receive payments beginning no later than December 31 of the calendar year immediately following the year in which the Participant dies and continuing for the beneficiary's life or a period not exceeding the beneficiary's life expectancy (except that with respect to distributions from a Section 457 Plan, such period cannot exceed 15 years). Special rules apply where the deceased Participant's spouse is his designated beneficiary. In addition to the above rules, with respect to a Section 457 Plan, any distribution that is payable over a period of more than one year can only be made in substantially non-increasing amounts no less frequently than annually. An excise tax applies to Participants or beneficiaries who fail to take the minimum distribution in any calendar year. SECTION 403(C) ANNUITY ARRANGEMENTS USING THE CONTRACTS Contributions to Section 403(c) annuities are neither deductible nor subject to tax law limitations on their amount. Federal income tax currently is not imposed upon the investment income and realized gains earned by the Subaccounts in which contributions have been invested until a distribution or withdrawal is received. When a distribution or withdrawal is received, either as a lump sum, an annuity, or as regular payments in accordance with a systematic withdrawal arrangement, a portion of the distribution or withdrawal is taxable as ordinary income. Section 403(c) annuities are subject to neither the Minimum Distribution Rules described above nor to the rules described below as Penalty Taxes on Withdrawals and Annuity Payments and Required Distributions Upon Death of Participant. TAXES PAYABLE BY PARTICIPANT We believe the Contracts are annuity contracts for tax purposes. Accordingly, as a general rule, Participants should not pay any tax on investment earnings until money is received under the Contracts. Generally, annuity contracts issued by the same company (and affiliates) to a Participant during the same calendar year must be treated as one annuity contract for purposes of determining the amount subject to tax under the rules described below. TAXES ON WITHDRAWALS AND SURRENDER If a Participant makes a withdrawal from the Contract or surrenders it before annuity payments begin, the amount received will be taxed as ordinary income, rather than as return of purchase payments, until all gain has been withdrawn. If a Participant assigns all or part of the Contract as collateral for a loan, the part assigned will be treated as a withdrawal. Also, if a Participant elects the interest payment option, this will be treated, for tax purposes, as a surrender of the Contract. If a Participant transfers the Contract for less than full consideration, such as by gift, tax will be triggered on the gain in the Contract. This rule does not apply to transfers to a spouse or incident to divorce. TAXES ON ANNUITY PAYMENTS A portion of each annuity payment a Participant receives will be treated as a partial return of purchase payments and will not be taxed. The remaining portion will be taxed as ordinary income. Generally, the nontaxable portion is determined by multiplying the annuity payment received by a fraction, the numerator of which is the purchase payments (less any amounts previously received tax-free) and the denominator of which is the total expected payments under the Contract. After the full amount of the purchase payments have been recovered tax-free, the full amount of the annuity payments will be taxable. If annuity payments stop due to the death of the annuitant before the full amount of the purchase payments have been recovered, a tax deduction is allowed for the unrecovered amount. PENALTY TAXES ON WITHDRAWALS AND ANNUITY PAYMENTS Any taxable amount received under the Contract may be subject to a 10 percent penalty tax. Amounts are not subject to this penalty tax if: * the amount is paid on or after age 59-1/2 or the death of the Participant; * the amount received is attributable to the Participant becoming disabled; * the amount paid or received is in the form of level payments not less frequently than annually for life (or a period not exceeding life expectancy); or * the amount received is paid under an immediate annuity contract (in which annuity payments begin within one year of purchase). If the lifetime annuity payment stream is modified (other than as a result of death or disability) before age 59-1/2 (or before the end of the five year period beginning with the first payment and ending after age 59-1/2), the tax for the year of modification will be increased by the penalty tax that would have been imposed without the exception, plus interest for the deferral. TAXES PAYABLE BY BENEFICIARIES Generally, the same tax rules apply to amounts received by a beneficiary as those set forth above with respect to a Participant. The election of an annuity payment option instead of a lump sum death benefit may defer taxes. Certain minimum distribution requirements apply upon the death of a Participant, as discussed further below. 20 REQUIRED DISTRIBUTIONS UPON DEATH OF PARTICIPANT Certain distributions must be made under the Contract upon the death of a Participant. The required distributions depend on whether the Participant dies on or before the start of annuity payments under the Contract or after annuity payments are started under the Contract. If the Participant dies on or after the annuity date, the remaining portion of the interest in the Contract must be distributed at least as rapidly as under the method of distribution being used as of the date of death. If the Participant dies before the annuity date, the entire interest in the Contract must be distributed within 5 years after the date of death. However, if an annuity payment option is selected by the designated beneficiary and if annuity payments begin within 1 year of the death of the Participant, the value of the Contract may be distributed over the beneficiary's life or a period not exceeding the beneficiary's life expectancy. The designated beneficiary is the person to whom ownership of the Contract passes by reason of death, and must be a natural person. If any portion of the Contract is payable to (or for the benefit of) a Participant's surviving spouse, such portion of the Contract may be continued with the spouse as the owner. ENTITY OWNERS When a Contract is held by a non-natural person (for example, a corporation), the Contract generally will not be taxed as an annuity and increases in the value of the Contract will be subject to tax. Exceptions include contracts held by an entity as an agent for a natural person, contracts held under a qualified pension or profit sharing plan, a TDA or individual retirement plan (see discussion above) or contracts that provide for immediate annuities. WITHHOLDING Taxable amounts distributed from annuity contracts in nonqualified annuity arrangements are subject to tax withholding. Participants may generally elect not to have tax withheld from payments. The rate of withholding on annuity payments will be determined on the basis of the withholding certificate filed with us. Absent these elections, we will withhold the tax amounts required by the applicable tax regulations. Participants may be subject to penalties under the estimated tax payment rules if withholding and estimated tax payments are not sufficient. Participants who fail to provide a social security number or other taxpayer identification number will not be permitted to elect out of withholding. In addition, certain distributions from qualified plans, which are not directly rolled over or transferred to another eligible qualified plan, are subject to a mandatory 20% withholding for federal income tax. The 20% withholding requirement does not apply to: (1) distributions for the life or life expectancy of the Participant, or joint and last survivor expectancy of the Participant and a designated beneficiary; or (2) distributions for a specified period of 10 years or more; (3) distributions required as minimum distributions. Amounts that are received under a Contract used in connection with a Section 457 Plan are treated as wages for federal income tax purposes and are, thus, subject to general withholding requirements; or (4) hardship distribution of salary deferral amounts. TAXES ON PRUDENTIAL Although the Account is registered as an investment company, it is not a separate taxpayer for purposes of the Code. The earnings of the Subaccounts invested in the Funds are taxed as part of the operations of Prudential. No charge is being made currently against those Subaccounts for company federal income taxes. Prudential will review the question of a charge to the Subaccounts invested in the Funds for company federal income taxes periodically. Such a charge may be made in future years for any federal income taxes that would be attributable to the Contracts. 21 ERISA CONSIDERATIONS Employer involvement and other factors will determine whether a Contract is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). If applicable, ERISA and the Code prevent a fiduciary and other "parties in interest" with respect to a plan (and, for these purposes, an IRA would also constitute a "plan") from receiving any benefit from any party dealing with the plan, as a result of the sale of the Contract. Administrative exemptions under ERISA generally permit the sale of insurance/annuity products to plans, provided that certain information is disclosed to the person purchasing the Contract. This information has to do primarily with the fees, charges, discounts and other costs related to the Contract, as well as any commissions paid to any agent selling the Contract. Information about any applicable fees, charges, discounts, penalties or adjustments may be found under "Charges, Fees and Deductions" starting on page __. Information about sales representatives and commissions may be found under "Other Information" and "Sale of the Contract and Sales Commissions" on page __. In addition, other relevant information required by the exemptions is contained in the Contract and accompanying documentation. Please consult your tax advisor if you have any additional questions. EFFECTING AN ANNUITY Subject to the restrictions on withdrawals from tax-deferred annuities subject to Section 403(b) of the Code, and subject to the provisions of the retirement arrangement that covers him or her, a Participant may elect at any time to have all or a part of his or her interest in the Participant Account used to purchase a fixed dollar annuity under the Contracts. The Contracts do not provide for annuities that vary with the investment results of any Subaccount. Withdrawals from the Participant Account that are used to purchase a fixed dollar annuity under the Contracts become part of Prudential's general account, which supports insurance and annuity obligations. In electing to have an annuity purchased, the Participant may select from the forms of annuity described below, unless the retirement arrangement covering the Participant provides otherwise. The annuity is purchased on the first day of the month following receipt by us of proper written notice on a form we have approved that the Participant has elected to have an annuity purchased, or on the first day of any subsequent month that the Participant designates. We generally will make the first monthly annuity payment within one month of the date on which the annuity is purchased. Under certain types of retirement arrangements, the Retirement Equity Act of 1984 requires that in the case of a married Participant, certain elections of payouts which are not qualified joint and survivor annuities must include the consent and signatures of the Participant and his spouse and must be notarized or witnessed by an authorized plan representative. A "qualified joint and survivor annuity" is an annuity for the Participant's lifetime with at least 50% of the amount payable to the Participant continued after the Participant's death to his or her spouse, if then living. Once annuity payments begin, the annuitant cannot surrender his or her annuity benefit and receive a one sum payment. We make the following forms of annuity available to Participants. LIFE ANNUITY WITH PAYMENTS CERTAIN This is an immediate annuity payable monthly during the lifetime of the annuitant. We guarantee that if, at the death of the annuitant, payments have been made for less than the period certain (which may be 60, 120, 180, or 240 months, as selected by the annuitant), they will be continued during the remainder of the selected period to his or her beneficiary. ANNUITY CERTAIN This is an immediate annuity payable monthly for a period certain which may be 60, 120, 180, or 240 months, as selected by the annuitant. If the annuitant dies during the period certain, we will continue payments in the same amount the annuitant was receiving to his or her beneficiary. We make no further payments after the end of the period certain. JOINT AND SURVIVOR ANNUITY WITH PAYMENTS CERTAIN This is an immediate annuity payable monthly during the lifetime of the annuitant with payments continued after his or her death to the contingent annuitant, if surviving, for the latter's lifetime. Until the selected number of payments certain have been paid, payments made to the contingent annuitant after the annuitant's death are the same as those the annuitant was receiving. Thereafter, the payments continued to the contingent annuitant will be a percentage of the monthly amount paid to the annuitant such as 33%, 50%, 66%, or 100% as selected by the annuitant. The amounts of each payment made to the annuitant will be lower as the percentage he or she selects to be paid to the contingent annuitant is higher. If both the annuitant and the contingent annuitant die during the period certain (which may be 60, 120, 180, or 240 months, as selected by the annuitant), we will continue payments during the remainder of the period certain to the properly designated beneficiary. We may make other forms of annuity available under the Contracts. The retirement arrangement under which the Participant is covered may restrict the forms of annuity that a Participant may elect. If the dollar amount of the first monthly annuity payment is less than the minimum amount specified in the Contract, or if the beneficiary is other than a natural person receiving payments in his or her own right, we may elect to pay the commuted value of the unpaid payments certain in one sum. PURCHASING THE ANNUITY We apply the value of your Participant Account, less any applicable taxes, to the appropriate annuity purchase rate determined in accordance with the schedule in the Contract at the time the annuity is purchased. However, we may determine monthly payments from schedules of annuity purchase rates providing for larger payments than the rates shown in the Contract. We guarantee the schedule of annuity purchase rates in a Contract for ten years from the date the Contract is issued. If at any time after a Contract has been in effect for ten years, we modify the schedule of annuity purchase rates, the modification is also guaranteed for ten years. A change in the schedule of annuity purchase rates used for an annuity certain with 180 payments or less, as described above, will apply only to amounts added to a Participant Account after the date of change. A change in any other schedule will apply to all amounts in a Participant Account. 22 OTHER INFORMATION MISSTATEMENT OF AGE OR SEX If an annuitant's stated age or sex (except where unisex rates apply) or both are incorrect, we will change each benefit and the amount of each annuity payment to that which the total contributions would have bought for the correct age and sex. Also, we will adjust for the amount of any overpayments we have already made. SALE OF THE CONTRACT AND SALES COMMISSIONS Prudential Investment Management Services LLC ("PIMS"), a wholly-owned direct subsidiary of Prudential, acts as the principal underwriter of the Contract. PIMS was organized in 1996 under Delaware law, is registered as a broker and dealer under the Securities Exchange Act of 1934, and is a member of the National Association of Securities Dealers, Inc. PIMS' principal business address is 751 Broad Street, Newark, NJ 07102. The Contract is sold by registered representatives of PIMS who are also authorized by state insurance departments to do so. The maximum commission that we will pay to the broker-dealer to cover both the individual representative's commission and other distribution expenses will not exceed 3.0% of the purchase payment. VOTING RIGHTS As stated above, all of the assets held in the Subaccounts of the Discovery Account are invested in shares of the corresponding Funds. We are the legal owner of those shares. As such, we have the right to vote on any matter voted on at any shareholders meetings of the Funds. However, as required by law, we vote the shares of the Funds at any regular and special shareholders meetings the Funds are required to hold in accordance with voting instructions received from Participants. The Funds may not hold annual shareholders meetings when not required to do so under the laws of the state of their incorporation or the Investment Company Act of 1940. Fund shares for which no timely instructions from Participants are received, and any shares owned directly or indirectly by us, are voted in the same proportion as shares in the respective portfolios for which instructions are received. Should the applicable federal securities laws or regulations, or their current interpretation, change so as to permit us to vote shares of the Funds in our own right, we may elect to do so. Generally, Participants may give voting instructions on matters that would be changes in fundamental policies and any matter requiring a vote of the shareholders of the Funds. With respect to approval of the investment advisory agreement or any change in a portfolio's fundamental investment policy, Participants participating in such portfolios will vote separately on the matter, as required by applicable securities laws. The number of Fund shares for which a Participant may give instructions is determined by dividing the portion of the value of the Participant Account derived from participation in a Subaccount, by the value of one share in the corresponding portfolio of the applicable Fund. The number of votes for which you may give us instructions is determined as of the record date chosen by the Board of the applicable Fund. We furnish you with proper forms and proxies to enable you to give these instructions. We reserve the right to modify the manner in which the weight to be given to voting instructions is calculated where such a change is necessary to comply with current federal regulations or interpretations of those regulations. We may, if required by state insurance regulations, disregard voting instructions if such instructions would require shares to be voted so as to cause a change in the sub-classification or investment objectives of one or more of the Funds' portfolios, or to approve or disapprove an investment advisory contract for a Fund. In addition, we may disregard voting instructions that would require changes in the investment policy or investment adviser of one or more of the Funds' portfolios, provided that we reasonably disapprove such changes in accordance with applicable federal regulations. If we do disregard voting instructions, we will advise you of that action and our reasons for such action in the next annual or semi-annual report. SUBSTITUTION OF FUND SHARES Although we believe it to be unlikely, it is possible that in the judgment of its management, one or more of the Funds may become unsuitable for investment by Contractholders and Participants. This may occur because of investment policy changes, tax law changes, the unavailability of shares for investment or at our discretion. In that event, we may seek to substitute the shares of another portfolio or of an entirely different mutual fund. Before this can be done, we would have to obtain the approval of the SEC, and possibly one or more state insurance departments. We would notify Contractholders and Participants of any such substitution. PERFORMANCE INFORMATION We may depict performance information for the Subaccounts in advertising and reports to current and prospective Contractholders and Participants. Performance information is based on the historical investment experience of the Funds, adjusted to take charges under the Contract into account, and does not indicate or represent future performance. 23 Total returns are based on the overall dollar or percentage change in value of a hypothetical investment over a stipulated period, and assume a surrender of the Contract at the end of the period. Total return quotations reflect changes in unit values and the deduction of applicable charges. 24 A cumulative total return reflects performance over a stated period of time. An average annual total return reflects the hypothetical annually compounded return that would have produced the same cumulative total return if the performance had been constant over the entire period. The Money Market Subaccount may advertise its current and effective yield. Current yield reflects the income generated by an investment in the Subaccount over a specified seven-day period. Effective yield is calculated in a similar manner, except that income earned is assumed to be reinvested. Reports or advertising may include comparative performance information, including, but not limited to: * comparisons to market indices, * comparisons to other investments, * performance rankings, * personalized illustrations of historical performance, and * data presented by analysts or included in publications. See Performance Information in the Statement of Additional Information for recent performance information. REPORTS TO PARTICIPANTS We will send Participants, at least annually, reports showing as of a specified date the number of units credited to them in the Subaccounts of the Discovery Account. We also will send each Participant annual and semi-annual reports for the applicable Funds. STATE REGULATION Prudential is subject to regulation by the Department of Banking and Insurance of the State of New Jersey as well as by the insurance departments of all the other states and jurisdictions in which it does business. Prudential must file an annual statement in a form promulgated by the National Association of Insurance Commissioners. This annual statement is reviewed and analyzed by the New Jersey Department, which makes an independent computation of Prudential's legal reserve liabilities and statutory apportionments under its outstanding contracts. New Jersey law requires a quinquennial examination of Prudential to be made. Examination involves an extensive audit including, but not limited to, an inventory check of assets, sampling techniques to check the performance by Prudential of its contracts and an examination of the manner in which divisible surplus has been apportioned and distributed to policyholders and Contractholders. This regulation does not involve any supervision or control over the investment policies of the Subaccounts or over the selection of investments for them, except for verification of the compliance of Prudential's investment portfolio with New Jersey law. The laws of New Jersey also contain special provisions which relate to the issuance and regulation of contracts on a variable basis. These laws set forth a number of mandatory provisions which must be included in contracts on a variable basis and prohibit such contracts from containing other specified provisions. The Department may initially disapprove or subsequently withdraw approval of any contract if it contains provisions which are "unjust, unfair, inequitable, ambiguous, misleading, likely to result in misrepresentation or contrary to law." New Jersey also can withhold or withdraw approval if sales are solicited by communications which involve misleading or inadequate descriptions of the provisions of the contract. In addition to the annual statement referred to above, Prudential is required to file with New Jersey and other states a separate statement with respect to the operations of all its variable contracts accounts, in a form promulgated by the National Association of Insurance Commissioners. LITIGATION We are subject to legal and regulatory actions in the ordinary course of our businesses, including class actions. Pending legal regulatory actions include proceedings specific to our practices and proceedings generally applicable to business practices in the industries in which we operate. As an example of such litigation, in March, 2000, plaintiffs filed a purported class action against us titled Olmsted v. Pruco Life Insurance Company of New Jersey and The Prudential Insurance Company of America, alleging that certain fees and expenses charged to the plaintiffs in connection with the sale of variable annuities since March 1, 1997 were excessive and unreasonable. In certain of these lawsuits, large and/or indeterminate amounts are sought, including punitive or exemplary damages. 25 In particular, Pruco Life and Prudential have been subject to substantial regulatory actions and civil litigation involving individual life insurance sales practices. In 1996, Prudential, on behalf of itself and many of its life insurance subsidiaries including Pruco Life, entered into settlement agreements with relevant insurance regulatory authorities and plaintiffs in the principal life insurance sales practices class action lawsuit covering policyholders of individual permanent life insurance policies issued in the United States from 1982 to 1995. Pursuant to the settlements, the companies agreed to various changes to their sales and business practices controls and a series of fines, and are in the process of distributing final remediation relief to eligible class members. In many instances, claimants have the right to "appeal" the decision to an independent reviewer. The bulk of such appeals were resolved in 1999, and the balance is expected to be addressed in 2000. As of January 31, 2000, Prudential and/or Pruco Life remained a party to two putative class actions and approximately 158 individual actions relating to permanent life insurance policies issued in the United States between 1982 and 1995. Additional suits may be filed by individuals who opted out of the settlements. While the approval of the class action settlement is now final, Prudential and Pruco Life remain subject to oversight and review by insurance regulators and other regulatory authorities with respect to their sales practices and the conduct of the remediation program. The U.S. District Court has also retained jurisdiction as to all matters relating to the administration, consummation, enforcement and interpretation of the settlements. In 1999, 1998, 1997 and 1996, Prudential recorded provision in its Consolidated Statements of Operation of $100 million, $1,150 million, $2,030 million and $1,125 million, respectively, to provide for estimated remediation costs, and additional sales practices costs including related administrative costs, regulatory fines, penalties and related payments, litigation costs and settlements, including settlements associated with the resolution of claims of deceptive sales practices asserted by policyholders who elected to "opt-out" of the class action settlement and litigate their claims against Prudential separately, and other fees and expenses associated with the resolution of sales practices issues. STATEMENT OF ADDITIONAL INFORMATION Page The contents of the Statement of Additional Information include: Definitions 2 Other Contract Provisions 2 Administration 2 Performance Information 2 Directors of Prudential 6 Principal Officers of Prudential 8 Sale of Contracts 9 Legal Matters 9 Experts 9 Consolidated Financial Statements of the Prudential Insurance Company of America and its Subsidiaries A-1 ADDITIONAL INFORMATION Prudential has filed a registration statement with the SEC under the Securities Act of 1933, relating to the offering described in this Prospectus. This Prospectus does not include all of the information set forth in the registration statement. Certain portions have been omitted pursuant to the rules and regulations of the SEC. You may obtain the omitted information, however, from the SEC's principal office in Washington, D.C., upon payment of a prescribed fee. You may obtain further information, including the Statement of Additional Information, from us without charge. The addresses and telephone numbers are set forth on the cover page of this Prospectus. 26 STATEMENT OF ADDITIONAL INFORMATION MAY 1, 2000 DISCOVERY PREMIER GROUP RETIREMENT ANNUITY DISCOVERY PREMIER GROUP VARIABLE ANNUITY CONTRACTS ISSUED THROUGH PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT The Prudential Insurance Company of America ("Prudential") offers the DISCOVERY PREMIERSM Group Variable Annuity Contracts for use in connection with retirement arrangements that qualify for federal tax benefits under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code of 1986 (the "Code") and with non-qualified annuity arrangements on a continuous basis. Contributions to the Contract made on behalf of a Participant may be invested in one or more of the 35 Subaccounts of Prudential Discovery Premier Group Variable Contract Account as well as the Guaranteed Interest Account. Each Subaccount is invested in a corresponding Portfolio of The Prudential Series Fund, Inc., AIM Variable Insurance Funds, Inc., Alliance Variable Products Series Fund, American Century Variable Portfolios, Inc., Davis Variable Account Fund, Inc., Dreyfus Socially Responsible Growth Fund, Inc., Franklin Templeton Variable Insurance Products Trust, John Hancock Declaration Trust, Invesco Variable Investment Funds, Inc., Janus Aspen Series, MFS Variable Insurance Trust, and Warburg Pincus Trust. This Statement of Additional Information is not a prospectus and should be read in conjunction with the prospectus, dated May 1, 2000. Certain portions of that May 1, 2000 prospectus are incorporated by reference into this Statement of Additional Information. TABLE OF CONTENTS PAGE DEFINITIONS....................................................... 2 OTHER CONTRACT PROVISIONS......................................... 2 ASSIGNMENT....................................................... 2 PARTICIPATION IN DIVISIBLE SURPLUS .............................. 2 ADMINISTRATION.................................................... 2 PERFORMANCE INFORMATION........................................... 2 AVERAGE ANNUAL TOTAL RETURN...................................... 2 NON-STANDARD TOTAL RETURN........................................ 3 PERFORMANCE INFORMATION.......................................... 3 DIRECTORS OF PRUDENTIAL........................................... 6 OFFICERS OF PRUDENTIAL............................................ 8 SALE OF THE CONTRACTS............................................. 9 LEGAL MATTERS..................................................... 9 EXPERTS .......................................................... 9 CONSOLIDATED FINANCIAL STATEMENTS OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA AND ITS SUBSIDIARIES.......................... A-1 Prudential 30 Scranton Office Park Scranton, PA 18507-1789 Telephone 1-800-458-6333 DEFINITIONS CONTRACTS--The group variable annuity contracts described in the Prospectus and offered for use in connection with retirement arrangements that qualify for federal tax benefits under Sections 401, 403(b), 408 or 457 of the Internal Revenue Code and with non-qualified annuity arrangements. FUNDS--The Portfolios of the Prudential Series Fund, Inc., AIM Variable Insurance Funds, Inc., Alliance Variable Products Series Fund, American Century Variable Portfolios, Inc., Davis Variable Account Fund, Inc., Dreyfus Socially Responsible Growth Fund, Inc., Franklin Templeton Variable Insurance Products Trust, John Hancock Declaration Trust, Invesco Variable Investment Funds, Inc., Janus Aspen Series, MFS Variable Insurance Trust, and Warburg Pincus Trust. PARTICIPANT--A person who makes contributions, or for whom contributions have been made, and to whom they remain credited under the Contract. PARTICIPANT ACCOUNT--An account established for each Participant to record the amount credited to the Participant under the Contract. PARTICIPANT ACCOUNT VALUE--The dollar amount held in a Participant Account. PRUDENTIAL--The Prudential Insurance Company of America. "We," "us," or "our" means Prudential. PRUDENTIAL DISCOVERY PREMIER GROUP VARIABLE CONTRACT ACCOUNT--A separate account of Prudential registered under the Investment Company Act of 1940 as a unit investment trust (the "Discovery Account"), invested through its Subaccounts in shares of the corresponding Funds. SUBACCOUNT--A division of the Discovery Account, the assets of which are invested in shares of the corresponding Funds. We set out other defined terms in the Prospectus. OTHER CONTRACT PROVISIONS ASSIGNMENT Unless contrary to applicable law, the right to any payment under the Contract is neither assignable nor subject to the claim of any creditor. PARTICIPATION IN DIVISIBLE SURPLUS A mutual life insurance company differs from a stock life insurance company in that it has no stockholders who are the owners of the enterprise. Accordingly, a Contractholder of Prudential participates in the divisible surplus of Prudential, according to the annual determination of Prudential's Board of Directors as to the portion, if any, of the divisible surplus which has accrued on the Contracts. No assurance can be given as to the amount of divisible surplus, if any, that will be available for distribution under these Contracts in the future. As discussed in the Prospectus, Prudential is considering reorganizing itself into a stock company. ADMINISTRATION The assets of each Subaccount of the Discovery Account are invested in a corresponding Fund. The prospectus and the statement of additional information of each Fund describe the investment management and administration of that Fund. We are generally responsible for the administrative and recordkeeping functions of the Discovery Account and pay the expenses associated with them. These functions include enrolling Participants, receiving and allocating contributions, maintaining Participant Accounts, preparing and distributing confirmations, statements, and reports. The administrative and recordkeeping expenses borne by us include salaries, rent, postage, telephone, travel, legal, actuarial and accounting fees, office equipment, stationery and maintenance of computer and other systems. We are reimbursed for these administrative and recordkeeping expenses by the daily charge against the assets of each Subaccount for administrative expenses. That daily charge is equal to a maximum effective annual rate of 0.75% of the net assets in each Subaccount. PERFORMANCE INFORMATION AVERAGE ANNUAL TOTAL RETURN The Discovery Account may advertise average annual total return information calculated according to a formula prescribed by the U.S. Securities and Exchange Commission ("SEC"). Average annual total return shows the average annual percentage increase, or decrease, in the value of a hypothetical contribution allocated to a Subaccount from the beginning to the end of each specified period of time. The SEC standardized version of this performance information is based on an assumed contribution of $1,000 allocated to a Subaccount at the beginning of each period and full withdrawal of the value of that amount at the end of each specified period. (There are no withdrawal charges under the Contract.) This method of calculating performance further assumes that (i) a $1,000 contribution was allocated to a Subaccount and (ii) no transfers or additional payments were made. Premium taxes are not included in the term "charges" for purposes of this calculation. Average annual total return is calculated by finding the average annual compounded rates of return of a hypothetical contribution that would compare the Unit Value on the first day of the specified period to the ending redeemable value at the end of the period according to the following formula: P(1 + T)n = ERV Where T equals average annual total return, where ERV (the ending redeemable value) is the value at the end of the applicable period of a hypothetical contribution of $1,000 made at the beginning of the applicable period, where P equals a hypothetical contribution of $1,000, and where n equals the number of years. NON-STANDARD TOTAL RETURN In addition to the standardized average annual total return information described above, we may present total return information computed on bases different from that standardized method. The Discovery Account may also present aggregate total return figures for various periods, reflecting the cumulative change in value of an investment in the Discovery Account for the specified period. PERFORMANCE INFORMATION The tables below provide performance information for each Subaccount for specified periods ending December 31, 1999. No standard total return table is included because the Subaccounts are only commencing operations on or after the date of this Statement of Additional Information. For the periods prior to the date the Subaccounts commenced operations, non-standard performance information for the Contracts will be calculated based on the performance of the Funds and the assumption that the Subaccounts were in existence for the same periods as those indicated for the Funds, with the level of Contract charges that were in effect at the inception of the Subaccounts (this is referred to as "hypothetical performance data"). Standard and non-standard average annual return calculations include all of the fees under the Contract (i.e., the mortality and expense risk charge and the administrative fee). This information does not indicate or represent future performance. 3 Table 1 below shows average annual total return assuming a hypothetical investment of $1,000 at the beginning of the period via the Subaccount investing in the applicable Fund and ending on 12/31/99. The tables use the same assumptions as SEC standardized performance. That means that the rates of return shown below reflect the mortality and expense risk fee and the administrative fee. TABLE 1 SUBACCOUNT "HYPOTHETICAL" AVERAGE ANNUAL TOTAL RETURN
From Date One Year Three Years Five Years Ten Years Established Ended Ended Ended Ended Through Inception Fund Portfolio 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99 Date THE PRUDENTIAL SERIES FUND, INC. Conservative Balanced Portfolio 5.66% 9.59% 11.30% N/A 8.99% Jan-94 Diversified Bond Portfolio -1.63% 3.98% 6.83% N/A 4.93% Jan-94 Equity Income Portfolio 11.27% 12.42% 15.53% 12.55% 13.21% Feb-88 Equity Portfolio 11.45% 14.29% 17.95% N/A 15.10% Jan-94 Flexible Managed Portfolio 6.85% 10.94% 13.60% N/A 10.45% Jan-94 Global Portfolio 46.97% 24.23% 21.18% N/A 16.21% Jan-94 Government Income Portfolio -3.57% 4.27% 6.35% N/A 4.18% Jan-94 High Yield Bond Portfolio 3.43% 3.95% 7.54% 8.56% 6.76% Feb-87 Money Market Portfolio 3.79% 3.73% 3.96% 3.89% 5.04% May-83 Prudential Jennison Portfolio 40.64% 35.00% N/A N/A 29.89% May-95 Small Capitalization Stock Portfolio 12.53% 11.71% N/A N/A 15.93% Apr-95 Stock Index Portfolio 19.51% 26.08% 27.03% N/A 22.09% Jan-94 20/20 Focus Portfolio N/A N/A N/A N/A 18.80% May-99 AIM VARIABLE INSURANCE FUNDS, INC. AIM V.I. Government Securities Fund -2.22% 3.86% 5.43% N/A 3.77% May-93 AIM V.I. International Equity Fund 54.14% 23.28% 21.03% N/A 17.92% May-93 AIM V.I. Value Fund 29.00% 27.71% 26.33% N/A 22.17% May-93 ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. Premier Growth Portfolio 31.42% 36.97% 35.13% N/A 25.41% Jun-92 Growth and Income Portfolio 10.47% 19.24% 23.01% N/A 14.58% Jan-91 Quasar Portfolio 16.18% 8.97% N/A N/A 9.73% Aug-96 AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. VP Income & Growth 17.12% N/A N/A N/A 23.79% Oct-97 DAVIS VARIABLE ACCOUNT FUND, INC. Davis Value Portfolio N/A N/A N/A N/A -22.33% Jun-99 DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. Dreyfus Socially Responsible Growth Fund 29.90% 28.40% 27.76% N/A 23.21% Oct-93 FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST Franklin Small Cap Fund - Class 1 74.03% N/A N/A N/A 32.30% May-98 Templeton International Securities Fund - Class 1 22.71% 14.59% 16.31% N/A 14.46% May-92 JOHN HANCOCK DECLARATION TRUST V.A. Bond Fund -1.42% 5.07% N/A N/A 5.82% Aug-96 INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Dynamics Fund 54.70% N/A N/A N/A 91.12% Aug-97 JANUS ASPEN SERIES Aggressive Growth Portfolio 124.49% 49.60% 35.33% N/A 33.30% Sep-93 Growth & Income Portfolio 73.15% N/A N/A N/A 63.74% Jun-99 Worldwide Growth Portfolio 63.57% 36.43% 32.71% N/A 28.63% Sep-93 MFS VARIABLE INSURANCE TRUST MFS Bond Series -2.46% 4.11% N/A N/A 3.92% Oct-95 MFS Emerging Growth Series 75.81% 41.54% N/A N/A 35.54% Jul-95 MFS Growth Series N/A N/A N/A N/A 39.11% May-99 MFS Growth With Income Series 5.79% 18.30% N/A N/A 20.22% Oct-95 MFS Total Return Series 2.18% 11.09% N/A N/A 14.52% Jan-95 WARBURG PINCUS TRUST Emerging Growth Portfolio N/A N/A N/A N/A 31.05% Sep-99
4 MONEY MARKET SUBACCOUNT YIELD The "yield" and "effective yield" figures for the Money Market Subaccount shown below were calculated using historical investment returns of the Money Market Portfolio of the Prudential Series Fund. All fees, expenses and charges associated with the DISCOVERY PREMIER Group Annuity and the Series Fund have been reflected. The "yield" and "effective yield" of the Money Market Subaccount for the seven days ended December 31, 1999, were 4.05% and 4.14%, respectively. The yield is computed by determining the net change, exclusive of capital changes, in the value of a hypothetical pre-existing account having a balance of one accumulation unit of the Money Market Subaccount at the beginning of the period, subtracting a hypothetical charge reflecting deductions from contract owner accounts, and dividing the difference by the value of the subaccount at the beginning of the base period to obtain the base period return, and then multiplying the base period return by (365/7), with the resulting figure carried to the nearest ten-thousandth of 1%. The deduction referred to above consists of the 0.15% charge for mortality and expense risks and the 0.35% charge for administration. The effective yield is obtained by taking the base period return, adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the result, according to the following formula: Effective Yield = (base period return + 1) 365/7 -1. The yield on amounts held in the Money Market Subaccount will fluctuate on a daily basis. Therefore, the stated yields for any given period are not an indication of future yields. COMPARATIVE PERFORMANCE INFORMATION Reports or advertising may include comparative performance information, including, but not limited to: (1) comparisons to market indices such as the Dow Jones Industrial Average, the Standard & Poor's 500 Index, the Value Line Composite Index, the Russell 2000 Index, the Morgan Stanley World Index, the Lehman Brothers bond indices; (2) comparisons to other investments, such as certificates of deposit; (3) performance rankings assigned by services such as Morningstar, Inc. and Variable Research and Data Services (VARDS), and Lipper Analytical Services, Inc.; (4) data presented by analysts such as Dow Jones, A.M. Best, The Bank Rate Monitor National Index; and (5) data in publications such as The Wall Street Journal, Times, Forbes, Barrons, Fortune, Money Magazine, and Financial World. 5 THE PRUDENTIAL INSURANCE COMPANY OF AMERICA DIRECTORS FRANKLIN E. AGNEW--Director since 1994 (current term expires April, 2005). Member, Committee on Finance & Dividends; Member, Corporate Governance Committee. Business consultant since 1987. Chief Financial Officer, H.J. Heinz from 1971 to 1986. Mr. Agnew is also a director of Erie Plastics Corporation. Age 65. Address: 600 Grant Street, Suite 660, Pittsburgh, PA 15219. FREDERIC K. BECKER--Director since 1994 (current term expires April, 2005). Member, Auditing Committee; Member, Corporate Governance Committee. President, Wilentz Goldman and Spitzer, P.A. (law firm) since 1989, with firm since 1960. Age 64. Address: 90 Woodbridge Center Drive, Woodbridge, NJ 07095. GILBERT F. CASELLAS--Director since 1998 (current term expires April, 2003). Member, Compensation Committee. President and Chief Operating Officer, The Swarthmore Group, Inc. since 1999. Partner, McConnell Valdes, LLP in 1998. Chairman, U.S. Equal Employment Opportunity Commission from 1994 to 1998. Age 47. Address: 1646 West Chester Pike, Suite 3, West Chester, PA 19382. JAMES G. CULLEN--Director since 1994 (current term expires April, 2001). Member, Compensation Committee; Member, Committee on Business Ethics. President & Chief Operating Officer, Bell Atlantic Corporation, since 1998. President & Chief Executive Officer, Telecom Group, Bell Atlantic Corporation, from 1997 to 1998. Vice Chairman, Bell Atlantic Corporation from 1995 to 1997. President, Bell Atlantic Corporation from 1993 to 1995. Mr. Cullen is also a director of Bell Atlantic Corporation and Johnson & Johnson. Age 57. Address: 1310 North Court House Road, 11th Floor, Alexandria, VA 22201. CAROLYNE K. DAVIS--Director since 1989 (current term expires April, 2001). Member, Committee on Business Ethics; Member, Compensation Committee. Independent Health Care Advisor since 1997. Health Care Advisor, Ernst & Young, LLP from 1985 to 1997. Dr. Davis is also a director of Beckman Coulter Instruments, Inc., Merck & Co., Inc., Minimed Incorporated, Science Applications International Corporation, and Beverley Enterprises. Age 68. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777. ROGER A. ENRICO--Director since 1994 (current term expires April, 2002). Member, Committees on Nominations & Corporate Governance; Member, Compensation Committee. Chairman and Chief Executive Officer, PepsiCo, Inc. since 1996. Mr. Enrico originally joined PepsiCo, Inc. in 1971. Mr. Enrico is also a director of A.H. Belo Corporation, Target Corporation, and Electronic Data Systems. Age 55. Address: 700 Anderson Hill Road, Purchase, NY 10577. ALLAN D. GILMOUR--Director since 1995 (current term expires April, 2003). Member, Investment Committee; Member, Committee on Finance & Dividends. Retired since 1995. Vice Chairman, Ford Motor Company, from 1993 to 1995. Mr. Gilmour originally joined Ford in 1960. Mr. Gilmour is also a director of Whirlpool Corporation, MediaOne Group, Inc., The Dow Chemical Company and DTE Energy Company. Age 65. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777. WILLIAM H. GRAY III--Director since 1991 (current term expires April, 2004). Chairman, Committees on Nominations & Corporate Governance. Member, Executive Committee; Member, Committee on Business Ethics. President and Chief Executive Officer, The College Fund/UNCF since 1991. Mr. Gray served in Congress from 1979 to 1991. Mr. Gray is also a director of Chase Manhattan Corporation, Chase Manhattan Bank, Municipal Bond Investors Assurance Corporation, Rockwell International Corporation, Warner-Lambert Company, CBS Corporation, Electronic Data Systems, and Ezgov.com, Inc. Age 58. Address: 8260 Willow Oaks Corp. Drive, Fairfax,VA 22031-4511. JON F. HANSON--Director since 1991 (current term expires April, 2003). Member, Investment Committee; Member, Committee on Business Ethics. Chairman, Hampshire Management Company since 1976. Mr. Hanson is also a director of James E. Hanson Management Company, Neumann Distributors, Inc., United Water Resources, and Consolidated Delivery and Logistics. Age 63. Address: 235 Moore Street, Suite 200, Hackensack, NJ 07601. GLEN H. HINER--Director since 1997 (current term expires April, 2001). Member, Compensation Committee. Chairman and Chief Executive Officer, Owens Corning since 1992. Senior Vice President and Group Executive, Plastics Group, General Electric Company from 1983 to 1991. Mr. Hiner is also a director of Dana Corporation, Owens Corning, and Kohler, Co. Age 65. Address: One Owens Corning Parkway, Toledo, OH 43659. 6 CONSTANCE J. HORNER--Director since 1994 (current term expires April, 2002). Member, Auditing Committee; Member, Committees on Nominations & Corporate Governance. Guest Scholar, The Brookings Institution since 1993. Ms. Horner is also a director of Foster Wheeler Corporation, Ingersoll-Rand Company, and Pfizer, Inc. Age 58. Address: 1775 Massachusetts Ave., N.W. Washington, D.C. 20036-2188. GAYNOR N. KELLEY--Director since 1997 (current term expires April, 2001). Member, Auditing Committee. Retired since 1996. Chairman and Chief Executive Officer, The Perkin Elmer Corporation from 1990 to 1996. Mr. Kelley is also a director of Hercules Incorporated and Alliant Techsystems. Age 68. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777. BURTON G. MALKIEL--Director since 1978 (current term expires April, 2002). Chairman, Investment Committee; Member, Executive Committee; Member, Committee on Finance & Dividends. Professor of Economics, Princeton University, since 1988. Dr. Malkiel is also a director of Banco Bilbao Vizcaya Gestinova, Baker Fentress & Company, The Jeffrey Company, Select Sector SPDR Trusts, and Vanguard Group, Inc. Age 67. Address: Princeton University, Department of Economics, 110 Fisher Hall, Prospect Avenue, Princeton, NJ 08544-1021. ARTHUR F. RYAN--Chairman of the Board Chief Executive Officer and President of Prudential since 1994. President and Chief Operating Officer, Chase Manhattan Bank from 1990 to 1994, with Chase since 1972. Age 57. Address: 751 Broad Street, Newark, NJ 07102-3777. IDA F.S. SCHMERTZ--Director since 1997 (current term expires April, 2004). Member, Audit Committee. Principal, Investment Strategies International since 1994. Age 65. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777. CHARLES R. SITTER--Director since 1995 (current term expires April, 2003). Member, Committee on Finance & Dividend; Member, Investment Committee. Retired since 1996. President, Exxon Corporation from 1993 to 1996. Mr. Sitter began his career with Exxon in 1957. Age 69. Address: 5959 Las Colinas Boulevard, Irving, TX 75039-2298. DONALD L. STAHELI--Director since 1995 (current term expires April, 2003). Member, Compensation Committee; Member, Auditing Committee. Retired since 1996. Chairman and Chief Executive Officer, Continental Grain Company from 1994 to 1997. President and Chief Executive Officer, Continental Grain Company from 1988 to 1994. Age 68 Address: 47 East South Temple, #501, Salt Lake City, UT 84150. RICHARD M. THOMSON--Director since 1976 (current term expires April, 2004). Chairman, Executive Committee; Chairman, Compensation Committee. Retired since 1998. Chairman of the Board, The Toronto-Dominion Bank from 1997 to 1998. Chairman and Chief Executive Officer from 1978 to 1997. Mr. Thomson is also a director of CGC, Inc., INCO, Limited, S.C. Johnson & Son, Inc., The Thomson Corporation, Canadian Occidental Petroleum Ltd., The Toronto-Dominion Bank, Ontario Power Generation, Inc., Canada Pension Plan Investment Board, and TrizecHahn Corporation. Age 66. Address: P.O. Box 1, Toronto-Dominion Centre, Toronto, Ontario, M5K 1A2, Canada. JAMES A. UNRUH--Director since 1996 (current term expires April, 2004). Member, Committees on Nominations & Corporate Governance; Member, Investment Committee. Founding Member, Alerion Capital Group, LLC since 1998. Chairman and Chief Executive Officer, Unisys Corporation, from 1990 to 1997. Mr. Unruh is also a director of Moss Software, Inc. Age 59. Address: 751 Broad Street, 21st Floor, Newark, NJ 07102-3777. P. ROY VAGELOS, M.D.--Director since 1989 (current term expires April, 2001). Chairman, Auditing Committee; Member, Executive Committee; Member, Committees on Nominations & Corporate Governance. Chairman, Regeneron Pharmaceuticals since 1995. Chairman, Advanced Medicines, Inc. since 1997. Chairman, Chief Executive Officer and President, Merck & Co., Inc. from 1986 to 1995. Dr. Vagelos originally joined Merck in 1975. Dr. Vagelos is also a director of The Estee Lauder Companies, Inc. and PepsiCo., Inc. Age 70. Address: One Crossroads Drive, Building A, 3rd Floor, Bedminster, NJ 07921. STANLEY C. VAN NESS--Director since 1990 (current term expires April, 2002). Chairman, Committee on Business Ethics; Member, Executive Committee; Member, Auditing Committee. Partner, Herbert, Van Ness, Cayci & Goodell (law firm) since 1998. Counselor at Law, Picco Herbert Kennedy (law firm) from 1990 to 1998. Mr. Van Ness is also a director of Jersey Central Power & Light Company. Age 66. Address: 22 Chambers Street, Princeton, NJ 08542. PAUL A. VOLCKER--Director since 1988 (current term expires April, 2004). Chairman, Committee on Finance & Dividends; Member, Executive Committee; Member, Committee on Nominations & Corporate Governance. Consultant since 1997. Chairman and Chief Executive Officer, Wolfensohn & Co., Inc. 1995 to 1996. Chairman, James D. Wolfensohn, Inc. 1988 to 1995. Mr. Volcker is also a director of Nestle, S.A,. and as well as a Member of the Board of Overseers of TIAA-CREF. Age 72. Address: 610 Fifth Avenue, Suite 420, New York, NY 10020. 7 JOSEPH H. WILLIAMS--Director since 1994 (current term expires April, 2002). Member, Committee on Finance & Dividends; Member, Investment Committee. Director, The Williams Companies since 1979. Chairman & Chief Executive Officer, The Williams Companies from 1979 to 1993. Mr. Williams is also a director of The Orvis Company, and AEA Investors, Inc. Age 66. Address: One Williams Center, Tulsa, OK 74172. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA PRINCIPAL OFFICERS ARTHUR F. RYAN--Chairman of the Board, Chief Executive Officer, and President since 1994; prior to 1994, President and Chief Operating Officer, Chase Manhattan Corporation. Age 57. MICHELE S. DARLING--Executive Vice President, Corporate Governance and Human Resources since 2000; Executive Vice President, Human Resources from 1997 to 2000; prior to 1997, Executive Vice President, Human Resources, Canadian Imperial Bank of Commerce. Age 46. ROBERT C. GOLDEN--Executive Vice President, Operations and Systems since 1997; prior to 1997, Executive Vice President, Prudential Securities. Age 53. MARK B. GRIER--Executive Vice President, Financial Management since 2000; Executive Vice President, Corporate Governance from 1998 to 2000; Executive Vice President, Financial Management from 1997 to 1998; Chief Financial Officer from 1995 to 1997; prior to 1995, Executive Vice President, Chase Manhattan Corporation. Age 47. JEAN D. HAMILTON--Executive Vice President, Prudential Institutional since 1998; President, Diversified Group since 1995 to 1998; prior to 1995, President, Prudential Capital Group. Age 53. RODGER A. LAWSON--Executive Vice President, International Investments & Global Marketing Communications since 1998; Executive Vice President, Marketing and Planning from 1996 to 1998; President and CEO, Van Eck Global, from 1994 to 1996; prior to 1994, President and CEO, Global Private Banking, Bankers Trust Company. Age 53. KIYOFUMI SAKAGUCHI--Executive Vice President, International Insurance since 1998; President, International Insurance Group from 1995 to 1998; prior to 1995, Chairman and CEO, The Prudential Life Insurance Co., Ltd., Japan. Age 57. JOHN R. STRANGFELD--Executive Vice President, Global Asset Management since 1998; Chief Executive Officer, Private Asset Management Group (PAMG) from 1996 to 1998; President, PAMG, from 1994 to 1996; prior to 1994, Senior Managing Director. Age 46. VIVIAN BANTA--Executive Vice President, Individual Financial Services since 2000; Consultant, Individual Financial Services from 1998 to 1999; Consultant, Morgan Stanley from 1997 to 1998; Executive Vice President, Global Investor Service, The Chase Manhattan Bank from 1991 to 1997. Age 49. RICHARD J. CARBONE--Senior Vice President and Chief Financial Officer since 1997; Controller, Salomon Brothers, from 1995 to 1997; prior to 1995, Controller, Bankers Trust. Age 52. ANTHONY S. PISZEL--Senior Vice President and Controller since 2000; Vice President and Controller from 1998 to 2000. Vice President, Enterprise Financial Management from 1997 to 1998; prior to 1997, Chief Financial Officer, Individual Insurance Group. Age 45. SUSAN J. BLOUNT--Vice President and Secretary since 1995; prior to 1995, Assistant General Counsel. Age 42. C. EDWARD CHAPLIN--Vice President and Treasurer since 1995; prior to 1995, Managing Director and Assistant Treasurer. Age 43. 8 SALE OF THE CONTRACTS Prudential Investment Management Services LLC ("PIMS"), a subsidiary of Prudential, offers the Contracts on a continuous basis through Corporate Office, regional home office and group sales office employees in those states in which the Contracts may be lawfully sold. It may also offer the Contracts through licensed insurance brokers and agents, or through appropriately registered direct or indirect subsidiary(ies) of Prudential, provided clearances to do so are obtained in any jurisdiction where such clearances may be necessary. We may pay trail commissions to registered representatives who maintain an ongoing relationship with a Contractholder. Typically, a trail commission is compensation that is paid periodically to a representative, the amount of which is linked to the value of the Contract and the amount of time that the Contract has been in effect. LEGAL MATTERS All matters relating to New Jersey law pertaining to the Contracts, including the validity of the Contracts and Prudential's authority to issue the Contracts, have been passed upon by C. Christopher Sprague, Assistant General Counsel of Prudential. Shea and Gardner of Washington, D.C. has provided advice on certain matters relating to the federal securities laws. EXPERTS The consolidated financial statements of Prudential and its subsidiaries as of December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999 included in this statement of additional information have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP's principal business address is 1177 Avenue of the Americas, New York, New York 10036. FINANCIAL STATEMENTS The consolidated financial statements for Prudential and its subsidiaries included herein should be distinguished from the financial statements of the Discovery Account, and should be considered only as bearing upon the ability of Prudential to meet its obligations under the Contracts. No financial statements are included for the Discovery Account because the Discovery Account had not yet commenced operations as of the date of this Statement of Additional Information. [Include Prudential Financial Module Here - CIK = 0000828972 CCC = sgk5b@od Module = PRU_FIN_99] PART C OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) The following financial statements are included in Part B: Consolidated Financial Statement of The Prudential Insurance Company of America and its subsidiaries. (b) Exhibits 1. Resolution adopted by the Board of Directors of The Prudential Insurance Company of America on November 9, 1999 establishing the Prudential Discovery Premier Group Variable Contract Account (the "Discovery Account"). (Note 1) 2. Not applicable. 3(a). Distribution Agreement. (Note 1) 3(b). Broker-dealer sales agreement (Marketing Agreement). (Note 1) 4(a). Form of Group Annuity Contract. (Note 1) 4(b). Form of Group Annuity Contract Amendment. (Note 1) 5(a). Not applicable. 5(b). Not applicable. 6(a). Charter of The Prudential Insurance Company of America, as amended November 14, 1995. (Note 3) 6(b). By-Laws of The Prudential Insurance Company of America, as amended May 12, 1998. (Note 4) 7. Not applicable. 8. Form of Participation Agreement. (Note 5) 9. Consent and opinion of C. Christopher Sprague, Assistant General Counsel, The Prudential Insurance Company of America, as to the legality of the securities being registered. (Note 1) 10(a). Consent of PricewaterhouseCoopers LLC, Independent Accountants. (Note 1) 10(b). Consent of Shea & Gardner. (Note 1) 10(c). Powers of Attorney. Ryan, Piszel, Carbone, Becker, Casellas, Cullen, Kelley, Malkiel, Agnew, Enrico, Gilmour, Hanson, Hiner, Vagelos, Van Ness (Note 2) Davis, Gray, Horner, Sitter, Staheli, Thomson, Unruh, Volcker, Williams (Note 1) 11. Not applicable. 12. Not applicable. 13. Schedule for Computation of Performance Calculations. (Note 1) - --------------------- (Note 1) Filed herewith. (Note 2) Incorporated by reference to Form N-4, Registration No. 333-95637, filed January 28, 2000, on behalf of Registrant. (Note 3) Incorporated by reference to Post-Effective Amendment No. 9 to Form S-1, Registration No. 33-20083, filed April 9, 1998 on behalf of The Prudential Variable Contract Real Property Account. (Note 4) Incorporated by reference to Form S-6, Registration No. 333-64957, filed September 30, 1998 on behalf of The Prudential Variable Appreciable Account. (Note 5) Incorporated by reference to Form N-4 Registration No. 333-0671, filed June 24, 1996 on behalf of the Pruco Life Flexible Premium Variable Annuity Account. Item 25. Directors and Officers of the Depositor Information about the Directors and Executive Officers of Prudential, Registrant's depositor, appears under the heading of "Directors and Officers of Prudential" in the Statement of Additional information (Part B of this Registration Statement). Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant Registrant is a separate account of The Prudential Insurance Company of America, a mutual life insurance company organized under the laws of the State of New Jersey. The subsidiaries of Prudential and short descriptions of each are listed under Item 25 to Post-Effective Amendment No. 36 to the Form N-1A registration Statement for the Prudential Series Fund, Inc., Registration No. 2-80896, filed May 1, 1999, the text of which is hereby incorporated. In addition to the subsidiaries shown on the Organization Chart, Prudential holds all of the voting securities of Prudential's Gibraltar Fund, Inc., a Maryland corporation, in three of its separate accounts. Prudential also holds directly and in three of its separate accounts, shares of The Prudential Series Fund, Inc., a Maryland corporation. The balance of the shares of The Prudential Series Fund, Inc. are hold in separate accounts of Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey, wholly-owned subsidiaries of Prudential. All of the separate accounts referred to above are unit investment trusts registered under the Investment Company Act of 1940. Prudential's Gibraltar Fund, Inc. and The Prudential Series Fund, Inc. are registered as open-end, diversified management investment companies under the Investment Company Act of 1940. The shares of these investment companies are voted in accordance with the instructions of persons having interests in the unit investment trusts, and Prudential, Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey vote the shares they hold directly in the same manner that they vote the shares that they hold in their separate accounts. Registrant may also be deemed to be under common control with The Prudential Variable Contract Account-2, The Prudential Variable Contract Account-10, and The Prudential Variable Contract Account-11, separate accounts of Prudential registered as open-end, diversified management investment companies under the Investment Company Act of 1940. Prudential is a mutual insurance company. Its financial statements have been prepared in conformity with generally accepted accounting principles, which include statutory accounting practices prescribed or permitted by state regulatory authorities for insurance companies. Item 27. Number of Contractholders Not applicable. Item 28. Indemnification The Registrant, in conjunction with certain affiliates, maintains insurance on behalf of any person who is or was a trustee, director, officer, employee, or agent of the Registrant, or who is or was serving at the request of the Registrant as a trustee, director, officer, employee or agent of such other affiliated trust or corporation, against any liability asserted against and incurred by him or her arising out of his or her position with such trust or corporation. New Jersey, being the state of organization of The Prudential Insurance Company of America ("Prudential"), permits entities organized under its jurisdiction to indemnify directors and officers with certain limitations. The relevant provisions of New Jersey law permitting indemnification can be found in Section 14A:3-5 of the New Jersey Statutes Annotated. The text of Prudential's By-law 27, which relates to indemnification of officers and directors, is incorporated by reference to Form S-6, Registration No. 333-64957, filed September 30, 1998, on behalf of The Prudential Variable Appreciable Account. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer of controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. Item 29. Principal Underwriter (a) Prudential Investment Management Services LLC ("PIMS"), a direct wholly owned subsidiary of Prudential, acts as the principal underwriter for the registrant and also for The Prudential Variable Contract Account-2, The Prudential Variable Contract Account-10, and The Prudential Variable Contract Account-11, which are registered as open-end management investment companies under the Investment Company Act of 1940. It also acts as principal underwriter for The Prudential Variable Contract Account-24, The Prudential Variable Contract GI-2, and The Prudential Discovery Premier Group Variable Contract Account, which are registered as unit investment trusts under the Investment Company Act of 1940. PIMS is also distributor for the following companies, which are registered as open-end management investment companies under the Investment Company Act of 1940: Cash Accumulation Trust, Command Money Fund, Command Government Fund, Command Tax-Free Fund, the Global Total Return Fund, Inc., Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund), Prudential Balanced Fund, Prudential California Municipal Fund, Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond Fund, Inc., Prudential Emerging Growth Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe Growth Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential Global Limited Maturity Fund, Inc., Prudential Government Income Fund, Inc., Prudential Government Securities Trust, Prudential High Yield Fund, Inc., Prudential High Yield Total Return Fund, Inc., Prudential Index Series Fund, Prudential Institutional Liquidity Portfolio, Inc., Prudential Intermediate Global Income Fund, Inc., Prudential International Bond Fund, Inc., The Prudential Investment Portfolios, Inc., Prudential Mid-Cap Value Fund, Prudential MoneyMart Assets, Inc., Prudential Mortgage Income Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund, Prudential National Municipals Fund, Inc., Prudential Natural Resources Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential Real Estate Securities Fund, Prudential Small-Cap Quantum Fund, Inc. Prudential Small Company Value Fund, Inc., Prudential Special Money Market Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential Tax-Free Money Fund, Inc., Prudential 20/20 Focus Fund, Prudential Utility Fund, Inc., Prudential World Fund, Inc. and The Target Portfolio Trust. (b)(1) The following table sets forth information regarding certain officers of PIMS. As a limited liability company, PIMS has no directors. None of these persons has a position or office with the Registrant. The principal business address for the following persons is 751 Broad Street, Newark, NJ 07102. NAME AND PRINCIPAL POSITIONS AND OFFICES BUSINESS ADDRESS WITH UNDERWRITER ------------------ --------------------- Robert F. Gunia President C. Edward Chaplin Treasurer Kevin B. Frawley Senior Vice President and Chief Compliance Officer Jean D. Hamilton Executive Vice President John R. Strangfeld Executive Vice President William V. Healey Senior Vice President, Secretary and Chief Legal Officer Margaret M. Deverell Senior Vice President, Comptroller and Chief Financial Officer
(c) NAME OF NET UNDERWRITING PRINCIPAL DISCOUNTS AND COMPENSATION UNDERWRITER COMMISSIONS ON REDEMPTION ----------- ---------------- ------------- Prudential Investment Management Services, LLC $0 $0
Item 30. Location of Accounts and Records All accounts, books and documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the rules thereunder are maintained by the Registrant through Prudential at the following addresses: The Prudential Insurance Company of America and The Prudential Investment Corporation 751 Broad Street Newark, New Jersey 07102-3777 The Prudential Insurance Company of America and The Prudential Investment Corporation Gateway Buildings Two, Three and Four 100 Mulberry Street Newark, New Jersey 07102 The Prudential Insurance Company of America and The Prudential Investment Corporation 56 North Livingston Avenue Roseland, New Jersey 07088 The Prudential Insurance Company of America c/o Prudential Investments 30 Scranton Office Park Scranton, Pennsylvania 18507-1789 The Prudential Insurance Company of America c/o The Prudential Asset Management Company, Inc. 71 Hanover Road Florham Park, New Jersey 07932 State Street Bank and Trust Company 801 Pennsylvania Kansas City, Missouri 64105 Item 31. Management Services None. Item 32. Undertakings The Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement as frequently as necessary to ensure that the audited financial statements in this registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted, unless otherwise permitted. (b) to include either (1) as part of any enrollment form to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information. (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. (d) Prudential Insurance Company of America hereby represents that the fees and charges deducted under the Contract, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Prudential Insurance Company of America. 403(b) ANNUITIES The Registrant intends to rely on the no-action response dated November 28, 1988, from Ms. Angela C. Goelzer of the Commission staff to the American Council of Life Insurance concerning the redeemability of Section 403(b) annuity contracts and the Registrant has complied with the provisions of paragraphs (1)-(4) thereof. TEXAS ORP The Registrant intends to offer Contracts to Participants in the Texas Optional Retirement Program. In connection with that offering, Rule 6c-7 of the Investment Company Act of 1940 is being relied upon and paragraphs (a)-(d) of that Rule will be complied with. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant and the Depositor have duly caused this Registration Statement to be signed on their behalf, in the City of Newark, and the State of New Jersey on this 24th day of April, 2000. The Prudential Discovery Premier Group Variable Contract Account ------------------------------------------------ (Registrant) BY: The Prudential Insurance Company of America ------------------------------------------------ (Depositor) By: /s/ C. Christopher Sprague - ------------------------------------- C. Christopher Sprague Assistant General Counsel - ------------------------------------- (Signature and Title) SIGNATURES Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated below on this 24th day of April, 2000. Signature and Title - ------------------- /s/ * ----------------------- Arthur F. Ryan Chairman of the Board, President and Chief Executive Officer /s/ * ----------------------- Anthony S. Piszel Vice President and Controller (Chief Accounting Officer) /s/ * ----------------------- Richard J. Carbone Senior Vice President and Principal Financial Officer /s/ * ----------------------- Frederic K. Becker Director /s/ * ----------------------- Gilbert F. Casellas Director /s/ * ----------------------- James G. Cullen Director /s/ * ----------------------- Carolyne K. Davis Director /s/ * ----------------------- Roger A. Enrico Director /s/ * ----------------------- Allan D. Gilmour Director /s/ * ----------------------- William H. Gray III Director /s/ * ----------------------- Jon F. Hanson Director /s/ * ----------------------- Glen H. Hiner Director /s/ * ----------------------- Constance J. Horner Director /s/ * ----------------------- Gaynor N. Kelley Director /s/ * ----------------------- Burton G. Malkiel Director /s/ * ----------------------- Charles R. Sitter Director /s/ * ----------------------- Donald L. Staheli Director /s/ * ----------------------- Richard M. Thomson Director /s/ * ----------------------- James A. Unruh Director /s/ * ----------------------- P. Roy Vagelos, M.D. Director /s/ * ----------------------- Stanley C. Van Ness Director /s/ * ----------------------- Paul A. Volcker Director /s/ * ----------------------- Joseph H. Williams Director * By: C. Christopher Sprague ---------------------- C. Christopher Sprague (Attorney-In-Fact) EXHIBIT INDEX 1 Resolution Establishing Account 3(a) Distribution Agreement 3(b) Broker-Dealer Sales Agreement (Marketing Agreement) 4(a) Form of Group Annuity Contract 4(b) Form of Group Annuity Contract Amendment 9 Consent and Opinion as to the Legality of Securities Being Registered 10(a) Consent of PricewaterhouseCoopers LLP, independent accountants 10(b) Consent of Shea & Gardner 10(c) Powers of Attorney 13 Schedule for Computation of Performance Calculations EX-1 2 RESOLUTION EXHIBIT 1 RESOLUTION RESOLVED THAT, subject to the approval of the Commissioner of Insurance of New Jersey, and to such conditions as said Commissioner may impose, pursuant to Section 17B:28-7 of the Revised Statues of New Jersey, a commingled separate account be established, to be designated the Prudential Discovery Premier Group Variable Contract Account. This Account will be registered as a unit investment trust under the Investment Company Act of 1940 and will invest in selected portfolios within the Prudential Series Fund, Inc., an open-end management investment company registered under the Investment Company Act of 1940, as hereinafter provided, and in the shares of certain open-end management investment companies not affiliated with Prudential or its subsidiaries. Such portfolios and management investment companies will be within investment categories recognized as appropriate for retirement investing. The Account will be used for the variable portion of combination fixed and variable group annuity contracts under which portion the values vary to reflect the investment results of said Account. FURTHER RESOLVED, that the Company shall receive and hold in the Account amounts arising from (i) group variable contracts sold in connection with retirement arrangements that qualify for certain federal tax benefits and (ii) such other assets of the Company as the proper officers of the Company may deem prudent and appropriate to have invested on the same manner as the assets applicable to its reserve liability under variable contract funded in the Account, and such amounts, together with dividends, interest and gains produced thereby shall be invested and reinvested, subject to the rights of the holders of such variable contracts, in shares of the Prudential Series Fund, Inc., an open-end management investment company, or in shares of certain open-end management investment companies not affiliated with Prudential or its subsidiaries which have entered into participation agreements with Prudential; and FURTHER RESOLVED, that the proper officers of the Company be and they hereby are authorized to sign and file, or cause to be filed, with the Securities and Exchange Commission a registration statement on behalf of the Account, as registrant, under the Investment Company Act of 1940, and, on behalf of the Company as issuer, a registration statement, including the financial statements and schedules, exhibits and form of prospectus required as a part thereof, for the registration under the Securities Act of 1933 of the offering and sale of the group variable contracts funded in the Account to the extent they represent participating interests in the Account, and to pay the registration fees required in connection therewith; and FURTHER RESOLVED, that the proper officers of the Company are authorized and directed to sign and file, or cause to be filed, such amendment or amendments of such Investment Company Act registration and Securities Act registration statement as they may find necessary or desirable from time to time; and FURTHER RESOLVED, that the signature of any director or officer required by law to affix his or her signature to any such Investment Company Act registration application and Securities Act registration, or to any amendment thereof, may be affixed by said director or officer personally, or by an attorney in fact duly constituted in writing by said director or officer to sign his name thereto; and FURTHER RESOLVED, that the Secretary of the Company is appointed agent of the Company to receive any and all notices and communications from the Securities and Exchange Commission relating to such Investment Company Act registration and Securities Act registration and any and all amendments thereof; and FURTHER RESOLVED, that the proper officers of the Company be and they hereby are authorized to take whatever steps may be necessary or desirable to comply with such laws and regulations of the several states as may be applicable to the sale of the group variable contracts funded in the Account; and FURTHER RESOLVED, that the proper officers of the Company be and they hereby are authorized, in the name and on behalf of the Company, to execute and deliver such corporate documents and certificates and to take such further action as may be necessary or desirable including but not limited to, the payment of applicable fees, in order to effectuate the purposes of the foregoing resolutions or any of them. EX-3.(A) 3 FORM OF DISTRIBUTION AGREEMENT EXHIBIT 3(A) FORM OF DISTRIBUTION AGREEMENT AGREEMENT made this ____ day of __________, 2000, by and between The Prudential Insurance Company of America (the "Company"), a New Jersey insurance company on its own behalf and on behalf of Prudential Discovery Premier Group Variable Contract Account (the "Account") and Prudential Investment Management Services LLC (the "Distributor"), a Delaware limited liability company. WITNESSETH: WHEREAS, the Company has established and maintains the Account, a separate investment account, pursuant to the laws of New Jersey for the purpose of providing a choice of variable investment options under group annuity contracts (the "Contracts"), to commence after the effectiveness of a Registration Statement filed with the Securities and Exchange Commission on Form N-4 pursuant to the Securities Act of 1933, as amended (the "Securities Act"); WHEREAS, the Account is registered as a unit investment trust under the Investment Company Act of 1940 (the "Investment Company Act"); WHEREAS, the Distributor is a broker-dealer registered with the Securities and Exchange Commission (the "Commission") under Section 15(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and is a member of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, the Company and the Distributor wish to enter into an agreement to have the Distributor act as the Company's principal underwriter for the sale of Contracts and the distribution of certificates of participation (the "Certificates") in the Contracts: NOW THEREFORE, the parties agree as follows: 1. APPOINTMENT OF THE DISTRIBUTOR The Company agrees that during the term of this Agreement it will take all action required to cause the Contracts to comply with all applicable federal and state laws and regulations. During the term of this Agreement, the Company appoints the Distributor and the Distributor agrees to act as the principal underwriter for the sale of Contracts, as well as the Certificates issued thereunder, in each state and other jurisdictions in which such Contracts may lawfully be sold. Distributor shall offer the Contracts for sale and distribute Certificates at premium rates set by the Company. Applications for the Contracts and the underlying Certificates shall be solicited only by representatives of Distributor duly qualified and appropriately licensed in each state or other jurisdiction where they solicit such applications. Company shall appoint Distributor's qualified representatives as life insurance agents of Company. Completed applications for Contracts and the underlying Certificates shall be transmitted directly to the Company for acceptance or rejection in accordance with underwriting rules established by the Company. Initial premium payments for the Certificates under the Contracts shall be made by check (or other payment method) payable to the Company and shall be held at all times by Distributor or its representatives in a fiduciary capacity and remitted promptly to the Company. Anything in this Agreement to the contrary notwithstanding, the Company retains the ultimate right to control the sale of the Contracts, as well as the Certificates issued thereunder, and to appoint and discharge life insurance agents of the Company. The Distributor shall be held to the exercise of reasonable care in carrying out the provisions of this Agreement. 2. SALES AGREEMENTS Distributor is hereby authorized to enter into separate written agreements, on such terms and conditions as Distributor may determine not inconsistent with this Agreement, with one or more organizations which agree to participate in the distribution of the Contracts and Certificates under the Contracts. Such organization (hereafter "Broker") shall be registered with the Commission under Section 15(b) of the Exchange Act and with the NASD as a member firm. Broker and its representatives soliciting applications for Contracts and Certificates shall be duly and appropriately licensed, registered, or otherwise qualified for the sale of such Contracts and Certificates (and the riders and other policies offered in connection therewith) under the insurance laws and any applicable blue-sky laws of each state or other jurisdiction in which the Broker or its representatives solicit such sales. Broker shall assume any legal responsibilities of Company for the acts, commissions or defalcations of such representatives insofar as they relate to the sale of the Contracts and Certificates. Applications for Contracts and Certificates solicited by such Broker through its representatives shall be transmitted directly to the Company, and if received by Distributor, shall be forwarded to Company. All premium payments under the Contracts shall be made by check (or other payment method) to Company and, if received by Broker, shall be held at all times in a fiduciary capacity and remitted promptly to Company. 3. LIFE INSURANCE LICENSING Company shall be responsible for insuring that Brokers are duly qualified, under the insurance laws of the applicable jurisdictions, to sell the Contracts and Certificates. 4. SUITABILITY Parties to this Agreement are prohibited from recommending the purchase of investment options or interests in the Account to prospective Contract holders and Certificates purchasers. Such prohibition also shall extend to contributions, transfers, exchanges, and redemptions by Certificate purchasers of investment options or interests in the Account. Parties shall take reasonable steps to ensure that their representatives and associates refrain from making the aforementioned recommendations. Parties to this Agreement shall take reasonable steps to ensure that they will offer Certificates that are appropriate to the needs of the prospective Certificate purchasers. While not limited to the following, a determination of appropriateness shall be based on information furnished to the parties after reasonable inquiry of such applicants concerning the 2 applicants' insurance and investment objectives, financial situations and needs, and the likelihood that the applicants will continue to make the premium payments contemplated by the Certificates under the Contracts. 5. PROMOTIONAL MATERIALS Company shall have the responsibility for furnishing to Distributor and its representatives sales promotion materials and individual sales proposals relating to the sale of the Contracts and Certificates. Distributor shall not use any such materials that have not been approved by Company. Distributor shall be responsible for obtaining NASD review of all promotional materials. 6. COMPENSATION Company shall arrange for the payment of commissions directly to those representatives of Distributor who are entitled thereto in connection with the sale of the Contracts on behalf of Distributor, in the amounts and on such terms and conditions as Company and Distributor shall determine; provided that such terms, conditions and commissions shall be as are set forth in or as are not inconsistent with the Prospectus included as part of the Registration Statement for the Contracts and effective under the Securities Act. Company shall arrange for the payment of commissions directly to those Brokers who sell Contracts and Certificates under agreements entered into pursuant to paragraph 2 hereof, in amounts as may be agreed to by the Company and specified in such written agreements between Distributor and Brokers. Company shall reimburse Distributor for the costs and expenses incurred by Distributor in furnishing or obtaining the services, materials, and supplies required by the terms of this Agreement in the initial sales efforts and the continuing obligations hereunder. Reimbursement shall be a portion of Distributor's yearly expenses based on Company's share of relevant activity. In addition, Company shall pay Distributor a surcharge of one (1) to three (3) percent of the commissions Company pays to Brokers and to representatives of Distributor. 7. RECORDS Distributor shall have the responsibility for maintaining the records of its representatives that are licensed, registered and otherwise qualified to sell the Contracts and the underlying Certificates. Distributor shall maintain such other records as are required of it by applicable laws and regulations. The books, accounts, and records of the Company, the Account and Distributor shall be maintained so as to disclose clearly and accurately the nature and details of the transactions. Copies of all records maintained by the Distributor in connection with this Agreement shall be made available to and become the property of the Company upon its request. The Distributor shall keep confidential any information obtained pursuant to this Agreement and shall disclose such information only if the Company has authorized such disclosure, or if such disclosure is expressly required by applicable federal or state regulatory authorities. 8. INVESTIGATION AND PROCEEDING Distributor and Company agree to cooperate fully in any insurance regulatory 3 investigation or proceeding or judicial proceeding arising in connection with the Contracts and Certificates distributed under this Agreement. Distributor and Company further agree to cooperate fully in any securities regulatory investigation or proceeding with respect to Company, Distributor, their affiliates and their representatives to the extent that such investigation or proceeding is in connection with the Contracts and Certificates distributed under this Agreement. The Distributor shall furnish applicable federal and state regulatory authorities with any information or reports in connection with its services under this Agreement which such authorities may request to ascertain whether the Company's operations are being conducted in a manner consistent with any applicable law or regulation. In the case of a substantive customer complaint, Distributor and Company will cooperate in investigating such complaint and any response to such complaint will be sent to the other party to this Agreement for approval not less than five business days before being sent to the customer or regulatory authority, except that if a more prompt response is required, the proposed response shall be communicated by telephone or telegraph. 9. TERMINATION This Agreement shall terminate automatically upon its assignment within the meaning of such term in the Investment Company Act. This Agreement, however, may be transferred by the Distributor without the prior written consent of the Company in the circumstances set forth in Rule 2a-6 under the Investment Company Act. The Agreement may be terminated at any time by either party on 60 days written notice to the other party, without the payment of any penalty. Upon termination of this Agreement all authorizations, rights and obligations shall cease except the obligation to settle accounts hereunder, including commissions on premiums subsequently received for Contracts in effect at a time of termination, and the agreements contained in paragraph 8 hereof. 10. REGULATION This Agreement shall be subject to the provisions of the Investment Company Act of 1940 and the Exchange Act and of the rules, regulations, and rulings thereunder and the applicable rules and regulations of the NASD, from time to time in effect, and the terms hereof shall be interpreted and construed in accordance therewith. 11. SEVERABILITY If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 12. WARRANTIES Each party to this Agreement warrants to the other party as follows: (a) it has full power and authority to execute and deliver this Agreement and to perform and observe the provisions herein; (b) the execution, delivery, and performance of this Agreement have been duly authorized by all necessary corporate actions and do not and will not contravene any requirement of law or any contractual restrictions or agreement binding on or affecting such party or 4 its assets; and (c) this Agreement has been duly and properly executed and delivered by such party and constitutes a legal, valid, and binding obligation of such party enforceable in accordance with its terms. 13. APPLICABLE LAW This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New Jersey. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: --------------------------------------- Name: Title: PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC By: --------------------------------------- Name: Title: 5 EXHIBIT 3(B) FORM OF MARKETING AGREEMENT This Marketing Agreement (the "Agreement") is made as of ______________ between Prudential Investment Management Services LLC ("PIMS"), a Delaware limited liability company with its principal place of business at 751 Broad Street, Newark, New Jersey 07102, and _________________________________ ("Broker"), a ________________ corporation with its principal place of business at ______________________________________. WITNESSETH: WHEREAS, PIMS and Broker each is a broker-dealer registered with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934 ("Exchange Act") and with any applicable State securities commission, and each also is a member of the National Association of Securities Dealers, Inc. ("NASD"); WHEREAS, PIMS and Broker wish to enter into this Agreement to allow certain of Broker's registered representatives to assist Prudential (as defined below) in the offer and sale of the Products and Services (as defined below) to the Plans (as defined below); and [WHEREAS, the parties intend that this Agreement shall replace the Broker Agreement and Marketing Assistance Agreement, both dated ____________, between them and that such Broker and Marketing Assistance Agreements are hereby terminated as of the date hereof]. NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows: 1. DEFINITIONS A. "Agreement" means this Marketing Agreement, and any appendices thereto. B. "Broker" means ___________________________ and, as the context requires, certain of its associated persons. C. "Plans" means the defined contribution pension plans each consisting of at least $3 million in assets that have been referred by Broker to The Prudential Insurance Company of America ("Prudential"), and that receive administrative and/or recordkeeping services from Prudential and Broker in accordance with Section 3 of this Agreement. D. "Products and Services" means the investment products and certain recordkeeping and administrative products and services that comprise the PruArray program (the "Program"), the Discovery Premier group variable annuity and ___________. The parties recognize and agree that certain aspects of the Products and Services may be provided by an affiliate of Prudential or PIMS. The parties further recognize and agree that Prudential has the unilateral right to add or remove mutual funds from the Program. Any such addition or removal will be binding upon Broker upon written notice from Prudential or PIMS to Broker. 2. SCOPE OF AGREEMENT A. PIMS and Broker each intend that only those registered representatives of Broker that have been approved in advance by PIMS and continue to be associated with Broker and appropriately licensed are authorized under this Agreement to offer and sell the Products and Services to the Plans. Any such authorized registered representative of Broker is referred to herein as an "Authorized Representative." Upon written notice to Broker, PIMS shall have the unilateral right to terminate a registered representative's authority as an Authorized Representative. In that event, such registered representative no longer shall have any authority to act under this Agreement and PIMS and Broker shall agree on one or more Authorized Representatives to assume the responsibilities of such registered representative with respect to any Plans; if PIMS and Broker are unable to so agree on one or more new Authorized Representative(s), PIMS shall have the unilateral right to appoint a registered representative who is not employed by or associated with Broker. B. PIMS shall make the Products and Services available to Plans that are referred to it in writing by an Authorized Representative. Broker shall perform such services as may be necessary or appropriate to assist PIMS in marketing the Products and Services to such prospective Plans. The services provided by Broker pursuant to this Agreement may include, but are not limited to, the introduction or referral to PIMS of Plans that may desire to retain PIMS to provide certain of the Products and Services. Broker also agrees that generally, of the investment options that Broker offers to Plans, at least 50% of such investment options shall be Prudential proprietary mutual funds. For purposes of satisfying the 50% requirement, the Prudential MoneyMart Assets Fund (the "Money Market Fund") will not be considered if any of the investment options that Broker offers to Plans include the Stable Value Fund, Guaranteed Interest Account ("GIA") or Guaranteed Interest Account Plus ("GIA Plus"). C. Broker shall notify PIMS in writing of any pending introduction or referral of a prospective Plan to PIMS. Within ten (10) business days after being notified, PIMS shall inform Broker in writing if Prudential already had established a prior relationship with such Plan. At Broker's request, PIMS shall provide Broker with evidence of such prior relationship (such as prior correspondence, etc.). The existence of such a prior relationship shall remove that potential Plan from the applicability of this Agreement; provided, however, that this proviso shall not exclude from this Agreement any Plan (a "Transferred Plan") (i) that was covered under a PIMS Marketing Agreement with a broker-dealer other than Broker ("Other Broker") and (ii) the 2 account for which was transferred to Broker in connection with an Authorized Representative leaving the employ of Other Broker and becoming associated with Broker. If PIMS does not notify Broker of a prior relationship with a prospective Plan, then Broker shall have twelve (12) months from the date of its original notification to PIMS to facilitate the prospective Plan's acquisition of the Products or Services pursuant to this Agreement. If such Plan (including any Transferred Plan) acquires the Products or Services during the twelve month period, it becomes a "Sold Engagement Plan" hereunder. Once a Plan has become a Sold Engagement Plan, such Plan shall be "registered" to Broker and Broker shall be compensated by PIMS for all Products and Services provided to that Plan pursuant to this Agreement; provided, however, that at any time a Plan determines that it no longer wishes to have a relationship with Broker through which relationship such Plan receives or has received Products and Services, then such Plan shall no longer be considered a "Sold Engagement Plan" for the purposes of this Agreement. D. Plan accounts ("Accounts") originated under this Agreement shall be exclusively accounts of PIMS for the purposes of the federal and state securities laws, but nothing in this Agreement shall prevent Broker from providing consulting and other services to the Plans. E. This Agreement shall not give Broker the right to offer, sell, or market any Prudential product or service that is not specifically referenced in this Agreement. Nor shall this Agreement give Prudential the right to offer, sell, or market any Product or Service directly to the Accounts without the prior written approval of Broker. 3. DUTIES OF PARTIES All on-going services provided to the Plans originated under this Agreement shall be provided in accordance with this Section 3. A. FUNCTIONS EXCLUSIVE TO PRUDENTIAL Prudential or PIMS, as the context may require, shall have sole responsibility for: (1) the opening, approval, and maintenance of Accounts; (2) maintaining for each Account the books and records required of broker-dealers under the Exchange Act and applicable State securities laws, and the Conduct Rules of the NASD; (3) receiving and disbursing Account funds; (4) preparing enrollment and educational materials for use with prospective participants in Plans; 3 (5) safeguarding any Account funds and securities; (6) preparing and delivering confirmations and statements for Accounts; (7) accepting orders from Accounts and executing transactions; and (8) providing continuous administrative support to Plans and Plan participants regarding their pension plans. B. FUNCTIONS EXCLUSIVE TO BROKER Broker shall have sole responsibility: (1) for maintaining a supervisory system reasonably designed to ensure that the activities of the Authorized Representatives and its other personnel are conducted in accordance with this Agreement and the standards imposed by the Conduct Rules of the NASD; (2) for ensuring that any Authorized Representative is appropriately licensed with the NASD and any appropriate state or other jurisdiction; (3) for ensuring that the Authorized Representatives' activities in offering and selling the Products and Services to the Plans are conducted in accordance with this Agreement and the standards imposed by the Conduct Rules of the NASD; (4) for ensuring that only Authorized Representatives service Sold Engagement Plans; and (5) for ensuring that at the time an Authorized Representative sells Products and Services, and for so long as any such Authorized Representative continues to be compensated by Broker under this Agreement, such Authorized Representative has not, within the previous 10 years: (a) been convicted, pleaded guilty (or no contest) to a felony or misdemeanor, or was the subject of a criminal proceeding (any of the foregoing referred to hereafter as an "Action"), and any such Action involved either an "investment-related" business (i.e., a business pertaining to securities, commodities, banking, insurance, or real estate), fraud, false statements or omissions, wrongful taking of property, bribery, forgery, counterfeiting, or extortion; (b) been found to have been involved in a violation of an investment-related (as defined above) statute or regulation; (c) been the subject of any order, judgment, or decree permanently or temporarily enjoining him/her from, or otherwise limiting him/her from, engaging in any investment-related (as defined above) activity; (d) been the subject of administrative proceedings before the U.S. Securities and Exchange Commission, any other federal regulatory agency, any state agency, the NASD, or any registered stock exchange 4 in which he/she (i) was found to have caused an investment-related (as defined above) business to lose its authorization to do business or (ii) was found to have been involved in a violation of an investment-related (as defined above) statute or regulation and was the subject of an order by any such regulator denying, suspending, or revoking the authorization of the person to act in, or barring or suspending the person's association with, an investment-related (as defined above) business, or otherwise significantly limiting the person's involvement in investment-related (as defined above) activities. Notwithstanding the foregoing, an Authorized Representative shall not be disqualified under this paragraph 3(B)(5) with respect to any Action or other proceeding that ultimately was resolved in his/her favor, or subsequently reversed, suspended, or vacated. C. FUNCTIONS TO BE PERFORMED BY PRUDENTIAL, BROKER OR BOTH PIMS and Broker shall use their best efforts to offer and sell the Products and Services to prospective Plans. These functions include cooperation in: (1) preparation of marketing materials for use with prospective Plans; (2) providing personnel to attend sales meetings with prospective Plans; and (3) providing personnel to attend enrollment meetings with new Plans. D. COMPLIANCE WITH RULES AND REGULATIONS PIMS and Broker shall comply with all laws, rules, and regulations of any governmental agency having jurisdiction with respect to their respective performance of their obligations hereunder. PIMS and Broker shall each be solely responsible for maintaining any and all licenses which may be required for the provision of the Products and Services and the performance of their obligations hereunder generally. E. DISCLOSURE DOCUMENTS, ADVERTISING AND/OR SALES MATERIAL Broker shall not distribute any disclosure document regarding any Products or Services (such as prospectuses and statements of additional information) other than those supplied by Prudential or PIMS. If Broker wishes to distribute advertising and/or sales material related to the Products and Services, such advertising and/or sales material must be prepared by PIMS or be approved by PIMS prior to first use. F. USE OF INSURANCE AGENCY AFFILIATE OF BROKER [It is understood and agreed that Broker's Authorized Representatives may be employed by, or associated with (as defined in Article I of the By-Laws of the NASD), __________________________________, an affiliate of Broker that is licensed as an insurance agency (hereinafter referred to as "Insurance Agency Affiliate"), and whose shareholders, officers, and employees are "associated persons" of Broker within the meaning of Section 3(a)(18) of the Exchange Act. Broker agrees that if the Products and Services are offered, sold or serviced through Insurance Agency Affiliate: 5 (1) Broker will retain full responsibility for compliance with the requirements of all applicable federal and state securities laws and insurance laws, except as otherwise set forth in this Agreement and except with respect to the maintenance of the SEC Registration Statement under the Securities Act of 1933, and will continue to perform all obligations set forth above; (2) Any books and records maintained by Insurance Agency Affiliate in the offer, sale and service of Products and Services will be deemed, for purposes of the Exchange Act, to be books and records of Broker and will conform to the requirements of Section 17 of the Exchange Act and the rules thereunder. The manner in which the books and records of Broker and Insurance Agency Affiliate are made and maintained will permit supervisory personnel of Broker as well as authorized examiners of the SEC, or of another appropriate governmental agency or self-regulatory organization, to review data concerning transactions relating to Products and Services effected through Insurance Agency Affiliate to the same extent as if such transactions had been effected through Broker itself. This may be accomplished either through maintaining one set of books and records for Broker and Insurance Agency Affiliate or by maintaining separate sets of books and records with adequate integration, through cross-referencing or otherwise, between records maintained by Broker and those maintained by Insurance Agency Affiliate; (3) Compensation to be paid to Broker attributable to sales of Products and Services shall be paid to Insurance Agency Affiliate in accordance with the SEC no-action letter dated ___________________ issued to _____________________________. At all times for which compensation payments are to be made to Insurance Agency Affiliate under this Agreement, Insurance Agency Affiliate is and shall be an insurance agency properly licensed and appointed as required under the insurance laws in any state(s) or jurisdictions(s) in which the Products and Services are solicited and sold; (4) All obligations and responsibilities of Broker under this Agreement, including but not limited to any supervisory, compliance, and indemnification provisions, shall apply to the activities of the Insurance Agency Affiliate and any other registered representative associated with the Broker offering or selling the Products and Services, for which compensation is payable to Insurance Agency Affiliate hereunder and notwithstanding payment of compensation to Insurance Agency Affiliate hereunder; (5) Payments by PIMS to Insurance Agency Affiliate shall constitute full payment for all compensation to be paid to Broker for the sale of the Products and Services in all applicable states and/or jurisdictions. PIMS has no responsibility for, nor any liability with respect to, any compensation arrangements between Broker and Insurance Agency Affiliate, and/or any Authorized Representative; (6) Broker agrees to provide Insurance Agency Affiliate's Taxpayer Identification Number ("TIN") to PIMS, and Broker understands and agrees, and will cause Insurance Agency Affiliate to understand and agree, that PIMS shall, for all the compensation payments made to Insurance Agency Affiliate, use Insurance Agency Affiliate's TIN for purposes of federal and state tax reporting and shall issue tax reporting forms with respect to such payments solely to Insurance Agency Affiliate. Broker also agrees to 6 cause Insurance Agency Affiliate to refund to PIMS any amounts due PIMS under this Agreement; (7) Payments under this Agreement to Insurance Agency Affiliate shall cease immediately: (a) with respect to any state or jurisdiction in which the Insurance Agency Affiliate's insurance license is expired, revoked, suspended, terminated, or impaired; or (b) when Insurance Agency Affiliate's status as an associated person of Broker terminates. (8) Broker may, upon the written consent of PIMS, designate a substitute Insurance Agency Affiliate, provided the substitute Insurance Agency Affiliate meets all of the requirements set forth herein.] 4. LIMITS ON AUTHORITY A. LIMITS ON BROKER'S AUTHORITY (1) Apart from this Agreement, Broker shall not bind Prudential in any way. In all of its activities under this Agreement, including assisting in the offer and sale of the Products and Services, Broker shall act as an independent contractor and not as an agent or employee of Prudential or PIMS. Broker shall not have any authority to assume or create any obligation or contract, express or implied, on behalf of Prudential or PIMS. (2) Neither Broker nor any of Broker's employees or representatives shall be considered employees of, or persons associated with, Prudential or PIMS for purposes of any federal or state securities law or regulation, or otherwise. Broker shall require all representatives or employees who perform services pursuant to this Agreement to agree to be bound by the terms of Sections 8, 9, 10, and 11 of this Agreement. (3) Broker is not authorized to use the name of Prudential or its affiliates in advertising or promoting its business without the prior written consent of Prudential. B. LIMITS ON PRUDENTIAL'S AUTHORITY (1) Apart from this Agreement, neither PIMS nor Prudential shall bind or obligate Broker in any way. In all of its activities under this Agreement, PIMS agrees to assist Broker in the offer and sale of the Products and Services, and not act as an agent of Broker, and shall not hold itself out as such. PIMS shall not have any authority to assume or create any obligation or contract, express or implied, on behalf of Broker. 7 (2) Neither PIMS nor any of PIMS's employees or representatives shall be considered employees of or persons associated with Broker for purposes of any federal or state securities law or regulation, or otherwise. (3) Prudential and PIMS are not authorized to use the name of Broker or its affiliates in advertising or promoting their business without the prior written consent of Broker. 5. TERM This Agreement is effective as of the date of its execution, and shall continue in force for one year from that date. Thereafter, this Agreement shall automatically be renewed every year for a further one year period; provided that either party may terminate this Agreement for any reason upon 60 days' prior written notice. PIMS may terminate this Agreement immediately if Broker breaches the Agreement, becomes insolvent, or ceases to maintain the net capital required under the Exchange Act. Termination of this Agreement shall not excuse Broker from any agreement, obligation, or undertaking pursuant to Sections 8, 9, and 10 of this Agreement, which sections shall survive the termination of this Agreement. 6. CONSIDERATION AND PAYMENT A. For the services provided herein with respect to each Plan, Broker shall receive compensation from PIMS ("compensation") pursuant to the fee arrangement outlined in Appendix A, which may be amended as provided for in Section 16 of this Agreement. Such compensation shall be paid to Broker by PIMS within thirty (30) days of PIMS's receipt of fees from Plans pursuant to this Agreement. Broker shall be responsible for paying Authorized Representatives the compensation that they are owed. B. PIMS agrees, in the event of termination of this Agreement, to pay to Broker any unpaid compensation accrued by Broker up to the date of termination. Notwithstanding anything to the contrary in this Agreement or any Appendix to this Agreement, any and all compensation owing to Broker hereunder (other than unpaid and accrued amounts up to the date of termination) shall cease as of the date of termination. Furthermore, to the extent that a Plan ceases to be a "Sold Engagement Plan" pursuant to the circumstances set forth in the final sentence of Section 2C of this Agreement or PIMS exercises its unilateral right to appoint a registered representative who is not employed by or associated with Broker pursuant to the final sentence of Section 2A, any and all compensation payable to Broker with respect to affected Plans will cease as of that time. C. PIMS shall on a monthly basis provide Broker with a report of any revenues derived from the Products and Services provided hereunder and from which Broker is entitled to receive compensation. In the event Broker should dispute any payment, PIMS, after receiving notice from Broker of such dispute, shall cause to be provided to Broker a statement of reconciliation which demonstrates the amount of compensation paid to Broker. If an inaccuracy is found, the payment made to Broker shall be adjusted in accordance with the statement of reconciliation. If the statement of reconciliation indicates that the payment made to Broker was correct, and Broker still disputes the payment, PIMS shall cause its independent auditors to supply Broker with an independent statement of reconciliation ("Independent Report"). If the Independent Report indicates that the payment to Broker was not deficient, then Broker agrees to reimburse PIMS for the cost of the Independent Report. 8 7. GOVERNMENTAL REQUIREMENTS Broker agrees to provide copies of all documents and other information requested by, and to otherwise cooperate with, Prudential and PIMS for purposes of complying with federal and state laws and regulations, which copies shall become the property of PIMS. 8. STANDARDS OF CONDUCT All services performed, directly or indirectly, by, or on behalf of Broker in connection with this Agreement, or in furtherance of its objectives, shall be carried out in form and substance in accordance with all applicable laws and regulations of the United States, the laws of all applicable states and other jurisdictions, and in accordance with the Conduct Rules of the NASD. 9. INTELLECTUAL PROPERTY AND DATA RIGHTS Broker shall not use any of the trademark(s) or tradename(s), servicemark(s) or any similar name or names, or combinations thereof, owned or claimed by Prudential or an affiliate, without the prior written consent of Prudential or PIMS. As soon as practicable, but no later than fifteen (15) days after termination or cancellation of this Agreement, Broker shall return all of the physically deliverable sales data or materials relating to the Products and Services to PIMS. Effective on the date of termination or cancellation, Broker shall discontinue using any such data or materials. 10. INDEMNIFICATION A. GENERAL PROVISION PIMS agrees to indemnify and hold harmless Broker, its members, directors, officers, employees, agents and representatives against any and all claims, liabilities, losses or damages which arise from PIMS's material breach of any term of this Agreement or any representation or warranty in Section 11 of this Agreement. Broker agrees to indemnify and hold harmless PIMS and its affiliates, and its current and former directors, officers, employees, agents and representatives against all claims, liabilities, losses or damages which arise from Broker's performance, negligent or otherwise, of its duties under this Agreement, any misstatement or omission made by Broker or any Authorized Representative regarding the Products and Services, or the 9 breach of any term of this Agreement or any representation or warranty in Section 11 of this Agreement. B. PAYMENT OF FINES AND PENALTIES PIMS shall indemnify and hold Broker harmless from any fines, penalties, and related expenses incurred by Broker because of PIMS's failure to comply with the laws, rules, and regulations of any governmental agency having jurisdiction over its performance of obligations hereunder. Broker shall indemnify and hold PIMS and its affiliates harmless from any fines, penalties, and related expenses incurred by PIMS because of Broker's failure to comply with the laws, rules, and regulations of any governmental agency having jurisdiction over the performance of its obligations hereunder. 11. REPRESENTATIONS AND WARRANTIES A. REPRESENTATIONS AND WARRANTIES OF BROKER Broker represents and warrants that: (1) It is duly organized and existing and in good standing under the laws of the State of _________________. (2) It is empowered by its organizational documents to enter into and perform under this Agreement. (3) This Agreement has been fully authorized, executed and delivered by Broker and constitutes a legal, valid and binding agreement enforceable in accordance with its terms. (4) The execution, delivery and performance by Broker of this Agreement shall not violate any provision of current law, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); the Internal Revenue Code of 1986, as amended (the "Code"); any federal or state or other jurisdiction's securities law or regulation; any order, rule or regulation of any court or governmental or regulatory body; or any agreement or instrument to which Broker is a party or by which Broker is bound. (5) It currently is, and shall continue to be during the term of this Agreement, registered as a broker-dealer under the Exchange Act and any applicable State securities laws, and is and will continue to be a member of the NASD. (6) It will use its best efforts to meet business goals and standards pertaining to the Products and Services, as mutually agreed upon from time to time between the parties, with respect to the activities it performs pursuant to this Agreement. 10 B. REPRESENTATIONS AND WARRANTIES OF PIMS PIMS represents and warrants that: (1) It is duly organized and existing and is in good standing under the laws of Delaware. (2) It is empowered under its organizational documents to enter into and perform this Agreement. (3) This Agreement has been duly authorized, executed and delivered by PIMS and constitutes a legal, valid and binding obligation enforceable in accordance with its terms. (4) The execution, delivery and performance by PIMS of this Agreement shall not violate any provision of current law, including, without limitation, ERISA, the Code and federal and state securities laws; any order, rule or regulation of any court or governmental or regulatory body; or any agreement or instrument to which PIMS is a party or by which PIMS is bound. (5) It currently is, and shall continue to be during the term of this Agreement, registered as a broker-dealer under the Exchange Act and any applicable State securities law, and is and will continue to be a member of the NASD. 12. ASSIGNMENT Broker may not transfer this Agreement without the prior written consent of PIMS. PIMS may assign this Agreement to any affiliate upon notice to Broker. 11 13. THIRD PARTY BENEFICIARIES This Agreement shall not be construed to create any enforceable right or interest in any party other than Prudential, PIMS, and Broker. 14. APPLICABLE LAW AND ARBITRATION This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New Jersey, without giving effect to the conflicts of laws principles thereof. Any controversy or dispute arising out of or related to this Agreement, or the breach thereof, which cannot first be settled amicably between PIMS and Broker shall be settled by arbitration pursuant to the Code of Arbitration Procedure of the NASD. Neither party shall seek punitive damages from the other, and, if punitive damages are so awarded by the arbitration panel, neither party shall seek to collect that part of the panel's award from the other. Arbitration shall be held in the State of New Jersey. Judgment on any award rendered by the arbitration panel may be entered in any court having jurisdiction thereof except to the extent punitive damages are part of the award. 15. SECTION HEADINGS The section headings in this Agreement are provided solely for the convenience of the parties, and shall not be construed as having any legal or interpretative effect. 16. ENTIRE AGREEMENT This Agreement supersedes all prior oral or written agreements, if any, between the parties relating to the subject matter hereof, and constitutes the entire agreement between the parties. Any revisions, amendments, or changes to this Agreement (except revisions, amendments, or changes to Appendix A, and except for PIMS's ability to unilaterally terminate the authority of an Authorized Representative and unilaterally appoint a registered representative who is not employed by or associated with Broker as described in Section 2A) shall be in writing and signed by authorized representatives of the parties. Appendix A may be amended only by PIMS, and will be considered amended upon notice to Broker. 17. NOTICES AND CORRESPONDENCE All notices and correspondence pertaining to this Agreement shall be sent by first class mail, express mail, or courier service to the following addresses, or other address(es), provided that prior written notice regarding such other address(es) is given to the other party: (a) To PIMS: Prudential Investment Management Services LLC Gateway Center Three 100 Mulberry Street 12th Floor Newark, NJ 07102 Attn.: Chief Legal Officer cc: Scott S. Wallner, Legal Officer Prudential Investment Management Services LLC 751 Broad Street Newark, NJ 07102-3777 12 (b) To Broker: Attn: ___________________ 18. EXECUTION The parties hereto have executed this Agreement as of the day and year first written above. [BROKER] PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC By: __________________________ By: __________________________ 13 EX-4 4 CONTRACT FORM EXHIBIT 4(A) THE PRUDENTIAL INSURANCE COMPANY OF AMERICA CONTRACT FORM agrees to pay the benefits provided under this Contract in accordance with and subject to its terms. Contractholder: ABC COMPANY Plan: ABC Company Pension Plan Effective Date: April 1, 19XX Jurisdiction: Any State Contract Number: GA-XXXX ABC COMPANY THE PRUDENTIAL INSURANCE COMPANY ANY TOWN, ANY STATE OF AMERICA - ------------------------------------- --------------------------------- Title: Chairman of the Board and Chief Executive Officer Date: ________________________________ _________________________________ Secretary Attest:__________________________ Date: ________________________ FIXED DOLLAR AND VARIABLE GROUP ANNUITY CONTRACT THIS CONTRACT CONTAINS A MARKET VALUE ADJUSTMENT FORMULA APPLICABLE TO THE FIXED INVESTMENT OPTION. THE APPLICATION OF THIS FORMULA MAY RESULT IN A DOWNWARD ADJUSTMENT IN CASH VALUES. SECTIONS 6.2 AND 6.3 IDENTIFY WHEN CASH VALUES ARE AVAILABLE WITHOUT THE APPLICATION OF THE MARKET VALUE ADJUSTMENT FORMULA. CONTRIBUTIONS TO THIS GROUP ANNUITY CONTRACT MAY BE INVESTED IN SEPARATE INVESTMENT ACCOUNTS. ALL BENEFIT PAYMENTS PROVIDED UNDER THIS CONTRACT THAT ARE BASED ON THE INVESTMENT RESULTS OF A SEPARATE INVESTMENT ACCOUNT ARE VARIABLE, SUBJECT TO GAIN OR LOSS, AND ARE NOT GUARANTEED AS TO A FIXED AMOUNT. SPECIMEN DC-401-97 DEFINITIONS PAGE 1.0 Annual Account Charge 1 1.1 Beneficiary 1 1.2 Business Day 1 1.3 Code 1 1.4 Competing Fund 1 1.5 Contractholder 1 1.6 Contractholder Account 1 1.7 Contractholder Fixed Account 1 1.8 Contractholder Variable Account 2 1.9 Contributions 2 1.10 Effective Annual Rate 2 1.11 ERISA 2 1.12 Good Order 2 1.13 Participant 2 1.14 Participant Account 2 1.15 Plan 2 1.16 Plan Investment Fund 2 1.17 Prudential 3 1.18 Rate Segment 3 1.19 Separate Account 3 1.20 Subaccount 3 1.21 Transfer Payments 3 1.22 Transfer Request 3 1.23 Unit 3 1.24 Unit Value 3 1.25 Withdrawal 3 1.26 Withdrawal Date 4 1.27 Withdrawal Value 4 RELATIONSHIP BETWEEN PLAN AND CONTRACT 2.1 General Understanding 4 2.2 Statutory Requirements 4 2.3 Conditions 4 CONTRIBUTIONS AND CONTRACTHOLDER ACCOUNT - ---------------------------------------- 3.1 Contributions 4 3.2 Participant Account Segments 5 3.3 Contractholder Fixed Account Interest Rates 5 3.4 Contributions from Prior Prudential Fixed Account Contracts 5 3.5 Contractholder Variable Account 6 3.6 Reports 6 VARIABLE INVESTMENT OPTIONS 4.1 Separate Accounts 6 4.2 Subaccounts 6 4.3 Voting Rights 7 4.4 Modification of Separate Accounts and Subaccounts 7 TRANSFER PAYMENTS 5.1 Transfer Payments to Plan Investment Funds 7 5.2 Transfer Payment Terms 8 WITHDRAWALS 6.1 Withdrawals 9 6.2 Withdrawals for Benefit Payments 9 6.3 Withdrawals at Termination of Contract 10 6.4 Withdrawals Subject to a Market Value Adjustment 11 6.5 Market Value Adjustment Formula 11 FORMS OF BENEFITS - ----------------- 7.1 General 12 7.2 Terms of Payment of Annuities 12 7.3 Certificates 12 7.4 Minimum Death Benefit 12 TERMINATION OF CONTRACT - ----------------------- 8.1 Sixty Day Termination 13 8.2 Termination for Cause 13 8.3 Effect of Termination 13 8.4 Partial Contract Termination 14 CHANGES - ------- 9.1 Changes by Agreement 14 9.2 Changes by Prudential 14 9.3 Persons Empowered to Act for Us 14 GENERAL TERMS 10.1 Communications 15 10.2 Place of Payment 15 10.3 Information - Records 15 10.4 Misstatements 15 10.5 Beneficiary 15 10.6 Small Annuities and Amounts; Natural Persons 16 10.7 Divisible Surplus 16 10.8 Limit on Assignment 16 10.9 Plan Changes 16 10.10 Entire Contract 16 10.11 Governing Law 17 10.12 Interest on Benefit Payments 17 10.13 Contractholder 17 10.14 Exclusive Benefit 17 DEFERRED SALES CHARGES 11.1 Deferred Sales Charge 18 APPENDIX A Separate Investment Accounts SCHEDULES Schedule A. Forms of Annuity which may be Purchased Schedule B. Life - Payment Certain Annuity Schedule C. Life - Contingent Annuity Schedule D. Payment Certain Annuity - ------------------------------------------------------------------------------- SECTION 1 - DEFINITIONS - ------------------------------------------------------------------------------- 1.0 ANNUAL ACCOUNT CHARGE If we provide services under an administrative services agreement, we will assess an Annual Account Charge on or about the last day of each calendar year and at the time of full Withdrawal for each Participant for whom an account is maintained in connection with this Contract. This charge will not exceed [$0] each calendar year per Participant. This charge will be deducted directly from funds maintained under this Contract, unless paid directly by the Contractholder. The Annual Account Charge will be prorated for new Participants on a monthly basis for their first year of participation. 1.1 BENEFICIARY A person designated by a Participant to receive benefits from funds held under this Contract. 1.2 BUSINESS DAY A day on which the New York Stock Exchange and Prudential are open for business. 1.3 CODE The Internal Revenue Code of 1986, as amended, or any of the corresponding provisions of prior or subsequent United States revenue laws. 1.4 COMPETING FUND An investment option available under the Plan that is primarily comprised of high quality fixed income securities with an average duration of less than or equal to 4.5 years. For purposes of the Contract, Competing Funds include but are not limited to money market and short term bond funds. 1.5 CONTRACTHOLDER The holder of the Contract as shown on the cover page, its successors and assigns. "You" or "your" means the Contractholder. 1.6 CONTRACTHOLDER ACCOUNT An account that is equal to the sum of the Contractholder Fixed Account and the Contractholder Variable Account. 1.7 CONTRACTHOLDER FIXED ACCOUNT An unallocated account that is equal to the sum of all Contributions earning a guaranteed rate of interest under Section 3.3 of this Contract plus interest credits, less all Withdrawals, Transfer Payments, fees and charges. There are no required Contributions to the Contractholder Fixed Account. 1 1.8 CONTRACTHOLDER VARIABLE ACCOUNT An unallocated account that is equal to the dollar amount of all Units in the separate accounts or Subaccounts in which you invest, less any fees or charges. 1.9 CONTRIBUTIONS Payments you make to us as described in Section 3.1. We will grant a period of 31 days for the payment of any required Contributions under this Contract. 1.10 EFFECTIVE ANNUAL RATE A method of crediting interest where the annualized income is expressed as a compound annual rate of interest. An amount invested for a full year would increase by a percentage equal to the Effective Annual Rate. 1.11 ERISA The Employee Retirement Income Security Act of 1974, as amended. 1.12 GOOD ORDER An instruction received by us, utilizing such forms as we may require, that is sufficiently complete and clear that we do not need to exercise any discretion to follow such instruction. 1.13 PARTICIPANT A natural person on whose behalf funds are contributed or maintained under the Plan. 1.14 PARTICIPANT ACCOUNT The dollar value of funds maintained for each person in accordance with the terms of the Plan. The Participant Account may be invested in the fixed interest option through the Contractholder Fixed Account, or the variable separate account options through the Contractholder Variable Account. 1.15 PLAN [A plan adopted by you that provides Participants with coverage under an annuity contract intended to meet the requirements of Section 401 of the Code. The Plan is mentioned for reference purposes only and is shown on the cover page. "Plan" shall include such other plans of the Contractholder or plans maintained for other employers as the parties agree. The terms of this Contract shall apply separately with respect to each plan maintained thereunder. We are not a party to the Plan.] 1.16 PLAN INVESTMENT FUND An investment fund available under the Plan as of the Effective Date or of which we are later notified. 2 1.17 PRUDENTIAL The Prudential Insurance Company of America. "We," "us," or "our" means Prudential. 1.18 RATE SEGMENT A section of the Contractholder Fixed Account that credits the same rate of interest for the same time period for Contributions and accumulated interest thereon. 1.19 SEPARATE ACCOUNT An Account established by Prudential and maintained primarily for one or more group annuity contracts. The Separate Account will hold assets acquired with the proceeds of Contributions. 1.20 SUBACCOUNT A subdivision of a Separate Account, the assets of which are invested in a corresponding portfolio of a fund or portfolio of securities. 1.21 TRANSFER PAYMENTS An amount transferred by or on behalf of Participants among Plan Investment Funds. 1.22 TRANSFER REQUEST A request by you or your designee pursuant to elections by Participants, received by us in Good Order to make a Transfer Payment. 1.23 UNIT You are credited with units in each Separate Account or Subaccount in which you invest. The number of Units credited to the account is determined by dividing each Contribution made to a Separate Account or Subaccount by the applicable Unit Value for the Business Day on which the Contribution is received by us in Good Order. 1.24 UNIT VALUE The dollar value of an interest in a Separate Account or Subaccount. The Unit Value of each Separate Account or Subaccount will be determined each Business Day, and will measure changes in the value of the Separate Account's or Subaccounts assets minus its outstanding liabilities, fees and expenses. The Unit Value is determined before giving effect to additions to and withdrawals or transfers from a Separate Account or Subaccount for that day. 1.25 WITHDRAWAL A payment from the Contractholder Account that is not a Transfer Payment. 3 1.26 WITHDRAWAL DATE The Business Day we receive notice from you in Good Order to make a Withdrawal as described further in Section 6. 1.27 WITHDRAWAL VALUE The dollar value of any Withdrawal less any charges or fees incurred, including any applicable market value adjustment. - ------------------------------------------------------------------------------- SECTION 2 - RELATIONSHIP BETWEEN PLAN AND CONTRACT - ------------------------------------------------------------------------------- 2.1 GENERAL UNDERSTANDING You will make Contributions as provided in this Contract. However, the existence of this Contract does not cause us to be a party to or a fiduciary of the Plan. We make no representation and assume no liability as to the sufficiency of Contributions or the Contractholder Account for the benefits to be provided under the Plan. You are solely responsible for the selection of this Contract as a suitable funding vehicle for the Plan. 2.2 STATUTORY REQUIREMENTS [This Contract is issued in conjunction with a 401 Plan. We reserve the right to administer this Contract in accordance with the provisions of Code Section 401 and its regulations and rules, the eligible rollover distribution rules of Code Section 401(a)(31), and other applicable provisions of the Code.] 2.3 CONDITIONS The continuation of this Contract is conditioned upon there being no change in the Plan or its investment policy that, in our judgment, would materially disrupt the level of Contributions or increase Withdrawals compared to prior periods. - ------------------------------------------------------------------------------- SECTION 3 - CONTRIBUTIONS AND CONTRACTHOLDER ACCOUNT - ------------------------------------------------------------------------------- 3.1 CONTRIBUTIONS You will remit as Contributions to this Contract all or a portion of funds contributed to the Plan unless we agree otherwise in writing or unless such remittance is to end according to the terms of this Contract. Contributions may include rollovers of amounts held by Participants under other tax-qualified retirement plans or funds transferred from Plan Investment Funds. You may direct that contributions be allocated to the Contractholder Fixed Account and/or the Contractholder Variable Account. 4 3.2 PARTICIPANT ACCOUNT SEGMENTS We may maintain the fixed interest portion of Participant Accounts in two or more Rate Segments The dollar value of any Segment is equal to the sum of all Contributions and interest credited to it, less all Withdrawals and Transfer Payments withdrawn from it. 3.3 CONTRACTHOLDER FIXED ACCOUNT INTEREST RATES We will notify you in advance of each interest rate we set under this Contract. Each interest rate is an Effective Annual Rate. Interest is credited to Contributions on a daily basis. (A) CURRENT QUARTERLY INTEREST RATE All Contributions received during the current calendar quarter will be allocated to the same Rate Segment and will be credited with interest at the current quarterly interest rate. This rate is set prior to the beginning of each calendar quarter, and remains in effect on all Contributions received during that quarter throughout the remainder of the current calendar year and all of the following calendar year. (B) RENEWAL INTEREST RATE After the expiration of a current quarterly interest rates, we will set a renewal interest rate for that Rate Segment to apply to Contributions (and interest thereon) that previously were credited that current quarterly interest rate. We may set one renewal interest rate to replace each expiring current quarterly interest rate. The renewal interest rate will be reset by us annually. (C) CONTRACTUAL ANNUAL MINIMUM INTEREST RATE Each interest rate set under Section 3.3 for the years shown below will not be less than the following: Calendar Year Rate 1998 and each year thereafter [3.0%] 3.4 CONTRIBUTIONS FROM PRIOR PRUDENTIAL FIXED ACCOUNT CONTRACTS If you contribute amounts to the Contractholder Fixed Account from the fixed rate investment of a predecessor Prudential group annuity contract, such amounts will be invested within Rate Segments that correspond to the investment segments or portions, if any, under the prior contract. 5 3.5 CONTRACTHOLDER VARIABLE ACCOUNT Contributions to the Contractholder Variable Account may be made to any of the Separate Accounts or Subaccounts listed in Appendix A. 3.6 REPORTS We will make a quarterly report to you of the financial activity within the Contractholder Account. - ------------------------------------------------------------------------------- SECTION 4 - VARIABLE INVESTMENT OPTIONS - ------------------------------------------------------------------------------- 4.1 SEPARATE ACCOUNTS The Separate Accounts in which this Contract participates, and their primary investments, are described in Appendix A. Assets held in each Separate Account, except assets representing Prudential surplus, if any, are not chargeable with liabilities arising out of any other business of Prudential. The total market value of the assets held in each Separate Account at all times will be at least equal to the total reserve liability required by law for all payments or values which vary in dollar amount to reflect the investment results of each Separate Account. [To the extent that applicable laws and regulations permit, investments for each Separate Account will be free of all limitations applicable to other investments by Prudential. Prudential restricts use of its Separate Accounts to certain plans. These plans include those which meet the requirements for qualification under Section 401 of the Code. If, at any time, we are informed that your Plan does not meet applicable requirements, we will (1) notify you and (2) cancel your Contractholder Variable Account. The dollar value of your canceled account will, within seven Business Days thereafter, be transferred to you, your trustee, or your financial institution that you designate. After that, no Contributions may be made to the Separate Account under this Contract until the Plan again satisfies applicable qualification requirements.] 4.2 SUBACCOUNTS A Separate Account may consist of Subaccounts. The income, gains and losses, realized or unrealized, from the assets allocated to a Subaccount are credited to or charged against each Subaccount, without regard to other income, gains or losses of the Prudential. Those Subaccounts currently available under this Contract are listed in Appendix A. Each Subaccount invests exclusively in shares of a corresponding fund or a portfolio of securities. Shares of a fund are purchased and redeemed for a Subaccount at their net asset value. Any amounts of income, dividends and gains distributed from the shares of a fund are reinvested in additional shares of that fund at net asset value. The dollar amounts of values and benefits of this Contract provided by a Separate Account vary as a function of the investment performance of the Subaccounts. You bear the investment risk for Subaccount value in the selected Subaccounts. 6 4.3 VOTING RIGHTS Certain Separate Accounts hold securities that have voting rights. We normally exercise these rights. However we reserve the right to solicit Contractholders for instruction as to how to vote some or all of the securities in these Accounts. 4.4 MODIFICATION OF SEPARATE ACCOUNTS AND SUBACCOUNTS We may from time to time change material features of, or close, certain Separate Accounts or Subaccounts. Any changes will be made only if permitted by applicable law and regulations. Also, when required by law, we will obtain the approval of Contractholders of the changes and the approval of any appropriate regulatory authority. For example, we may combine Separate Accounts or Subaccounts, or provide additional Subaccounts, transfer part or all of the assets of a Separate Account or Subaccount to another Separate Account of Subaccount, make any changes necessary to comply with, or obtain and continue any exemptions from the Investment Company Act of 1940 (the 1940 Act), and make any other necessary technical changes to this Contract to conform with any action this provision permits us to take. - ------------------------------------------------------------------------------- SECTION 5 - TRANSFER PAYMENTS - ------------------------------------------------------------------------------- 5.1 TRANSFER PAYMENTS TO PLAN INVESTMENT FUNDS You may, pursuant to elections by Participants, subject to any restrictions in the Plan, direct us to make Transfer Payments from the Contractholder Fixed Account or Variable Accounts to any Plan Investment Fund made available under the Plan. Transfers will be made under the terms of Section 5.1(a) unless you request, and we agree, to allow transfers under the terms of Sections 5.1(b) and 5.1(c). If we are not provided sufficient information to effectively administer transfers under Sections 5.1(b) and 5.1(c), we will reinstate the terms of Section 5.1(a) upon written notice. Prudential may, upon notice to the Contract-Holder and Participants, limit the frequency of Transfer Payments. The action will take effect on the date of the notice. In the event that a Participant Transfer is made as a result of a communication by the Contractholder, Employer, agent or broker to the Participant, which communication in Prudential's reasonable judgment advised Participants to transfer or withdraw their funds held under this Contract, the Transfer will be treated as a Contractholder Withdrawal under Section 6.4. If such communication is not provided to Prudential upon written request, Prudential reserves the right to consider the communication as one which advises Participants to transfer or withdraw their funds held under this Contract. (A) TRANSFERS FROM CONTRACTHOLDER'S FIXED ACCOUNT A Participant may transfer an amount from the Fixed Account to another investment option made available under the Plan, subject to the following conditions: 7 In any one year, a Participant may transfer 20% of his Fixed Account balance, as measured as of the first day of the year, without a market value adjustment. The amount transferred in excess of 20% of such balance will be transferred subject to the adjustment described in Section 6.5. (B) DIRECT TRANSFERS TO A COMPETING FUND Transfer Payments directly between the Contractholder Fixed Account under this Contract and a Competing Fund as defined in Section 1.4 may not be made without Prudential's consent. (C) INDIRECT TRANSFERS TO A COMPETING FUND Indirect transfers between the Contractholder Fixed Account under this Contract and a Competing Fund may be made, provided the amount to be transferred is first transferred to a fund which is not a Competing Fund and such amount is held in a non-Competing Fund for a period of at least 90 days before being transferred to a Competing Fund. Amounts transferred from the Contractholder Fixed Account to a non-Competing Fund may be transferred back into the Contractholder Fixed Account after being held in the non-competing fund for at least 90 days. In the event of unusual volatility in the financial markets, Prudential may, in its discretion, eliminate or reduce the 90-day restriction of this Section 5.1(c) for all Contractholders within this class of contracts. The 90-day provision may be prospectively reinstated by Prudential upon written notice to the Contractholder. We reserve the right, upon 30 days notice and in our sole discretion, to determine whether any investment option under the Plan is or becomes a Competing Fund. We also may upon 30 days notice, in order to protect the financial interests of other group annuity Contractholders with similar transfer rights, require that transfers be made under Section 5.1(a) instead of 5.1(b) and (c). We may also waive transfer restrictions to accommodate asset allocation programs offered by Prudential. Any such action will be made uniformly for all similarly situated Contractholders. 5.2 TRANSFER PAYMENT TERMS Transfer Payments will be made from the Contractholder Fixed Account and the Contractholder Variable Account. Transfer payments from the Contractholder Fixed Account will be made on a pro rata basis from all Rate Segments. Each payment will be in full settlement of our liability for the Transfer Payment. Transfer Payments from the Contractholder Fixed Account will be effective on the Business Day we receive the Transfer Request in Good Order. Transfer Payments from the Contractholder Variable Account will be at the Unit Value of the applicable Subaccount(s) at the close of the Business Day we receive the Transfer Request in Good Order. You agree to provide for the recordkeeping of investment funds available under the Plan on a Participant-level basis, and to furnish us with such information as we may reasonably require in connection with Transfer Requests. We reserve the right to monitor the Participant-level investment activity in order to enforce these transfer provisions. We will notify you immediately upon receipt of a Transfer Request that is inconsistent with the Transfer Payment conditions then in effect. 8 We may, upon notice to you, limit the frequency of Transfer Payments. This action will take effect on the date of the notice. Any such limit will allow transfers as least as frequently as quarterly. - ------------------------------------------------------------------------------- SECTION 6 - WITHDRAWALS - ------------------------------------------------------------------------------- 6.1 WITHDRAWALS You may make Withdrawals from the Contract. Withdrawals from the Contractholder Fixed Account for purposes listed in Sections 6.2 and 6.3 will not be subject to the market value adjustment described in Section 6.5. However, we may apply this adjustment if, at the time you request the Withdrawal, the terms of your Plan are materially different from the terms or manner of administration in effect on this Contract's effective date, and such amendment or change adversely affects our rights or liabilities under this Contract. Withdrawals from the Contractholder Fixed Account will be made on a pro-rata basis from all Rate Segments applicable to a Participant under the Contract. Payment to the Participant ordinarily will be made within seven days of our receipt of a properly completed payment request. If any Withdrawal payment under this section is not made within 10 Business Days, interest on the delayed payment will be credited (starting as of the first day following receipt of the Withdrawal request) at the rate applicable to new contributions under Section 3.3 on the date the Withdrawal request is received. If more than one employer participates in the Plan, and Contributions are discontinued for one employer, Withdrawals of funds attributable to that employer may be made under any option available within this Section. You may make Withdrawals to pay expenses of the Plan. Such Withdrawals will not be subject to any market value adjustment. 6.2 WITHDRAWALS FOR BENEFIT PAYMENTS We will make payments to the Contractholder to provide benefits permitted under the terms of the Plan. Such benefit payments may be made for reasons of a Participant's retirement, termination of employment, death, disability, hardship, loans, or in-service withdrawal after age 59 1/2. Benefits may also include such other payments made pursuant to the Plan provisions as agreed to by us in accordance with our existing administrative practices. The amount of a benefit payment will be the amount certified by you as necessary to fulfill a benefit payment request of a Participant. You agree to supply us with documentation to support benefit payments on request. We will also make distribution payments consistent with the terms of the Plan relating to the minimum required distribution provisions of Sections 401(a)(9) and/or 457(d) of the Code, as applicable. Loans made available to a Participant under this Contract will be made in accordance with the terms provided in the Plan. Prudential will administer loans in conformity with the Code and ERISA. 9 With respect to amounts invested in the Contractholder Fixed Account, if permitted by the Plan, we will make payments to you to provide for Participant requests for payments of after-tax contributions. For each Participant request for a payment of after-tax contributions, you will inform us of the amount that comprises one-third of the Participant's entire interest in after-tax contributions held under this Contract as of the first day of the year. The lesser of such amount or the amount of the request will be paid under this Section; any excess of the request over one-third of the Participant's interest under this Contract will be paid under Section 6.4. "After-tax" means employee contributions made to the Plan which were, when made, subject to federal income taxes. 6.3 WITHDRAWALS AT TERMINATION OF CONTRACT You may, in conjunction with a termination of the Contract, make a Withdrawal of the balance from the entire Contractholder Fixed Account over a four-year period. During the four-year payout period, interest will be added to the Contractholder Fixed Account at the end of each day on the amount of the Contractholder Fixed Account at the end of the preceding day at an Effective Annual Rate determined on the Withdrawal Date. This rate is determined by multiplying each Rate Segment by the interest rate that applies to that segment, adding the products, dividing the sum by the total dollar amount of all segments and subtracting 0.50%. In no event will the interest paid under this provision be less than 3.0%. We will pay one-fifth of the balance of the Contractholder Fixed Account within 90 days of the Withdrawal Date. We will pay one-fourth of the Contractholder Fixed Account as of the first anniversary of the Withdrawal Date on the first Business Day following the first anniversary of the Withdrawal Date. If payments are over a period of greater than two years, subsequent payments will be made on the first Business Day following the anniversary of the Withdrawal Date, with each such payment substantially equal in amount to the previous payment. We will pay the entire balance of the Contractholder Fixed Account on the first Business Day following the fourth anniversary of the Withdrawal Date. We will make all payments to you or to any institution or account you designate. We will make all payments from the Contractholder Variable Account to you or to an institution or account you designate. We will usually pay the entire balance of the Contractholder Variable Account within seven Business Days after receipt of a Good Order request for a Withdrawal at termination of the Contract. However, we can postpone such payments if: 1. the New York Stock Exchange is closed, other than customary weekend and holiday closing, or trading on the exchange is restricted as determined by the Securities and Exchange Commission (SEC) 2. the SEC permits, by an order, the postponement for the protection of Contractholders 3. the SEC determines that an emergency exits that would make the disposal of securities held in the Contractholder Variable Account, or the determination of their value, not reasonably practicable. You may also elect to make a withdrawal at Contract termination under Section 6.4 in accordance with the terms of the above paragraph. 10 6.4 WITHDRAWALS SUBJECT TO A MARKET VALUE ADJUSTMENT Withdrawals from the Contractholder Fixed Account that are not governed by the provisions of Sections 6.2 and 6.3 may be made at any time. If the amount withdrawn under this paragraph in any calendar year exceeds $5 million, the Withdrawal may be paid in up to five substantially equal quarterly payments. The first payment will be made within 10 Business Days of our receipt of your written request in Good Order. A separate market value will be calculated for each quarterly Withdrawal. During the quarterly Withdrawal period, the unpaid amounts will be credited interest at the rate in effect under Section 3.3 of the Contract, less a daily risk charge of one-half of one percent annually. The amount withdrawn under this Section shall be equal to the Withdrawal request decreased by the market value adjustment (MVA), and reduced by any applicable deferred sales charges as described in Section 11. The market value adjustment will be applied before the deduction of any applicable deferred sales charge. 6.5 MARKET VALUE ADJUSTMENT FORMULA The market value of the amount withdrawn from the Contractholder Fixed Account in accordance with Section 6.4 will be calculated using the formula described in this paragraph. A separate market value adjustment is determined for each Rate Segment. The interest rate applicable to each such Rate Segment is compared to the interest rate credited for new Contributions in the current quarter. The market value adjustment for a Rate Segment is calculated by subtracting the interest rate for new Contributions from the interest rate credited to that Rate Segment and multiplying that result by a factor of 3.0. In no event will the market value adjustment exceed 0.0%. Each market value adjustment is then applied to the dollars withdrawn from the corresponding Rate Segment. The market value of the amount withdrawn from the Contractholder Fixed Account is equal to the sum of the market values of the amount withdrawn from each Rate Segment. The market value adjustment factor may be changed in accordance with Section 9.2. 11 In the event that a Participant Withdrawal is made as a result of a communication of the Contractholder or Employer received by the Participant, which communication in Prudential's reasonable judgment advises Participants to transfer or withdraw their funds held under this Contract, the Withdrawal will be treated as a Withdrawal at Contract termination under Section 6.4. If communication to a Participant is not provided to Prudential upon written request, Prudential reserves the right to consider the communication as one which advises Participants to transfer or withdraw their funds held under this Contract. - ------------------------------------------------------------------------------- SECTION 7 - FORMS OF BENEFITS - ------------------------------------------------------------------------------- 7.1 GENERAL You may request that we pay amounts that are withdrawn for benefit payments under Section 6.2 in any of the following forms, to the extent not contrary to the terms of the Plan: (a) a lump sum; (b) any annuity form described in Schedule A; (c) any other settlement method or combination of methods to which we consent. 7.2 TERMS OF PAYMENT OF ANNUITIES If, a Participant, elects an annuity pursuant to Section 7.1(b), the amount withdrawn will be applied to purchase an annuity in accordance with Schedule A. The monthly annuity payment is determined from the schedule of purchase rates for that annuity. Any payments made in annuity form will be governed by the terms of the annuity certificate. 7.3 CERTIFICATES A Certificate will be provided for each Annuitant, summarizing the amount and the terms of such annuity. Certificates are not a part of this Contract. 7.4 MINIMUM DEATH BENEFIT [Any lump sum death payment from this Contract made to a Beneficiary within one year of the Participant's death will be equal to the greatest of : (1) the Participant's Account value as of the date Prudential receives a death benefit payment request in Good Order; (2) the sum of all contributions made to the Participant's Account less withdrawals, transfers and charges; and (3) the greatest of the Participant's Account value calculated on every third anniversary of the first contribution made on behalf of the Participant less any withdrawals, transfers and charges under the Contract.] 12 - ------------------------------------------------------------------------------- SECTION 8 - TERMINATION OF CONTRACT - ------------------------------------------------------------------------------- 8.1 SIXTY DAY TERMINATION This Contract may be terminated by either party by providing the other party with 60 days written notice. The Contract termination date will be established as the first Business Day occurring 60 calendar days following receipt of the notice of termination. The parties may agree to a different termination date. 8.2 TERMINATION FOR CAUSE We may terminate this Contract for cause by giving you 30 days written notice. Causes for our termination are: (a) You fail to meet any of your obligations under this Contract or under any related agreement. (b) The Plan is no longer a qualified plan under the Code. (c) The Plan is terminated. (d) You no longer have any obligations under the Plan. (e) You, your agent, or your trustee take an action which, in our reasonable determination, materially and adversely affects our rights and obligations under this Contract. (f) You reject a change or an amendment to this Contract proposed by us under Section 9.1 or 9.2. (g) You distribute communication material to Plan Participants that can reasonably be expected to materially decrease the amounts directed to this Contract or materially increase the amounts of Withdrawals or Transfer Payments from this Contract. 8.3 EFFECT OF TERMINATION You may make no further Contributions or Transfer Payments after a contract termination date is established, unless we agree otherwise. Death benefits and previously purchased annuities will continue to be paid. Benefit Withdrawals, including the purchase of annuities if we agree, may be made from the Contractholder Fixed Account after the contract termination date. Benefit withdrawals from the Contractholder Variable Account will continue to be made after the 13 contract termination date. The Contractholder Fixed Account will be distributed under the terms of Section 6.3 unless you elect to have it distributed under the terms of Section 6.4. Withdrawals upon termination are subject to any limitations or restrictions that appear elsewhere in this Contract. 8.4 PARTIAL CONTRACT TERMINATION If, through a divestiture or other corporate restructuring, employees of an employer cease to be eligible to participate in the Plan, you may partially terminate this Contract and request that we issue a new contract to a successor plan. Any such contract is subject to any terms and conditions mutually agreed to. Section 8.3 applies to amounts payable in connection with a partial termination. - ------------------------------------------------------------------------------- SECTION 9 - CHANGES - ------------------------------------------------------------------------------- 9.1 CHANGES BY AGREEMENT This Contract may be changed at any time by agreement between the parties. A change will be effective after each party receives notice of such change. Any change made to this Contract will be consistent with applicable state and federal law. 9.2 CHANGES BY PRUDENTIAL We may change this Contract if we, in our discretion, deem it appropriate to conform to the requirements of any law or regulation. We reserve the right to change the method for determining the market value adjustment upon 30 days prior written notice to you and to periodically update the annuity purchase rates. No modifications or amendments to this Contract may affect the terms of any annuity purchased prior to the effective date of the modification or amendment. The annuity purchase rates will not be modified or amended (i) during the first year that the Contract is in effect, or (ii) more than once in any 12 month period; and (iii) may not be less favorable to you than the annuity purchase rates we offer to any Contractholder in the same class as this Contract. 9.3 PERSONS EMPOWERED TO ACT FOR US No agent or other person except one of the following Prudential officers may change this Contract or bind us. Chairman of the Board and Actuary Chief Executive Officer Associate Actuary President Secretary Vice President Assistant Secretary Second Vice President 14 - ------------------------------------------------------------------------------- SECTION 10 - GENERAL TERMS - ------------------------------------------------------------------------------- 10.1 COMMUNICATIONS All communications under this Contract shall be in writing. They will be addressed to you at your principal office, or at such other address as you may communicate to us. Communications to us should be addressed to Prudential, c/o Prudential Investments, 30 Scranton Office Park, Scranton, Pennsylvania 18507-1789, or at such other address as we may communicate. 10.2 PLACE OF PAYMENT All payments to us under this Contract shall be payable at our office described above or at an address or to a representative we specify by notice to you. 10.3 INFORMATION - RECORDS You agree to furnish all information which we may reasonably require for the administration of this Contract. You also agree to provide to us any applicable administrative agreements pertaining to recordkeeping or servicing of Participant Accounts. We will not be liable for the fulfillment of any obligations in any way dependent upon information unless and until we receive the information in a form satisfactory to us, which includes receiving information in Good Order where appropriate. Information furnished to us may be corrected for demonstrated errors unless we have already acted to our prejudice by relying on the information. Except for the corrections, information furnished to us will be regarded as conclusive. 10.4 MISSTATEMENTS If there has been a misstatement as to any annuitant, we will not pay more than that which should be paid based on the correct information. Any overpayment will, together with interest, be deducted from future payments. Any underpayment will, together with interest, be paid immediately upon receipt of the corrected information. The interest rate credited or charged under this section will be 3.0%. 10.5 BENEFICIARY You may, if permitted by law, direct that we pay any benefit under this Contract directly to the Beneficiary of a Participant or other designated payee. Payments in annuity form will be governed by the terms of the annuity certificate. 15 10.6 SMALL ANNUITIES AND AMOUNTS; NATURAL PERSONS To the extent consistent with the terms of the Plan and Code Section 411(a)(11) as applicable, if the total monthly payment from the annuity that would otherwise be purchased on behalf of any person, or any series of payments under this Contract, is less than $50, we may, in our discretion, make a single sum payment in lieu of purchasing such annuity or making such series of payments. The single sum paid will be equal to the amount that would otherwise be applied to purchase such annuity. The single sum paid in lieu of a stream of payments will be equal to the value of the series of payments discounted at interest from each payment due date to the date of the single sum payment. The discount interest rate will be the interest rate in the schedule of annuity purchase rates used to establish the series of payments. If the payee is not a natural person and a series of payments is payable, we may choose to make a payment in one sum. 10.7 DIVISIBLE SURPLUS The portion, if any, of our divisible surplus accruing under this Contract will be determined annually by our Board of Directors and credited to the Contractholder Account as determined by the Board. It is unlikely that any divisible surplus will accrue upon this Contract. No annuity under this Contract will be taken into account in the determination of any divisible surplus to be credited to this Contract. 10.8 LIMIT ON ASSIGNMENT To the extent applicable law requires, the interests in and payments from this contract are not transferable nor assignable or subject to the claims of any creditor. For this purpose, compliance with the terms of a Qualified Domestic Relations Order as defined in subsection 414(p) of the Internal Revenue Code will not be considered to be an assignment of benefits. 10.9 PLAN CHANGES This Contract applies to the terms of the Plan in effect on the Effective Date of this Contract. You shall furnish us a copy of the Plan, any proposed amendment or any change to the Plan, its operation, or its investment policy, and any communications by you to the Participants concerning investments available through the Plan. If we notify you within 60 days of receipt of a proposed Plan amendment, change in Plan operation, or change in Plan investment policy that such change, in our reasonable judgment, will adversely affect the financial experience of Prudential or other Contractholders in this class of Contracts, the change will be effective only upon agreement between the parties. 10.10 ENTIRE CONTRACT This document constitutes the entire Contract between us. 16 10.11 GOVERNING LAW This Contract will be construed according to the laws of the jurisdiction set forth on the cover page. 10.12 INTEREST ON BENEFIT PAYMENTS Any benefit payment we make under Section 6.2 that is not made within 10 Business Days of the receipt in Good Order of a request for such payment will be credited with interest in the same rate and manner as provided in Section 3.3 or as required by state insurance or Federal securities law. We reserve the right to credit interest on benefit payments paid within 10 Business Days for all Contractholders within this class of contracts. 10.13 CONTRACTHOLDER We will normally conduct business only with you. We will be entitled to rely on any acts or omissions by you pursuant to the terms of this Contract. Either party may, from time to time, delegate to an agency or trustee certain administrative powers and responsibilities under this Contract. No party is bound to recognize any such delegation until it has received notice of it. The notice must specify those powers and responsibilities and include evidence of acceptance by the agency. On and after the date of receipt of the notice, the notified party will deal with the agency with respect to those powers and responsibilities and will be entitled to any action taken or omitted by the agency with respect thereto in the same manner as if dealing with the party to the Contract. Either party may give notice to the other party of a subsequent delegation to another agency of specified powers and responsibilities. 10.14 EXCLUSIVE BENEFIT Under this contract it is impossible, at any time prior to the satisfaction of all liabilities with respect to Participants and their beneficiaries under the contract, for any part of the corpus or income to be used for, or directed to, purposes other than for the exclusive benefit of the Participants or their beneficiaries. 17 - ------------------------------------------------------------------------------ SECTION 11 - DEFERRED SALES CHARGES - ------------------------------------------------------------------------------ 11.1 DEFERRED SALES CHARGES Transfer Payments made to Plan Investment Funds on behalf of Participants and Withdrawals made under Section 6 on behalf of Participants (other than those made under Section 6.2) are subject to a Deferred Sales Charge. The amount of a Transfer Payment or Withdrawal subject to a Deferred Sales Charge shall be the amount requested less the Deferred Sales Charge determined from the following table. However, if the entire dollar amount held on behalf of a Participant under the Contractholder Fixed Account is withdrawn, the amount paid will not be less than the Contributions made into that option for the Participant reduced by previous Withdrawals and transfers. Withdrawals or Transfer Payments made in the years indicated, counting from the day an amount was contributed on behalf of a Participant under this or a predecessor Prudential Contract, will have the following Deferred Sales Charge, measured as a percentage of Contributions withdrawn: 0 - 1 year [0%] 1 - 2 years [0%] 2 - 3 years [0%] 3 - 4 years [0%] 4 - 5 years [0%] After 5 years [0%] Deferred sales charges do not apply to amounts withdrawn in excess of the Participant's Contributions under this Contract. No charge is imposed upon rollover contributions, contributions withdrawn due to the Participant's termination of employment, death, financial hardship or disability retirement. Withdrawals from the Contractholder Fixed Account will be made on a pro-rata basis from all Rate Segments applicable to a Participant under the Contract. APPENDIX A - SEPARATE INVESTMENT ACCOUNTS Contributions paid to the Contractholder Variable Account may be invested in the Subaccounts of the Prudential Discovery Premier Group Variable Contract Account ("the Discovery Account"). This variable separate account, sponsored by Prudential Insurance Company of America, is currently divided into 35 Subaccounts. Any income and realized or unrealized gains and losses in a Subaccount are credited to or charged against that Subaccount without regard to income, gains, or losses in other Subaccounts. - -- Subaccounts invest in portfolios of the Prudential Series Fund. These portfolios include _____________. The Subaccounts of the Discovery Account also invest in other underlying Fund portfolios. These include ___________ __________. The investment strategy of each Subaccount is described in the Prospectus. The choice of Subaccounts may change. Any such change will be described in the Prospectus. [The administrative charge for each Subaccount in the Discovery Account will not exceed an effective annual rate of 0.75%. This charge is deducted daily from the assets in each of the Subaccounts. This charge is for the issuing of the Contract, establishing and maintaining records, and providing reports to the Contractholder and the Participants. Prudential may impose a lower administrative charge for certain classes of contractholders that meet minimum size requirements (for example, assets exceeding $25 million or plans with 500 or more Participants). In addition, Prudential may impose a lower administrative charge for any contractholder in Prudential's MEDLEY group annuity program for whom Prudential is providing administrative services as of June 1, 1997 that exchanges their MEDLEY contract(s) for a Discovery Premier contract to reflect the reduced set-up, recordkeeping and administrative costs incurred by Prudential. Any reductions in administrative charges will be available on a uniform basis to similarly-situated contractholders.] [Mortality risk and expense charges are deducted daily at an effective annual rate of not more than 0.15% of the assets held in the Subaccounts.] Participants selecting from any of the Subaccounts in the Discovery Account must receive a Prospectus prior to investing. - ------------------------------------------------------------------------------- SCHEDULE A - FORMS OF ANNUITY WHICH MAY BE PURCHASED Form of Payment Payable Applicable Schedule 1. Life - Payment Certain Annuity. Use Schedule B 2. Life - Contingent Annuity. Use Schedule C 3. Payment Certain Annuity. Use Schedule D We may provide monthly amounts of annuity larger than those shown in the following schedules for annuities purchased during any period we specify. Annuity purchase rates for other forms of annuity to which we consent will be furnished on request. The annuity purchase rates under this contract will be no less favorable to a Participant than used under other Prudential group annuity contracts of this Class. The forms of annuities which may be purchased are fixed dollar annuities which are guaranteed by Prudential. The amount of fixed annuity payments depends only on the form and duration of the annuity selected, the dollar amount applied to purchase the form of annuity, the age of the Annuitant and the annuity purchase rates in Schedules B, C and D. The amount of the fixed annuity payments does not depend on the performance of the Discovery Account or any Subaccount. AVAILABLE FORMS OF ANNUITIES Life annuities and Payment Certain annuities are available under this Contract. A Life form of annuity is one payable at least during the lifetime of the person (referred to as the "Annuitant") for whom it was purchased. Depending on the existence and nature of any payment payable after the death of the Annuitant, a Life annuity will be either a Life-Payment Certain or a Life-Contingent annuity. A Payment Certain form of annuity may be payable for a period less than the lifetime of the Annuitant. The terms of payment for each form of annuity are described below. Life-Payment Certain Annuity: The first monthly payment of a Life-Payment Certain annuity is payable as of the date the annuity is purchased. Monthly payments are payable on the first day of each month thereafter throughout the Annuitant's remaining lifetime. If the Annuitant dies before the number of annuity payments made equals the number of Payments Certain applicable to him, monthly annuity payments will continue to be made to the Annuitant's Beneficiary until the total number of payments is so equal. The number of Payments Certain is established when the annuity is purchased and may be 60, 120, 180, 240, or any other number accepted by Prudential. Life-Contingent Annuity: The first monthly payment of a Life-Contingent annuity is payable on the date the annuity is purchased. Monthly payments are payable on the first day of each month thereafter throughout the Annuitant's remaining lifetime. If the Annuitant dies before the death of his Contingent Annuitant, monthly payments will continue to the Contingent Annuitant throughout the Contingent Annuitant's remaining lifetime. The amount of each monthly Contingent Annuity payment will be a percentage of the monthly annuity payment payable before the Annuitant's death. The percentage is established when the annuity is purchased and may be 33 1/3%, 50%, 66 2/3%, or 100%, or any other percentage we accept. Payment Certain Annuity: The first monthly payment of a Payment Certain annuity is payable on the date the annuity is purchased. Monthly payments are payable on the first day of each month thereafter until the total number of Payments Certain specified when the annuity was purchased has been paid. The number of payments may be 60, 120, 180, 240 or any other number we accept. If the Annuitant dies before his Beneficiary, monthly annuity payments will continue to be made to the Beneficiary until the number of payments specified by the Annuitant has been made. Other forms of annuity may be provided with our consent. - ------------------------------------------------------------------------------- ANNUITY SCHEDULES The schedules show the monthly amount of annuity purchased per $10,000, after deduction of any taxes on annuity premiums that may apply. The amounts of annuity for other ages of the Annuitant or Contingent Annuitant will be provided upon request.
- -------------------------------------------------------------------------------------------------------- SCHEDULE B - LIFE - PAYMENT CERTAIN ANNUITY (120 PAYMENTS CERTAIN) Monthly Amount If the date the annuity is purchased is in: AGE 1998 1999 2000 2005 --- ---- ---- ---- ---- 60 $34.89 $34.75 $34.61 $33.90 65 39.86 39.67 39.49 38.59 70 46.17 45.93 45.70 44.55
SCHEDULE C - LIFE - CONTINGENT ANNUITY Monthly Amount If Annuitant and Contingent Annuitant have same date of birth. If the date the annuity is purchased is in: AGE 1998 1999 2000 2005 --- ---- ---- ---- ---- If specified percentage to Contingent Annuitant is 100%: 60 $29.87 $29.77 $29.66 $29.15 65 33.64 33.49 33.35 32.66 70 38.74 38.54 38.34 37.40 If specified percentage to Contingent Annuitant is 50%: 60 $32.36 $32.23 $32.10 $31.48 65 36.87 36.70 36.53 35.71 70 42.97 42.74 42.50 41.37 - --------------------------------------------------------------------------------------------------------
SCHEDULE D - PAYMENT CERTAIN ANNUITY Monthly Amount If the date the annuity is purchased is in:
NUMBER OF PAYMENTS CERTAIN 1998 1999 2000 2005 ----------- ---- ---- ---- ---- 60 $160.49 $160.49 $160.49 $160.49 120 84.21 84.21 84.21 84.21 180 58.87 58.87 58.87 58.87 - ---------------------------------------------------------------------------------------------------
EXHIBIT 4(B) AMENDMENT TO BE ATTACHED TO AND MADE A PART OF GROUP ANNUITY CONTRACT NO. [GA-XXXXXX] Section [9.1] of the contract provides that the contract may be changed by agreement between the Contractholder and Prudential. Therefore, by mutual agreement between the signatories below, the contract is hereby amended as follows: Effective [ ], Section [7.4] MINIMUM DEATH BENEFIT is replaced with the following: [7.4] MINIMUM DEATH BENEFIT Any lump sum death payment from this Contract made to a Beneficiary will be equal to the Participant's Account value as of the date Prudential receives a death benefit payment request in Good Order. Also effective [ ], [the attached Appendix A is hereby added to the contract][the existing Appendix A will be replaced with the attached Appendix A]. [ABC COMPANY THE PRUDENTIAL INSURANCE Any Town, New York] COMPANY OF AMERICA By:__________________________ By:______________________ Title: Title: Date:________________________ Date:____________________ DCA-1-DP [APPENDIX A--SEPARATE INVESTMENT ACCOUNTS Contributions paid to the Contractholder Variable Account may be invested in the Subaccounts of the Prudential Discovery Premier Group Variable Contract Account ("the Premier Account"). This variable separate account, sponsored by Prudential Insurance Company of America, is currently divided into 35 Subaccounts. Any income and realized or unrealized gains and losses in a Subaccount are credited to or charged against that Subaccount without regard to income, gains, or losses in other Subaccounts. Thirteen Subaccounts invest in portfolios of the Prudential Series Fund. These portfolios include Money Market Portfolio, Flexible Managed Portfolio, Equity Portfolio, Diversified Bond Portfolio, High Yield Bond Portfolio, Prudential Jennison Portfolio, Government Income Portfolio, Stock Index Portfolio, Global Portfolio, Conservative Balanced Portfolio, Equity Income Portfolio, 20/20 Focus Portfolio, and Small Capitalization Stock Portfolio. The Subaccounts of the Premier Account also invest in other underlying Fund portfolios. These include the [AIM V.I. Government Securities Fund, AIM V.I. Value Fund, AIM V.I. International Equity Fund, Alliance Premier Growth Portfolio, Alliance Quasar Portfolio, Alliance Growth and Income Portfolio, American Century VP Income & Growth, Davis Value Portfolio, Dreyfus Socially Responsible Growth Fund, Franklin Small Cap Fund, Franklin Templeton International Equity Fund, John Hancock Bond Fund, INVESCO VIF Dynamics Fund, Janus Aggressive Growth Portfolio, Janus Worldwide Growth Portfolio, Janus Growth & Income Portfolio, MFS Bond Series, MFS Growth with Income Series, MFS Emerging Growth Series, MFS Total Return Series, MFS Growth Series, and the Warburg Pincus Emerging Growth Portfolio]. The investment strategy of each Subaccount is described in the Prospectus. The choice of Subaccounts may change. Any such change will be described in the Prospectus. The administrative charge for each Subaccount in the Premier Account will not exceed an effective annual rate of [0.75%]. This charge is deducted daily from the assets in each of the Subaccounts. This charge is for the issuing of the Contract, establishing and maintaining records, and providing reports to the Contractholder and the Participants. Prudential may impose a lower administrative charge for certain classes of contractholders that meet minimum size requirements (for example, assets exceeding $50 million or plans with 1,000 or more Participants). [In addition, Prudential may impose a lower administrative charge for any contractholder in Prudential's MEDLEY group annuity program for whom Prudential is providing administrative services as of [February 14, 2000] that exchanges their MEDLEY contract(s) for a Discovery Premier contract to reflect the reduced set-up, recordkeeping and administrative costs incurred by Prudential.] Any reductions in administrative charges will be available on a uniform basis to similarly-situated contractholders. Mortality risk and expense charges are deducted daily at an effective annual rate of not more than [0.15%] of the assets held in the Subaccounts. Participants selecting from any of the Subaccounts in the Premier Account must receive a Prospectus prior to investing.] EX-9 5 EXHIBIT 9 EXHIBIT 9 CONSENT AND OPINION OF C. CHRISTOPHER SPRAGUE April 13, 2000 The Prudential Insurance Company of America 751 Broad Street Newark, New Jersey 07102-3777 Gentlemen: In my capacity as Assistant General Counsel of The Prudential Insurance Company of America, I have reviewed the establishment of the Prudential Discovery Premier Group Variable Contract Account (the "Account") on November 9, 1999 by the Finance Committee of the Board of Directors of Prudential as a separate account for assets applicable to certain variable annuity contracts, pursuant to the provisions of Section 17B:28-7 of the Revised Statutes of New Jersey and relevant documents contained in the registration statement. I was responsible for oversight of the preparation of the Registration Statement (Registration Number 333-95637) under the Securities Act of 1933 for the registration of certain variable annuity contracts issued with respect to the Account. I am of the following opinion: (1) Prudential was duly organized under the laws of New Jersey and is a validly existing insurance company. (2) The Account has been duly created and is validly existing as a separate account pursuant to the aforementioned provisions of New Jersey law. (3) The portion of the assets held in the Account equal to the reserve and other liabilities for variable benefits under the variable annuity contracts is not chargeable with liabilities arising out of any other business Prudential may conduct. (4) Assuming that the variable annuity contracts are issued in accordance with their terms, and that any necessary payment for the contracts is received by Prudential, the variable annuity contracts are legally issued and are valid and binding obligations of Prudential. In arriving at the foregoing opinion, I have made such examination of law and examined such records and other documents as I judged to be necessary or appropriate. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Sincerely, /S/ C. Christopher Sprague C. Christopher Sprague Assistant General Counsel EX-10 6 EXHIBIT 10(A) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Statement of Additional Information constituting part of this Pre-Effective Amendment No. 1 to the registration statement on Form N-4 (the "Registration Statement") of our report dated March 21, 2000, relating to the consolidated financial statements of The Prudential Insurance Company of America and its subsidiaries, which appears in such Statement of Additional Information. We also consent to the reference to us under the heading "Experts" in the Statement of Additional Information. PricewaterhouseCoopers LLP New York, New York April 21, 2000 EXHIBIT 10(B) SHEA & GARDNER 1800 Massachusetts Avenue, N.W. Washington, D.C. 20036 (202) 828-2000 Fax: (202) 828-2195 April 14, 2000 Board of Directors The Prudential Insurance Company of America 751 Broad Street Newark, NJ 07102 Ladies and Gentlemen: We hereby consent to the reference to our name under the caption "Legal Matters" in the State of Additional Information filed as part of Pre-Effective Amendment No. 1 to the registration statement on Form N-4 for The Prudential Discovery Premier Group Variable Contract Account (File No. 333-95637). In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933. Very truly yours, SHEA & GARDNER By: /s/ CHRISTOPHER E. PALMER Christopher E. Palmer EXHIBIT 10 C POWER OF ATTORNEY Know all men by these presents: That I, CAROLYNE K. DAVIS, of NEW HOPE, PENNSYLVANIA, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 8th day of February, 2000. /s/ Carolyne K. Davis State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, William H. Gray III, of Vienna, Virginia, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 7th day of February, 2000. /s/ William H. Gray III State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, Constance J. Horner, of Washington, D.C., a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this ____ day of _______, 2000. /s/ Constance J. Horner POWER OF ATTORNEY Know all men by these presents: That I, Charles R. Sitter, of Dallas, Texas, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 28th day of January, 2000. /s/ Charles R. Sitter State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, Donald L. Staheli, of Salt Lake City, Utah, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 27th day of January, 2000. /s/ Donald L. Staheli State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, Richard M. Thomson, of Toronto, Ontario, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 15th day of February, 2000. /s/ Richard M. Thomson State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, James A. Unruh, of Paradise Valley, Arizona, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 31st day of January, 2000. /s/ James A. Unruh State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, Paul A. Volcker, of New York, New York, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 31st day of January, 2000. /s/ Paul A. Volcker State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public POWER OF ATTORNEY Know all men by these presents: That I, Joseph H. Williams, of Spring Island, South Carolina, a member of the Board of Directors of The Prudential Insurance Company of America, do hereby make, constitute and appoint as my true and lawful attorney in fact, LEE D. AUGSBURGER, SUSAN L. BLOUNT, THOMAS C. CASTANO, CLIFFORD E. KIRSCH, THOMAS J. LOFTUS, LINDA E. SENKER, ANDREW M. SHAINBERG, C. CHRISTOPHER SPRAGUE and ARTHUR D. WOODS III or any of them severally, for me and in my name, place and stead, to sign, where applicable: annual reports on Form 10-K, registration statements on the appropriate forms prescribed by the Securities and Exchange Commission, and any other periodic documents and reports required under the Investment Company Act of 1940, the Securities Act of 1933 and all amendments thereto executed on behalf of The Prudential Insurance Company of America and filed with the Securities and Exchange Commission for the following: The Prudential Discovery Premier Group Variable Contract Account and group annuity contracts, to the extent they represent participating interests in said Account. IN WITNESS WHEREOF, I have hereunto set my hands this 27th day of January, 2000. /s/ Joseph H. Williams State of __________) ) SS County of _________) On this ____ day of __________ 2000, before me personally appeared ,to me known to me to be the person mentioned and described in and who executed the foregoing instrument and duly acknowledged to me that (s)he executed the same. My commission expires: Notary Public EX-13 7 EXHIBIT 13 Exhibit 13 Schedule For Computation of Performance The performance that appears in Table 1 of the SAI was calculated by reducing the annual total return by the total maximum expense charge of 0.90%. The 0.90% charge is composed of the 0.15% charge for mortality and expense risk and the maximum 0.75% charge for administration. The following example uses the One Year Total Return for the Prudential Conservative Balanced Portfolio:
- ---------------------------------------- -------------------------------- ----------------------------------- Gross Average Annual Total Return Mortality and Expense Risk and "Hypothetical" Average Annual One Year Maximum Administrative Charge Total Return Ended One Year Ended 12/31/99 12/31/99 - ---------------------------------------- -------------------------------- ----------------------------------- 6.56% 0.90% 5.66% - ---------------------------------------- -------------------------------- -----------------------------------
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